Entrance in the Chinese Market - Omega Motors Gmbh - Essay Example

Download file to see previous pages Micklethwait and Wooldridge (2001, 17) stated that ‘the main challenge for companies in a global economy is to situate themselves in various centers of excellence and weave together different centers of excellence into a global production network’. In many cases, the solution of transferring part or all the production units in developing countries appears as the most appropriate corporate decision at least for a specific period of time. It has to be noticed that in accordance with the World Economic Outlook (2002, 82) ‘trends and cross-county differences in corporate indicators reflect a variety of country-specific institutional and macroeconomic factors, as well as industrial specialization and firm size’.

In other words, the decision to ‘relocate’ to a new commercial market has to be based on several elements which must be thoroughly examined before the beginning of any relevant process. The existence of factors that may not have been taken into account when deciding this option can delay the development of the relevant plan and in many cases can even lead to its cancellation. China has proved to be a place that can help companies to survive – at least on a short-term basis – and to develop their level of production while the cost involved is low. Specifically regarding the particular issue MacMurray (1994, 68) stated that ‘as China's enterprise reform movement accelerates, MNCs will need to closely monitor the evolution of the industries in which they participate and seek a deeper understanding of the emerging competitors and acquisition candidates in each’.

In other words, relocation to China can be an appropriate solution for many corporations however all parameters have to be examined thoroughly in order to assure that in the future the company will continue to have the same benefits or at least that this decision will not be proved to be ‘fatal’ for the firm’s survival. This paper examines the ‘viability’ of a relevant decision that refers to a German automobile company, Omega Motors Gmbh. The company decided to transfer part of its production unit to China at least for a few years in order to examine if such a decision could help it to reduce its costs and to develop its level of production on a long-term basis.  ...Download file to see next pages Read More