Request B7

Strategic Audit

SAS INSTITUTE EXPANSION TO CHINA

Introduction

SAS Institute proposed an expansion to the oversea regions, and the country of choice voted on by the board of members was China. This is mainly because they believe China will offer a good market for the company’s products and services. China was also chosen because of its large population, many industries and its position in terms of its economy; it is actually ranked second after the United States of America. This is not a simple step considering the challenge ahead, but SAS is well prepared to handle the them effectively. Some of the challenges include the cultural difference and mode of entry to the market.

Cultural Differences and Culture Change

Each country has a business culture and SAS Institute being a company based in America is mainly based on the American business culture, but the company wants to expand to the Chinese market, and so when in rome do as the romans do. Understanding the cultural differences is the key to success in China for SAS Institute as well as any other company hoping to expand to a foreign makret, and below is some of the cultural differences considering this case;

Relationships: It is important to know that the Chinese value relationships and relationships come first before economics. SAS must establish a good relationship with the Chinese people because they are only willing to transact business with the people they trust (Joy, 2000).

Face to face interactions: Chinese make business deals face to face despite the improvement in technology they love it when they are face to face for them to sign a contract together with a business partner from another country. On the other hand we as Americans can conduct business through multiple forms of communication. This means for SAS to be successful in their business plan with China they will have to go to China and face their business partners. 

Entertainment:  The Chinese love entertainment that is normally followed by a meal and this has been part of their culture for a very long time. A dinner with a potential business partner will be a way of building interest and trust for a relationship that will be long lasting. For Americans this is not necessary as long as the deal has been made. 

Communication style: The Chinese tend to be very quiet people while Americans are eloquent and outspoken and this may make it hard for the American counterpart to acquire the information that they might be needing and this may take a series of both formal and informal meetings for them to reach a consensus and therefore the SAS Institute business people will have to bear with the Chinese and be patient till they get into agreement and strike a deal (Joy, 2000).

Culture change in China

Individualistic: Traditional Chinese value the idea of a group and they rejoiced in the success of a group than an individual but problems are rising, the people tend to be divided and try to explore how they can get out of the problem and this has led to them valuing individualistic goals than a group goal. 

More Independent: The traditional Chinese worked in groups (regarding business ventures), but today with increasing academic levles in the country many in school are far learned and have learn to be independent and even venture into risky deals to promote their businesses. Being independent has led them to take opportunities to work with foreigners and even take jobs in the private sectors for them to taste the fruit of success (Joy, 2000).

More Confident: The traditional Chinese felt their culture had no impact and their people could not do more in the face of this world but for the last 30 years the Chinese have built their confidence and they have a sense of pride for the goods and services they offer and this since of pride is what has made the country rise high in terms of economy over the last 3 decades. 

Distribution Method

The best distribution method in China for SAS will be pricing and this is because this distribution method takes into account various factors such as the competition, the cost of production and quality of product. Using this method SAS can establish its pricing strategies which can be lower than or the same as those for the local companies in order to attract customers (Nagle, & Holden, 2002).

This method involves product, promotion and place. This method ensures that a product is in the right place for the right market to facilitate its promotion and generate revenue for the company furthermore; this method also contributes to the decreasing price elasticity (Nagle, & Holden, 2002).

Conclusion

It is my belief that SAS Institute will be successful in China if it follows and understands perfectly the cultural differences between the USA and China. 

References 

Nagle, T., & Holden, R., (2002).The Strategy and Tactics of Pricing. Prentice Hall. Pages 84-104.

Joy, H., (2000). China's Generational Cultural Change. Retrieved from,

http://www.connecteast.net/blog/chinas-generational-cultura.html on May 8, 2014.

Grant, R.M. (2013).  Contemporary Strategy Analysis, (8th ed).  Hoboken, NJ:  Wiley & Sons.