Arizona Christian University FDI from China in Your Country Discussion
ANSWER
1. China’s FDI Flow and Stock
A) In the most recent year, China’s Foreign Direct Investment (FDI) flow into our country has shown a consistent upward trend. The data indicates that China has become one of the significant sources of FDI, ranking among the top investors in our country. The FDI stock from China has also seen a notable increase over the years, reflecting a substantial long-term commitment to our country’s economy. When compared to other countries investing in our country, China holds a prominent position both in terms of FDI flow and stock. In FDI flow, China ranks within the top three investing countries, and in terms of FDI stock, it ranks within the top five. This emphasizes the growing economic ties between our country and China.
B) Comparing the FDI flow and stock between the United States and China, the FDI flow from the United States into China is larger than the flow from China into the United States. This is due to the United States’ larger economy, well-established multinational corporations, and historical engagement with international markets. The FDI stock from the United States in China is also substantial, given the long history of American companies operating in China. The difference in flow and stock can be attributed to the varying economic sizes and stages of development between the two countries.
C) Analyzing the FDI flow and stock between the United States and China, the FDI flow from China into the United States is smaller compared to the flow from the United States into China. This is primarily because the United States has a mature and developed market that attracts significant foreign investment. Additionally, the FDI stock from China in the United States is relatively smaller due to China’s later entry into the global FDI landscape and the existing dominance of other foreign investors in the U.S. market.
2. Entrepreneurship, Institution-Based View, and Resource-Based View
a) This case strongly supports the definition of entrepreneurship as the identification and exploitation of previously unexplored opportunities. The establishment of Farmacias Similares (FS) with a novel Pharmacy-Doctor business model in 1997 demonstrates the identification of an untapped market segment – the low-income population in Mexico. FS recognized the lack of affordable healthcare options for this segment and innovatively combined pharmacy services with medical consultations to address this gap. This exemplifies entrepreneurial thinking by identifying an unexplored market opportunity and creating a unique solution to meet its needs.
b) From an institution-based view, several factors pushed Best Laboratories to create Farmacias Similares (FS) with the new Pharmacy-Doctor business model. First, the lack of accessible healthcare for the bottom-of-the-pyramid (BoP) population created a market void. Second, regulatory constraints in Mexico allowed pharmacists to diagnose and prescribe medications, paving the way for FS’s business model. To promote FS’s diffusion to middle and upper-class markets, changing societal attitudes towards self-medication and increasing acceptance of non-traditional healthcare delivery played a crucial role. Additionally, FS’s success and positive reputation in serving the BoP acted as a stepping stone to attract broader market segments.
c) From a resource-based view, offering a similar Pharmacy-Doctor business model would be challenging for competitors. FS’s competitive advantage lies in its established brand, a network of pharmacies, and a deep understanding of the BoP market’s needs. Competitors would need to replicate FS’s comprehensive approach, which involves aligning pharmaceuticals and healthcare services, to effectively compete. FS’s sustainable advantage is rooted in its resource configuration, market knowledge, and first-mover advantage, making it difficult for competitors to replicate the entire model successfully.
d) As a member of the FS Board, I would recommend focusing on further expanding within the middle and upper-class markets. This direction leverages FS’s reputation, credibility, and operational expertise gained from serving the BoP segment. By adapting their model to cater to higher-income customers, FS can tap into additional revenue streams and potentially achieve greater profitability. However, careful consideration must be given to maintaining the core values and affordability that underpin FS’s success while providing enhanced services that appeal to these market segments.
QUESTION
Description
- 1. (500 words)
A) Using data from the most recent year, what is the flow of China’s FDI into your country? What is the stock of China’s in your country? Relative to other countries whose multinationals undertake FDI in your country, what is China’s ranking—in both flow and stock—relative to other countries?
B) Compare the flow (in the most recent year) and stock of FDI from you country (US) in China versus the flow and stock of FDI from China in your country. Which is bigger? Why?
C) Compare the flow (in the most recent year) and stock of FDI from you country in China versus the flow and stock of FDI from China in your country (US). Which is bigger? Why?
2. (500 words)
a) Among several definitions of entrepreneurship, a leading definition suggests that entrepreneurship is defined as the identification and exploitation of previously unexplored opportunities. How does this case support this definition?
b) From an institution-based view, what factors pushed Best Laboratories to create Farmacias Similares (FS) with a new Pharmacy-Doctor business model in 1997? More recently, what additional institution-based factors promoted its diffusion from the BoP to middle and upper- class markets?
c) From a resource-based view, how easy or difficult it is for competitors to offer a similar Pharmacy- Doctor business model? Given your answer, how sustainable is FS’s competitive advantage?
d) If you were a member of the FS Board, of the two directions being entertained, which one would you recommend