Chapter 4 Mini Stimulation attempt 2

What should Burger Time do?

hire Chinese employees to help locate suppliers

Well done. Your initial decision to support franchises in China was smart in that it placed all financial risk on the franchise owners. Burger Time experienced rapid growth that would not have been achieved through wholly owned affiliates. Additionally, hiring Chinese employees who had experience in the industry better positioned Burger Time to establish the local relationships required to conduct business in China. This move would also provide consistency for the Burger Time brand which would be especially important if Burger Time chose to open wholly owned affiliates in the future. Consumer preference has already been determined and suppliers have been identified which make opening a corporate owned location less risky. Finally, you made a good decision to import the beef from Australia. The Chinese ban on U.S. beef and operating through a gray market could have presented problems.

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What type of market entry strategy do you recommend for Burger Time?

franchises

It takes some time to find the right team in China, but you and Mr. Harris are confident that the group you have assembled have the right connections to help make Burger Time successful in China. The team is led by Chen Liang. The Beijing team has no trouble obtaining the required licenses and permits required by the Chinese government and construction begins quickly. Unfortunately, logistics and distribution infrastructure becomes an issue when Chen suggests that Mr. Harris agree to import beef from Australia for burgers. Chen explains that there is limited Chinese beef cattle supply due to lack of government support and lack of farmers willing to invest in beef production because of the high costs and shortage of labor. "Australian beef is often imported here, and I have connections and supplier relationships already in place. I just need your approval, sir," Chen says. Mr. Harris replies, "I want to import U.S. beef. It will help to maintain Burger Time's brand consistency if we do." Chen informs Mr. Harris that China has had a ban on U.S. beef since 2003 when mad cow disease caused the Chinese government to cut any imports of U.S. beef. Importing the beef from the United States is not an option. Mr. Harris remains firm. "There has to be a way," he says. Chen reluctantly admits that there is a "gray" market for U.S. beef imported through Hong Kong and Vietnam. Eventually, the beef finds its way to the Chinese mainland. However, Chen warns that using this method could become problematic. Frustrated, Mr. Harris turns to you and asks, "What do you think?

Import Australian beef