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Coca-Cola's operations in China

2019-03-04 来源: 51due教员组 类别: Paper范文

下面为大家整理一篇优秀的paper代写范文- Coca-Cola's operations in China,供大家参考学习,这篇论文讨论了可口可乐在中国的运营。可口可乐公司在中国市场的运营,实施了本土化战略,包括原料本土化、风味本土化和人才本土化。超过99%的原料是在中国购买的,因为中国的原材料和劳动力的价格比美国便宜很多,这一策略为可口可乐公司节省了大量的生产成本。另外,可口可乐公司投入了大量的资金来开发适合中国人口味的饮料,从而使可口可乐公司的饮料销量能够持续增长。可口可乐公司还将总部从香港迁至上海,在中国大陆培养和发展了一批人才,帮助可口可乐公司在中国蓬勃发展和壮大。

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Introduction

3.1  Background of the topic

The purpose of this essay was to discuss the culture differences between United States and China. To gain a deeper insight into how the culture differences affect on the operation of an international company, the Coca-Cola Company was used as an example to discuss how it has adapted its products and management techniques to Chinese culture while operating in China.

3.1  Background of two countries

The United States had been the world’s largest economy for 140 years until this title was overtaken by China in 2015. United States is a sophisticated and highly diversified economy that is based on services, finance, and consumption from the middle class. China has similar aspirations in the future, but right now it is resource-intensive growth engine making the transition from a manufacturing hub to a consumer-driven economy. (Desjardins, J 2015)

Following is an overview of the economic data of the two countries in 2016 (CountryEconomy.com 2017):

U.S.       China

GDP annual  18,624,500M.$    11,232,108M.$

GDP per capita    57,608$ 8,123$

Expenditure  6,636,550M.$      3,515,775M.$

Expenditure per capita       20,538$ 2,558$

CPI        2.20%    1.60%

According to the data above, the annual GDP and expenditure of China are both higher than United States, but GDP per capital, expenditure per capital and the Consumer Price of Index of United States are higher than China. Both United States and China are large economy in the world, the large population of China contributes to its economy.

3.1  Background of the company

The Coca-Cola Company is the world's largest beverage company, more than 1.8 billion servings of beverages from Coca-Cola are sold to more than 200 countries everyday. As one of the most well-known international brands, Coca-Cola entered China in 1920s. In 2011, Chinese market had already occupied almost 7% of Coca-Cola’s global sales. Coca-Cola has invested more than US$5 billion in the local market since reentering China in 1979, and a total of 43 plants has been established in China. (The Coca-Cola Company 2013). No wonder that Coca-Cola in China was a story of success.

Chapter II

Culture Differences

2.1  Language

Chinese has thousands of characters, each with many meanings and with pronunciations that vary from region to region. Chinese uses a logographic system for its written language, in which symbols represent the words themselves - words are not made up of various letters as in alphabetic systems. Because of this fundamental difference, Chinese learners may have great difficulty reading English texts and spelling words correctly. Besides, Chinese is a tone language, it uses the pitch of a phoneme sound to distinguish word meaning. What’s more, the grammar and vocabulary are also different between these two countries. (Shoebottom, P 2017) Thus it’s a common situation that Chinese words won’t be able to find their equivalents in English.

2.2  Social structure

Chinese culture had been a collectivist culture, the social structure is formal and hierarchical, Chines people tend to follow the rules and personal decision making can always be affected by people around; while the American social structure is more loose and informal, people are more ambitious, they focus on the individual success and being different.

2.3  Social Relationships

In China, they put a very strong emphasis on building social networks. A well-know Chinese “guanxi”, which may be literally translated as “relationship” in English, represents the unique Chinese social relationship. Chinese people need to having a meal, drink or talk to know each other better and build trust before conducting business. While things in America are different, business is kept to be business, and won’t involve much social relationships.

The approaches to relationships are also different between America and China. Networking events are quite common in America but rarely seen in China, American people held networking events publicly to socialize at a professional level, while Chinese people usually develop their social network in private.

2.4  Regulation

China had been closed in the past, the policies on import and export had been very strict, while America are relatively loose on foreign trade. But China gradually opened their door of foreign trade and gradually relaxed its restrictions on foreign companies in later years. China canceled the import quotas of soft drinks in 1992 and canceled license requirements in 1996.

2.5  High vs. low context

With a history of five thousands years and population of more than one billion people, Chinese had emphasized the importance of maintaining balance in relationships, to avoid saying or doing things that could upset others, they often do not directly express their true feelings. In traditional Chinese culture, being too direct is generally seen as an indication of lack of sophistication, of being poorly educated, or simply of being rude and inconsiderate of others. But in America, people’s communications are much easier, they usually say exactly what mean, so people will save more time on understanding each other.

2.6  Hofstede’s dimensions

Source: http://geert-hofstede.com/countries.html

Work attitudes change based on 4 dimensions

2.6.1 Power distance

As we can see in the chart above, the power distance of United States is 40 while the power distance of China is 80, the power distance in China tends to be much higher than America. The authority of top management in China can hardly be challenged, final decisions are always made by the person at the highest position, people tend to obey to the commands from the upper level with no questions. In America, on the other hand, the decisions are usually made together, and it’s common that managers and employees undergo heated debate before coming up with a final decision.

2.6.2 Individualism verse collectivism

Americans put strong emphasis on individuality, one’s personal goals and motives are usually more prioritized over collective ones. This culture is believed to encourage individuals to be more ambitious and they use it to drive individuals to succeed. While Chinese people, mostly think of themselves in a collective manner, they will first consider how their decisions will affect their family, colleagues and friends. More often than not, decisions are commonly made for the greater good as opposed to personal gain. (Tan, J 2015)

2.6.3 Masculinity verses femininity

According to the chart above, the masculinity of America and China are similar.

2.6.4 Uncertainty avoidance

The uncertainty avoidance of America is higher than China. Contrary to the traditional thinking thinking that Chinese people are more conservative to changes, Both Collis (1995) and Brown et al(1998) conclude that people from China hold more positive attitudes on change and new technologies than those from countries that they compare, namely, UK, US and Japan.

Chapter III

Coca-Cola’s Strategy

3.1  Chinese brand name

Due to the culture differences in languages, many multinational companies often bring unfortunate names with them when moving into new markets. As mentioned previously, Chinese is a complicated language, and it’s a common situation that Chinese words won’t be able to find their equivalents in English. Therefore, choosing a name was a big challenge when Coke was first introduced in China.

As a result, Coca-Cola took the dual adaption approach to name their brand in Chinese, both the sound and the meaning of the Chinese name relate to the original English name. The Chinese brand name sounds like “ke kou ke le”, and means “to make people feel happy and pleasant”. This two-way match gives Coca-Cola a chance of success in the Chinese market.

3.2  Rapid expansion

At the beginning, China’s policy had many restrictions on foreign companies, thus Coca-Cola chose to cooperate with a big Chinese food company. Two years later, Coca-Cola reentered China by investing in some factories. As a big company with huge capital, Coca-Cola gained a competitive advantage over may domestic producers due to its scale and financing abilities.

China canceled the import quotas of soft drinks in 1992 and canceled license requirements in 1996. (Daxue Consulting 2013). Coca-Cola took advantage of this chance and built 10 factories in China in less than 5 years after 1992 with more than $300 million spending in the process. This rapid expansion brought scale effect, regional synergy and cost optimization to Coca-Cola in China, which resulted in a leap forward in China. In 2001, it built another 6 factories in China, and became one of the biggest foreign drink brands in China.

3.3  Localization strategy

The Coca-Cola Company carried out a strategy of localization in Chinese market, which includes ingredient localization, flavor localization and talent localization. More than 99 percent of the ingredients were purchased in China, since the prices of materials and labor in China were much cheaper than in America, this strategy saved much costs of production for the Coca-Cola Company; large amount of money was invested in developing the flavor that suit the taste of Chinese, thus the sales of beverages of the Coca-Cola company would be able to keep going up; the Coca-Cola company also transferred its headquarter from Hong Kong to Shanghai, a galaxy of talents were trained and developed at China mainland, they helped the Coca-Cola Company flourish and expand in China. This localization strategy made Chinese people quickly fall in love with this new beverage brand in China, and also lower the cost of production and human resources for the Coca-Cola Company in China.

Chapter IV

Conclusion

There are many culture differences among countries, when international companies are trying to enter the foreign market, understanding cultures differences and knowing local features are necessary before making the decision, any single ignored culture difference may bring a successful company down at the foreign market. But culture is a complex whole with various determinants, which may include language, religion, regulation and social relationship, a depth exploration of a country’s background must be conducted before analyzing the culture differences.

Both American and Chinese culture are unique, their cultures are different in many aspects. As a well-known global brand, Coca-Cola has a presence in more than 200 countries, it also successfully hit the Chinese market, over the past decades, China has become one of Coca-Cola’s biggest market. The Chinese brand name, rapid expansion and localization strategy helped the Coca-Cola Company quickly won the market share in China. The success of Coca-Cola in China set a good example for the foreign companies which are trying to enter the Chinese market, appropriate adaption strategies are very necessary and effective to help the companies quickly won recognition, expand rapidly and operate efficiently at the foreign market, and those adaptions strategies are derived from knowing and solving the culture differences.

Culture differences are the hint for those international companies which are entering foreign market, learning and understanding the culture differences will help us gain a better view on the operating strategies of international companies.

Reference

Desjardins, J 2015, China vs. United States: A Tale of Two Economies. Available from: http://www.visualcapitalist.com/china-vs-united-states-a-tale-of-two-economies/. [27 November 2017].

Country Economy 2016, Country Comparison China vs. United States. Available from: https://countryeconomy.com/countries/compare/china/usa. [27 November 2017].

New York Etiquette Guide 2017, Culture Differences between America and China. Available from: http://www.etiquetteoutreach.com/blog_new-york-etiquette-guide/bid/92662/Cultural-Differences-Between-America-and-China. [28 November 2017].

Graf, R 2010, 10 Major Culture Differences between China and the United States. Available from: https://owlcation.com/social-sciences/10-Major-Cultural-Differences---China-and-the-United-States. [28 November 2017].

Tan, J 2015, 7 Differences between Chinese and American Culture. Available form: https://goldstarteachers.com/7-differences-between-chinese-and-american-culture/. [28 November 2017].

Shoebottom, P 2017, The Differences between English and Chinese. Available from: http://esl.fis.edu/grammar/langdiff/chinese.htm. [29 November 2017].

Fetscherin, M, Alon, I, Litterll, R & Chan, A 2012, In China? Pick Your Brand Name Carefully. Available from: https://hbr.org/2012/09/in-china-pick-your-brand-name-carefully. [29 November 2017].

Tan, J 2015, 7 Differences between Chinese and American Culture. Available form: https://goldstarteachers.com/7-differences-between-chinese-and-american-culture/. [29 November 2017].

NoToes 2010, Notes on Intercultural Communication. Available from: https://laofutze.wordpress.com/tag/asians-uncertainty-avoidance/. [30 November 2017].

Daxue Consulting 2013, Market Research: Coca-Cola in China. Available from: http://daxueconsulting.com/market-research-on-coca-cola-in-china/.  [30 November 2017].

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