International Business Strategy/Assignment 1

tegy is to conduct an internal assessment, looking at Midea’s strengths and weaknesses, because this allows the firm to build on strengths as a source of competitive advantage over rivals. This includes finding out its weaknesses so these could be remedied or, if not, to see how their negative effects could be minimised, building up on strengths to do so to prevent these weaknesses from becoming an obstacle in achieving its plans.
1. Management competence and quality. This assumes that the company enjoys good governance, which means the Board and management are after maximising long-term shareholder value. An evidence of this is the 1997 reorganisation of Midea into SBUs.
Midea executives Chen and Wang have realised the need to defend their strong domestic market position, whilst at the same time seeing the need to craft a strategy that would address its concern to go global. What made them decide could only be the result of an external assessment of opportunities and threats facing the company. These are factors outside the firm – competitors, customers, economic and social climate, international factors such as WTO membership, technology – that impact Midea’s business. Like any other firm in a free market economy, much less one that is globalising fast such as China’s, Midea is not assured of permanent success.
Unless it adjusts to these external factors by building up on strengths to overcome weaknesses, taking advantage of realistic opportunities, and protecting itself from threats, Midea will lose in a competitive marketplace.
2. China’s membership in the WTO (also a threat) which opens the world to goods and services from China. This allows China to access more markets especially in developing countries where its low-cost products have a competitive advantage.
3. Access to foreign capital: if Midea decides to expand internationally, it will have access to new sources of financial capital that it can use to expand its production base