Resource Concerns - Research Paper Example

Resources as a Concern in Global Strategy Customers expect value for money when purchasing a product. The manufacturer has to ensure that the customer is delivered the greatest value for money while keeping base costs as low as possible. Globally, consumers tend to behave differently as per their geographical, cultural or other tastes. In certain cases, it is possible to substitute local solutions for customers but in other situations it is imperative to use original resources. The custom furniture manufacturing business under consideration is able to sell its products given their novel form.

Such a form can only be maintained when using resources that were being used by the parent manufacturing plants located in the United States. However, it must be considered that importing such resources from the United States would cost heavily and carries the additional risk of making the products uncompetitive in an already competitive market. Resources of Concern in China China is a large buying and selling paradise for both consumers and manufacturers. Given that China produces a large number of manufactured products, it is highly likely that a number of critical resources might be available in China.

However, certain specialized resources might not be available and might have to be outsourced from the United States before they can be manufactured locally in China. The custom furniture business relies in large part on the use of wood (Han, Wen, & Kant, 2009) as well as other construction materials such as wrought iron, stainless steel and novelty plastics. As far as materials such as wrought iron and stainless steel are concerned, China has an ample cheap supply of these materials. However, when the issue of woods and novelty plastics is considered, the situation is altogether different.

Although China has an ample supply of wood but Chinese woods such as mahogany, oak wood or birch cannot be expected to provide the same output as local woods (Chunquan, Taylor, & Guoqiang, 2004). Chinese focus lies more towards the production of synthetic boards to create furniture while custom furniture requires original wood for the exquisite feel and taste (Lee, 2011). The issue with novelty plastics is similar since they would have to be outsourced from the United States. In turn these imports would cost the company heavily and there may even be certain trade barriers for novelty plastics.

On another note, China would provide a number of different textiles and fabrics for use in furniture manufacturing. However, in order to keep the look and feel of the original furniture, it would be necessary to import specialized fabrics. In the longer run, it may be possible to manufacture these textiles inside China but initially it would cost the company heavily. Impact on Decision to Expand in China Even though the Chinese market may hold some entry barriers such as the need to import certain resources but a competitive business can still be afforded given that Chinese imports of furniture originating from the United States totals some 8.

8% of overall furniture imports (Aspin 2000, 2009). If the concerned company begins business in China by importing certain resources from the United States, the cost of the produced furniture would be lower than that of imported furniture. The lower cost of other base inputs such as electricity and labor would help to offset the cost of imports. Moreover, in the longer