Global Business

globular Business Assignment Elecdyne Student ID 11071850 Name Qingyuan Lin Submission Date 09/01/2013 banter account 2585 Contents 1. 0 Introduction3 1. 1 Background3 1. 2 Objective3 2. 0 conscienceless table analysis4 3. 0 Country Analysis6 3. 1 country select and comp ar6 3. 2 porters Diamond Theory7 3. 3 organise analysis8 3. 5 Summary of data13 3. 6Discussion13 4. 0 grammatical case of method to worldwideize13 5. 0 Conclusion15 1. 0 Introduction 1. 1 Background Elecdyne is a Tokyo corporation founded in 1990, which dedicated themselves to marketplaces a series of televisions, CD Players, DVD players, MP3 players to their wide range of domestic customers.In recent years, with the deepening of domestic electronics market argument, the companys profit declined in the last two years, and now it is facing the uncertain outlook. More everywhere, the company has to confront the chief designer leaving, offshoot of expert licenses fees and loss of produce price advantage. It is evident that Elecdyne does not require the capacity to afford the license fees and recruit new RD graduates. In order to relieve the inside and external crisis of the Elecdyne, the board of Elecdyne has decided to go international. As the European Commission (2010) views that a immediate elation between internationalisation and increased SME performance international activities strengthen increment, improve competitiveness and sustain the long-term sustainable development of companies. With regard to Elecdyne, the management team foc riding habits on the work cost reduction, license for obvious technology and market access and cultural diversity and uncertain risk testament be to a fault considered. Though the company has never touched with overseas markets, completely of the top management teams hire learnt foreign language, and some of them held the oversea university diploma.But what is certain is that the Elecdyne will get the chance to redevelop its business in th e globalization. 1. 2 Objective The objective of this report is to analyse the global environs for the electronics industry by using the STEEP and SWOT theory for the triad potential countries. The three considerable countries compared in this report are chinaware, Thailand and the United States respectively. The report based on data comparison and pragmatic theoretical analysis, to determine the most adapted country and the optimal way to record new markets. . 0 STEEP table analysis In order to analyse the surround of Elecdyne more thoroughly, the STEEP table will be utilized. As hazard Navigator (2008) mentioned, The STEEP model is a tool to help the user think about the broader issues that have an influence on the industry or service field as a holistic study, including five main factors Socio-cultural factors, Technological environment, Economic environment, Ecological environment and semipolitical factors. The by-line diagram illustrates a comprehensive business environ ment of the Elecdyne.Socio-cultural factors 1. As Weil (2008) explains that after 2008, electronic products are consisting in our lives ubiquitously. People who likely to ingest the electronic products to acquire external information from their Mobile phones or television. 2. Favourable population structure, rising discretionary incomes of consumer, and developing more relevant lifestyles is expected to avail the global consumer electronics industry. (Lucintel, 2012) 3. With the proliferation of broadband, accessing the media has become easy and rewarding for consumers.And suppliers of the electronics are constantly updating their technology innovation to keep up with consumer requirements. (ALTERA, 2012) Technological environment 1. With regard to electronic, technological innovation has become indispensable to adapt new marketplace competitions and cater to consumer preferences. (Accenture, 2010) 2. According to Accenture (2012) reported Smartphones and tablet PC are the star in electronics products market, and consumers use the virtual network to access a great deal of information. 3.With the striction in the electronics industry, producers are under enormous pressure to create new products. Since product development cycles shorten, the electronics industry is still pumping out better products. Economic environment 1. As Weil (2008) views the electronics industry has weathered the most recent economic recession with relatively effortless, specially when compared to other industries. 2. With the Consumer Electronics Association reports global spending on technology facilities will exceed $1 trillion in 2012, increasing by 5% over 2011s figure of $993 billion. CEA, 2012) 3. According to Weil (2008) mentioned, Jim Feldhan said enterprises see tremendous value in electronics, and the electronic products become an extremely popular consumption product. Ecological environment 1. There are thousands of scrap electronic products are dumped in landfills or burn ed in smelters, and these discarded electronic products have potentially serious disablement to adjacent resident. (GREENPEACE, 2012) 2. Through regulation, enterprises will be required to get more used electronics back, which will improve the recovery ratio and reuse more devices. SCRC, 2012) Political factors 1. According to European Commission (2012) mentioned, the investment policy of European Union (EU) is emphasized to providing entire investments with legal certainty and a reliable, predictable, impartial and proper modulate environment in which to conduct their business. 2. With Foreign Direct Investment (FDI) flows have increased dramatically, the investors look at stable, predictable macro economic policy, an effective and sightly political sympathies and intellectual property protection. 3.As International Trade Administration (2012) views Free Trade Agreements (FTAs) have proved to be one of the best ways to enter into foreign markets for American exporters. Trade Ag reements inflict slew barriers to U. S. exports, and protect U. S. interests. 3. 0 Country Analysis 3. 1 country select and compare 3. 11 chinaware As BBC word of honor (2012) reported Chinas Economic expansion accelerated remarkably in the 1990s due to mass privatization, reforming and the opening up of the country to overseas investment. A large number of multinational corporations crowded into this world factory to take advantage of its cheap labour force.To this day, the government of China has claimed that it welcomes foreign investment. specially China go bys incentive to investors to invest in higher value-added industry, including high-tech research and development, advanced manufacturing, and select modern services sectors. (State, 2011) 3. 12 France As the big EU member states, the French possess remarkable technology, broad market and good infrastructure, and central location in Europe. The French government affirms foreign investment is a positive method to create employment opportunities and stimulate growth.Investment regulations are unconstrained, and a large number of financial encouragement are available to foreign investors. In addition, the French government also utilizes fiscal subsidies and tax concessions to attract the attention of investor to Frances underdeveloped regions. Preferential policies are available equally to French and foreign investors and eligibility requirements are the same. (State, 2012) 3. 13 The United States (US) The US owned the largest and most technologically powerful economy in the world. Not only do foreign investors have the granting immunity to make economic decisions within the U.S. economy, but also enjoy relatively low levels of regulation and taxation. Moreover, the US provides a foreseeable and transparent legal system, first-class infrastructure, and the most profitable consumer market. (AmCham, 2012) To compare with Japan, China own cheap labour power and attractive investment incentive France has an investment preferential policy as well as remarkable technology in addition to above, the US offers an impeccable legal system, excellent infrastructure and the most profitable consumption market. 3. 2 Porters Diamond TheoryPorters diamond model, which offers a comprehensive way to realize the competitive position of a nation in the global competition scale. And business leaders may use this model to assess in which counties to invest, and to assess which countries are most likely to be able to continue growth and development. Porters model includes 4 determinants of national advantage, which are shortly described below divisor Conditions For the company, the Highly skilled workforce is the key success factors. Since it will hit the development of the company.The sufficient linguistic abilities of the staff could make the operation become more effective. Cheap labour and minimum wages can greatly reduce the cost of production. Demand conditions The per capita disposable inc ome will directly affect the demand of market. Whether the products cater to customer requirements, it will impact the companys performance. Related and documentation Industries The existence or non-existence of internationally competitive supplying industries and supporting industries. Firm Strategy, Structure, and RivalryIn different nations, management structures, working attitude, or interactions between companies are shaped diversely. This will offer advantages and disadvantages for special industries. 3. 3 SWOT analysis Previous suggested by Albert S Humphrey in the 1960s, SWOT analysis is an effectively useful instrument for all sorts of situations in business and organizations to understand and make decisions. The management team could use the SWOT analysis in order to fully use the advantage and opportunities as well as weaken the threat.The detailed strengths and weakness of factor is formulated in following table. (Businessballs, 2004) Strength Weakness * The brand of El ecdyn has 20 years engender in producing electronics * Experienced employee (could speak English), some of them have a broad education background * Producing a range of electronic products * Low cost production * Elecdyne owns abundant experience competing in a large and strongly competitive market, which proves the competitive capacity ofElecdyn * Lack of key innovation * 5% cut run through on price * No growth in the last two years, and lead to key employees leaving * Increasing expenses of technological licenses * Unable to recruit RD graduates * Lake of experiences to manage an overseas business * Elecdyne is currently at a loss . This means that the limited financial resources. 3. 4 Weighting table Opportunities and threats Factor weighting Japan Other countries 1 to10 0 -10 to 10 Ps 1 = not important, 10 = very important 10 = worse than Japan, +10 = better than Japan PEST table Political Japan China France The US Source Corporation tax % 6 40. 69(0) 25. 005*6=30 33. 333*6= 18 40. 001*6=6 Nationmaster Political Japan China France The US Source Tariffs % 7 0(0) 10-10*7=-70 6-6*7=-42 5-5*7=-35 WTO Political risk moderate/long term 5 1(0) 2-2*5=-10 10 *5=0 10*5=0 ONDDA Political stability 7 86. 42(0) 46. 83-6*7=-42 82. 22-1*7=-7 72. 84-2*7=-14 ONDDA Regulatory quality 6 76. 62(0) 45. 88-6*6=-36 85. 702*6=12 87. 42*6=12 spherical innovation index Total -128/5=-25. 6 -19/5=-3. 8 -31/5=6. 2 Economic Japan China France The US Source GDP growth rate % 4 -0. 80(0) 9. 28*4=32 1. 71*4=4 1. 81*4=4 CIA GDP per capita(USD) 5 39578. 07(0) 2634. 71-10*5=-50 23016. 85-4*5=-20 37691. 00-1*5=-5 CIA Minimum periodic Wage ($) 10 11(0) 2. 256*10=60 17-4*10=-40 15-3*10=-30 Minimum- wage Working hours(per week) 6 40 hours(0) 40 hours0*6=0 38. 4 hours-1*6=-6 40 hours0*6=0 Prospects Economic Japan China France The US SourceUnemploymentRate % 6 4. 6(0) 6. 52*6=12 9. 24*6=24 94*6=24 CIA Interest rate 8 0. 00(0) 6. 00-6*8=-48 0. 75-1*8=-8 0. 25-1*8=-8 Tradingeconomics Market size Ranking 8 4(0) 22*8=16 7-4*8=-32 14*8=32 Global innovation index Disposable income $ 8 23,458(0) 3,384-10*8=-80 27,7893*8=24 37,7089*8=72 OECD Inflation Rate% 4 -0. 30(0) 5. 50-5*4=-20 2. 30-2*4=-8 3. 10-3*4=-12 CIA Total -78/9=-8. 66 -62/9=-6. 88 77/9=15. 4 complaisant Japan China France The US Source Population in (million) 8 127. 6(0) 1343. 2310*8=80 65. 63-1*8=-8 313. 843*8=24 CIA Individualism 4 46(0) 205*4=20 71-5*4=-20 91-7*4=-28 Geert-hofstede Power distance (culture) 4 54(0) 804*4=16 682*4=8 40-1*4=-4 Geert-hofstede Social Japan China France The US Source Expenditure on education 8 27. 22(0) 11. 15-2*8=-16 48. 792*8=16 45. 922*8=16 Global innovation index Uncertainty evasion 6 92(0) 306*6=36 862*6=12 465*6=30 Geert-hofstede Total 136/5=27. 2 8/5=1. 6 38/5=7. 6 Technological Japan China France The US SourceRD expenditure 8 80. 53(0) 34. 07-6*8=48 51. 88-4*8=-32 65. 00-2*8=-16 Global innovation index University/industry research collaboration (Rank) 6 15(0) 28-6* 6=-36 34-8*6=-48 36*6=36 Global innovation index Global Innovation Index 7 51. 7(0) 45. 4-1*7=-7 51. 80*7=0 57. 71*7=7 Global innovation index Quality of scienti? c research institutions 6 75. 75(0) 55. 20-4*6=-24 72. 470*6=0 80. 451*6=6 Global innovation index Total -115/4=-28. 75 -80/4=-20 33/4=8. 25 3. 5 Summary of data Japan China France The US Political 0 -25. 6 -3. 8 6. 2 Economic 0 -8. 66 -6. 88 15. 4 Social 0 27. 2 1. 6 7. 6 Technological 0 -28. 75 -20 8. 25 Totals 0 -35. 81 -29. 08 37. 45 4. 6 Discussion Based upon the results of data analysis, the best choice for Elecdyne is the US, which having the highest mark in the result. The scores of China and France are significantly lower than America, even if they out slightly advantage in some items. As for China, though it had highest GDP real growth rate 9. % in 2011, due to the large population, the per capita GDP is dramatically lower than America. That means Chinese citizens are having not enough disposable income to co nsume. The French government although utilizes preferential to attract investment, the Minimum Hourly Wage is the highest than China and the US. It will be greatly increased the cost of production. On the contrary, not only the US government provides favourable policy and huge consumer market, but also the appropriate R&D expenditure and reasonable scienti? research institutions. To sum up, the US market has greater potential than the other two countries. 4. 0 Type of method to internationalize With regard to internationalize, the Elecdyne could choose the most compatible method to enter a new market. The advantage and disadvantage of the way to internationalize should be analysed rigorously by the management team on the basis of established expansion strategy. The proper methods are joint ventures, Greenfield sites, mergers or acquisitions respectively. Joint VentureThe Joint Venture means that the cooperation of two or more individuals or businesses in which from each one approve to share profit, loss and control in a specific company. (Investopedia, 2012) Greenfield Sites An eye socket of agricultural or forest land, or some other undeveloped site earmarked for commercial development or project engineering. (Businessdictionary, 2012) Mergers and Acquisitions A merger is bodied between two similarly sized companies, which is combined to shape a new company. An acquisition occurs when one company lawfully purchases another and becomes the new owner. Investinganswers, 2012) The following table indicates analyse the advantage and disadvantage of these three methods. Type of method Strengths Weaknesses Joint Venture * The opportunity to gain new capacity and expertise * communion of risks with a venture partner * Access to greater resources, including specialized staff and technology * The objectives of the venture may not fully clear and executed to each participant. * Different cultures concepts and management styles may affect integration and cooperatio n. Imbalance in levels of expertise Greenfield Sites * The environment changed from rural to urban use * Good policies of local government * Wholly owned and fully control * More expensive housing * Demand excessive cash * Undertake full risk * High initial investment Mergers and Acquisitions * A merger does not require cash * A merger may be achieved tax-free. * The merger allows the acquirer to avoid many of the dear(p) and time-consuming aspects of asset purchases * Form a scale of production and reduce production cost * Increase product awareness, enhance corporate image. * Diseconomies of scale, which may give rise to higher unit costs. * Conflict of culture between different businesses, may reduce the effectiveness of the integration. * Make a part of workers unnecessary, this may have a bad effect on motivation. According to the situation and background of the Elecdyne, the best option is incorporated with other electronics. In short, it will be spiritual rebirth current p light, increasing profit and lower the risks. In the long run, it will be good for the company to gain prestige and more agile development space. 5. 0 ConclusionThe findings indicate that the Elecdyne confront the challenge and opportunity according to STEEP analysis. And the report also analyses the external and internal environment of Elecdyne based on the SWOT and Porters Diamond Theory. Through the PEST analysis, makes a compare between three countries, and finally concluded the US was the best choice for the Elecdyne to utilize the overseas market. This paper has finally advised Elecdyne to mergers or acquisitions with other countries. 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