Analysing the Business Environment in China

Globalisation has made the world a market place and companies are increasingly expanding their operations worldwide to find the most cost-effective means of manufacturing their products or to access global markets for their products. The phenomenal development in transport and communication technologies have vastly enhanced and supported international business. The last few decades have also seen the emergence of agreements such as the General Agreement on Tariffs and Trade (GATT) and North American Free Trade Agreement (NAFTA) and international organisations such as the World Trade Organization (WTO), International Monetary Fund (IMF) and European Union (EU) to encourage and support international trade.

These international tools have equipped companies to source the most effective and efficient ways of conducting their operations and sales. However, these companies should note that industry in the foreign market not only changes the formation of companies, but administration culture, their roles and responsibilities in the organisation also have to be changed [Hill 2007, p.10] This document is a business development plan for Stillwater Design, a car audio manufacturing company based in the United Staes of America (USA). Stillwater is a multinational company that sells its products globally but manufactures them in their facilities in the USA only. Stillwater would like to expand its manufacturing operations to China to cater to the local demand in China by taking advantage of the friendly international trade policies adopted by China in recent years.

1.1Company BackgroundStillwater Designs was founded by Steve Irby in 1973 in Stillwater, Oklahoma in the United States of America. Initially Stillwater was hand-building sound and musical instrument speaker systems for churches, auditoriums, and entertainers. Before the end of 1980, car audios were in fashion and Steve Irby developed the first Kicker product: a full-range speaker enclosure designed specifically for car. Following its success in the car audio segment, Stillwater strengthened its product line by developing a range of car audio products over a period of time. Today, Kicker is one of the best selling car audio products.

In September, 2006, it acquired SoundGate, a manufacturer of high-quality audio interfaces which helped Stillwater to integrate Kicker systems into the new technologies, such as audio in mobile devices, media players and iPods, available in automobiles. Kicker and SoundGate products are currently sold by approximately 1,500 Authorized Dealers in the United States. These locations are served by 15 manufacturers’ representative firms. Export sales are managed through a network of distributors serving over 2,000 dealers in approximately 50 countries [Company profile, Kicker 2008]. In 2008, Stillwater developed its first home audio product. Today, Stillwater is a corporation with more than 220 employees in facilities of more than a quarter million square feet. This report shall henceforth use the brand name ‘Kicker’ to represent Stillwater Designs.