IB China Analysis Essay

Submitted By zeeshanhalim
Words: 522
Pages: 3

Chinese Market Overview ( case facts )
Population :1.3 billion, 21% of the world, large consumer base
Economy: predicted fastest growth in income per capita, an increase in food and beverage spending
Consumer Spending: underdeveloped, only 57% of
China’s GDP, large potential to dig up.

Analysis of the situation
• Market share: dominant position 90% of herba l tea industry
• Domestic Competitors: some other herbal, not as famous as Wang, not a problem
• Foreign Competitors: Pepsico, Coca-Cola, huge companies, but their herbal tea brand awaren ess is low, not a problem
• Recipe: Protected under the preservation law and, no worry of secret leak

Major Problems
• Food Safety: some ingredients such as prunell a have strong medicine side effects
• Product Variety: low, only one kind and two ty pes and package (can and paper box)
• Tea effects: internal heat awareness only in so uthern China
• Price: a little higher than normal soft drinks wi th the same volume

Possible Solutions
• Food Safety: need some networking with governm ental institutions to get the safe product license an d remove consumers’ worry
• Product Variety: need to diversify the recipe and m eet different ages of consumers, children, youth, a nd old
• Tea effects: need advertise the internal fire conscio usness • Price: could produce low volume can with lower pr ice Financial Plan
• Increase advertisement fee(10% of sales revenue) to popularize the internal fire idea(tax deductible)
• CSR: increase the donation expenses ( 1% ) to im prove the company’s publicity ( tax deductible )
• Increase the plow back ratio(80% of net income) and decrease the dividend to build the manufacturing lin es to produce different sizes of cans

High level Implementation Plan
• Since our group’s decision is that overseas mar kets are not attractive and we are not in a com pelling position to go global, our recommenda tion for Wang is to expand domestically and fo cus on the Greater China Area including mainl and china, hongkong, macao, taiwan.

High level Implementation Plan
Segmenting Market: mainland southern china, eastern china, northern china, Hongkong
cao, Taiwan…