Michel’s Patisserie

2544 Words Feb 7th, 2007 11 Pages
Global Marketing
325-309

Assignment 2: Michel’s Patisserie

Word Count: 1979
(excluding title page, executive summary, tables, and bibliography)

I Executive Summary
This report analyses the expansion of Michel’s Patisserie into the Chinese market through the creation of joint venture franchise agreements. Michel’s will be evaluated based on the motivations for expanding to China, process of internationalisation, choice of entry mode, and standardisation versus adaptation decisions. This analysis will be undertaken so that recommendations can be made to determine the most effective means of securing the future success of Michel’s in Shanghai. It will be demonstrated that while the motivations for expansion were fundamentally sound
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Negligible Risks
Through a joint venture franchising structure with fairly rigorous contractual stipulations Michel’s central administration were able to expand the business to China “on a shoestring” while still maintaining “arms length control” of how the Chinese business was run. The licensee and joint venture partner bore the financial risks, while risks of damage to the brand that a failed venture would cause were deemed negligible due to China being so far away from the Australian market.

EXTERNAL MOTIVATIONS
Globalisation
China is becoming more westernised, particularly the ‘cosmopolitan’ city of Shanghai, where demand for Western products is increasing rapidly as disposable income rises in line with China’s strong economic growth. Michel’s wanted to establish a foothold in the market at an early stage to demonstrate a long-term commitment, which has been identified as essential to compete successfully in the Shanghai market (per Tim Harcourt, Austrade Chief Economist).

China’s accession to the World Trade Organisation (‘WTO’)
China’s accession to the WTO in 2001 has helped shape its economy to becoming a more predictable environment for trade and foreign investment. Corporate governance and frameworks for business operations and interactions have improved, providing a much more transparent environment. (Deckers, 2004)

The Chinese Economy
China’s economy has
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