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Case study n°1, China on the I-Way

Group Frenese
by

Aline Nonono

on 19 September 2012

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Transcript of Case study n°1, China on the I-Way

China on the I-Way General Environment Competitors' analysis Porter's 5 forces Firm's analysis The threat of new entrants - Books are indifference
- Same quality
- Customers have low switching costs
searching and time cost are low (boraid.com)
benefit increases when enjoying a low price The bargaining power of buyers - Low switching cost
Searching cost is low
Many different choices to buy and read the books
- Price sensitive : books are the same
"Product can be bought from
somewhere but customers
don’t particularly care
where, provided price is the lowest." - Library / Bookstores
provides lots of books
no need to buy the books
- E-Books The threat of substitute products The amount of bargaining power suppliers have - Staging advertising battles
More capital (larger customer-based)
- Increasing consumers warranties and services
deliver the books within 5 days
pre-read services are provided
- Price Competition The amount of rivalry among competitors Political and legal Demographic Economic Sociocultural Global Technological General Environment Demographic Economic Global Sociocultural Political and legal Technological Competitors' analysis - Before 1990’s, ChinaNet was used for academic purposes.
- In 1995, ChinaNet started selling Internet accounts to Chinese people.
- By mid-1998, there were already 4 Internet Service Providers in China serving over 1.175 million Internet users.
- In the late 1990s’ emerged online advertising and e-commerce.
- By 2001, 1.2 million users had mobile terminals or other Internet appliances to go online. The primary reason to access the Internet was then collecting information, even those kept secret by the state, which resulted in blocking several websites.
- In 2003, Internet was mostly used for online shopping, short messages services and online games. 7.9% 3.4% 3.3% NB: Numbers in colors represent average annual rates 8.7% 5.4% 6.0% - In a global way, R&D expenditure in Asia grow much faster than in the EU and in the USA.
- Concerning gross domestic expenditures, China's R&D expenditures are rapidly approaching those of Japan, which is the world's second largest R&D-performing country. Republic of China : communist government - What would we do without Internet? Entertainment, information, studies... Internet covers everything.

- E-commerce: the new way of shopping changes the citiezens' habits. - Mobile phones companies propose more and more products to surf on the web, all at different prices so that everyone can enjoy Internet (It is possible to get an Androïd for less than 80 $).
- The size of China internet economy has reached 94.34 billion Chinese Yuan in 2012.
- Internet shopping market has one of the fastest growth (up 400% year-on-year).

- Internet in China is affordable. - Internet gets more and more secure (we can now pay by credit card which was unconceivable few years ago).
- The quality of the searching tools is always improving (Google employees rate main contents and the layouts of every single article on the Web).
- No more distinction between News and Social Media (When you go on Google News for ex, you can read about politics, economics and stuff but also who recently got married or which celebrity just lost their dog).
- Changing markets





- New global markets - Apple is entering the online mapping, it's a new challenge to Google.
- It is now possible to store folders, videos and pictures online in a "cloud". Future Objective

Current Strategy

Assumptions

Capabilities - Evolution of Internet




- R&D expenditures (Bargaining Power Of Buyers Or Customers, Paul Simister On, 8 Oct 2011) In China, in 2012 : 37% of the population uses Internet
( 538 million / 1.3 billion) Geographical distribution Income distribution Internet concerns everyone Internet is more important in the East of China, where the big cities are. People from 10 to 30 : bigest part of Internet users Population size Age distribution of Internet users in China Main Access Locations Office Café Mobile Control on information:
- avoid people to access sensitive information
- avoid political debates on Internet. Internet censorship : types of sites blocked Response - Amazon: “to continue to solidify and extend our brand and customer base”
Focus on improving system and infrastructure
- Dangdang: to become the dominant online retailer in China. - Diversification

- Pricing Strategy: Significant discount - Sustainable growth on International e-commerce channel
- Intense competition
- Great challenges on the product pricing and sourcing, product and service quality and fulfillment of customer demands. Competitors' capabilities Our capabilities Strengths:
- Have more loyal customers
- Have good Cooperating relationship
with suppliers
Weaknesses:
- Share out resource to other business
- Have higher uncertainty in operation Strengths:
- Lower switching cost

Weaknesses:
- Lack of loyal customer
- Lack of goodwill Observation:
- Competitors prefer diversify their range of merchandises.
- Have an intension to expand the business in China market.

Our strategies:
- Specialize in book selling market for reducing founding cost and risk.
- Begin the business in China as the potential market is large.
This can reduce the direct competition with the competitor. Price per month for 1 MB China Vietnam USA HK Korea
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