Inchcape shall enter the automotiveindustry in China with the aim of producing on low costs and high profit margins. The corporate governance code ofChinaposes a majorbarrier to the entry of the company in the Chinese market. The company can either enter a joint venture or most preferably, Inchcape can take over a state owned organization going into a loss which will allow the company to reap the benefits of operating in the largest automobile market of the world.
This strategy will help them avoid import taxes, it helps them enjoy reduced transportation costs, they can use cheap labor and this way they can gain access to raw material as well. This way they can achieve competitive advantages and also that they will get support from the acquired company in increasing their market share. The benefits are many which include lowest costs that help incur economies of scale, to cater to the largest automobile market of the world and immense growth oppoetunities with the appropriate strategy to enter the market. The corporate governance code ofChinacan pose hindrances yet the benefits are great if the mode of entry is appropriate (Wright, 2006).
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