Beijing Jeep Corporation was one of the leading industries in the production of the locally consumed automobiles in China. BJC was facing a major challenge in this industry after the liberalization of the market in China leading to the welcoming of the outside investors to indulge in the exploitation of the China Market. BJC was organized in such a manner that there were major players in the management of the industry and the potential buyers before the liberalization of the market were its own population and the upper hand producer in the industry was the BJC members themselves that is before the assignation of an agreement between the and the AMC that saw them restructuring on the production method.
Hence, the previous market share that the BJC had in the Chinas potential market was to be divided among the various industries that had captured the opportunity that presented itself in China. Hence, BJC managers had to restructure on their way of operation and policies governing them in order to cope in the current situation in the market. This saw the BJC making certain decisions that favored it in certain times and limited its operations at certain times. But in summery from the case of Beijing Jeep Corporation, the key success dynamics in this industry are technology, management and the channel relationships.
The problem was that after the liberalization of the economy and the decline of the BJC as leading manufacturer of automobiles in the local market, the major predicament was now either to act as a Joint Venture Model or thrash about with its weaknesses to realize its preceding status of the leading top local industry in the furnish of automobiles.
BJC found itself in this situation after the liberalization of the market and assignation of covenants that lead to its manipulation, degradation of its policies and mission. Some of the key issues that undermined BJC were.
This was as a result of the liberalization of the market that saw the creation of opportunities for other external investors who eyed China as a potential market. This was because of its population that was rated the largest in the world enormous habitat to ¼ of the world’s population. Initially BJC was the major distributor of automobiles to that huge populace but the contract signed and the market system of the economy initiated by the government lead to the market loss through the division of the market with both domestic and non domestic industries.
Conflict of interests
Beijing Jeep Corporation assigned a contract with the AMC that they viewed as an opportunity to venture into the international market. The conflict of interest emerged when the two sides realized they had different missions. BJC and China as a country in general wanted to assimilate the sophisticated technology and eventually rank among the world’s advanced auto producers while the AMC in the assignation of the joint venture between them and BJC saw an opportunity. Hence, her main goal was to establish base in Asia that would enable them to manufacture cars at low cost and compete in the growing region and by trying to beat Japan which was a threat in the auto mobile industry.
The administration is the heart of any corporate organization. BJC had an administration that was blinded by the liaison between them and the top official both locally and nationally. This was through the manipulation of the amity between them through enactment of laws both locally and nationally that favored its operation. They could not foresee a situation that could arise that could threaten their own existence.
The BJC administration was easily convinced on deals that could easily manipulate them and displace them from the market. E.g. AMC and BJC deal that saw the manipulation of the company by the AMC to accomplish its own interest like the shift of the Americans from the mutual contract of manufacturing automobiles with BJC to a company that majors in the distribution of its kits to China market and the same could not be effectively initiated because of the challenges that come with it like taxes imposed on the imported goods which were higher than the BJC expected.
Unfavorable government policies
The eco-political goal of the china authorities, to attain a market system and the adoption of joint ventures both locally with the BJC and internationally through assignation of contracts that could ensure the view of its own market as a place to invest in disadvantaged its local industries. BJC reached a point of collapsing after the government policies encouraged external investors who collaborated with the initially small automobile industries to venture into the Chinese market.
BJC and China in general were not ready to venture into the international market. China was still a developing world and its venture into the World Trade Organization saw it face stiff competitors i.e. the world greatest manufactures and producers of automobiles e.g. Japan. And being a socialist society their views totally differed with the rest of the world who had adopted a capitalist movement e.g. AMC.
Though china had a wise intention with its involvement in joint ventures, to acquire technology that could see them achieve their mission, Technology wise they were still catching up. Hence world superpowers in the field like Germany took that opportunity to capitalize on the Chinese potential market.
Discussion of Alternatives
Market survey and local market
BJC was in a better position than other external investors. The shift from the dependence on the locally produced goods to international was not to be threat to the Chinese company. They were in a better position to conduct consumer demand and preference survey to capitalize more on the local market than being beaten by the external investors at its own game. They did not have to join the international market if they were not primed.
The advantageous part of this initiative is that the China market us their own and they were the first to form a base of the industry in China. Hence, the market recognizes their existence more than the crippling up industries on the same automobile industry.
Though it cannot rely only on the local market alone as its potential market, it can consider an option of going global. That’s the disadvantageous part of this initiative because the external investors might also win the confidence of the local market depending on the demand of their automobiles and the market preference too.
Each company has a mission when venturing in any kind of business so is the BJC. Upon reaching an agreement, it might be mutual benefit to all, but in any kind of business like for BJC they should consider independence in certain kind of their operation. And if in any case they are forced to pamper in any kind of agreement, it should state the limits to avoid on compromising on each other’s personal interests or mission.
Independence can also apply to the administration. They should not so much rely on the individual relationship between them and both local and national officials who will favor them on certain issues that will blind them on the real achievements of the business.
This initiative can be advantageous when it comes to the assignation of contracts that stipulates clearly the steps and procedures to be taken in the transaction that lead to the assignation of the contract. And also the officials can limit the extent to which they manipulate the state of the economy to suit their local industries. Though the role of the state can be when it comes to the enactment of laws that will protect the interest of their people and the local industries that are facing threats due to the invasion of the local market by foreign markets.
Technology and Competition
These are aspects in the corporate world that can be avoided. An alternative to these cases can lead to the actual demise of the business itself. Hence, technology wise, its application is dive. Hence, the joint venture that was adopted by the Chinese system was a wise one. This was to enable the disposal and acquisition of the relevant technologies that were being applied.
A business is not a business lest Competition. Hence, it’s an obligation of the business is to embrace it and focus on its mission. It can occur both in the local and international markets.
Favorable government policies
The government plays a significance role when it comes to the determination of the nature of the market system. Market system was favorable to a developing nation like China. But, the extent to which there were no clear stipulations of the nature of operations both locally and internationally saw the oppression of the local transition industries by the already established industries from the contemporary countries through competition and manipulation.
Hence, government policies should be an advantage for a country like China to safeguard its interest and at the same time not compromise the existent of the international market which can also act as an asset to the country. E.g. In the acquisition of technology and non available products for its populace and local industries.
The tax system should be geared towards the creation of a fair ground play for locally produced products and imported ones. But the moment the government allows for a country like USA to exploit its resources and disperse the outcomes of the same at a cheaper price than the local industries who at times need to export goods to come up with the final products hence being expensive is retreating to the local industries.
The BJC firm tried a lot of alternatives to be able to survive the crisis of falling. Unfortunately most of its applications did not favor it at all. Some of them include:
- Signing of contracts with foreign investors through assigning of loans, partnership e.t.c
- Signing of contracts with the government through join ventures
Taking advantage of the liaison between the Corporate and the government in pursuance of their interests. This is when the corporate advises the government to enact policies that could suit its interests and retreat others existence.
All these seemed not to rectify the mistake they had already made hence as recommendations, the application of the:
- Three C’s Model
- This model emphasizes on the Cost, Customers, and Competitors.
Cost majorly describes the cost of input and output that a business uses to ensure the achievement of its goal. Customers are the final consumers of your products. They should be satisfied through the demand and preference survey. Competitors are the fellow contestants that are out to exploit the available opportunity on a similar field that you are operating on too.
This is the determination of the Strengths, Weaknesses, Opportunities and Threats.
Strength can be determined through the analysis of the business strong points and take pro on the same. And also through the strength can be analyzed on the competitors perspective and have the loopholes through which the business transaction can be operated on a fair ground.
Weaknesses can be determined through the examination of the business own weakness and come up with strategies that can ensure improvement of the same. The examination can also be extended to the competitor and the business once has found the grounds to outdo the fellow contestant can take advantage on the same.
An opportunity is the evaluation of the prospects that are there and those that are arising and take advantage of the same.
Threats is the assessment of the likely events that can lead to the diminishing of the corporate and have measures on how to avoid them and back up plans to deal with them in case they affect the business.
Seven S Model
Strategy: This is the planning stage where the business comes up with procedures on how the business will operate setting it limits of operation. Putting down the business vision and mission that are supposed to be attained
Structure: is the general organization of the business and how its operations will be.
System: these are the techniques that will be applied in accordance with its operation to achieve the purpose of its existence.
Style: Does the uniqueness of the corporate that distinguishes it from others exist in the same field.
Staff: are the people concerned who will foresee the achievement of the vision and mission through manipulation of the systems put in place. And they are the people who will possess the skills that will ensure the achievement of the set objectives.
The shared values upon signing of contracts with other corporate, they are able to determine how relevant the contract is by identification of the common values. And its identification will be replicated to the already existing principles to circumvent violation of the same when partnering to bring about a mutual gain to both parties in that covenant.
Rationale of these Models
Many organizations do commence their operations, and exist without clear having an initial blueprint that will ensure the achievement of the mission of the corporate. These models are significance to any business. They will provide a clear guideline on how they will conduct the operations and attain the set objectives of the business.
Donald, J. (2001). Business Case Analysis. Carlifornia: University of Sothern Carlifornia.
John, H. (2004). Note on Case Analysis. Ontarion: University of Western Ontario.
Louis, B. (1994). Teaching and Case Method: text, cases, and readings. New York: Harvard Business.