Short Introduction to: WTO, IMF and OECD

September 4, 2010 2 Comments

LONDON. Before meetings of the Heads of State ...
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Listen to this postThe three principle international institutions that influence the global economic relations are World Trade Organization (WTO), the International Monetary Fund (IMF), and the Organization for Economic Co-operation and Development (OECD) (Rose, 2005). WTO is primarily concerned with trade but does not have the biggest effect on trade. The recent recession had weakened the WTO and many countries started implementing preferential trade agreements that may not agree with the WTO (Dieter, 2009). The recession made many managers and policy makers questioned the international institutions ability to control the trade and generate more sales (Dieter, 2009). Globalization call for international finance and trade agreement, and for the same reason, globalization made most of the financial and business crises more global (Arner & Taylor, 2009). The Group of 20 (G20) called for greater consistency and systematic corporations between countries during their London Summit in April 2009. This call came while the WTO and the IMF are in effect but not effective as expected to be (Arner & Taylor, 2009). WTO was developed and was effective ten years ago but the resent recession’s downturn discouraged the organizations and the countries to neglect the trade agreements between them (Dieter, 2009).  Dieter (2009) state that IMF is not as important international organization as it was ten years ago.

Globalizations was and still believed to benefit the producing countries but the recent economical recession made many lose their confidence in OECD although Rose (2005) believe that OECD is the only international institution that that still can influence the pattern of global economic relations. Rose (2005) state that IMF has an agenda but fewer tools to implement it while OECD had legal instruments and tools but could offer fewer incentives.

References:

Arner, D. W., & Taylor, M. W. (2009). The global financial crisis and the financial stability board: Hardening the soft law of international financial regulation. University of New South Wales Law Journal, 32(2), 488-513.

Dieter, H. (2009). The decline of global economic governance and the role of the transatlantic powers. Business & Politics, 11(3), 1-23.

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Is Anti-dumping Misused?

August 30, 2010 1 Comment

Listen to this postDumping refer to the act of exporting goods by a country to another at a price below its cost of production. Anti-dumping is the penalty imposed on low-priced imported goods to give local products fair chance to compete against the suspiciously low-priced imports (Kochher, 2009). Theoretically, dumping was set to give fair chance to the local product and local producers, however, an anti-dumping started between China and India and affected many other countries. Each country is imposing the anti-dumping penalties as a retaliation to the same act done by the other. Anti-dumping spread from 35 to 96 countries between 1980 and 2003 (Vandenbussche & Zanardi, 2008). World Trade Organization (WTO) should revise its anti-dumping rules to prevent some countries for misusing the anti-dumping rules. The Foreign Direct Investment (FDI) was affected by anti-dumping misused in China but Dang, Feng, & Lv (2010) stated that multinational corporations’ FDI will not be affected if China select to impose fair anti-dumping measures.

References:

Dang, J., Feng, Z., & Lv, H. (2010). The effects of antidumping measures on the FDI: A pre-marketing behavior aspect analysis in China. [Article]. International Journal of Organizational Innovation, 2(3), 206-224.

Kochher, P. (2009). India and china antidumping wars: Who is the winner? Globsyn Management Journal, 3(2), 61-64.

Vandenbussche, H., & Zanardi, M. (2008). What explains the proliferation of antidumping laws? Economic Policy, 23(53), 93-138. doi: 10.1111/j.1468-0327.2007.00196.x

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Considering Russia For New Business

August 18, 2010 3 Comments

Listen to this postRussia has many natural resources with oil and gas are at the top of the list (Ledyaeva, 2009). Most of the goods produced in Russia would be approximately close to European market. Ledyaeva (2009) warns that the legislation and political risk in Russia had increased since 1998.  Geinberg (2008) explain that Russia had good natural resource that made the Russian government accumulate enough cash to invest in the available opportunities.  Foreign investors are shying away from Russia because of the their growing concern that their investments could be seized by the government (Grinberg, 2008). Czech Republic would be a better place for your investment because of its association with the EU. Czech Republic would had lower labor cost and is open for trade but need the capital investment (Janicki & Wunnava, 2004). Kraftova (2005) state that the most promising countries for investment that joined the European Union is the Czech Republic. The rate of youth in the age of 20-24 with secondary education is high, the employment of women is more than 50%.

The Czech Republic would need to increase its labor productivity because it  has productivity lower by %40 than the EU countries (Kraftová, 2005). The Czech Republic need to spend more on the research and development because its research and development effort is lagging behind the EU countries (Kraftová, 2005). New opportunities would be discovered during the research and development work which will benefit. The local governments workforce life time education for the people in the age between 25-64 is lower than EU countries because Czech has %6.3 when EU had %9.5. Czech Republic is part of the EU which is a complex and creative cooperative system of 25 different cultures. This mix would consider the Czech Republic as a potential site for investment if the above points were mitigated (Kraftová, 2005).

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References:

Grinberg, M. (2008). Oil and power politics. Risk Management (00355593), 57-57.

Janicki, H. P., & Wunnava, P. V. (2004). Determinants of foreign direct investment: empirical evidence from EU accession candidates. Applied Economics, 36(5), 505-509. doi: 10.1080/00036840410001682214

Ledyaeva, S. (2009). Spatial econometric analysis of foreign direct investment determinants in Russian regions. World Economy, 32(4), 643-666. doi: 10.1111/j.1467-9701.2008.01145.x

Kraftová, I. (2005). Investing in the Czech Republic. Journal of Corporate Accounting & Finance (Wiley), 16(6), 39-45.

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How Philips Are Doing Now?

July 3, 2010 1 Comment

Listen to this postPhilips started with the simple production of a light pulp and concentrated its effort on that single product to have the advantage of product specialization. Global market was a good opportunity when Holland market became too small for Philips production. Philips established production centers around the world and research and developments centers around different locations to support its expansion strategy (Bartlett, Ghoshal, & Beamish, 2008). Philips innovation produced competitive products like the color TV, stereo TV and the first TV with teletext. Philips realized that some of the products are not profitable in the existing operational setting and chose to outsource them. Most of Philips competitors moved their electronic production facilities to low-cost production sites like East Asia and south America. However, Philips licensed its innovations to other producers which made it less competitive like its decision to abandon the VHS technology. I would recommend that Philips continue downsizing its operations and re-engineer its profitable production sites but close or sell the struggling one. Philips should concentrate its budget and effort on research and development to come up with new challenging products that can be produced in the low-cost manufacturing sites in East Asia and south America.

References:

Bartlett, C., Ghoshal, S., & Beamish, P. (2008). Transnational management: Text, cases, and readings in cross-border management (5 ed.). Boston: McGraw-Hill/Irwin.

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Example of An International Expansion Strategy

June 12, 2010 1 Comment

Listen to this postThe color TV market boomed after the introduction of color TV in the late 1979. China opened for commercial production and the electronics manufacturing moved steadily to China up to the 1990s because of the cheap labor cost. Growth in the TV market in the past 10 years was dominated by the flat screen TV. TCL is an emerging Chinese company which bought Thomson television business and Alcatel Mobil phones in line with its main business of multimedia , communications, home appliances and electronics. This accusations moved TCL from being the 60th in the 1995 to be the number one brand in China now. TCL vision is to strengthening their foundation by reforming their basics and continuously innovating . Acquiring the Thomson television and Alcatel Mobil brings in a proven and successful technology to TCL and widen the ambitions goal of the “top 10 in 10 year” globalization vision (“Vision”, 2007-2008).

Innovations is a strong part of TCL business and part of the organization vision. TCL set up the first Research and Development (R&D) center for audio research in 1992. Currently, TCL has 18 R&D centers with 20 manufacturing bases around the world. TCL operated as separate business units in 2004. Some of the business units are multimedia, telecommunications, personal computers, consumer electronics and CD/DV distribution. Multimedia and mobile handsets generated most of TCL’s revenues at the same period. Supply chain management is a key success factor for TCL, which employed 80 people for sourcing and quality management. TCL made substantial profit because of its efficient supply chain management while its competitors lost money although all of them are sourcing their material from china (C. Bartlett, Ghoshal, & Beamish, 2008). The perfect supply chain enabled TCL to integrate its businesses and R&D centers together to move faster than its competitors in selecting the promising innovations and convert them into competitive product distributed around the world (C. Bartlett, et al., 2008).

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References:

(“Vision”, 2007-2008). Vision  Retrieved Jun 10, 2010, from http://www.tcl.com/main_en/About%20TCL/Vision/index.shtml?catalogId=13047

Bartlett, C., Ghoshal, S., & Beamish, P. (2008). Transnational management: Text, cases, and readings in cross-border management (5 ed.). Boston: McGraw-Hill/Irwin.

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Which Market Segment the New iPhone Will Take

June 9, 2010 1 Comment

iPhone 4GListen to this postApple is introduced the new iPhone which nicknamed 4G and i find it fascinating but I do not think I would buy one soon. I just got my iPad which can do most of the iPhones function but with a better resolution displayed on a larger screen. I find the iPad to be a “Phenomenal device” that keep on amazing me every time I use it. I never used Apple’s products until I bought the iPhone model (3Gs) last year. I was amazed by its simplicity and ease of use. However I found its price to be a challenge especially for the regular users who use their phones as a simple device to communicate. Such users would not need the thousands of applications offered in the iTunes store. Many customers in the Far East and the Middle East need a mobile communication device at the lowest price possible, unfortunately Apple does not offer such mobile phones. Students in India who spend less than Rs. 600 ($13) use their mobile phones for sports updates, playing games and downloading software but spent less on local calling and SMS messaging (Jha, 2008). Mobile phone penetrations in the Far East countries (like Philippines) depend on the lower-income segments. The model for serving high income segment would not work for the low-income segment according to Anderson and Kupp (2008). So the new iPhone might be amazing but do we need that amusement?

References:

Anderson, J., & Kupp, M. (2008). Serving the poor: drivers of business model innovation in mobile. [Article]. Info, 10(1), 5-12. doi: 10.1108/148366908108501 20

Jha, S. (2008). Understanding mobile phone usage pattern among college-goers. [Article]. ICFAI Journal of Services Marketing, 6(1), 51-61.


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Acer SWOT Analysis

June 4, 2010 8 Comments

Listen to this postAcer was founded in 1976 under the name “Multitech” and had a significant role in popularizing the PC use in Taiwan. The Brand name was firmed in 1987 and then Acer switched from technology manufacturer to  world-wide recognized computer brand name.

Strength: Acer has many innovations like the Aspire One laptop that let the user connect to the Net almost anywhere with 8 hours of battery live. Acer presented the Tempo Smartphone series in 2009 to compete in the lucrative mobile phone market.  Acer main factory is located in Taiwan which has low-cost labor and distribution advantage in the US market and Asian market. Acer price its products with low competitive prices to compete with the strong rivals and acquire the low-priced laptop market share.

Weaknesses: the PC, laptop and mobile phone markets are extremely competitive and require frequent innovations to keep up or exceed the customers’ expectations. The laptop customers expect new functions and improved computing power at least once every year. Innovations and changing market demand needs strong and flexible supply chain to execute the successful innovations and deliver them to the market before the competition.

Opportunities: Acer had competed on delivering a reliable PC’s and laptops at a competitive price. Similar market entry model would be useful to enter the eBook Readr market and the iPad© market. Acer would be a good competitor in the eBook Reader market and had the ability to enter a new market of acquire an existing manufacturer. Acer was successful in acquiring Gateway©, emachines and pockard bell (Acer inc., 2010). This success will help Acer to integrate its existing assets or set up new manufacturer to producer eReders or similar products that does iPad functions. Acer can also compete in the Asian market by using its low price model. The Asian market is huge and would consume many of Acer’s products if marketed well.

Threats: the laptop and PC market are extremely competitive. Both products needs management support to invest in the Research and Development departments. Research and development departments would consult between each other to produce new competitive products that can be produced from the current integrated ability for Acer’s subsidiaries. The innovation will continue as long as the workers are compensated and the subsidiaries are willing to compromise for the sake of benefiting the holding company.

To know more on SWOT analysis and how to make one please click here.

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Expanding A Business Internationally

June 2, 2010 Leave a comment

Listen to this postStarting a business from the ground up has almost the same difficulties of expanding an existing business into the international market. The business owner may use the same business model but that successful model will not be as successful in the international market. The business model may not work in another culture because of the ethnocentrism, geocentrism, or polycentrism factors (Bartlett, 2008). For example, theaters in Kingdom of Bahrain are similar to the theaters in the US (even the popcorn boxes are the same). Cinema theaters in Kuwait almost the same but half of the seats (mostly the back seats) are reserved for families. Male audience not accompanying their spouses are seated in the front half of the cinemas. Kingdom of Saudi Arabia does not have cinema theaters at all, which makes the DVD business take a larger share of the entertainment market. Working days are different in this part of the word, Sunday is the first work day of the week and the weekend starts on Friday. There is a one day difference between most of the countries in the Persian Gulf area and the rest of the word. Businesses in Kuwait lose one working day when they deal with the international market.

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References
Bartlett, C. A., Ghoshal, S., & Beamish, P. W. (2008). Transnational management: Text, cases, and readings in cross-border management (5 ed.). Boston: McGraw-Hill/Irwin

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Perfecting the Supply Chain

May 18, 2010 2 Comments

Listen to this postInventory management and the difference between good and bad performances are some of the principles that being lectured to Dell’s employees through multiple presentations (Stewart & O’Brien, 2005). Reword and punishment are some of the performance techniques used by most of Dell’s rivals, but Dell’s employees set the rewards and punishment for themselves to drive their performance. Dell Inc. has the “no excuse” culture since the management will not accept excuses for low performance or the failure to make money. Dell’s top management believe that if the expectation are set high enough then the performance will be high and the opposite is true. Dell’s General Managers have to find the reason for their poor performance and fix it, or the General Manager will be blamed for the failure (Stewart & O’Brien, 2005).

Dell Inc. became famous for its innovative supply chain model that allowed Dell to carry out successful mass customization. Dell is using Build-to-Order model to cut off the dealers’ fees and the inventory cost (Magretta, 1998). The computers are built according to the end user’s specifications which are placed in the company’s portal. Dell’s innovative supply chain insures the required parts availability when needed for the right assembly point at the exact time and place. Kumar and Craig (2007) state that Dell’s success is not only fueled by its supply chain but other processes made it more competitive than its rivals. The following are the main four processes that made Dell Inc. competitive:

  1. Postponement: Dell will postpone assembling the computer until the order is placed and customer credit is cleared. This postponement enables Dell to decrease its inventory and use the latest products from its suppliers. Dell’s rivals have to push their finished product inventory before marketing the new parts for their customers (Kumar & Craig, 2007).
  2. Modularity: means that each part of the computer is managed separately which allow the assembler to connect different parts together. This flexibility allowed Dell to excel in mass customization and overcome the last-minute changes (Kumar & Craig, 2007).
  3. Vendor Managed Inventory: Dell does not stock the required inventory in its stores. The suppliers manage the inventory in small warehouses, called revolvers, near Dell’s plants. This technique help Dell focus on the customers and the suppliers focus on innovation (Kumar & Craig, 2007).
  4. Supply chain partners: Dell sign contracts with the suppliers and service providers and share with them the available information to guarantee future order volumes.

Dell’s innovative supply chain and unique culture will keep it competitive as long as it can keep up the low production cost. Dell will lose its competitive edge once its rivals perfect their supply chain management and start to offer innovative computers at the same price.
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References:

Dell Inc. (2009). Dell Worldwide. Retrieved August 29, 2009, from http://www1.euro.dell.com/content/topics/global.aspx/about_dell/company/dell_worldwide/index?c=ae&l=en&s=corp

Kumar, S., & Craig, S. (2007). Dell, Inc.’s closed loop supply chain for computer assembly plants. Information Knowledge Systems Management, 6(3), 197-214.

Magretta, J. (1998). The power of virtual integration: an interview with Dell Computer’s Michael Dell. Harvard Business Review, 76(2), 73-84.

Stewart, A., & O’Brien, L. (2005). Execution without excuses. Harvard Business Review, 83(3), 102-111.

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Financial Disclosure: How Much is Enough?

May 16, 2010 4 Comments

Listen to this postI had a chance to research the “financial disclosure” subject and I found an important article which discusses the information overload related to financial disclosure. Radin (2007) argues against “excessively long financial statement disclosures.”  He cites reasons the accounting profession should be worried about financial statement disclosure overload. He then asserts that there is significant anecdotal evidence that the footnotes to a company’s financial statements are read only by the registrants’ drafters and accountants.  The article is fascinating and surfaces old questions like “How much information is enough?” and “Where should we stop?” the article provokes the need to analyze the usefulness and effectiveness of the current financial disclosures.  Information redundancy and repetition like “If our customers stop buying our product,  sales may decrease” (Radin, 2007, p. 9) should be eliminated and an effective reporting method maybe created to communicate the important disclosed information to the readers. Lately,  marketing expert are able to pass their massages to the public in 30 seconds and cartoonist are able to simplify a complicated issue into a funny drawing, however, accountants are still writing a longer and more complicated reports (Radin, 2007).
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References

Radin, A. (2007). Have we created financial statement disclosure overload? CPA Journal, November, 6-9.

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