Global Business

global Business Assignment Elecdyne Student ID 11071850 Name Qingyuan Lin deference Date 09/01/2013 Word account 2585 Contents 1. 0 Introduction3 1. 1 Background3 1. 2 Objective3 2. 0 suck table synopsis4 3. 0 Country Analysis6 3. 1 expanse select and comp be6 3. 2 Porters baseball field Theory7 3. 3 fancy up compendium8 3. 5 epitome of info13 3. 6 handling13 4. 0 emblem of method to internationalize13 5. 0 Conclusion15 1. 0 Introduction 1. 1 Background Elecdyne is a Tokyo corporation founded in 1990, which dedicated themselves to markets a series of televisions, CD Players, DVD players, MP3 players to their wide oscilloscope of domestic customers.In recent years, with the deepening of domestic electronics market competition, the guilds profit declined in the last twain years, and now it is facing the uncertain outlook. Moreover, the confederation has to demonstrate the chief designer leaving, harvest-festival of expert licenses fees and loss of product set good . It is evident that Elecdyne does not yield the talent to afford the license fees and advance impudent RD graduates. In order to relieve the inherent and external crisis of the Elecdyne, the board of Elecdyne has decided to go international. As the European consignment (2010) views that a immediate elation between internationalisation and increase SME public presentation international activities strengthen reading, improve rivalrousness and sustain the long-term sustainable development of companies. With regard to Elecdyne, the steering team focuses on the deed be reduction, license for patent engineering science and market access and cultural variety show and uncertain risk pass on be too considered. Though the company has never touched with overseas markets, all of the top management teams have learnt impertinent language, and some of them held the oversea university diploma.But what is certain is that the Elecdyne bequeath get the go on to redevelop its tel ephone line in the globalization. 1. 2 Objective The objective of this spread a free is to analyse the global surround for the electronics industry by using the imbibe and deck up theory for the three potential countries. The three considerable countries buttocksvasd in this report are mainland China, Thailand and the United States respectively. The report based on data comparison and pragmatic theoretical analysis, to determine the most suitable awkward and the optimal way to enter new markets. . 0 souse table analysis In order to analyse the environment of Elecdyne more thoroughly, the STEEP table exit be utilized. As Venture Navigator (2008) mentioned, The STEEP model is a tool to help the user think come up-nigh the broader issues that have an influence on the industry or service subject area as a holistic study, including five main factors Socio-cultural factors, technological environment, stinting environment, Ecological environment and Political factors. The follow ing diagram illustrates a comprehensive patronage environment 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 take up the electronic products to acquire external instruction from their Mobile phones or television. 2. Favourable population structure, rising discretionary incomes of consumer, and create more relevant lifestyles is expected to facilitate the global consumer electronics industry. (Lucintel, 2012) 3. With the proliferation of broadband, accessing the media has plow diffuse and rewarding for consumers.And suppliers of the electronics are constantly updating their technology foot to elapse 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 Acce nture (2012) inform Smartphones and tablet PC are the star in electronics products market, and consumers use the documentaryistic 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, especially when compared to early(a) 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 stop tremendous value in electronics, and the electronic products become an extremely habitual consumption product. Ecological environment 1 . There are thousands of scrap electronic products are dumped in landfills or burned in smelters, and these discarded electronic products have potentially serious damage 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 authorisement policy of European Union (EU) is emphasized to providing total investments with legal certainty and a reliable, predictable, impartial and proper regulated environment in which to conduct their business concern. 2. With Foreign Direct enthronement (FDI) flows have increased dramatically, the investors look at stable, predictable macro economic policy, an effective and trustworthy government and intellectual property cheerion. 3.As International Trade Administration (2012) views unornamented Trade Agreements (FTAs) have pro ved to be one of the best slipway to enter into irrelevant markets for American exporters. Trade Agreements reduce trade barriers to U. S. exports, and protect U. S. interests. 3. 0 Country Analysis 3. 1 country select and compare 3. 11 China As BBC News (2012) reported Chinas Economic expansion accelerated remarkably in the 1990s due to mass privatization, reforming and the spread up of the country to overseas investment. A great(p) number of multinational corporations crowded into this world factory to take advantage of its cheap crunch force.To this day, the government of China has claimed that it welcomes foreign investment. Especially China gives motivator to investors to invest in higher value-added industry, including high-tech research and development, advanced manufacturing, and select advanced(a) services sectors. (State, 2011) 3. 12 France As the big EU member states, the french possess peculiar technology, broad market and good infrastructure, and central ke ttle of fish in Europe. The French government affirms foreign investment is a haughty method to create employment opportunities and stimulate harvest-time.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 fear 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 freedom to make economic decisions within the U.S. economy, but also enjoy relatively low levels of regulation and taxation. Moreover, the US provides a predictable and transparent legal system, subtile 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 warring position of a nation in the global competition scale. And business leaders whitethorn use this model to evaluate 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 infra Factor Conditions For the company, the Highly skilled workforce is the key success factors. Since it will see the development of the company.The sufficient linguistic abilities of the staff could make the physical process become more effective. Cheap labour a nd minimum wages can greatly reduce the personify of production. Demand conditions The per capita expendable income will instanter affect the demand of market. Whether the products cater to customer requirements, it will impact the companys performance. Related and Supporting 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 blots in business and organizations to understand and make decisions. The management team could use the SWOT analysis in order to to the full use the advantage and opportunities as well as weaken the threat.The detailed strength s and weakness of factor is formulated in following table. (Businessballs, 2004) Strength Weakness * The brand of Elecdyn has 20 years ingest 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 power amply competitive market, which proves the competitive capacity ofElecdyn * Lack of key innovation * 5% cut down 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 former(a) 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 root system 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 etymon Tariffs % 7 0(0) 10-10*7=-70 6-6*7=-42 5-5*7=-35 WTO Political risk intermediate/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 Global innovation magnate finger 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 Hourly enlist ($) 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 top executive 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 Social Japan China France The US Source tribe 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 place 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 Avoidance 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 emerge slimly advantage in some items. As for China, though it had highest GDP real growth rate 9. % in 2011, due to the large popula tion, the per capita GDP is dramatically lower than America. That means Chinese citizens are having not enough disposable income to consume. 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 grand consumer market, but also the appropriate R&D expenditure and mediocre 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 localises, mergers or acquisitions resp ectively. Joint VentureThe Joint Venture means that the cooperation of two or more individuals or businesses in which each approve to divvy up profit, loss and control in a specific company. (Investopedia, 2012) Greenfield Sites An area of rural or forest land, or some other undeveloped site earmarked for commercial development or project engineering. (Businessdictionary, 2012) Mergers and Acquisitions A merger is collective 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 * Sharing 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 cooperation. 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 money * 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 costly 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 changeover current plight, 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 dispute and opportunity according to STEEP analysis. And the report also analyses the external and upcountry environment of Elecdyne based on the SWOT and Porters Diamond Theory. Through the PEST analysis, makes a compare between three countries, and last concluded the US was the best choice for the Elecdyne to exploit the overseas market. This typography has finally advised Elecdyne to mergers or acquisitions with other countries. 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