International Business and Globalization

The sign of globalization

The most vivid example is Sussex University. When I walk on campus, I can see many different types of people with different skins, languages, customs. Globalization makes the world smaller.
From the professional angle of economy, there are many internal and external strategies of business operation. For example, E-commerce becomes increasingly popular and common. To be honest, I found online business chains in the UK are more mature than the one in China, which means, I guess, the influence of globalization in Britain is more profound. Because almost every transactions can be operated on the Internet, such as online payment, online booking, online shopping even online register for opening shops. Besides, I think the government of UK advocates to achieve businesses online and it is widely accepted and carried out by corporations. I always discover that I can buy almost every brand of clothes online even much cheaper. However, in China many people still have to drive out to buy things. For instance, my father redecorated his hotel during the summer and according the new law, he had to reregister. Those days, I found he was really busy, because he needed to prepare relevant documents and drive to different places in order to get license. So I think it not only does decrease the efficiency but shows the unsound of E-commerce in China.

The impact of globalization----PetroChina

Oil is a vital source for the world and will likely remain for many decades, even under the growth in alternative energy sources. In 2008, oil provided about 34% of the world's energy needs and it is absolutely expected to continue to provide a leading component of the world's energy mix.
The same, petroleum in China is an indispensable energy and is one of the most important items that government focuses on. Analysis from the angle of economic globalization, China petroleum and chemical industry chain development is not balanced and the main products are still in the structure of domestic general type, low value added and high energy consumption. So to some extent, globalization is a good news, because it is much easier and cheaper to import oil from the Middle East and Africa. On the other hand, it protects Chinese environment as well. Because petroleum is uneven distribution, mainly in northwest of China and the natural environment there is quite vulnerable, so giant oil excavations will cause a disaster. According the report of China Customs, in 2012 China's crude oil imports of about 2.71 tons, grows 6.8% compared to last year's. Analysts predict, "in 2013 China's oil imports will reach 2.85 tons and import dependency may exceed 60%. "

However, just because of this high import dependency, there are some risks. Firstly, once the price or condition of oil suppliers change, it will directly influence the petroleum import and then impact the whole industries in China.
We can see clearly in all three imagines that the figures are all climbing dramatically even with some fluctuations.

In addition, depending too much on external demand to stimulate economic growth is detrimental to adjustment, optimization and upgrading of domestic industrial structure.

Some personal tips

Overal, I think China should import petrol to satisfy its developing demands, after all it is an essential energy for industries, however, it cannot wholly rely on other countries, because it will put China into a passive situation. So exploiting own oil energy is also necessary but must under the guarantee of the domestic petrol resources supply still has some potential.
We can fight for globalization, but we cannot avoid globalization, what we can do are only expanding the merits and minimizing the drawbacks.

Organizational Strategy and SWOT Analysis on EasyJet

Personally, I think the main knowledge points of this week are scattered, which covers many parts, such as SWOT --- an analysis, Mintzberg's strategies, levels of strategy, strategy development directions, etc.

CS -- EasyJet

Background

EasyJet is a company by most standards, having been set up in 1997. Its basic business model is that it is a low cost airline: competing head on major with the carriers: Ryanair, IAG, Lufthansa, AF-KLM and so on. The ambitions of the company are becoming Europe's preferred short-haul airline, delivering market leading returns and putting to make travel easy and affordable as its aim. 

SWOT Analysis

Talked about the threats to EasyJet, it's definitely the competitive environment, the government policies and current domestic economical position. I've showed some powerful rivals above, they "share" customers with EasyJet even benefits, so it directly shows the connection between bargaining power of buyers, substitutes and the profits of EasyJet. It's a quite big threat, isn't it? As to wider aspects, in recent years, the sustained high price of aviation fuel combined with restricted European economic growth and consumer spending, rising aviation taxes and scarcity of financing has led to a difficult operating environment for all airlines. Therefore, we can see that EasyJet not only does undertake the pressure from other competitors, but also needs to deal with the negative factors from government and social situation. 

Facing those kind of challenges, EasyJet of course has to show relevant response and make specific strategies in order to occupy a positive position. Thus, it focuses on four key objectives: 1. build strong number 1 and number 2 network positions 2. maintain cost advantage 3. drive demand,conversion and yields across Europe 4. Disciplined use of capital. I think the first two points are the strengths of EasyJet. It leads short-haul network and has an efficient and robust capital structure. The most impressive one is that it is one of the very few pan-European low-cost carriers in the European short-haul passenger aviation market. It does save costs from establishing a high asset utilization system, so EasyJet gains "low-fares" ability and reputation. Different companies have different strategies. I think cost advantage is the most enormous merit to EasyJet, which can be regarded as a competitive advantage and also absorb various ages of customers. 

As to opportunity, the impact of globalization becomes increasingly distinct. Traveling is no longer rear any more, traveling by air is much more common and popular. So customers in emerging markets tend to buy air tickets is definitely a good news to EasyJet.

Concerning the demands of customers' intention, EasyJet found offering free seating is not an 100% attractive factor.  Some people especially business persons are tire of waiting for clogged aisles and finding own seat, they tend to find a particular seat. Therefore, EasyJet wants to start allocating seats and charging for some of them, such as the first few rows and seats over the wing. Besides the airlines would allocate blocks of seats to family bookings which is quite attractive for families who don't want to sit separately. It's a kind of EasyJet's allocated weakness.

Conclusion

Overall, I think the most important thing is safety and it is also the thing that people put in the fist position. EasyJet has "low-fares" advantage but cannot ignore primary and initial problems, otherwise I'd rather it increases the price and guarantees the security.

Macro Environment ---- PESTEL and Stakeholders

Apart from Porter's five forces of micro environment, I've also learned macro environment which involves PESTEL and stakeholder two main parts. Besides, when I searched some information, I touched another analysis method--SWOT, which connects both micro and macro. I suppose it will be covered in the future lessons.

Political & Technological ----- Government & Competitors ---- Chinese History

After the Revolution of 1911, leader Sun established the Republic of China (1912-1949). After that, he came up with the Principle of People's Livelihood and advocated to develop and protect national industry and commerce. Because of the policy, private enterprise emerged in a large number and at an alarming rate all over the whole country. However, at that time due to the invasion of foreign capital, political corruption of the new government, the Japanese invasion of china and the three years of Civil War, the conditions for business companies were negative. In addition, the structure of industries were unbalanced, most of them was textile industry, so Sun put forward a development of heavy industry policy to reinforce the government's power. Thus, many people began to importing machines and technologies from western countries. Indeed, the business was much stronger than before, however, facing many powerful competitors from advanced countries, Chinese companies were still vulnerable. 

So I think for all business, an initial and fatal condition is political stability. Government policies do influence business and frequent regime changes do destroy all efforts of local companies.

Economic & Socio-culture ----- Customers  ----- Current China

To be honest, the overseas studying becomes more and more prevailing in China. Many young generations like me come to abroad for further education. From social aspect, the sense of values are much more different from the ancestors', people increasingly focus on education and self-development. Thus, the universities of Australia, UK, USA, New Zealand set up branch schools in China or widen channels to absorb students. To some extent, Chinese "customers" stimulate economic in other countries and personally I think it is a big lose for Chinese government. As to exchange rate, I experienced in person. When I paid my first tuition in May, the exchange rate was 1:9.3 ( pounds:RMB), however, when I paid my second fee in August, it climbed at 1:9.6. Nowadays, the rate stays still in 1:9.8 which is really high. So, I'v decided to use cash rather than credit card recently. I forecast it won't go down until January, because the Christmas is coming, in other word, another consuming peak is coming. If the rate is still high next year, I suppose I may find a job and earn "₤":)

Environmental & Legal ---- Communities & Shareholders ---- all over the World

In 2009, the United Nations Climate Change conference was carried out in Copenhagen. More than 85 countries' heads attended the meeting and discussed the environmental problems. After that, COP16 in Cancun, COP17 in Durban, COP18 in Doha were convoked in sequence. During those period, many countries institute relevant laws to limit the behavior of enterprises. I acknowledge there is a dilemma between profits and environment. Companies need to improve their producing technology or invest wasting dispose to shrink carbon dioxide emission. For shareholders, it is absolutely a bad news, because it means increase expenditure. On the contrary, for communities, it's not only do something good to the social environment, but also strengthen people's environmental awarenesses.

UN Climate Change Conference 2009

Internal environment and micro environment

Internal Environment

We've learned that internal environment contains eight factors which are from  inside of a corporation, connect closely and influence the compony as well. There is a short story about my sister's experience : My sister had an interview of both french and japanese firms. After that, she said she'd rather go to the french compony, because the rules of the japanese one are very strict. For instance, the employees are not allowed to late even 1 minute. On the contrary, french people are more flexible. They do have a long lunch break for afternoon tea. So I think those giant managing styles are caused by different cultures. Different structural styles may influence the link of people, such as people's motivation, the liquidity of employees, etr. People will directly impact on the finance, the profit.

Micro Environment

Porter's Five Forces is a key point of the micro environment. Companies nowadays are not only influenced by the competitors but also be affected by suppliers, customers, substitutes and new entrants. I'd like to make an analysis about THE BODY SHOP.

Analysis of The Body Shop

The threat of new entrants is not very high. Actually, I found almost all the products of body shop are from nature : nature green tea hand protector, ginger shampoo, body butter,etc. I think the awareness of environment and nature products idea make it unique. On the other hand, the reputation of body shop is quite good by advocating fair community trade to cut the costs of raw materials. So I think it's hard for new entrants to build a good reputation, form a mature product concept and have a strong loyalty of buyers in a short-term.
The rivalry and the threat of substitutes are both high. Apart from body shop, Bath & Body, Garden Botanika are produced similar products, too. They are competitors with source of customers and their products are substitutes as well.
The bargaining of buyers is really strong. Every time I visit body shop, I discover discount about 40%-50% off. The firm uses those kind of selling strategy to attractive customer. Besides, an E-commerse model was launched to regain the losing market share.
However, the bargaining power of suppliers is low. Because the major suppliers are from third world country. The price of raw material is not very high and there is no monopolistic situation happened. 

Tips For Managers

Overall, the both two layers of environment are incline to be increasingly significant for Business companies. From my perspective, managers need to analyze the five forces of their marketing conditions first and then reshape organizational structure for marketing share and profit.

                                  The Body Shop-- A Symbol of Nature

Management models and theories

Last week, we showed a presentation about Google. Google employs people who are smart and determined and favor abilities over experiences. Although googlers share common goals, they hail from all walks of life and speak dozens of languages. Under such a diversified culture background, people share more view points and experience more brainstormings. It would seem that Google more or less refers to some theories of Henri Fayol and Hawthorne. Henri Fayol advocates to focus on the personal duties of management at a much more regulatory level and believes personal efforts and team dynamic are part of an "ideal" organization. Google shows that points : everyone has their freedom to choose what kind of working methods they prefer and has their own rights to discuss even dispute in order to make decisions. In Google, every individual's effort will be complimented and one of the staff said " In Google, I can direct my future and determine where I want to go". It's quite democratic and harmonious, isn't it ? However, Google does not only concentrate on personal development but does pay attention to group work which shows Henri Fayol's team dynamic. In Google, the design of offices and cafes trend to encourage people to communicate and interact more. There are also some basic disciplines and rules to control the whole managing operations. Planning, organizing, controlling and leading are connected closely in Google. As to Hawthorne, whose theory encompasses human relations and works experiments. He attaches importance to group strength. For example, if women are good at produce product A while men can produce more product B, he will let all female employees to focus on PA and all males handle PB. It is quite wisdom because it can mass production and make the efficiency maximum but I think it may puts too much pressures on shorter hours and employees' stock.

Then, I'd like to talk about some feelings of other theories. Frederick Taylor leads to "the one best" practice and uses a systematic training of workers. It optimizes the performance of subtasks and makes works standardized but to some extent, it shows "dehumanize" to the workers. The similar drawback of  Max Weber's and Lyndall Irwick's. Besides, I think their ideas are similar too. Max focused on bureaucracy. He discovered the tremendous growth of government and wanted to use the power of government to control things. It shows an extremely small span of control and centralization. The head of organization has absolute power to make decisions and the employees only have rights to obey. So does Lyndall's . That let me think about the history of China.  In the past,  The People's Republic of China has not published and there were many dynasties. The kings control everything and the ministers and civilians have no rights to advice or suggest otherwise they will be killed. So, those kind of managing structure made organization to go to disappear. In my option, I do not recommend this kind of structure to others although it still has some advantages.

From all my researches, I reckon the theories of Henri which is still used today and Elton Mayo's are good. Elton Mayo thinks if the company or managers take an interest in employees and care for them, it have a positive effect on their motivation and managers have responsibility for motivating individuals and their teams, which is a little similar with Hawthorne's. In addition, it is worthwhile to point out the contingency theory. It encompasses that managers should use different theories and strategies depends upon a range of situational variables. It shows flexibility and adaptation of a company and I think it is what the whole competitive environment wants and expects.

Organizational design and structure

The Definition of Structure

It would seem that structure is like a skeleton or a backbone of human being, so it plays an irreplaceable  role in things especially in business. Organizational structural chart is a soul of a company, which shows the main departments and senior positions clearly. Thus, both employees and employers can know their own tasks well and also realize who is responsible for them or who should they report to.

Complex Conceptions

I have to say that organizational structure is complex, because it contains a lot of conceptions: formal/informal structure, vertical/horizontal specialization, chain of command, span of control, centralization&decentralization, tall/flat structure and five kinds of structures. From my perspective, most of firms are formal because they are consists of guidelines, documents and their own managing procedures. Besides, if the company has a flat structure, it means there are less levels, the hierarchy is not strict and obvious and has a large span of control. Employees have freedom to decide what methods they gonna use and make their own decisions. From a wider way, it is decentralization. Vise versa. In addition, if the company is a giant international firm with businesses all over the world, the structure is more likely to be matrix structure, because staff always have both functional and divisional responsibilities.

EG: Oticon

Oticon is a really famous and successful company which produces hearing-aids. Just like what text says, it encountered a big competitive challenge in 1980s and then the chairman Kolind made a series of changes. One of them was that he innovated a new organizational structure called spaghetti organization which is a kind of dynamic structure without any traditional old fashion or hierarchy and every individual has own tasks and projects.  This creative masterpiece made Oticon alive. Obviously, it is a flat structure and the merit are making a better decision and leading a better levels of customers' service. However, I think the spaghetti structure still has many disadvantages. The worst one is there is no department in the company so it will cause chaos and inefficient. To some extent, I suppose it is a fatal disadvantage. I think a company should not has too many rules and hierarchy awarenesses, after all it isn't an army, but still has a complete structure. In another words, the firm should balance the dilemma  between individuals' freedom and teams'/departments' cooperation.

What is organization and management?

Last week, I touched organizations and management in different places and in various ways. From my perspective, organization is a kind of social arrangement within a controlled performances and instructions to achieve the common goals. There are hundreds of millions of organizations in the whole World with different objectives, managerial structures, operational scales, working backgrounds, etc.

However, all existing organizations have people(labour), goals, structure and management. Those four things are essential.For example, Starbucks and Red Cross are both organizations, but they are quite different. Starbucks is commercial, the main objective is to make profits. It produced many products : dessert, coffee, mugs with own logo. In a specific way, the coffee is also divided into many types : Caffe Latte, Caffe Mocha, Cappuccino, Espresso, Caremel Macchiato and Frappuccino for hot summer. Actually, Starbucks are very popular in China and there are countless physical stores there. In many Chinese eyes, especially young people, Starbucks means modern, good taste and leisure, so if you go to China, you will discover that there are always long queues in Starbucks. To some extent, Starbucks is successful, because it activates the market and caters the customers' needs. On the other hand Red Cross is the other kind of recognizable organization which protects and aids victims and social vulnerable groups with a very good reputation in the World. Red Cross is a kind of charity and also a holy one to do humanitarian work. The aim of it is to protect the health of human being , develop humanitarian and promote the peace.

However, the most important part of business is "structure", in another word, managing style. In an old fashioned company with a vary strict hierarchy system and employees there have no freedom to make own decisions even no opportunities to create, to some extent, it will suppress the interests and motivations of staff and cause a negative impact. A good organizational style or an appropriate will stimulate and guide people into a higher level of working condition and then it will also influence the profits of the corporation.

Overall, an organization whether the final goal of it is to make money or to do charity want to be successful, an effective and proper management and structure system is indispensable.

   




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