Abstract
This paper proposes a SWOT-FANP (strengths, weaknesses, opportunities, and threats – fuzzy analytic network process) analysis, together with the grand strategy matrix method (GSM) to deal with the multiple-criteria decision-making problem of location selection for a second tier city in China. This hybrid method can not only combine both qualitative and quantitative information and utilize fuzzy logic to eliminate vagueness, subjectivity, and imprecision, it can also clearly represents the competitive position of second-tier cities on a the quadrant coordinate to help an enterprise choose a strategy for development. To this end, I empirically chose a multinational pharmaceutical enterprise (MNE) as an illustrative example. The results reveal that Suzhou and Chongqing cities are in the best positions in the competition as a result of having external opportunities for development and internal competing strength. Moreover, the MNE could adopt a niche-focus strategy for the market by focusing on specific ailments to which people in Chinese communities are vulnerable to strengthen their competitive strengths. This study demonstrates and validates that such an enhanced methodology is viable and highly capable of providing enriched insights regarding strategic decision-making management in complex real-world situations.
Highlights
The main research stream regarding foreign direct investment (FDI) to China in international business over the past 30 years has been identified as the location determinants of FDI to China (Dunning, Lundan 2008), including market size and economic growth, labor factors, and government policies on foreign investment
We held a focus group discussion (FGD) with five experts that had more than 15 years of experience in the identified pharmaceutical enterprise and had roles as a marketing and sales director, a general manager and a manager to determine the preliminary criteria belonging to strength, weakness, opportunity and threat categories and second-tier cities according to (1) a literature review and (2) experts who got involved in this study to finalize, verify, and validate the criteria
SWOT-fuzzy analytic network process (FANP), together with the grand strategy matrix (GSM) method is proposed to deal with the multiple criteria decision making (MCDC) problem of location selection for second-tier cities in China
Summary
The main research stream regarding foreign direct investment (FDI) to China in international business over the past 30 years has been identified as the location determinants of FDI to China (Dunning, Lundan 2008), including market size and economic growth, labor factors, and government policies on foreign investment. Most related studies have examined China at Technological and Economic Development of Economy, 2015, 21(1): 140–163 the regional or provincial level or focused on so-called first-tier cities (e.g. Beijing, Shanghai, Shenzhen, and Guangzhou). In the case of China, there is an increasing need for research on second and third-tier cities to identify their geographical advantages and attractiveness, as well as their disadvantages, for MNEs. Such research would shift the focus from such historic “hot-spots” for inward FDI, such as Shanghai, Shenzhen, and Guangzhou, to cities on the periphery, thereby providing new set of data (Fetscherin et al 2010). To the best of our knowledge, no study has, as of yet, explored the location of foreign investment for second-tier cities. To fill this gap in the literature, the present study presents an attempt at selecting the best second-tier city location for such investments
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