2011年4月10日 星期日

Revolutionary Shift in the Brand and Positioning Strategies of Emerging Market Firms

 
What means by emerging markets?


Emerging markets describe the countries that are in the stage of rapid development and industrialization. According to Li (2011), those countries are restructuring their economies, shifting steadily from planned to market economy, in order to create wealth and knowledge transfer. The meaning of “Emerging markets” is similar to “Developing countries” or “Less-developed countries”. Different organization has different method to delineate which country belongs to emerging markets. Jain (2006) suggested that there are around thirty emerging markets in the world (p.384). As suggested by the World Bank, China, India, Indonesia, Brazil and Russia are the five largest emerging markets in the world.

What are the Brand and Positioning Strategies for a firm?


        In the corporate aspect, brand strategies involve a long stage, i.e. from the design of the products to the selling of the products. Therefore, products and target customers are our major focus. Positioning is critical to the success of a company. So, branding strategy, research & development and project management strategy are three important areas to be discussed.

How does it related to globalization?
        The openness of the less developed economies is smaller than those advanced economies. Most of their firms are state-owned and the always monopolize the market. Those firms are big and without competition. When the country is a closed economy, there are little firms to complete in the market. Therefore, innovations and efficiency are low. With the opening up of the country’s market due to globalization, more foreign firm entered into the market. As these local firms don’t have sufficient experience and product quality, they are difficult to complete in the market. Not about the foreign market, even the local market share couldn’t be maintained. Therefore, the local firms should restructure and shift its strategy in order to react to this competitive market.

Strategy for the firms in the advanced economies

Due to globalization, companies in the advanced economies are expanding their business towards developing countries in order to enjoy economies of scale through mass production. At the same time, they are also searching for methods to reduce their cost. One of the important methods is the multi-point production. They usually design the products in their head office near the universities of their own country. Then, they will outsource their production line to the less developed countries like China and India. This method will also benefit the less developed countries and reduce the tax as well as transportation cost for those multinational corporations. It is easier for them to enter the emerging market. This is the major model for the advanced economies companies.

Tranforming from Conservative to getting involvement in international trade - Positioning and methods of operation for the companies in the less developed countries

        In the other way round, those companies in the less developed countries are more likely to have joint venture and manufacture products for those companies in the advanced economy for the following reasons:

(1) Technological Transfer by Join Venture

Most emerging market firms do not have sufficient technologies to handle technical issue, especially for those hi-tech and electronic firms. The firms in Bangalore, India concentrated a lot of IT companies. Some of the companies cooperated with giant transnational IT companies like HP, Microsoft, etc. The automobile companies in China usually set up joint venture with some American and Japanese based car companies. China FAW Corporation set up joint venture with Toyota; Dongfeng Automobile Corporation of China also cooperates with Nissan Group; Shanghai Automobile Industry Corporation also has joint venture with the General Moto of the U.S and the Volkswagen. By doing so, the Chinese companies captured many important production methods as well as technological breakthrough.


(2) Learning the corporate structure and governance by introducing the foreign strategic shareholder

In the developing countries like China, most of the companies are state-owned. Their structure is inefficient as well as non-profit orientated. In order to catch up with the market, some of the state owned companies have to learn from the west. For example, state owned banks in China like the Bank of China, Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China started to go public and introduce strategic shareholders like the UBS, Goldman Sachs, Bank of America, etc. In this sense, their operations turned into the Western mode with the combination of Chinese features like the appointment of Chainman and CEO.


(3) Better ensure of market due to foreign brand

When a company in emerging economy manufacture a product, it is difficult for her to sell it in the market. She doesn’t have any fame and the quality perception by customers is bad. Nevertheless, putting the foreign brand logo in its products will ensure the sales. Although the value added for that firm is small, it is more important for them to have exposure. Therefore, those company’s sales will improve steadily.


Problem Created Under This Operation Model

(1) Labor Exploitation and Low Value Added

Emerging market firm usually give people a low cost and cheap labor impression. Foxconn, one of the biggest electronic manufacturing companies in Taiwan, set up several huge factories in China. The most famous client for Foxconn is Apple. It manufactures iPhone and iPad for Apple Limited. However, it can just earn USD$3 for each iPhone product and USD$5-$7 USD produced. Foxconn can just earn USD$3 per iPhone manufactured, how can you image how much the workers could earned. Fourteen workers in Foxconn committed suicides in 2010. In this way, those companies in emerging market cannot earn “Big money” as most of the profits were captured by foreign firm. They are just utilizing the human and natural resources in the emerging market.


(2) Lack of Independency and Rigid Decision Making

When the emerging market firm operates under joint venture or even introduces strategy shareholders, the company is partly controlled by the foreign company and the decision marketing is very rigid. It is because the foreign companies are aggressive in control the operation of those companies and hinder the dependency as they don’t want to have competition. The technological skills may also be secretes and not be allowed to produce some part in emerging market. Even if the Chinese firm knows the technology, the technical skills are protected by the patent of foreign firms. They are not willing to share the patent and the Chinese firms have to pay those companies a large sum of money in order to use the technology to make their own products. Let’s take the GAC Group of China as an example. It is a state-owned automobile manufacturing company who has joint venture with Toyota and Honda. It planned to go public in 2002. Toyota opposed to inject the jointly owned company to the listing company. Due to the opposition of Toyota, GAC Group have to get sufficient shares and borrow the listing state of its subsidiary Denway Automobile in order to raise fund in the stock market and go listing. It takes eight years for GAC Group to go listing.



The Second Revolutionary shift for the Firms in Emerging Market after the World Financial Tsunamis

After the world financial tsunamis, many firms in the advanced economy are short of capital. Some of the firms in the U.S. have to seek for help from the Federal Government like the General Motor, Bank of America. Together with the problems I mentioned before, the emerging market firms become more aggressive in expanding this international market as well as removing the control from foreign companies.

(1) From manufacturing products for foreign firms to self-determined brand


The emerging market firm started to put many efforts in advertising. They started to improve its own brand image. Like the Li Nng Sport Company, it widely sponsored the Chinese national team during Olympic Games in 2008 and it is going to make use of the fame of Chinese national team to create brand image and enter oversea market. BYD, one of the biggest electric car manufacturing companies in China, like to use its own brand to enter into the Russian and Korean market in 2011. By doing so, the companies in emerging market and capture the highest profit in the whole chain of production.

(2) Moving from Market follower to Market Leader through Research and Development

Under the circumstance of globalization, the competition of organizations in the world, especially in developing countries, is increasing sharply that companies needs to use different kinds of manners to survive which can balance different aspects, such as polity, economy and society. ‘Most of the many versions of globalization discourse focus on a recent qualitative transformation and emphasize the unique qualities of the new stage, while the longer view sees recent changes as part of a much older process of capitalist development and expansion in which there are important continuities as well as changes’ (Christopher, 19980). Organizations want to maintain the quality and competitiveness of their products or services that it can increase the loyalty and the number of customers. How to achieve this goal? Companies should change their strategies from normal to special mode which has a change constantly to satisfy the increased needs of customers and has ability to compete with other companies. Organizations need to implement different measures in order to increase the competitive advantages, and R&D plays an integral role that it can help companies create and reform products and services and develop the future direction of companies.

What is R&D?

‘Research and Experimental Development comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this knowledge to devise new application.’ This is the official international definition of R&D. Organizations develop new products or services to improve and expand their operations and future growth. ‘Creativity involves a large number of people from different disciplines working effectively together to solve a great many problems’ (Catmull, 2008). Those companies need a R&D team which helps those designs new products.



The trend of R&D

The level of R&D in one company can show the competitiveness of the company. Some famous corporations in the world treat R&D as the life of company that they all make the huge investment in R&D. According to some findings, the expense of R&D of General Motors (GM) was 6.5 billion US dollars in 1996 which was 5.6% of total sale and Lucent used 4.2 billion US dollars which was 11.6% of total sale. Therefore, it can be seen that R&D is essential for business growth which many corporations are focusing on.



 
The difference between emerging market firms and advanced economy firms
            In bygone days, emerging market firms did not have sufficient fund and technologies for research and development. They always relied on the support of foreign firms and shared their knowledge. Emerging market firms became passive as the foreign firms have the rights to decide which knowledge should be shared and which should not. With the raising power of the emerging market firms, they are willing to do research and development for their own.

Specialized University ensure better Supply of Human Resources in the emerging market

The firms in advanced economy usually cooperate with some sound university. For example, HP and Microsoft are cooperating with Standford University in conducting research. However, there are several problems to cooperate with those universities. First, they could not make sure that the graduates could work for their companies after graduation as they are free to choose which organization they could work for. Second, those universities are not specializing in particular industry. That means, graduate have conceptual skills but not technical skills. Due to this problem, the emerging market firms have another idea. They set up their own universities and teach them technical skills. By doing so, they can provide on job training as well as injecting corporate culture to their students. They can also guarantee a graduate job for their students and it leads to a win-win situation. Take the Geely Holding Group of China as an example, it set up the Beijing Geely University, Geely Automobile Engineering Research Centre, etc. Petro China is also subsidizing the China University of Petroleum. Most of its graduate was worked as the technician as well as management broad members of Petrol China, CNOOC and Sinopec Corporation of China. By doing so, those companies in the emerging market firms could have a better human resource supply as well as maintaining company secret as they would not need to afraid if the data sent to partner University are being stolen by the other staffs.



Revolutionary Shift in Research and Development

In the past, most of companies in developing countries focused on manufacturing in their business, such as China. However, they change it from manufacturing to design and development recently. This is because they notice that they will be washed out in the future if they do not have change to give chase to the trend of the global market. Both the public and private companies put the increasing investment significantly in basic science and research that they understand companies need to become knowledge-based industries. And there are many supports in their countries, such as good supply of trained scientists and public and government support for science. For example, China is studying to produce GM rice which requires using new technology to help solving the problem of foods. It can show that China has put more and more investment in technology to create new things.



In some developing countries, corporations are focusing on R&D in recent years. For example, corporations in China spend huge money in R&D. Local companies recognize the importance of R&D in the future trend and set up the R&D centers one after the others. Costs is one of the advantages companies can get when they development their business. Daniel Q Zhu, director of China Engineering, Communications & Industrial Solutions at TE, said that they were developing cost-conscious and customized products for the domestic market and cost-efficient and equipped with advanced features for export. That means those companies can use lower costs to design and investigate new products comparing to western companies. It can help those companies increase the competitive advantage and earn more market share all over the world.

Another shift in strategies is that companies do not only product the goods to local customers, and they also create new products which will be shipped to other countries. Because of globalization, companies need to design products which can be suitable to satisfy the needs of foreign customers to expand the markets from local to international. Companies should make this change to maintain the business and compete with other companies. Moreover, the products should be new and different from the existent products to attract more new customers. For instance, a local company creates 3D social network which is the first 3D network in the world. It shows that companies need to implement different strategies in order to be successful in the global market.



R&D and management

Even though one company invests a lot of money in developing R&D, they do not guarantee to have equal return. This is because there are many factors which may affect the success of implementing the measures. One of the important factors is management. Implementing the project of R&D includes a lot of management issues in the long term. For example, the company needs to have good practices in human resource management. The company should assign the right person to take charge of R&D that makes sure staff understands how to take action to cooperate the strategies of the company. Moreover, there is some staff coming from different countries in this global market, so managing the staff relationship is quite important thing the company needs to focus on. ‘Getting work done through others requires a free flow of accurate information and open, productive relationship with employees. But that’s easier said than done in a diverse workplace where many cultures collide’ (Gardenswartz & Rowe, 2001). If there are some conflicts in the working environment, it will make the business decay. Thus, good management practices are essential to corporations to implement the R&D projects.

R&D and Marketing

The relationship between R&D and Marketing is extremely important that developing a new product which will be popular needs the cooperation of these two departments. When R&D department creates and produces new products, they require the information provided by marketing department to understand the needs and trend of the market. On the other hand, if the product designed by R&D department does not sell, it will affect the performance of marketing department. Therefore, it require these two departments to work together effectively in order to ensure the product is can be sell. To solve this problem, companies could set up a team which is responsible to help these two departments cooperate. This team receives the information from different departments and sends to other departments. It can make sure that the products can satisfy the needs of customers and performance of departments.



 
(3) Changing Project Management

Thanks to globalisation, many new way of management practises have arisen over the past few decades. To name a few, they include crisis management, talent management, project management, quality management, green supply chain management. We would just focus on project management and talent management in this blog.



(a)  The emergence of project management 

      Due to globalisation, the world becomes interdependent. There are more cooperation between departments, firms and nations through partnership, mergers, joint ventures, strategic alliances and acquisition. Traditionally, workers only work in his/her own department. However, now employees have more opportunities to work with other people from other discipline through projects. So, project management is a new topic which management need to aware nowadays.

Comparison between traditional workforce management and project management


Traditional organizational structure

             Traditional bureaucratic structures, there is a tendency to increase task specialization as the   organization grows larger. In grouping jobs into departments, the manager must decide the basis on which to group them. The most common basis, at least until the last few decades, was by function. For example, all accounting jobs in the organization can be grouped into an accounting department; all engineers can be grouped into an engineering department, and so on. The size of the groupings also can range from small to large depending on the number of people the managers supervise. The degree to which authority is distributed throughout the organization can vary as well, but traditionally structured organizations typically vest final decision-making authority by those highest in the vertically structured hierarchy. The jobs in the traditional organizational structure usually are grouped by function into departments such as accounting, sales, human resources, and so.

First of all, we have to know what is project and how project management works. Projects differ from routine operation, and they can benefit from the application of special tools for planning and management. A project is generally considered to be a one-time endeavour with a specific goal, constrained by limited time and resources. Projects are often executed by interdisciplinary teams and supported by outside entities such as subcontractors, partners and suppliers.




Basic project management process
The objectives of a project are to sustain the long-term partnership, increase the chance to achieve successful and fruitful partnership which consequently increases the project performance. A successful project management involves applying long-term (strategic) planning through proper risk allocation in addition to short-term planning (management) approach.

One case study of using project management is the infrastructure (toll way) project under public-private partnership in Indonesia. They have to build Jakarta-Bandung corridor. In this globalisation era, the private sector has been playing an active role through involvement in delivering public services to enhance infrastructure development, especially in the developing countries. In the rapidly developing countries such as the countries in the East Asia region, concessions as well as build and operate agreements for large-scale infrastructure networks have been the main interest. As such, public-private partnership is inevitable which requires large-scale project management.

(b) Talent management

Globalisation has affected the practices of human resources management a great deal. It has resulted in the term “Integrated talent management” directly. First, globalisation causes the transport costs keep falling which increases the mobility of workers, especially the elites. They can choose the most attractive jobs they want free from the geographical barriers. Besides, the intensification of competition in global markets forces organization especially multinational enterprises to fight for talents from all around the world. So, the demand for superior talents far outweigh supply, and more and more companies are feeling the impact as they compete in the global market (Frank & Taylor, 2004). Globalisation, workplace reform and changes in the demographical composition of the workplace have affected how talent needs to be managed (Nankeevis, Compton & Baird, 2005). The growth potential of organizations worldwide depends on the ability of companies to have the right people, in the right place at the right time. They understand the competitive value of talented people and spend considerable time identifying and recruiting high calibre individual wherever they can be found.

Let me explain the general concept of Integrated Talent Management. Gaining agreement about the definition of ‘talent’ is a vital first step in being able to manage that talent well. According to Conference Board (Morton, 2005), ‘talent’ refers to individuals who have the capacity to make a significant difference to the current and future performance of the company. This definition emphasis the need to include not only a view of how employees are performing now, but also capacity to perform in the future to meet new commercial demands.  
Therefore, managing talent should be about identifying, attracting, integrating, developing, motivating and retaining key people across the whole of the business, not just the ‘elite few’ decision makers, as is so commonly the case. Talent management activities can include performance management, succession planning, talent reviews, developing planning and support, career development, workforce planning and recruiting (Heinen & O’Neill, 2004).

 

Conclusion

        Although the brand strategy is changing for the emerging market firms, it still has a long way to go and there are still many challenges for them to enter into the international market as they don’t have the first mover advantages in many business areas. Also, it is difficult for them to complete in the high-end product market. Let’s say, BMW and Mercedes Benz used a century to establish its high end corporate image. If is difficult for the automobile companies in emerging market to catch up. Nevertheless, there are room for expansion in the middle to low end market as it is easier to complete. As far as the company can create a safe and environmental friendly product with average price, I believe that it is competitive in the international market. With the massive investment in research and development, I hope that there will be technological breakthrough for them and they can be the leader in the niche market.


Reference:

Asakawa, K. (2001) "Organizational tension in international R&D management: the case of Japanese firms" Research Policy 30(5): 735-757


Asakawa, K. and A. Som (2005) "Managing R&D in Asia: Opportunities and dilemmas for foreign firms." Paper presented at Carnegie Bosch Forum, Innovation and the Growth of the International Firm, in Stuttgart, Germany, September 8-10, 2005. (Proceedings, pp.9-13)

Bowonder, B. and P.K. Richardson (2000) "Liberalization and the growth of business-led R&D: the case of India" R&D Management 30(4): 279-288

Chuan Li (2011), What Are Emerging Markets? University of Iowa Center for International Finance and Development, from http://www.uiowa.edu/ifdebook/faq/faq_docs/emerging_markets.shtml

Cong Cao (2009), China's R&D investment facing dilemma, from http://www.upiasia.com/Economics/2009/09/15/chinas_rd_investment_facing_dilemma/4598/

Christoper Chase-Dunn (1998), Globalization: A world-systems perspective, Johns Hopkins University

DeMeyer, A. and S. Garg (2005) Inspire to Innovate: Management & Innovation in Asia. London: Palgrave Macmillan.

Doz, Y., J. Santos, and P. Williamson (2001) From Global to Metanational. Boston: Harvard Business School Press.

Ed Catmull (2008), How Pixar Fosters Collective Creativity, Harvard Business Review

Ellendnaylor (2009), How a Good Relationship between Marketing & R&D Improves Product Development, from http://cooperativeintelligenceblog.com/2009/08/05/how-a-good-relationship-between-marketing-rd-improves-product-development/

Gassmann, O. and Z. Han (2004) "Motivations and barriers of foreign R&D activities in China" R&D Management 34(4): 423-437.

Lee Gardenswartz and Anita Rowe (2001), Cross-Cultural Awareness, Lee Gardenswartz and Anita Rowe, HR Magazine

Motorola Inc. (2010), Motorola increases its R&D spending, from http://www.wirelessindustrynews.org/news-nov-2010/2215-111610-win-news.html



S. Chen (2011), Brain Power: China as a base for R&D, from http://www.nzcta.co.nz/chinanow-strategy/1431/brain-power-china-as-a-base-for-randd/


Strategy for research and development, Business Link, from http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075083671&type=RESOURCES


Subhash Chandra Jain. (2006), Emerging Economies and the Transformation of International Business" Subhash Chandra Jain. Edward Elgar Publishing, p.384

Von Zedtwitz, M. (2004) "Managing foreign R&D laboratories in China" R&D Management 34(4): 439-452

2011年3月1日 星期二

Dilemmas of a State-owned Enterprise in China


Chen Tonghai, the ex-chairman of Sinopec Corporation of China, was one of the members of the Communist Party. Since 1998, he was the Vice chairman of the Sinopec Corp. In 2003, he became the Chairman. During these several years, he was being corrupted and bribery including illegalized using its position for personal affairs like property acquisition, remitted money to overseas bank accounts. In 2009, he was being arrested and the Chinese government took over all of his property as well as eliminated his political rights.



All about Dilemma

Dilemma for Chen Tonghai

Since Sinopec is a state owned enterprise, the salary for the chairman is relatively low when compare to those western companies like Exxon Mobile, Chevron, etc. If the bribery does not affect the general operation of Sinopec Corp, he could see the point that he should stay away from corruption. Accounting to Pei (2007), corruption in China is almost a risk free activity. If most of the Chairmen did that kind of thing, he may believe that he can do it too. Say, if all of your classmates cheat in the examination, it will increase your incentive of cheating too.

Dilemma for Sinopec Corp.

        When the company discovered Chen’s action, Sinopec didn’t know whether it should announce it to the public and the government. After all, Sinopec Corp. is a famous company in both China and the world. If people discover the issue, it would harm the company’s goodwill. Also, shareholder would have capital loss due to this incident.

        It is just like the recent case of Alibaba. The company discovered cheating of some employee. Some buyers incur loss in their transaction. If the company didn’t announce this incident, it would just be known by some buyers and the company. If they announce the incident, some management director of the company should bear the responsibility. Therefore, it is difficult for the company to make that decision. Hopefully, Alibaba decided to announce it.



Dilemma for Big shareholder of Sinopec

        The big shareholders normally know the problem related to Chen. If they know that the company was going to announce Chen’s incident, they would sell their stock first in order to avoid capital loss. However, it constituted with insider trade and it may be unethical to do so. Due to the grey area in regulation, they may do it without breaking the law.

Dilemma for the Chinese government and court

        Should the court penalize Chen heavily or lightly? If the penalize is too heavy, it may affect the current system as well as reduce the incentive of other companies’ chairman. They may be afraid of making decision for the companies in finally they decide to do nothing and this discourage companies’ development. If the penalize is too light, citizen would believe that the government has another transaction with the business sector as well as Chen.



i.                    Ethical decision making

In China, being a government official especially in senior position enjoys a great deal of privileges and power. By making use of these kinds of authority and power, one and people surrounded can make a fortune and live an extremely luxurious life. Like Chen Tonghai in this case, he was convicted of taking US$28.7 million in bribes. This figure was underestimated as Chen transferred part of his corrupted money to overseas accounts during investigation. As the article “Corruption Threatens China’s Future” said, the odds of a corrupt official going to jail are less than 3 out of 100, corruption is a high-return, low-risk activity. For amount of money huge like millions of dollars, many people would like to risk their life to achieve that. Paying for renovation costs, house purchases or abnormal accounts on houses and free trips were some of the ways in which officials were tempted to compromise themselves. Besides, he would not thought of being caught. This is one of the tempting reasons that lure officials to take briberies. It is human nature that one put self-interest over the public interest. Driven by greediness and the low-riskiness of corruption in mainland China, it is hard to resist not engaging in any corruption activities when this has already become the norm among government departments. 



ii.                  Organizational decision making

Chen’s behavior is a severe breach of party disciplines. This kind of high-profile corruption case would bring a lot national and international attention. As a listed company, it seriously hampers the image. Moreover, since company revenues goes to a handful of senior management, the resources would be inefficiently used. Once the senior members of the company are charged, it would also affect the daily operations.

It is understandable that company employees are hard to do anything as Chen and his close friends were in charge of all the decisions of the business. So, one of the approaches is to develop an independent team in the organization to combat any corruption activities and does auditing work. But again, anything in China can be brought through bribery. Even though similar anti-corruption agent exists, implementation is still questionable. It is sad to admit that single force cannot change much on the matter of corruption.

Given the environmental factors in China as stated in the “Corruption Threatens China’s Future” article, like high involvement of government, powerful Communist party and lax enforcement etc, corruption is extremely difficult of crackdown unless a large-scale reform embark. This mostly depends on self-discipline to resist the temptation of money.

iii.                Corporate social responsibility

Sinopec, one of the largest state companies in China, should set an example on anti-corruption. Corruptions exploit the interests of general public to a handful of elites in the society. As a top listed company in China, the policies are longer a national issue but also affect how the West perceives China. As China’s determination of cracking down rampant corruption is increasing, it is wise for corporations to comply the law and regulations and fulfill its corporate social responsibilities to earn some credits from the media and the public. To specify anti-corruption, organizations should become hold an open, integrity and transparent manner. For example, disclosing annual reports to public, not falsify any documents and carefully choice the right candidate as the CEO etc.

Leadership qualities, capabilities and dilemma in managing business in the global context

Nowadays, leadership is one of the most important factors that the organization wants to be successful in the world. That means the leaders in companies should be knowledgeable, excellent and competent to direct people to achieve the goal. Moreover, leaders need to have personal characteristics and past experiences to face a current environment which is uncertain, unpredictable and uncontrollable in the complex international market.


In this case, under the management of Mr. Chen, Sinopec Corporation got into the global top 10. It proves that Chen is a capable leader to help the company achieve the business goal. He is not only capable, but also outgoing that he always communicates with his employees even the building elevator attendants. Thus, he could know more about his employees and how to manage them. In the international market, leaders should understand the needs of employees. Even if an organization can successfully identify high-potential individuals, it may not have and accurate understanding of their specific development needs (Byham, 2009). Managers should have more communication with employees to know about their personalities and needs.

Nevertheless, his decision-making is bold and creative to make the organization more successful. Open-mind and bringing new perspectives are the essential factors of a leader to present in complex international markets. This is because most of the things in the world are changing constantly that leaders should make some change to adapt it.


Even though Chen has such leadership qualities and capabilities, he failed because of corruption. The case proves that businessmen must follow the rules if they want to be success in the world. If someone break the laws in order to take some advantages, that person must be failed. He also spends 1.2 million dollars of public funds on eating and drinking with clients every month. As a top management of the company, he should make the right decision on resource allocation. This is because the resource is the important assets of the company.

When a person does business, he/she must face a problem which is very different to solve. In this case, Chen had similar problem in his business. In one side, he can earn a lot of money. In other side, he breaks the law. On average, 6000 senior local officials were prosecuted for corruption every year during this period (Pei, 2007). That means corruption is a high-return and low-risk activity. His decision may be affected by the business environment in China. Under this environment, a person may be ostracized from the majority if that person does not join the activities of corruption. In international markets, there are many dilemmas leaders need to know to solve them smoothly.

References
William C. Byham (2009), Developing the next generation of China Business leaders

M. Pei (2007), Corruption threatens china’s future