How organizational knowledge can affect the choice of entry mode

Abstract: Summary This is a bachelor thesis within strategic management and knowledge management. It is a case study of a family-owned Italian Olive oil company, Frantoi Celetti e Cultivar, here referred to as FCC. FCC has built a thorough olive oil competence throughout the years and has decided to exploit its business on the Chinese market. After careful considerations, FCC has chosen to enter the Chinese market by building an alliance with a Chinese firm that has some experience of olive oil production. This Chinese olive oil supplier will be contracted to produce Monocultivar Extra Virgin Olive Oil ac-cording to FCC’s strict directions. The oil produced in China is planned to be distributed on the Chinese market through FCC’s new Chinese restaurants, through exclusive retailers and eventually probably also via the firm’s website on the Internet. To be successful on the Chinese market, FCC must succeed in transferring relevant pro-duction knowledge to the Chinese producer, and this production knowledge is difficult to transfer, as it contains a lot of tacit knowledge that is hard to articulate. FCC must also get access to valuable knowledge that the allied partner has about the Chinese business climate, Chinese values and tastes, Chinese networks etc. FCC’s founder and CEO plans to be pre-sent in China during the start-up period. By this way the partners can attain the close friendship, trust and commitment that are needed for the knowledge exchange to take place. The idea is to create a win-win situation where the partners have a mutual goal, which is to produce high quality monocultivar olive oil. It is important for FCC that competitors do not get access to the valuable production knowledge, which actually is FCC’s core competence. The complexity of the organizational knowledge is the hindrance for competitors to steal and make use of the valuable knowl-edge. That is because to achieve competitive advantage from the production knowledge, several other knowledge areas are also required simultaneously. For example knowledge about where and how to plant olives, how to contract suppliers that are promising for the purpose, how to produce the oil and where to sell it, knowledge of the best distribution chain, are all knowledge areas that are dependent and related to each other. One single piece of knowledge in itself will not make any revenues. FCC uses the knowledge and ex-perience throughout all the distribution chain of its products, from the start of production of olive oil to the sales to the end customer. The problem discussion concerns how FCC’s organizational knowledge can have influ-enced FCC’s choice of entry mode into the Chinese market. The firm’s knowledge that will be needed for gaining competitive advantage in China is not exactly the same as was needed in Italy. Therefore, FCC seeks to exchange knowledge with someone who has local knowledge in China. The purpose of this thesis is to reach a deeper understanding of the complexity concerning how the organizational knowledge that is needed for FCC’s competitive advantage in China, can affect the choice of entry mode. In order to answer the purpose of the thesis, a qualitative approach has been used. In depth, unstructured interviews have been conducted with FCC at four different occasions. The data gathered has then been analyzed by using theoretical framework