Ownership structure for its international expansion strategy

Assignment Help Management Theories

Reference no: EM133673908

Case: Wumart Stores, Inc. operates and manages supermarkets and convenience stores in China. The Company offers meat, seafood, dry fruits, eggs, fruits, oil, and other products. The company also has fresh supermarket meals that it plans to introduce to the selected market. These meals are mainly pork-based, a staple in China. These meals are very profitable to the company, and they would like for it to continue as is, given the growing Chinese expat communities around the world. Wumart Group is one of the earliest and biggest retailers in China the largest supermarket chain in Beijing-Tianjin-Hebei area and also one of the biggest modern circulation enterprises.

The group operates over 1000 stores nationwide in northern, eastern, and northwestern China with annual sales and assets of over RMB 100 billion. The company serves more than 600 million customers each year. Wumart's business formats consist of retail, Internet, and Internet of Things (IOT) technology, logistics, and supply chain. In line with the tenet to develop a modern circulation industry and improve the quality of life of the masses. Wumart Group constantly contributes to national economic growth and employment, and they aim to better the lives of people, for this reason, it is known as the "rice bag" and" vegetables basket" of Beijing, the capital city of China.

The founder, Dr. Zhang Wenz hong, insists on his principles of kindness and honesty within the company, something that he would like to continue inthe selected market. Being technology-driven, the Group has developed location-based e-commerce in Beijing, Hangzhou, Yinchuan, Wuhan, and other major cities, empowering supermarkets into Omni-channel retailers with online-offline integration and serving over 50 million members. [These reforms and developments were fully affirmed by both national and provincial government officials.]Wumart believes in helping its employees, as it provides new jobs and the opportunity to make a good living. To this end, Wumart has developed special rules that the company follows, they have promoted a collectivist culture; they also monitor the mental and physical health of employees; they support team spirit and efficiency; and ensure that all employees' work is monitored. In November 2023 Wumart announced that it was planning to expand outside of China.

Wumart planned to invest around $500 million per annum, over five years. This was estimated to be sufficient to build between 100 and 150 stores in the first year of operation. The company plans to undertake detailed market research including visiting shoppers at home to see what they bought and asking people to keep a food diary to observe what they consumed. To achieve this, the company plans to build a mock store in their chosen location.1You have now provided a name for your consultancy, and have selected a country for the company to enter. The company has reviewed your initial submission which covered Globalization, Cross-Cultural business and Political, Economic and Legal System. However, before they move forward they need you to answer a few more questions. Please keep the following definition in mind: home country (China), host country (country that the group has selected in assignment one).

The country that we selected is South Africa

The questions are:

Question 1. Based on the company's expansion goals and market analysis, which theory of Foreign Direct Investment (FDI) would you recommend as the most suitable approach for the company's international expansion strategy??

Question 2. How would you advise the company on selecting the most suitable ownership structure for its international expansion strategy, considering factors such as market entry barriers, regulatory environments, and long-term growth objectives?

Question 3. If Wumart Group were to move their operations into Mexico, and export from Mexico into Canada. What is the name of the trading bloc that encompasses Canada, Mexico, and the United States that our company might benefit from? Also, clarify the level of regional economic integration of the trading bloc?

Reference no: EM133673908

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