This essay is a week 2 team assignment for a Global Business Strategy Management Course. The assigment was to give an executive summary on exporting a product to a foreign country excluding Mexico and Canada.
China has a growing trend and need for plastic raw materials that it cannot domestically fill. The AstroChem Sheboygan plant in Wisconsin has the raw materials and labor for full production capacity; however, it has been lacking the domestic demand for its products. Therefore a China joint venture is being advocated to expand sales in both countries - a win-win situation for both companies.
Many benefits will be realized in this partnership. First, the Jiangsu Jiuding Group (Jiuding) in China has an existing production and distribution facility in place, which eliminates the need for large capital outlays to set up production and distribution facilities in China. Next, they have a large customer base and the use of existing sales and distribution channels that will save a tremendous amount of ramp up time and marketing costs.
Our joint venture partner's customer base is the same customer base that forms the target group for sale of the pellet products to be distributed by Sterling Plastics, the joint venture company. Sterling Plastic's start up costs will be funded through the sale of 2,500,000 shares of its common stock to AstroChem, at a $1 par value.
STATEMENT OF PURPOSE
Organizational Description and History
While the first plastics date back more than a century, the real advent of petrochemical-based polymers occurred during the 1930s, with rapid innovation taking place during the Second World War and the immediate post-war period. By the 1960s, all of the key commodity resins and a large number of engineering resins were developed, and the machinery infrastructure was sufficiently established to allow the commercial...