Doing Business Globally & Internationally Assignment
CONTENTS
INTRODUCTION………………………………………………………………………………………………………….3
MAIN BODY…………………………………………………………………………………………………………………3
Involvement of Chinese and the Italian governments………………………………………………………..3
PESTLE analysis of Italy and China………………………………………………………………………………4
Porter’s 5 forces on Heavy machineries in Italy and China…………………………………………………4
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Write My Essay For Me- Describe this partnership with risks associated. Justify it with Zoomlion’s subsequent
partnership with India’s ElectroMech………………………………………………………………………………5
Recognise the differences between business and national cultures………………………………………7
Distinguish cultural distance and difference based on stock market reaction to IGV stock price
……………………………………………………………………………………………………………………………………8
CONCLUSION…………………………………………………………………………………………………………..10
REFERENCES………………………………………………………………………………………………………….11
APPENDIXES…………………………………………………………………………………………………………….13
REFERENCES…………………………………………………………………………………………………………..22
INTRODUCTION
Business environment on the global level is important component these days and support
the growth and development of various aspects of companies with respect to profits, revenue
generation and market suitability. In regard to the same, companies are susceptible to various
factors on the competition platforms. They need strategic planning and implementation of proper
measures which will prove beneficial and provide support to the entire business organisations.
Furthermore, it caters to the needs and requirements of international customers by combating the
marketplaces through employing the latest trends and apply suitable strategies for overall profits.
This assignment is based on theresearch that is based on the business partnership
between Chinese Construction Equipment Manufacturer Zoomlion with Compagnia Italiana
Forme Acciaio (CIFA), the Italian concrete equipment manufacturer. It also describes the
internalbenefitswiththesynergiesprevailingafterthispartnershipbetweenboththeir
employeesandstaff.Moreover,itlayslightonthecontributionofboththecountry’s
governments, that is. Italy and China. This includes the models like Handy’s Model etc. to gain
insights about the cultural disparities along with national and corporate cultures. Moreover, this
will assist in improving the economic aspects and related knowledge for overall enhancements of
the operational activities.
MAIN BODY - Areas for expected internal benefits and synergies for both companies
With reference to the partnership between Zoomlion and CIFA, it has become the talking
point as it led the medium sized construction machinery maker into the maximum stakeholder of
60 percent at CIFA in association with other two investors. For Zoomlion, this came under the
strategic planning of expansion in terms of competing at global levels by boosting their
technologies and exportation in the labour markets. This move came after its biggest rival Sany
Heavy Industry’s announcement of investments of more than 100 million dollars for a new US
Facility (Brock, 2005).
This partnership has proved beneficial in terms of matching synergies between both the
companies. Zoomlion used its own cash of 50 million dollars and rest borrowed from the
Barclay’s Bank of Hong Kong branch in the hope to secure a foothold in overseas through this
expansion plan by sales generation of 40 percent of total sales (Luo, 2007). On the other hand,
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Cifa’s eight shareholders sold the entire shares in acquisition to maintain the brand’s name
through Magenta, an Italian’s private sector equity enterprise.
Involvement of Chinese and the Italian governments
Here, the Chinese government promoted investments by regional corporations in abroad
due to its hunger of influencing the mature markets by prevailing capitalism. Additionally, the
struggling equity markets tend to seek such options by Chinese buyers to capture the deal by not
over-paying for the asset. Thus, the government looked into this arena after encountering failure
in few overseas deals.
Nonetheless, this impacted the Italian Government in small manner as the shares of its
products in international market might make Zoomlion the largest concrete handling company in
the world. Although, the entire framework of R&D and supervision of drawings with related
components has been done at their head office only and underpinned the future positioning in the
targeted growth rate (Caponio, 2005).Along with, the engineering parts like hydraulics and
mechanical have been delivered from Milan only leading to implement the governmental policies
for exporting and other taxation charges. It assisted in entering the Chinese market in direct
terms by setting up of their factory due to the shared synergies.
PESTLE analysis of Italy and China
This analysis is done to understand the micro-environmental factors in terms business and
project management. China has opened up its cross border activities to gain economic profits by
moving towards e-commerce development, low labour costs and growing GDP rate. Further, it
also laid regulations with respect to IPR, Taxation, consumers’ rights in relation to reliability and
validity of electronic products(Schniederjans & et.al., 2015). The sociocultural have a deep
rooted affects as China’s demographics of being the most populous country leads to fluctuations
in distribution of social parameters like religion, emigration, education etc. However, there is an
unstable online payment system as B2C industry is still in developing phase, with lack of trust in
the functioning and low acceptance of credit card usage. The environmental aspects involve the
reduction in carbon footprint with proper elimination of wastage in the surroundings.
Italian market has variations as the Parliament has remained unchanged and is making
changes to overhaul the enactment of bills at speedy manner. It led to a shaken economy and rise
in rate of unemployment. Along with, the Euro crisis made it worse but such acquisitions led to a
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participative system by trusting the private sector and the government (Geckeler, 2006). This is
an agrarian based country but also one of the richest economies and had a good debt ratio with
good VAT offers. Its community is proper mix of urban and local and include shopkeepers,
farmers, estate owners and more. In addition, it is called as the hub of innovations and
conceptualizations in art and scientific experiments. Here, pollution is the area of problem but
also promoter of renewable sources of energy. Lastly, it is feeding in the court of jurisdiction
where tribunals, court of appeal are evident.
Porter’s 5 forces on Heavy machineries in Italy and China
This five forces have helped in shedding light on the usage of heavy machineries in both
the countries. As both the companies are into the same sector, this acquisition helped them, in
retaining their positing in the targeted markets. This deal came when the entire global suffering
from financial crunch, thus they suffered a steep decline in their sales and revenues. However,
this acquisition paved a path of opportunities for both sides at global markets. Furthermore, this
conceptual framework determine the intensity between the competitive forces to attract the
potential growth in the Industrial Organisation (Bellandi & Di Tommaso, 2005). The Porter’s
Five Forces Framework put insights on the heavy machineries at globalism level with respect to
Zoomlion and Cifa. There have been an analysis in terms of buyers’ power of Zoomlion with
other two investors with inclusion of suppliers bargaining power, of giving back in the surplus
market through consistent quality and standards, the complete competitive rivalry with the threat
of new entrants like Sanye etc. with substitution of threats.
2.Describethispartnershipwith risksassociated.Justifyit withZoomlion’ssubsequent
partnership with India’s ElectroMech
This partnership paved a customary evolution in the heavy machineries’ sector. Due to
economic recession, the Chinese Company, Zoomlion took this step of acquiring Cifa to conquer
this sector on global level through expansion by streamlining their decision making and gaining
the competitive edge over its local rival company Sany. Nonetheless, with maturation in time, it
has affected both the companies’ synergies with respect to sales, revenues and production (Peng
& et.al. 2017). However, there were few challenges attached with it, as China was still in
progression of putting foot in the global market, the Italian political system was booming
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(Deresky,2017). This affected the dynamism as Cifa was in turmoil state due to decreased
revenues and was given a steady push to directly enter the Chinese market without any
significant moves. Zoomlion needed to crack on the global podium and tapped this opportunity
by joining into new dimensional territory with pool of options and it became the second largest
European and Chinese acquisition deal of that time.
This can be compared and contrasted with another joint venture of Zoomlion’s with
India’s largest Industrial Crane Manufacturer, ElectroMech. This deal was set up for the first time
as the direct invested overseas plant. It has 70 percent with the strategic planning of going
localized by becoming globalised through investing in the Indian market for 100 million dollars
(Meyer & Peng, 2016). Recently, India is on the brink of growing economies and has a GDP of 8
percent growth rate(Deresky, 2017). Thus, this alliance led both the companies in the limelight
by entering the infrastructural sector having tower cranes as the potential future place with an
explosive demand in all developmental projects like construction, real estate and more.
In this regard, the justification that can inferred is that Zoomlion has spread its power in
almost all the countries gradually by taking over the global market in strategic alliance with other
similar companies of the world to spread out the product portfolio through market positioning. It
helped to utilise the advanced technologies with the expertise in research and development with
manufacturing sector strengthened the service with sales and profits in exponential direction
(Wilson & Wilson, 2017). Henceforth, this partnership of Zoomlion with both Cifa and Electro
Mech respectively encountered into addressing opportunities in tapping new and reserved
marketplaces in successful and effective manner and such small companies in terms of global
levelcanreplicatethisChinesecompany’sgrowth andprogressionatinternationallevel
(Welford, 2016).
3.Analyze the impact of ‘partnership’ between Zoomlion with CIFA by involving national and
corporate cultures
The above mentioned partnership involve both corporate and national cultures that have
an impact on the overall working practices. There are many models which must be explored to
study the nature of this partnership and its effects.
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Trompenaars Cultural Dimension Model:
This model is based on the cross cultural communication between the management and
business ethics. It has seven dimensions namely:
Individualism vs Communitarianism- Here, the realization of culture disparity is important as
China has low individualism with high communitarianism, and Italy with high intensity of
individualism due to the cultural differences’ in their societal norms (Zander, McDougall-Covin
& Rose, 2015).
Neutral vs Emotional- Neutrality means emotionless or holding back like China whereas
emotional infers an open and natural culture in terms of Italian culture.
Universalism vs Particular-ism- These are the beliefs with set of practical ideals which can be
applied but when in general then called as universal ism and when applied as per situations then
referred as particular-ism (Tate & et.al., 2014). China has high particuliarism whereas Italy led
the universalism ideology that led to innovations.
Specific vs Diffuse- This aspect concentrates on the interconnection between the different
aspects of life such as work life balance (Meyer & Peng, 2016). Italian people in coalition with
integrated work responsibilities whereas Chinese have the diffusivity nature.
Sequential vs Syn-chronic- Here, sequential is the time specific with chain of events. Whereas
syn-chronic is structured with proper scheduling. This is circumstantial and is based on both long
and short term orientations. In this aspect, both of the parties behaved as per the situation.
Internal vs External control- In this, all the factors are important, that is both internal and
external environmental factors (Schniederjans & et.al., 2015).
Achievement vs Ascription- Achievement culture is based on performing functions whereas
ascription is the term where an individual’s personality is significant (Zucchella & Magnani,
2016). China is ascripted oriented and Italy is achievement based.
This model assisted the workforce of both the companies in viable and proper way,
leading to enhanced productivity and sales volume.
Handy Model of Corporate culture:
This is the model which lays emphasis on the organizational culture and is based on the
power, role, task and person. Here, the power describes both the companies strengths which is
based on the workforce’ abilities, knowledge and skills. If followed effectively, then organization
is on the path of success (Terjesen & et.al. 2016). Its initiated from the role culture has an
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imperative part in standardization and formalization of functional areas through collaboration
with stable business environment. In context of partnership, this took place with the purpose of
gaining steady growth at global level (McIntosh,Waddock & Kell, 2017). Moreover, task culture
is influenced from structured project orientation for bringing profits. Lastly, the person culture
mainly depends on unusual cultural work space due to such partnerships between two countries,
affecting the entire organizational set-up (Gerschewski, Rose & Lindsay, 2015).
To sum up, these models helped the companies to gain insights about the existing and
newly formed policies and their employees reactions for better working environment (Hair Jr &
et.al., 2015).
Recognize the differences between business and national cultures
There are cultural differences in both business and national levels. With advent of
globalization and open economy, there are various dimensions to analyze the differences in
national cultures with respect to organizational culture(Zahra & et.al., 2014). This difference can
assist the organization to channelize the behavior of workforce by unifying the managerial
problems arising due to this parameter. Moreover, this occurs due to diversified cultural
backgrounds, traditions, values and religious beliefs(Taglioni & Winkler, 2016). Here, one must
have an understanding that business cultures are the practices due to strategic options between
different companies whereas the national cultures are connected to the different cultural values.
In addition to the above, national cultures is the representation of country’s socialization
networking whereas the corporate cultures is the foundation framework of capitalistic goals and
objectives through making a uniform corporate work culture among different employees for
exploiting as well as accepting the already existent regulations and policies(Acs, Szerb & Lloyd,
2017).
Distinguish cultural distance and difference based on stock market reaction to IGV stock price
In order to bring association with the capital market linkage with the organizational
cultural distance, it is imperative to know the metrics for the measurement and reflection of the
bias differences. Mainly, the primary metric is the religious beliefs prevailed it he country which
has direct link with behavioral approach ability of individuals (Tuleja, 2014). Secondly, Hofstede
cultural dimensions must be considered such as power distance, masculinity, uncertain avoidance
and individualism (Boshyk, 2016). These gives the stock market analysis that sharing a common
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