The Possibility of Dachser Far East Ltd. Entering into Western China - Research Proposal Example

The prospects of entering China for Dachser Far East Ltd. Abstract This proposed research project is directed towards studying the existing prospects with regards to entering the Chinese market in the case of Dachser Far East Ltd., which is looking to gain a foothold into this lucrative market, especially in the western part of the country. Further, the proposed study aims to outline the path adopted towards conducting a thorough and efficient research in a timely fashion. Chapter 1 Introduction (200 words) The central theme of the proposed study is aimed at examining the prospects of Dascher Far East Ltd. (henceforth referred to as DAFE in the remainder of the paper) for entering the Western Chinese market The aim of the study is to study the market conditions that are likely to influence the pace of entry and progress in the case of DAFE, towards establishing a foothold in the market and take the necessary steps towards achieving profitable and efficient business operations in the least possible time. Additionally, the research will also look into the conditions of administration as well as the Chinese legal framework, which are likely to play a key role in shaping up the entry strategy of the company in various areas such as management, inventory, labor, manufacturing, sales etc. As such, the study aims to further determine if the resulting strategy would provide the required financial benefits to the company in the long run and whether it will help achieve all the targets set forth by the company. In addition, it is also deemed important to assess and evaluate all potential obstacles that can hinder the pace of progress of this proposed entry by the firm. 1.2 1.2.1 Background The Government of China has recognized the disparity in terms of development between the heavily industrialized east and the relatively underdeveloped west. In order to minimize this and ensure uniform development throughout the country, the government has carved special economic and announced political incentives to the foreign investor. International firms find that one of the major competitive advantages in Western China is the available of relatively cheap labor. As such, some of the factories intended to have been set up originally in South China through foreign investments have either moved or are being planned to be shifted to Western China. As a company specializing in freight forwarding and logistics, DAFE is experiencing a decline in the turnover through operations in South China. To overcome this and even increase the market share within Mainland China, DAFE is seeking to re-consider its corporate strategy. 1.2.2 Project Objectives The objectives of the proposed study are to evaluate through a careful and well planned analysis whether it is a good strategic initiative to relocate DAFE’s operations and to recommend solutions based on the analysis that can assist DAFE towards achieving success though the proposed business expansion. Chapter 2 Literature Review In order to be able to undertake a study that aims to highlight a well defined expansion strategy for a company such as DAFE, it is deemed necessary to gain knowledge and inspiration in planning and suggesting solutions by referring to various associated studies, theories and frameworks that are considered essential in the content of the proposed research. This is not only necessary to ensure a thorough study based on concrete principles, but would also help associate the study towards tightly bound principles that are in use through the industry and have been suggested by eminent academicians and professionals from the industry. As such, there are different models that have been discussed in this section. The service-profit chain A large portion of the industry lies within the service sector, where the basic model comprises performing a service required by a section of customers and deriving revenue from these services. As such, any company wishing to conduct operations must undertake a thorough evaluation if the intended activity will be profitable and thereby ensure stability for the company (James Heskett, 1997). The service-profit chain model establishes the required relationships in this context between profitability, customer loyalty, customer satisfaction, employee satisfaction, employee loyalty, and employee productivity in the “Service-Profit Chain” thereby helping companies and researchers apply it to study their prospects in terms of profitability (Robert Kaplan, 1996). According to James L. Heskett, (March – April, 1994) the links in the service-profit chain when profit and revenue growth are stimulated primarily by customer loyalty. Actually, the customer loyalty is a direct result of customer satisfaction. And the customer satisfaction is largely influenced by the value of services which created by satisfied, loyal and productive employees. On the other hand, employee satisfaction results primarily from high-quality support services and policies that enable employees to deliver results to customers. The writers of the article, Mr. James L. Heskett, specially highlighted the success of the “Service-Profit Chain Model” that the internal quality of a working environment contributes most to employee satisfaction. And leadership develops and maintains a corporate culture focus on service to customers and fellow employees. PEST analysis PEST analysis is a very important to a firm to scan the environment from political, economic, social and technological point of view before starting the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. It can be used for marketing and business development assessment and decision-making (Chuck Williams, 2002). PEST analysis template is presented as a grid, comprising of the four sections, one for each PEST headings. The analysis can be converted into a scientific measurement by scoring the items in each of the four sections. By scoring, it can compare the more or less significant factors. Strategies for competition SWOT analysis According to Michael Porter’s SWOT analysis is the major step to be carried out in this strategic decision making model. Based on the result of Strength, Weakness, Opportunities and Threat analysis, the strategy formulation is to develop a strategy which will take advantage of the opportunities and overcome the threats (Tim Berry, 2000). Michael Porter’s Competitive Advantages According to the model, corporation needs to concentrate upon developing competitive advantages which are sustainable over time – the most significant factor in the business success. An effective marketing strategy, the identification, development and maintenance of a competitive advantage, and hence a strong selling proposition. Michael Porter suggested that cost leadership and differentiation are basic competitive advantages. Michael Porter cited three generic strategies: overall cost leadership, product differentiation and focus for attaining competitive advantages (Michael Porter, 2008). Chapter 3 Research Methodology Prior to undertaking the proposed study, it is important to determine a relevant path that when followed upon during the course of the study, will help achieve the required results in the most efficient manner in addition to helping to achieve this in the shortest possible time. As has been mentioned before, the study intends to base its recommendations by relying on past and current data, which can be obtained in a number of ways. While past data necessary for formulating a strategy based on recognized theories can be obtained from secondary sources such as books and journals, it is also intended to obtain first hand information through primary sources of information, wherein the primary means of collecting the required information shall be by way of interviews and surveys of relevant people through a properly prepared questionnaire, a template of which can be found at the end of this section. Further, the study shall make of providing the necessary inferences by pooling the required data from all the collected information, whereby the process will be speeded up by categorizing and grouping all the data that has been chosen to be included in the analysis. Further, statistical analysis will be undertaken in the case of examining numerical data to help understand patterns within the industry and the general market environment in China. The questionnaire shown below is believed to be an effective way to address the current problems associated with the company’s intended expansion into western china as it will pave the way for collecting data not only related to the situation on ground, but would also help understand the perceptions and beliefs held by the various stakeholders associated with the proposed expansion. Questionnaire Customer survey enhances the customer participation and helps to design a meaningful and customer focus strategy. A questionnaire per Table 3.1 : “ Customer Survey on Dachser Far East Ltd.” will be distributed to 20 customers, agents and co-loaders in China. Table 3.1 Customer Survey on Dachser Far East Ltd. Customer Survey on Dachser Far East Ltd. Date : ____________ Kindly answer this questionnaire and return to the Sales and Marketing Department of Dachser Far East Ltd. (DAFE) 1. Customer Name : __________________________________ 2. What is your business relationship with DAFE? a. direct customer b. consumer electronic customer c. agent d. co-loader 3. Please list out your 3 major forwarder below a. __________________________________________ b. ___________________________________________ c. ___________________________________________ 4. Annual Turnover of freight service with DAFE:______________ 5. How do you know DAFE? a. By good month of other companies b. By our advertisement c. By other branches of Dachser in other countries d. By your agents e. Others, please specify : ________________________________ 6. Where is the freight origin? a. Greater China (Hong Kong, Taiwan and Mainland China) b. Other countries 7. How would you rate our customer service when you first contact us? a. Very good and professional customer service b. Fairly good and professional customer service c. Reasonable but not outstanding customer service d. Fairly poor customer service, not impressive e. Poor customer service, unprofessional 8. How do you rate our price? a. Very expensive b. Fairly expensive c. Reasonable d. Comparatively cheap e. Very cheap 9. When you call our operation department, how would you rate our service? Please circle the number that best reflects your level of agreement with each of the following statements : strongly strongly agree disagree 7a. Phone pick up time within 3 rings 1 2 3 4 5 7b. Our employees polite 1 2 3 4 5 7c. Reply is quick enough 1 2 3 4 5 7d. Can provide correct freight information 1 2 3 4 5 7e Our quotation is clear 1 2 3 4 5 7f Is the service professional 1 2 3 4 5 7g Our employees helpful 1 2 3 4 5 7h Our employees sincere 1 2 3 4 5 7i Our service gave you confidence 1 2 3 4 5 7j Our pricing is reasonable 1 2 3 4 5 7k You are satisfy with our work 1 2 3 4 5 7l Our invoices are clear 1 2 3 4 5 7m Our invoices are error free 1 2 3 4 5 7n Our tracing system is helpful 1 2 3 4 5 7o Follow up actions are prompt 1 2 3 4 5 10. If your freight origin is from Hong Kong, Macao, Taiwan and Mainland China (Greater China), will you choose DAFE? 11. If your freight origin is outside Hong Kong, Macao, Taiwan and Mainland China (Greater China), will you choose DAFE? 12. Which of the following factor(s) are most important to you when you choose the freight forwarder? a. Famous company b. Reliable service c. Low price d. Wide Locations network and coverage e. Good tracing system and follow up actions f. Good reputation g. Recommendation from friends h. Advertisements i. Other, please specify ; _________________________________ 13. When you evaluate the quality service of a freight forwarder, which factor(s) are most important to you? a. Locations networks and coverage b. Competency of the employee c. Polite and friendly employees d. Prompt and immediate respond e. Systems supports, e.g. tracing system 14. Will your company move or set up branches in Western and North West China? 15. What will the 3 China cities your company move or set up branches? a. __________________________________ b. __________________________________ c. __________________________________ ********* Thank you for your help ******* 3.2 Top Management Interviews Within any company regardless of the area or sector it is operating within, the management and the elements responsible for the decision making channel the way for the possible growth or destruction of the firm as the efficiency with which the related decisions are thought out, planned and implemented by taking all the influential factors into considerations will be instrumental to determining the future sustainability and growth prospects for the firm. Management interviews are an effective way to help establish the thought process that is in progress at the highest levels of the firm and are one of the most effective ways of determining the most probable course the company is set to take. As such, management interviews will be conducted to gather ideas and concerns at the management level. Such interviews further help enhance the understanding of the organizational direction as well as the overall strategies. In simler words, they are a direct, easy and reliable way to gather such information. Interview Questions : 1. How long have you been working in Dachser? 2. What is your last job in Dachser (or applicable, in other company)? 3. What is your present job in Dachser? 4. When did you start working for DAFE (or applicable in Dachser)? 5. What sort of market you feels DAFE is in? 6. What are the needs that DAFE going to Western China? 7. If you do, how expansion is important to DAFE and Dachser Group? 8. Besides, increase the revenue earned from the expansion, what are the others contributions from going to Western China to DAFE? 9. Is the management of Dachser values the same way as you value the expansion strategy? 10. What was the plan for the development of DAFE when Dachser took over DAFE in Year 2003? What had you emphasis on the product differentiation? 11. What will be the plan and direction of DAFE in future? 12. According to your experience, what are the common problems of DAFE facing for expansion? 13. What do you feel are important to improve our service to the customers in order to be success in the expansion? 14. Any other comments on the service quality, service supports to the company’s profit ? 15. What are the concerns you have for DAFE to Go West? ********* Thank you for your help ******* Chapter 4 Reflection Potential Constraints on customer survey There are several potential constraints considering the customer survey that could hamper the quality and volume of the collected information apart from providing efficiency related obstacles in the survey. Firstly, it is not possible to determine the size of the number of responses as it is uncertain how many return questionnaires. Since the questionnaires are collected from customers, it is impossible to force them to reply. Therefore, the number of replies really depends on the willingness of the involvement of customer. Another concern is that the collected date might not be answered in a serious manner or thoroughly considered; therefore putting its validity under doubt. For the management interview, it is planned to interview Mr. Edoardo Podesta who is the managing director – Greater China of Dachser Far East Ltd. which is the regional head quarter of all subsidiaries in Greater China and Mr. Thomas Reuter, who is the director of Air, Sea and Logistics of Dachser German Holding Company. Mr. Thomas Reuter is located in Germany and I need to take the opportunity to invite him for face to face interview when he will travel to Hong Kong in August, 2009. Therefore, it is proposed to apply to the target company to take up the whole search project. However, it is necessary to guarantee the company that the contents of the research paper are confidential and will be used strictly for internal use only with the only exceptions being in cases where it is approved to submit the paper including in the dissertation after completion of the study. There is vulnerability that DAFE might just imitate other successful firms without taking into consideration the required circumstances. Therefore, the research is intended to be done in an objective manner without any bias. Linearity trap In theory, we analyze and develop a strategic plan in a step by step way. Firstly, we reach the consensus on corporate objectives. Then, we develop a plan for achieving our objectives. And we implement the plan by allocating resources. Therefore, theoretically, these three elements are independent. However, in reality, they are interdependent. Therefore, we should have a range of feasible implementation approaches determined by the availability of resources. Chapter 5 Conclusion The purpose to this research is to evaluate Dachser Far East’s strategy to develop in the Western China. By using the strategy tools, we will able to analysis whether the strategy is suitable to DAFE, whether it is feasible to invest in the Western China and whether it will workable. As the preceding sections have highlighted, the study is a major effort towards combining corporate and management theory with a real expansion effort that is being considered by a company, thereby providing a unique opportunity to combine both these facets as part of the proposed academic research. Further, it is also aimed to gain an understanding on several fronts of corporate management and strategy in terms of expansion, market forces, profitability, planning, management as well as maintaining the efficiency and sustainability of the expansion in the long term. After the proposal, it would be in the best interests to start the whole research project as soon as possible. Monitoring the time closely is also very important as it would help provide sufficient time for the customers to fill in and return the customer survey, whose quality is crucial to the success of the project. Execution of the strategy is another important aspect from an overall perspective to this study. DAFE should need to cascade the strategy into tactics and should execute it so as to gain the competitive advantage over competitors. Such a road map can help DAFE monitor the progress of implementation and to solve the problems that arise during the implementation stages in a prompt manner. Chapter 6 Timetable 6.1 Time Schedule To manage the project, the major activities are based on information and data collection, analyzing and writing up. I hope the project could be finished with 5 months and to be handed-in well before the deadline on middle of November 2009. In order to keep the time as possible, the collection of information has already been started. 6.2 Gantt Chart The following Gantt Chart shows major activities lead to the execution of the project. Schedule on each stage of work is set 2009 Jun Jul Aug Sep Oct Nov Week 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Collecting and review literature O O O 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 Design questionnaire 　 　 O O 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 Distribution of questionnaire 　 　 　 O 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 Design and conduct interview 　 　 　 　 O O 　 　 　 　 　 　 　 　 　 　 　 　 　 　 Data collection 　 　 　 　 　 　 O O 　 　 　 　 　 　 　 　 　 　 　 　 Data analysis 　 　 　 　 　 　 　 　 O O O 　 　 　 　 　 　 　 　 　 Write literature review 　 　 　 　 　 　 　 　 　 O O O O 　 　 　 　 　 　 　 Write methodology 　 　 　 　 　 　 　 　 　 　 　 O O 　 　 　 　 　 　 　 Write recommendations and action plan 　 　 　 　 　 　 　 　 　 　 　 　 　 O O 　 　 　 　 　 Write conclusion 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 O 　 　 　 　 Write introduction 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 O 　 　 　 　 Review the project 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 O 　 　 　 Write reflections and executive summary 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 O O 　 Check whole project 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 O Submit the project 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 　 O References (1) William G. Zikmund (1990), Business Research Methods, (3rd Edition), Orlando, U.S.A. : The Dryden Press, International Edition (2) James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., and Leonard A. Schlesinger, Putting the Service-Profit Chain to Work, Harvard Business Review, March – April, 1994 (3) Frederick F. Reichheld and W. Earl Sasser, Jr., Zeor Defections ; Quality Comes To Services, Harvard Business Review, September – October 1990 (4) Robert M. Grant, (1999), Contemporary Strategy Analysis – Concepts, Techniques, Applications, Blackwell Publisher Ltd. (5) Chaffe, E.E., Three Models of Strategy, Academy of Management Review (1985) (6) Porter, M.E., Competitive Strategy, Free Press, New York, (1980) (7) Porter, M. E., Competitive Advantage, (1985) (8) Porter, M. E., How Competitive Forces Shape Strategy, Harvard Business Review, (1979) (9) Porter, M. E., From Competitive Advantage To Corporate Strategy, Harvard Business (1987) (10) Ackoff, R. L., On the Use of Models In Corporate Planning, Strategic Management Journal, Vol. 2 (1981) (11) Leonard L. Berry, Service Marketing is Different, Business Horizons, May – June (1980) (12) Valarie A. Zeithaml, A. Parasuraman, And Leonard L. Berry, Problems and Strategies in Services Marketing, Journal of Marketing, Spring (1985) (13) Moore, Mark H. Creating Public Value : Strategic Management in Government, Cambridge : Harvard University Press (1995) (13) www.dachser.com (14) www.china.org.cn (15) James Heskett (1997), The service profit chain: how leading companies link profit and growth to loyalty, satisfaction, and value. New York: Free Press. (16) Robert Kaplan (1996), The balanced scorecard: translating strategy into action. Harvard Business Press. (17) Chuck Williams (2002), Management. New York: South Western. (18) Tim Berry (2000), On Target: The Book on Marketing Plans. new York: Prentice Hall. (19) Michael Porter (2008), On Competition. Harvard Business Press. Read More