1st Semester MSc Economics and Business Administration Roskilde University, Department of Social Sciences and Business (ISE) May 2018 Roskilde, Denmark A General Motors case study Written Hui Cui 64341, Durga Narayan Poudel 64336, Philippe Mouritzen 60226, Jakob Aarsoe 62086 and Pietro Di Girolamo 64209 Characters: 136.029 Supervisor Poul Dines Contents 1 Introduction ......................................................................................................................................... 4 1.2 Problem area ................................................................................................................................. 5 1.3 Problem formulation ..................................................................................................................... 5 1.4 Research questions ....................................................................................................................... 5 2 Methodology ........................................................................................................................................ 6 2.1 Purpose of the research ................................................................................................................ 6 2.2 Framework for research methodology ......................................................................................... 6 2.3 Research philosophy/paradigm .................................................................................................... 7 2.4 Research Approach ....................................................................................................................... 8 2.5 Research Techniques .................................................................................................................... 9 2.6 Research Strategy ......................................................................................................................... 9 2.7 Case Selection ............................................................................................................................. 10 2.8 Data Collection Methods ............................................................................................................ 11 2.9 Reliability and validity of data ..................................................................................................... 11 2.10 Role of the researcher............................................................................................................... 11 3 Theory ................................................................................................................................................ 12 3.1 Foreign Direct Investment .......................................................................................................... 12 3.2 Joint Ventures ............................................................................................................................. 13 3.2.1 Equity joint venture ............................................................................................................. 13 3.2.2 Contractual joint venture ..................................................................................................... 14 3.2.3 Selecting a partner for Joint Venture ................................................................................... 15 3.2.4 Forming ................................................................................................................................ 15 3.2.5 Duration ............................................................................................................................... 15 3.2.6 Local law ............................................................................................................................... 16 3.3 Wholly owned enterprise/sole ownership ................................................................................. 16 3.4 Exporting ..................................................................................................................................... 17 3.4.1 Indirect export ..................................................................................................................... 18 3.4.2 Direct export ........................................................................................................................ 18 3.5 PESTEL ......................................................................................................................................... 19 3.5.1 Political ................................................................................................................................. 20 3.5.2 Economical ........................................................................................................................... 20 3.5.3 Social/cultural ...................................................................................................................... 21 3.5.4 Technological ....................................................................................................................... 21 3.5.5 Environmental ...................................................................................................................... 21 1 3.5.6 Legal ..................................................................................................................................... 22 3.6 OLI framework ............................................................................................................................ 22 3.6.1 Ownership advantage .......................................................................................................... 23 3.6.2 Location ................................................................................................................................ 24 3.6.3 Internalization advantage .................................................................................................... 24 Analysis ................................................................................................................................................. 25 4 PESTEL China ...................................................................................................................................... 25 4.1 Political ........................................................................................................................................ 25 4.1.1 Socialist market economy .................................................................................................... 26 4.1.2 China and WTO .................................................................................................................... 27 4.1.3 Intellectual Properties .......................................................................................................... 28 4.2 Economic ..................................................................................................................................... 29 4.3 Social/Cultural environment ....................................................................................................... 30 4.3.1 Consumer preference: ......................................................................................................... 31 4.4 Technological factors .................................................................................................................. 32 4.5 Environmental Factors ................................................................................................................ 33 4.6 Legal ............................................................................................................................................ 34 5 Entry barriers ..................................................................................................................................... 36 5.1 Government policy ...................................................................................................................... 36 5.2 Intellectual property ................................................................................................................... 36 5.3 Language and cultural ................................................................................................................. 37 5.4 Bureaucracy ................................................................................................................................ 38 5.5 Protectionism .............................................................................................................................. 39 5.6 Partial Conclusion ....................................................................................................................... 40 6 Case study .......................................................................................................................................... 40 6.1 History of GM in China ................................................................................................................ 40 6.1.1 American financial crisis ....................................................................................................... 43 6.1.2 Electric cars .......................................................................................................................... 43 6.2 Performance of GM .................................................................................................................... 44 6.3 GM Brands in China....................................................................................................................