Globalization in China

Kiely defined that globalization refers to a world in which societies, cultures, politics and economies have, in some sense come closer together. Globalization gives a huge influence to the world, especially to the developing countries such as China.

In globalization, China’s GDP grew fast and the companies are becoming bigger and stronger. These evident indicated a continuous economic development in China. Is that means globalization is totally good for China?

It’s true that China enjoy lots of benefits in globalization. Firstly, as a developing country, china embraces the benefits of trade and direct investment because of globalization. Before 1987, china’s foreign trade was negligible. But after china opening the door to the world, the ratio of trade to GDP has quadrupled—from a mere 8.5 percent in 1978 to 36.5 percent in 1999. Moreover, due to globalization, china’s opening up was undertaken step by step. At the begining, it started geographically with special economic zones, then advancing gradually in various industries from the more competitive manufacturing industry to the weak agriculture and service sectors.

So we can see, under globalization, china seize the chance and realized that it is crucial to develop itself but not protect for a developing country. And china increases its advantages to absorb foreign capital and maximize the benefits of opening up. That’s why China gain a lot in globalization.

However, in my opinion which from my experience, while the Chinese economy has dramatically increased its openness over the past two decades, income inequality has risen as well, which cause a big suffering with the poor. For example,the World Bank estimates that China's Gini coefficient—a measure of the inequality of income distribution in a society (0 being perfect equality and 100 being complete inequality)—rose from 28.8 in 1981 to 38.8 in 1995. These data indicate an increase in inequality among residents. Moreover, I find some figures about the inequality of 100 urban areas, since this kind of inequality constitute 75% change in the general change of inequality in China from 1980 to 1990. We can find a clear evidences from the data that cities which have opened up quickly also had a quick decline in urban-rural inequality.

In addition, referring to the income distribution, from 1988 to 1995, the poor who live below the normal standard in terms of the purchasing power complained the decline of income in most rural areas. Moreover, along with the opening in rural area, an obvious reduction in poverty we can see.

Therefore, we can see that globalization brings both advantages and disadvantages to countries. What we can do is utilize the opportunities we can seize to make the country stronger. At the same time, we also should admit the demerits that brought by globalization, and try to improve them step by step.  

SWOT analysis

SWOT is a structured planning method that used to evaluate the strengths, 

weaknesses, opportunities and threats involved in a project or company.

In applying SWOT analysis, we should minimize or avoid the weaknesses and threats. Specifically, threats should be converted into opportunities, and weaknesses should be converted into strengths. SWOT analysis is particularly useful in mid-term evaluations as it can provide useful information about the intermediate objectives of the program. Moreover, it is useful to summarize the relationship between environmental influences and core competencies and hence framing the agenda for developing new strategies. I would like to take Easyjet which is a UK airline company as an example into the SWOT analysis.

Strengths

There 3 main strengths of Easyjet. First of all, easyjet enjoy a low cost advantage because of  high seat density, high load factors, a point -to-point strategy that allows high aircraft utilization, a young and efficient fleet, lean overheads, labour productivity and a lack of legacy pension costs. Therefore, they can provide a 50% lower price than those of the major carriers on short haul routes and 20% to 40% below those of most other lower cost competitors. There is no doubt that is a significant attraction to customers put Easyjet as priority.

Moreover, Easyjet has a big market share in Europe which more than any other carriers.

Thirdly, Easyjet has improved the brand perception in recent years even to other countries, since they are keep improving customer satisfaction.

Weaknesses

As a airline company, easyjet’s earning is very seasonal, they are unhappy to use the increasing profit in summer to offset a loss-making winter as summer is a hot season for travelling. This makes it vulnerable to any unexpected problems in the summer.

In addition, although Easyjet is much stronger than many LCCs competitors, LCCs as a whole still suffer from brand weakness relative to major legacy carriers. This means price will remain a key dimension of competition.

Opportunities

It is possible for easyjet to get a bigger market share in the future, because of its low cost and price advantages and current capacity cuts from most of its legacy carrier competitors. As carrier is cautious about connecting with other airlines, the partnership opportunities will also open new doors.

Secondly, easyJet also can look at cost reduction further, such as airports, ground handling, engineering and fuel, in order to maintain the price advantage to compete with legacy carriers.

Threats

As with any labour-intensive service industry, airlines are vulnerable to labour unrest, not only among their own staff, but also among key airport-based suppliers. While easyjet has a much better history of labour relations than most legacy carriers, some factors still increase the risk of internal labour disputes.

Another factor that brings a negative impact to Easyjet is the airline tax. Due to the price elasticity, the increase of airline tax would reduce the demand of customers. And generally the tax charges higher percentages of short haul tickets than long haul tickets, which influence the profit of easyjet.

Now, I want to focus on the strength of Easyjet, since it is fairly important for it to succeed in UK. Easyjet has considerable strengths in its cost base and ticket pricing against the legacy carriers and a strong airport network across Europe, so they can have power to keep improving their market share by obvious financial power. It has a presence in 49 of the top 100 market pairs in Europe, which much more than another company in this industry. Also, 46 of these involve primary airports, versus 24 primaries for Ryanair and 34 for IAG. Those was amazing data to make it to be strong.

PESTEL and stakeholders analysis of APPLE

We learned the knowledge about PESTEL this week, and here I’m going to emphasize one part of that on APPLE as an example.

As we all know, Apple is a spotlight of the world in electronic area. For my perspective, I think the elements of Social-cultural influences Apple a lot. Social- cultural is defined as demographic change affecting the organizations in terms of the population growth rate, language and people’s preferences etcetera. Since the globalization interact people around the world, and technology plays the main role in globalization, people cannot imagine the life without electronic devices such as telephones and computers. Because of that, the appearance of Apple makes people fall in love with its products in terms of its usage, quality and design.

Moreover the music industry would be another social influence, since people has tended to download and listen to music on the internet. At that time Apple’s developed the biggest virtual media store-iTunes, which is the leader of any other competitors. Although the web privacy is a threat, government and laws would punish the breakers.

In addition, people, especially teenagers likes to play games in telephone, which lead Apple develop the games function, and Apple 's games brought a unprecedented experience with screen touching. This is also an social influence that made Apple succeed.

All in all, considering the image of Apple display people’s life in terms of the good function, brilliant design and loyalty, the social influences brought a positive effect to on Apple.

Just because these kinds of influences brought Apple good benefits, it grow very fast which also give an influence to the stakeholders such as shareholders, suppliers, government, customers, employees and lenders. Here I am going to emphasize the influence of employees who be treated as internal stakeholders, since they work for apple and they can express their opinion in what happened.

According to the research, we can find that Apple treats its employees very nice in terms of the income and equipments they can use. For example, they are able to get their own food on their own eatery which avoiding the problem of queuing. Moreover, Apple brings a high satisfaction and good sense of job to all employees. Because Apple employees could have influenced Apples aims as they could have been telling their customers how good the iphone is which is resulting to Apples profits riding by 24%. A high profit not only means Apple has more financial resources to support its developing, but also means a higher income to employees. Workers will be enjoyable to the job which provides both high income and high satisfaction. While employees were motivated to work, they will also create better influences to company.

Five forces analysis

This week we studied the topic about internal environment and micro environment.

Internal environment relates to people, structure, objectives, and culture etcetera in a company. Refer to the competitive environment, Porter's 5 forces should be treat as a key point and I want to use automotive industry to analyze them.

The treat of new entrants refer to how easily new entrants can go into one certain industry. For new entrants, they need to compete on cost, high capital investment. They also need to overcome the barrier of lack distribution channels, subsides, customer trust. For example, this threat of automotive industry is quite low, since the barriers of entry are significant. To run a company of automobile would require a big amount of startup capital. Moreover, the manufacturing facility of automobile is specialized and they need much money to repair. In the newer, undeveloped markets of Asia, Africa, and South America, the barriers to entry similarly exist.

The bargaining power of buyers is the power of customer to force down the price. When customers buy a large amount of goods or the alternative choices are significant, the power will be high. In automotive industry, the power of buyer is quite high, due to the standardized nature of automotive commodity and the switching cost is low for buyers.

The bargaining power of supplier is the opposite of those applying to customers. When the suppliers are limited, the product is distinctive or the cost of switching cost is high, supplier's power will be high. For some famous brand of automobile such as BMW and BENZ, the supplier's bargaining power is quite high, since these kinds of company must ensure the quality of the components and the they ask for specialized manufacturing skills to fulfill the tasks.

 

The threat of substitute refers to how easily the product will replace by other goods. For example, using cans instead of bottle. In automotive industry, this threat is fairly low. Although there are many transportation substituting cars such as train, subway and bike, none of those can provide the utility, convenience, independence and value offered by automobiles. Furthermore, for some areas such as Utah, upstate NY, car is the only transportation other than walking.

Strong competitive rivalry lowers benefit, and it occurs when there are many firms in an industry; fixed costs are high, exit cost are high or products are similar. In automobile industry, there is a large amount of brands and the expense of both fixed cost and exit cost are high. Therefore, the intensity of rivalry among competitors is significant high.

Hawthorne Effect

Hawthorne Effect

Last week, we learned several management theories. Among them, Hawthorne effects interested me a lot. After learning from seminar and searching in book, I have the following gains.

effects commonly refer to as observer effect, which points that when people realize that they are being observed they will improve or modify an aspect of their behavior. This also pointed the importance of human relation in an organization.

After four stages of experiments, researchers got some conclusions.

First, they proved that we should focus on human relation and psychology to motivate employees but not only money. Second, the experiments proved that the key point of working efficiency is enthusiasm and human relations in family and society. Third, they conclude that money is just a small part of factor of motivation; people need more sense of belonging, sense of security and harmony. So modern manager should have the abilities to improve the satisfaction of employees, be good at listen to employee’s opinions. In addition, they pointed that there are small informal organizations into a company. These kinds of informal organizations aim to protect mutual benefits of members, which avoid from individual mistakes to affect organization’s benefits.

We also can reflect this effect into our life that we need to praise others more, because it will make them feel good in psychology and be a motivation for them. In my experience, when we realize that we are being concerned we will be motivated to performed better, thereby be more efficient. Therefore, we should behave ourselves and then get more praises, which will make us confident and study better.

Thanks Rob.

Organization structure

This week, we studied the chapter of organizational structure.

Organization structure is the key of a company. According to Mintzberg, he define organizational structure as the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them. And there are four general principals we need to consider when designing a structure, which are The division of work, Centralization and decentralization, Span of control and chain of command, Matrix structures.

Here I want to use the case of coca cola to explain these four principals. Centralization and decentralization refer to the power of control are retained by the core part of an organization or is delegated to the edges of company. The Coca Cola Company is a decentralized structure, since Coca Cola is an international business, it has chosen the region to decentralize in their decision-making. The decision-making determined by the managers located nearby to the company who can easily identify the products are the customer wants and needs.

In coca-cola company, they divide their company by region and then divide work by function. For example, some workers make bottles and cans, some worker made coca-cola.

In terms of span of control, in high level of management, they have a very wide span of control which gives sufficient autonomy and responsibilities to subordinates to be creative. In the middle and low level of management, they have a narrower span of control which means managers have a closed contact with subordinates and supervise them better.

In addition, coca-cola operate a matrix structure that means each product has a product manager who retains overall responsibility for the product but that manager can then draw upon resources form the different functions. For example, a marketing manager may also be in charge with production line. This practice making people from different departments to meet up and work together will bring about exchange of ideas, the task would be looked from people coming from different professions and hence different perceptions would be brought forward. As a result the goals of the business or organization will be achieved both efficiently and effectively.

The knowledge above makes me understand structure clearer, I’ll keep going research them and apply them in the future.

Thanks Rob and Vish.

Organization and Management

Organization and Management

This week, we studied the topic of Organization and Management which I think is useful for us.

In my opinion, organization is a structural system with numbers of people who are managed to accomplish objectives. There are 4 points which are people, objectives, structure and management.

People in organization usually play different roles and have different tasks and responsibility. For instance, in a school, some people may be lecturers. They need to teach student knowledge and motivate them to make them keep being progress. And some people may be accountants. Their responsibility is count the money flows in school and ensure school to run well. But it does not mean they just work individually; they need to interact and communicate to finish the same objective.

In most organization, profit is the key objective, but there are also another objective like growth, market share, reputation. For example, Coca cola company used to do some charity works in China is not for profit but the reputation. However, they improve reputation for making people believe and like them and then make more profit.

In organization, structure and management are also vital. A clear and proper structure can make organization achieve goals efficiently and effectively. It reflects management hierarchies and responsibilities just as the picture below. It shows who report to who to make the management system efficient. In terms of management, a good manager is the key to lead team to success. According to Henry Mintzberg, there are three kinds of manager which are informational, interpersonal and decisional. I think a good manager can change management style flexibly according to different situation and different people.

On Thursday, we played a team game in APT class and I applied the knowledge I learned in group. The games’ name called ‘how high can you built’. We were required to use only ten pieces of A4 paper to establish a building, and who build the tallest one who would win. Although there were just 6 people in our group, we are still a small organization. Because we have the same objective and we divide the tasks into everyone. At the beginning, I was the first to came up with an idea and everyone agreed with me.(planning) And then I allocated the tasks to everyone; two people fold the paper, two people build the construction and two people observe  what need to improve and help others.(organizing) After 5 minutes, our construction collapsed. Everyone seemed sad, another group mate said:’ do not worry’ and keep going thinking.(motivation). At last 5 minutes, we enhanced the old method and build it again. And then we won at the last minute.(coordinating and monitoring)

Although we won, we still have some weaknesses. Before the first built, if we think it carefully in the planning part, we would not make it collapse. Moreover, in the last 5 minutes, everyone is nervous and build that with shivering hands. I should be supposed to motivate them more and let them calm down. Next time, I’ll do it better with more manager skills.

Thanks Rob and Vish