SWOT analysis

SWOT Analysis

For a U .S . automobile company to develop and manage operations in Asia 's emerging market like China , a thorough knowledge of business conditions and practices are needed . To do

this , the strategic tool SWOT analysis would help the company in its feasibility study

Strengths

Experiencing sustained economic development

Production and labor costs are considerably lower than other countries in Asia

The tariff for imported auto parts and accessories are lower

U .S . auto firms manufacturing cars locally have a higher chance of patronage because the

p Chinese people are nationalistic

Government policies are favorable to foreign investments

Weaknesses

The Chinese labor system is weak on customer service , particularly in answering customers ' complaints after sales have been made

China is known for making counterfeit products

There are many Japanese automobile companies in China , making competition stiffer

Transport costs of car parts bound for North America may cause a lot

Exchange rates could fluctuate and become unpredictable , making planning and costing

difficult

Internal conflict , particularly that with Tibet , can affect production

Infrastructure and technology in some areas are outdated , while badly in need of repairs in some

Low turnout for people with college diplomas

There are many people in the country who are illiterate

Many Chinese workers have little regard for quality

Lack of power supply and fuel in some areas

Sewage and pollution problems the country is considered on of the dirtiest in the world

Opportunities

Economy is growing and is opening its very large market to the world

The World Bank predicts that China will become one among the world 's six largest markets by 2020

China 's large population base has a potential buying capacity that is continually increasing

Shift to market economy is making citizens become more materialistic

A U .S . company can easily partner with local firms to get around bureaucracy

People riding bicycles are predicted to shift to cars in the future

China could become the distribution point for all Asian markets

Threats

China 's economic boom is not without serious glitches . Some of its policies are

pro-Communist that could hamper growth

Local automobile companies may pirate U .S . top executives . For example Shanghai Automotive pirated General Motor 's Philip Murtaugh , GM 's top guy in China . Chinese automakers are hiring executives that have international experience

The government encourages the manufacturing of environment-friendly vehicles once the government 's effort will prove fruitful , U .S automakers will have a problem selling in the Chinese market

The government is also supporting local manufacturers to become more competitive

Certified accountants in the country are very few , and accounting practices are different

from what is practiced in the U .S

Cultural differences such as the concept of collectivism that could hinder growth

Highly bureaucratic

Advertising rules are different from that of the U .S

Government controls media

References

China 's Automotive Industry (2006 , June 19 . American Public Media Retrieved May 7 , 2008

from http /marketplace .publicradio .org /display /web /2006 /06 /19 /chinas_automot ive_industry

Helms , M .M (1999...