Globalisation and International Trade

Here’s come to an end of my Business and Management lectures. However, here’s also the most impression topic I have ever had. This week’s topic is Globalisation. When I first heard this word, I will immediately think of the quota of HSBC “Think globally, act locally”. Globalisation has lots of definition. Even, when you ask different people, I believe they would give you different answers. Nevertheless, I believe there’s no a correct answers. In an organisation, they have different strategy, so, they also got different method to think globally. Even though there’s no a correct definition. I believe the following one is the clearest phrase to show how it works. Globalisation refers to a world in which societies, cultures, politics and economies have, in some sense come closer together. (Kiely, 1999)

 
To go international, there are lots of methods. For example, outsource, exporting/ importing, franchising, joint venture and E-commerce, etc. In the following, I would like to describe a bit for some of the elements.
 

Outsource (1/4):

It is a method to go international by lowering their cost, shifting their manufacturing to another place. Since the cost in China or India would be cheaper, most of the firm would like to move to there. For example, call centre, in old days, they are mostly in UK and Europe. However, nowadays, it’s in China and mostly in India. You might except that India has a very cheap cost, their quality might be very bad, and however, you are wrong. Those Indian has a very high education level, they can speak for about 3-4 languages for instance, Chinese, French and English, but of course there mother language. This is because in the above countries, they don’t need to pay for minimum wage, but need for another.

 

Exporting/ importing (2/4):

It has become the most important element nowadays. Selling your products in all over the world can help increase the market share and improve their well-known. This element is to sell oversea to find an agent to help your organisation. Since agent know the local needs.

Franchising (3/4):

Getting McDonald as an example, it has been very successful as it opened all over the world. By franchising, its revenue has increase rapidly every year. It was a well-known brand nowadays. There’s shop everywhere all over the world. Franchising can expand rapidly beyond their home market. The expanding firm sells the right to a company which allows them to use McDonald name to sell their products. And everyone take part of the profits.

 

 

E-commerce (4/4):

Technology has been an important element today. However, it is more useful for some industry. For example banking industry. They can provide online services to do transaction, to transfer money and buy insurance which is very convenient.

 

Globalisation and international trade are good to an organisation. There are some successful example. One of them are Starbucks. Starbucks is a very successful organisation is because it’s revenue amount increase sharply. It’s revenue is about $9.8 billion and profits to almost $900 million. Originally, Starbucks is not a franchising organisation. In 1971, it started its business. In 1981, it just got about 5 stores. However, after franchising, it got about 114 stores in 1987. Nowadays, it has over 16,000 retail stores and about 12,000 in US and 4,000 in more than 50 countries. Starbucks used joint ventures, licensing or wholly owned subsidiaries to enter new markets.

 

Nevertheless, you might think that acting globally or internationally must give benefits to a company, however, that’s not! It’s just a delusion that most of the company are successful. There is also a company which is not, Tesco. Tesco has want to become an international brand too in many years ago. They opened their first shop in China. However, it was not successful. They had used the same method and the taste of local people in UK for Chinese people. This is inappropriate. An organisation should satisfy the local needs and wants. Different countries and places have different needs. We should find more research and find an agent for help.

 

In the following, there will be more details about what are th pros and cons for globalisation. In the video, it also tells us what is TNC stands for. It would also provide you some example which the organisations has been acting globally.

After you have watched the video, I believe you would understand more what is TNC, it stands for Trans National coporation! They operate franchises all around the wrold.

Organisation and strategy

In the past week, our business management taught about organisations and strategy. I feel that it was a difficult topic. This is because strategy is a long term and things which is difficult to handle, you can’t control much things in an external environment. Mintzberg said, a strategy is ‘a pattern in a stream of decisions.’ (Mintzberg 1972)

 

I believe an organisation would feel difficult and complicated when they choose and set up their strategy. It consists myriads of levels, for instance, corporate level, business level and operational level. These levels shows the overall scope, the individual business and the delivery of an organisation. To develop a strategy, lots of elements are needed. At least, you have to know what is your position is in the market. If an organisation has a large market share and a good reputation, they might set up a stronger and a difficult strategy.

 

For example, by using SWOT analysis, a famous brand, Sony. It was a huge brand and successful brand in early 1990’s.

 

Strength (1/4):

The strength of Sony is that it sells high quality product and it has a good reputation for customers. Their product has a guarantee, especially for TV and camera.

 

Weakness (2/4):

In weakness, they got a declined in their profit. Their revenue keep decrease in this few years, due to the exciting competition and lots of substitute.

 

Opportunities (3/4):

In opportunities, Sony has did a well job, they tried to use risk diversification to spread their risk into different electronic device.

 

Threat power (4/4):

In threats power, they face lots of problem. Due to lots of substitution, customers may choose other products, they got big bargaining power. However, they got a back a bigger bargaining power from supplier. For threat of competitive rivalry, the market got lots of sellers which sell similar product and it’s difficult and costly for them to switch the products.

 

As what I have said at the beginning, there are strategic choices at the corporate level. It includes the market and Ansoff’s Matrix. For this corporate level, it includes the generic growth, product development, market development and diversification.

In another company, Samsung. They also did product diversification. They sell no just mobile phone, they also sell computer, TV, high fi and also camera. When they first enter the market, they just sell mobile phone and TV. But they didn’t sell computer at the beginning. But they changed their mind. In order to satisfy different people’s want, they enter different market and sell different products.

The above video would tell you how to develop a great a business strategy!

Pestle Analysis

Before the half term break, I have learnt what Porter’s Five Forces is. It shows the Micro environment of the industry that the company is in. This week, I have learnt what Pestle Analysis is. To start with, let me first kindly introduce you the detail for Pestle analysis.

 

To come out with, Pestle Analysis is an analysis that shows the external environment of an organization. In briefly explain, it shows the Macro environment. Porter’s Five Forces tells us the competition of the industry with how to fight with other’s not just focusing your competitor. It tells us to look and consider the bargaining power of buyers and sellers. Nevertheless, it’s not enough. It can’t show the effect of the Macro environment. There’s also alternative powers which would affect the whole company. In Pestle Analysis, we can consider six factors, for instance, Political, Economic, Social, Legal, Technical and Environment. In the following, I would like to use an example of a company to introduce you more about this analysis which is not difficult to comprehend at all.

In order to have a good explanation, I would like to choose a global company to explain. I have chosen Apple for this analysis.

Political (1/6):

I bet there are not much political factors that will affect the Apple, vice versa. However, it might have some barriers of their apps. As in China, they are not able to use YouTube, Facebook and whatsapp. Therefore, Apple has to consider those factors and change their market and product line. For instance, they need to cancel those apps to enter China market.

 

Economic (2/6):

In the view of global, the whole economic in the world are facing depression and recession. However, in some country, their economic are improving. Using the example of China again, its market is very big, every company wants to enter this huge market. Due to China’s economic growth, the exchange rate between America and China will change. Chinese people can use a cheaper price to buy Apple’s product. The interest rate of the bank will also affect the consumer’s habit and attitude.

 

Apart from that, due to the high demand for Apple’s product, the labour market in China will increase as most of the production line are in China, the effect of the Economic in both country will affect the production and selling of Apple’s product.

 

Social (3/6):

Apple’s product in the society is affecting so much to our life style. It changes many people’s attitude after their iPhone 4 has launched. And also due to the education in the world is increase, they would like to know more about different products, they would buy more their products. Furthermore, the distribution of income will also affect the selling of Apple’s product. The more the people earn, the most they are willing to buy their products.

 

Technological (4/6):

As more and more company enter the mobile phone market, and they are expanding their market share, they focus more on their own product. Due to the technology factor, more and better and high technology phone has been discovered. Apple produces more products which they had their own patents so that Samsung and other main companies cannot copy their products.

Moreover, the speed of people changing their phone increase rapidly. Therefore, Apple has to increase the productivity and to improve their own products by using new technology.

 

Legal (5/6):

In this part, it talks about law. In reality, Apple controversy that Samsung copy their product and need them to pay a certain amount of money due to the patent. This is because law will protect the patents side which is Apple. This could help Apple in developing their product and protect their product to avoid copying their product.

 

Environment (6/6)

Producing a phone need to use lots of raw material and this will affect the environment. It has affected lots of people living standard. In China, due to the production process, many workers in can’t afford the harsh working hour and little time for rest, they commit suicide by jumping out of the building at night and before they work in the morning.

 

Lastly, producing phones will produces lots of waste and part of the component of the phone are not reusable. They can’t reuse it in the phone. This would produce lots of waste and affect the natural environment.

 

To take these into consideration, there are no circumstance should be ignore the role of Pestle Analysis. To survive and grow, the organization must be responsive to these factors. Even though, this analysis can’t show much about their own management, which cannot show the own company structure, but it is quite useful for a company to get used to it and predict the future change. For furthermore information, you may look at the link below, which is the same as what I have written above.

Porter's Five Forces

What’s Porter’s five forces? It is a simple but powerful tool for understanding where power lies in a business situation. I think it is quite useful and helpful for an organization to enter a market or even essential for an organization which is already in the market. The five forces help me to understand both the strength of the current competitive position.

 

From Porter’s five force, I understand that a company shouldn’t just concentrate with his business only compete with his competitor, that’s not enough. This is because in the market, not just the competitor will be the only one who will affect your profit and successful.

 

 

The five forces are: Supplier power, buyer power, and competitive rivalry, threat of substitution and threat of new entry. Different market would have different forces made by different part of environment. This five forces are micro. Giving an example, market of shampoo. The threat of entry is not so difficult. When you got enough capital, you may enter the market,. In addition, the bargaining power of buyers are quite high, as the market has different large and small origination. There are lots of substitute, the market provide lots of choice for buyer. Therefore buyers got a very high bargaining power. With the same reason, the threat of substitution is high. There are lots of different brands, Dove and Dettol etc. However, the bargaining power of supplier might not be so high, because they could use different raw materials to produce their final product. The company can use different substitution for their product ingredients.

 

I believe this forces must be suitable for every market for many years. Because it shows different forces which will affect the company. From the five forces, you could know what is the company’s weakness, and the avoid taking wrong steps by thinking wrongly for your organization. http://www.youtube.com/watch?v=mYF2_FBCvXw

After watching the Five Forces through this link, I am surely understand and more clearly know how to use this five forces into different market and industry, as what he have said, for airline industry, it would be easy to enter but hard to bargin with buyers. In reality, nowadays, people discover and creates many different' 'clever' products. There are lots of substitutes. It really depends how your product can be survive in yor own market, and this five forces will definitly can help you!!

Management models through the years and presentation for this week

Here’s come to the week with old management theory. Even though it’s not new, but it’s still kind of useful.

This week, I have learnt some of the new management theory, for instance, Mary Parker Follett, Max Weber and Frederick Taylor. They are new to me. Taylor’s theory is about the scientific management which is to create a science of factory production. I understand that Taylor theory is to provide the best job to the right person. This could lower down the cost for spending the wrong thing from a wrong person. Taylor also said that we should train and teach and develop the worker to follow the defined procedures so that they would know clearly what they should do.

 Apart from that, I believe a successful organization need kind of harsh policy. For example, Weber and Fayol both said we need to have rules and regulations to the workers, so that they will ensure what they did and force themselves to finish some target. I think this would a quite useful for most of the organization. It’s because if workers feel a bit pressure, they will try their best to work hard. Moreover, with specialization, they can be improved with their own skills, this could also increase the company output and productivity.

In addition, after the mini tutorial group, I understand more about Google structure. I know more about how they improved their organization from only a few person to a large company. Its structure and management theory are now clearly in my mind, and it would be useful for my future.

Lastly, is about my presentation in the previous week. It was a fantastic experience for us to train our braveness. We try our best and try to practice as smooth as we can. We also learn from other classmates on how they perform. I found that, we have to ignore the people who would made you nervous. We should be confident by practicing more and more. And we should also try to memorize as much as we can but not just presenting what we have written on our script. Therefore, we can get a higher marks next time we got presentations.

Organisational structure (week 3)

It has come to my week 3 of my University life. This week, Business and Management has taught a lot of new and important terms. And it comes to the new section about organizational structure which includes four main component. They are the division of work, centralization and decentralization, matrix structure and also span of control and chain of command. They are all important to an organization and different organization would have different types of structure. There would be different changes for them when they face internal and external environment. In the following, I would like to tell you some of the special elements which an organization needs.

 

Through doing the Business report, I know more about those elements. For example, I am doing HSBC. Their division of work depends on products and services and customers. But of course they need more customers. They products and services are mostly for customers. HSBC is a large organization which the practice of dividing a job, task, assignment, or contract into smaller tasks do exist. Subtasks are often distributed to functional areas such as operations, finance, production, or marketing. They may also be assigned to individuals.

 

Apart from division of work, we also got centralization. From the lecture, I know that most of the big company are centralization. This is because big company has trick and tight policy. They need easier management. This would also reduce the overhead costs. For mini company, they would like to satisfy local needs. They would like to enlarge their market share. Through their decisions, they would know what customers’ needs are. In reality, Google is a special organization. They are having decentralization. Because their staff have their choice to do what they want to do, they can have their rest area.

 

I found that span of control and chain of command are the most interesting part. Because every organization would need to face this. It kind of tricky, the larger the organization, the more people and staff. They need to choose they want a wider span of control or chain of command. However, this would lead to different structure and problem for an organization. A bank would have a tall structure but their decision will make slower. Take HSBC as an example, HSBC in no doubt is in tall structure. It gets long chain and also with wide spans of control. They have different kinds of functions for each layer, like managers and employee, they got their use in the bank. One is providing new resources and products to public and customers. Managers supervise subordinates. For a bank, it has a very tight control. They seldom have big contradiction for their decisions between managers and subordinates.

 

It’s quite an interesting and amazing topic for this week. It makes me know that, the different organization would lead to have different structure. But the utmost I remember is structure and performance are directly proportional. And I believe that’s true, a strong structure would lead to successful easier.

The first week and lessons for Business and Management

It has been a fruitful week in the previous University life. I got to learn new things deeply compared to my high school life in HK.

 

The studying environment here is totally different from my home country. We got plenty of time to study by ourselves which was call self-study. It was totally different from the teachers in high school which just give us most of the book knowledge and keep on memorizing business book.

 

The previous week, I have had a Business law and Business and Management lesson. It was quite interesting even it just talk about introduction. For Business and Management, I don’t feel too much difficult for my first week, I bet it’s because it’s just an introduction. I have learnt about organization and Management. I learnt some common features in organizations such as, people, target, manager and structure. We have discussed them individually. Each organizations need to have a well communication and structure to become successful. I have also learnt the definition for it. However, only memorizing it is not enough, we need to deeply know what it means. I remember the tutor told us her 5 years old daughter can memories it, so what’s the difference between her daughter and us!

 

In addition, we learnt the role of management too. For example, each company would produce more than their input. They would intake people, materials and resources to provide customers services, goods and also waste which damage the environment.

 

For the basic structure of organisations, there are operational core and support. Organisation support and the top management, But of course the utmost important, middle management. This shows the front line and how direct they would help us when we need them. Some of them would be the backup, some will transfer their services, and some will support their front line.

 

Moreover, we have also learnt lots of different types of organisations. For example economic, public service, social enterprise, protective, social or associative and political organsations. These organization acts as different parties. Some would earn income from customers, some would help people who are in need. For University of Sussex, it was a educational organization. It provide education for us.

 

Lastly, we have learnt the utmost important about management. They are in the work of Herny Mintzberg and also Henri Fayol. Mintzberg combines ten management roles and he divided these into three groups, ie, informational, interpersonal and decisional. Fayol also set out 6 managerial activities, ie, forecasting, planning, organizing, commanding, coordinating and also controlling. This two person is very important for us to learn about Business and Management.

Friday Business and Managemnt activity

The introduction of Business and Management was held on last Friday. It has been a very fun day.Vishal has lead us to travel some 'meaningful' things, which was drawing a picture one by one.Even though it sounds weird, but it was quite funny.

 

He encourage us not just study things about account, debits and credits. He said he will teach us those, but the most important things that we need to learn is about creativity. He thinks it was the utmost important things.

 

Apart from that, on that lessons, we have to buy 6 books about Busines and Management.Everyone was shocked after receving the list of books, because the books are really expensive compare to my country. It costs about 230 pounds.

 

I really hope it is the start of enjoyment for my University life in University of Sussex.