Question

JCPenney has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal, Singapore, and Thailand. It has opened new stores in Europe, Asia, and Latin America. In each case, the firm was aware that it did not have sufficient understanding of the culture of each country that it had targeted. Consequently, it engaged in joint ventures with local partners who knew the preference of the local customers.

a. What comparative advantage does JCPenney have when establishing a store in a foreign country, relative to an independent variety store?

b. Why might the overall risk of JCPenney decrease or increase as a result of its recent global expansion?

c. JCPenney has been more cautious about entering China. Explain the potential obstacles associated with entering China.

Answer 1

JCPenney will have great advantage if it opens a store through a joint venture as it will get a experienced partner who is well aware of the local aspects in a foreign country . It will have a advantage as the local partner will have a detail knowledge of the customer preference & the latest trends of the place. In case of an independent store there will have to face a challenge of understanding the customer & will also face a tough competition from the other local brands.

JCPenny will reduce its risk through a joint venture in the global market as it will get the help from a local partner in terms of the customer understanding & it will employ its own resources for the growth of its new store. It will also get a globel peresence in the market.

China has the most amount of labour available ,which makes them more effecient. The can easily change the product , they can catter to fads & trends . All these factors makes JCPenny more cautious in entering China.There are chances that they would loss there money if they entere & do not succede in China.