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Global Business Environment Analysis

2826 words - 11 pages

This essay is a week 2 team assignment for a Global Business Strategy Management Course. The assigment was to give an executive summary on exporting a product to a foreign country excluding Mexico and Canada.EXECUTIVE SUMMARYChina has a growing trend and need for plastic raw materials that it cannot domestically fill. The AstroChem Sheboygan plant in Wisconsin has the raw materials and labor for full production capacity; however, it has been lacking the domestic demand for its products. Therefore a China joint venture is being advocated to expand sales in both countries - a win-win situation for both companies.Many benefits will be realized in this partnership. First, the Jiangsu Jiuding Group (Jiuding) in China has an existing production and distribution facility in place, which eliminates the need for large capital outlays to set up production and distribution facilities in China. Next, they have a large customer base and the use of existing sales and distribution channels that will save a tremendous amount of ramp up time and marketing costs. Our joint venture partner's customer base is the same customer base that forms the target group for sale of the pellet products to be distributed by Sterling Plastics, the joint venture company. Sterling Plastic's start up costs will be funded through the sale of 2,500,000 shares of its common stock to AstroChem, at a $1 par value.STATEMENT OF PURPOSEOrganizational Description and HistoryWhile the first plastics date back more than a century, the real advent of petrochemical-based polymers occurred during the 1930s, with rapid innovation taking place during the Second World War and the immediate post-war period. By the 1960s, all of the key commodity resins and a large number of engineering resins were developed, and the machinery infrastructure was sufficiently established to allow the commercial plastic products industry to enter its high-growth phase. AstroChem was incorporated in 1962. Its continuous growth trend was interrupted only by the mid-1970s oil crisis and the 1981-82 and 1990-92 recessions.As manufacturing processes began looking for ways to reduce raw material costs, AstroChem began to focus on the automobile, airplane and construction industries by furnishing plastic components to replace the more expensive metal components. However, since these industries tend to be cyclical, AstroChem expanded into other end-use segments of the economy. The unique attributes of plastics (including ease of processing, light weight and corrosion resistance) have led to the creation of new products, and plastics which have also displaced paper, glass and metal from traditional applications. Although there is a wide range of plastic products, three major product lines continue to dominate: 34% of shipments are packaging materials, 26% are construction products, and 18% are automotive components.In addition to being produced by companies within the defined plastic products industry, plastic production is a...

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