Thursday, November 4, 2010

Harvard Offers Executive MBA in China

I read an article in today's WSJ about Harvard's expansion of executive education offerings in China. David Yoffie, senior associate dean of executive education at Harvard, was asked about the competitive nature of executive MBA programs offered by American schools in China. Yoffie responded, "...all the major competitors are engaged in those marketplaces... [but] we're not stepping on each other's toes yet. The markets in China are too huge for that."

This, in a nutshell, explains the allure of the Chinese marketplace for American organizations. We are learning in Managerial Economics course how pricing and output should reflect supply and demand. The Chinese market is so unusual today because demand for products is literally off the charts. Thus, Porter's three generic strategies appear to be incomplete with regards to a firm's ability to be profitable in China. The relatively rapid opening up of the Chinese market is causing firms to adopt a strategy of "just get in the game." In this situation, firms can pay less attention to cost leadership, product differentiation, or competitive forces when making operational decisions. The sheer magnitude of buyers in China means that, for the foreseeable future, all suppliers can operate without much regard to their competition.
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