Chipotle Enter China Essay

The U.S. follows a floating exchange rate regime, while China’s regime is a “managed float”— a hybrid of fixed and floating (Salitan, 2010). Like the floating regime, the market forces determine the direction of the currency’s trend, but the value of the renminbi is still controlled by the Chinese government (China’s Exchange Rate Policy, 2015). The People’s Bank of China is currently acting to keep the value of its currency low for its trading partners so that China’s exports are cheaper and more attractive to them, thereby sustaining China’s high rate of economic growth. With fixed exchange rate regimes, keeping control over the exchange rate helps to create a stable atmosphere for foreign investment so that investors always know the value of their investment without having to worry about daily fluctuations. Greater confidence in the stability of the currency also helps to lower inflation rates and generate demand. However, fixed exchange rate regimes are often difficult to maintain in

As a restaurant, it can choose to franchise, take part in a joint venture, or invest in a wholly owned subsidiary. The benefit of franchising is that Chipotle would avoid many costs and risks of opening up in a foreign market, and the brand could quickly build up a global presence by franchising many restaurants. Chipotle could also opt to take part in a joint venture, which would allow it to share in the costs and risks of international expansion while benefiting from the partner’s knowledge of the local market, culture, and business systems. Finally, Chipotle could choose to set up a completely new operation in China, which would give it complete ownership and control over its operations. (An acquisition is also possible, though it is unlikely that there will happen to be an established firm in China similar enough to Chipotle that it can readily