PowerChina: International Strategy and Risk Management

PowerChina was an integrated construction group that provided investment and financing, planning design, engineering construction, equipment manufacturing and operations management for hydraulic and hydropower projects and infrastructure. According to the company’s data, PowerChina had over 50 per cent of the medium- and large-sized flood mitigation and water supply reservoir construction market worldwide. The aim of the company was to build a world-class comprehensive construction investment group that was globally competitive and of high quality and efficiency. However, the integration of international business and localization in certain markets combined with international and domestic development meant that PowerChina needed to remain cautious and vigilant. PowerChina’s managers were confident with the prospect of its international expansion to accelerate the company’s growth rate, but it was still necessary for them to seriously consider the strategy they should choose in the next phase of their internationalization, and how to upgrade their risk management system in these changing times.

This case can be used in international business courses dealing with strategy or risk management, at the undergraduate or graduate level. The case provides the opportunity to combine quantitative and qualitative data to analyze factors that affected the international strategy decisions of PowerChina. In addition, students can judge PowerChina’s future international strategy decisions and provide recommendations for PowerChina’s enterprise risk management approach. After working through the case and assignment questions, students should be able to do the following:<ul><li>Identify and classify factors that influenced PowerChina’s international strategy decisions.</li><li>Assess the company's level of international commitment and understand its wait-and-see strategic approach by analyzing how its resources, context of operation, and managerial oversight interact with uncertainty and potential risk to inform that assessment.</li><li>Evaluate and upgrade the company’s recent enterprise risk management system.</li></ul>

• international commitment, risk management, China