Part I (from the Key Assignment draft in week 4) Deliverable Length: 1,000–1,200 words A regional bank has decided to open an office overseas for serving those businesses that are expanding...

Part 1

Introduction:
I am the manager in charge of global expansion and have decided to strategically opt to open a
branch in China. Carolina People’s bank is already a recognized bank and has global operations
all over. The decision to open a branch in China was to understand the importance of China in
the growing global scenario. China was closed economy in the sense that it had never opened its
doors to any foreign investment firm to do operations in china. There was a lot of pessimism that
china entertained in allowing foreign banks to enter the country. The reasons though not very
clear, the message to the western world and to the capitalists was very clear and that was not to
look at china as a favored destination. One thing was that, the banking scenario in china was a
well guarded secret and all banking operations were controlled by the central bank of china.
There was nothing further known to this and foreign banks were waiting for china t o allow the
entry of banks into the PROC. The communist government and the closed economy with no idea
of free market enterprise were the reasons why foreign banks were not allowed to do operations
in China.
The Challenges faced by Carolina People’s bank in China
a. The bank’s main reason for opening entry to foreign banks was very strategically opted for.
The banks in china were owned by the government and were in very bad shape. The inefficiency
of operations and the lackadaisical approach to expansion and efficiency were visibly lacking in
all banking operations. The feeling that the government owned the banks hence it was no cause
of worry if the banks did not make profits made the top officers rather indifferent to productivity
and profitability. The banks were controlled by the beaucrats and were in an appalling state of
bad debts and almost near bankruptcy. The mismanagement of banks was a concern to the
government and there needed to be some effort from somewhere to bulldoze the bank operations
into starting something new. The imitative to working efficiently was needed. The beauracracy
had to be shaken up to bring in a new stream of blood and all this could be possible only if these
banks were exposed to competition.
b. Carolina People’s bank's competitive advantages in
foreign markets?
Carolina People’s bank worldwide was the first bank to be operating in 98countries over 3400
locations. the greatest competitive advantage for Carolina People’s bank was that it had been in
the foreign market for over 100 years and was very much attuned to how foreign countries
especially each country and legislations worked. They were the first movers in the international
market as got all the advantages that a first mover got.
.c. Carolina People’s bank's worldwide strategy
The strategy as defined by reed was to build on what the bank was good at and what was already
profitable and strengthen this base to bring in more expansion and integration and build
profitable working relationships .Carolina People’s bank was already in the global market and so
its strategy was to serve the global market globally.Citi bank concentrated on low risk activities
of day to day banking and custodial instead of looking at high risk banking operations. The
strategies of CPB as they served the local community by hiring locally and developing
relationships with the regulators and authorities to serve aggressively growing local companies
as well as many western multinationals. The GRB was based on franchises of CPB. Furthermore
Carolina People’s bank offered a range of retail banking products to suit the local needs and the
temperaments of the country that they served.
The political and legal systems of China :
China had been a closed economy till recently. The decision to open its doors to foreign banks
was a major part of policy reforms that the country was going though. The communist country
was known to be very averse to any aspect of capitalism and its effects on common people and
since the principles of socialism and communism dictated the country, resources were owned by
the government and there was no private participation whatsoever. The political system of the
country was dominated by the communist party and every aspect of trade was under
governmental control. Banks especially was under strict regulation by the government and every
bank was owned...