The Investigation of Volkswagen's Entry Strategy in China's Car Market

MA MANAGEMENT DISSERTATION
XIAOFENG WEN
figure out how to mitigate the pressure of threat and obtain the opportunity. Under
the analysis of five forces model, companies can start to see how this relates to the
generic strategies (see appendix 1: the Five Forces Model and Generic Strategies). In
order to develop effective strategies, a company must understand the implication of
the forces and how each of them affects the company in its strategy formulation.
However, porter also stated that forces that take on prominence in shaping
competition could be different in different industries. (Besanko et al, 2000)
2. SWOT analysis
SWOT analysis provides information that is helpful in matching the firm’s resources
and capabilities to the competitive environment in which it operates, and helps to
know the position of the firm in the existing market, then firm can decide if they can
use FDI as entry strategy. The Figure 2.36-2 shows how a SWOT analysis fits into an
environmental scan:
Figure 2.36-2 SWOT Analysis Frameworks
Strengths:
A firm’s strengths are its resources and capabilities that can be used as a basis for
developing a competitive advantage, so it is a firm’s internal analysis, and normally a
firm’s strengths may include: patents, strong brand names, good reputation among
customers, cost advantages from proprietary know-how, exclusive access to high
grade natural resources and favorable access to distribution networks, etc.
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