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Write 8 pages with APA style on Risk Assessment for a De Novo Company in a Developing Country.
Write 8 pages with APA style on Risk Assessment for a De Novo Company in a Developing Country. China has been in the joint venture automobile business for only 26 years, from the time that the first Joint Venture law was promulgated by the government. . The first joint venture concluded between the Beijing Automobile Corporation and Jeep Motors (at the time, American Motors) took four years to conclude, and ended in failure after a loss of significant investment on Chrysler’s part. . As a pioneering effort, both the Beijing government and automobile makers learned a good deal about what can go wrong, and how to do it differently .(Mann 1997).
The second joint venture resulted in a significant success which continues to the present day. . Volkswagen negotiated a joint venture with the regional government of Shanghai and Shanghai Auto Works to develop and manufacture the Santana for the Chinese market. . Volkswagen had learned from the Jeep experience that allying itself with a regional, rather than a national, partner would help to shield it from the vagaries of change at the center, and ensure a strong ally for growth.
In the 1980s, all the ground rules had to be established—legal, employment, and investment. . By this time, with 6 million vehicles per year being manufactured, the ground rules are much better-established. . Indeed, one can argue that China is now in its 4th wave of automobile industry expansion: the decade of the ‘80s for the pioneers and the Japanese importers, the early 1990’s for the refining of the joint venture law, the late 1990’s for preparation for entry into the WTO (and gradual liberalization), and post-2002 for the fall of nearly all tariffs on autos and auto parts. . . With 6 million autos, trucks and buses manufactured per year, China now ranks in the top 5 nations in the world for automobile manufacturing.
The operational risks are nevertheless major. . Although the cost for labor is 5-10 times lower than in the developed West, there are a number of side expenses that can make costs higher than thought. . Management is not yet developed, either in its people-management skills or in its ability to profitably employ capital equipment and labor. . The first risk, therefore, is finding proper operational management to build and operate the plant .(Dodds 1995).