Professional Documents
Culture Documents
Analysis
1. Given what you know about the two countries in the packet, in 1950, which country provides an overall better long-term investment climate? Why?
2. For each country, which sectors would you think are most attractive for foreign investment?
3. What are your greatest concerns in entering either of these markets?
4. Suppose you have made an investment in a sector (as noted in 2) in your preferred country (as noted in 1). What would lead you to subsequently exit this market
and enter the other one, if at all? What should be considered if you wish to delay such an exit?
Unilever
Its 1960 and the Anglo-Dutch consumer goods producer
Unilever is looking at establishing operations in Asia.
It is considering two economies that have recently established
independence but have strong links to Western economies.
Rather than merely exporting European produced products to
the region, the firm recognizes the potential long term gains that
may be achieved from a significant investment.
It can only make a single investment that would constitute a
(i) manufacturing facility and (ii) a local distribution network.
The facility will produce household goods, including soaps,
detergents, and shampoos.
The planned investment represents 25% of total capital
expenditure in 1960.
Longer term goals would involve introducing their processed
foods lines to Asia (such as margarine and frozen entrees).
Your Task
You are an analyst in Unilevers strategic
planning group in Amsterdam.
Your manager has dropped files of information
on two economies (see below) that she would
like you to consider, Balonia and Banchuria.
Analyze the prospects of both countries for
Unilever and provide a recommendation on
which market would present the best option for
Unilever to invest in and why.
Balonia: Geographical
Considerations
Balonias borders were created following
WWII.
Population dispersed regionally with a large
centre in Balonia and another in the country
of Stalonia.
Political tensions had been on-going between
Balonia and Stalonia.
Banchuria: Historical
Considerations
One of the two regions of a country called
Chanchuria; the other region is called Ranchuria.
Former colony of the island nation of Kingchuria.
Had been under colonial rule for almost 150 years
and was still heavily reliant on colonial link for key
resources and as a market for their goods.
Chanchuria gained independence following WWII.
Recognized as one of the poorest regions in the
world (GDP/Capita of about $150).
Population of 50m people with a very low literacy
rate, with more than 80% of the population living
in rural areas.
Banchuria: Geographical
Considerations
Banchurias borders were created after WWII,
when Kingchurian army left .
Population dispersed regionally with a large
centre in Ranchuria and another in
Banchuria.
The region Banchuria is located in Asia, has
significant coastline and is relatively close in
proximity to other developing countries,
both large and small.
Population
60,000,000
50,000,000
Population
40,000,000
Balonia
Banchuria
30,000,000
20,000,000
10,000,000
1953
1954
1955
1956
1957
1958
1959
Year
Size of Economy
10000
9000
8000
7000
6000
5000
Balonia
Banchuria
4000
3000
2000
1000
0
1953
1954
1955
1956
Year
1957
1958
1959
Wealth
Balonia (Relative to USA)
Balonia (GDP/Capita)
Banchuria (GDP/Capita)
350
30
300
250
20
200
15
150
10
100
5
50
0
1953
1954
1955
1956
Year
1957
1958
1959
25
100
80
Net Exports
60
Investment
Government
Consumption
40
20
Balonia
-20
Banchuria