Gbm/489 Global Trends Paper
Global Trends
Debra Elliott
University of Phoenix
Strategic Topics in Global Business Management/GBM/489
Dr. Joanne Nesbitt
March 22, 2009
Global Trends
Globalization trends contribute a significant impact toward society and the development of specific markets. The entire world continues to experience the process of globalization and the effect on the country and society. No matter if the country is seen as developed or developing, by keeping apprised of trends in any market will affect a company’s performance (Daniels, Radebaugh & Sullivan, 2007).
Management and Functional Areas of Business
Management identifies global trends by researching “demographics, economics, politics …” of a country (FW9-Global Trends, 2005, Introduction, …show more content…
para. 1). Although trend patterns of globalization exist in every country, the effects can be quite different because of economics, politics, and culture.
Demograghics
Demographics are the characteristics of a human population. Demographic trends describe changes in demographics in a population over time. Demographics are used in marketing analysis that assists in determining subgroups existing in the population and characteristics within these subgroups. By gathering this information, marketing analysis keeps track of trend demographics with determining specific segments based on age, gender, income level, race, and ethnicity.
Political Environment
Democratic states have grown throughout the world resulting in “progress toward freer civic institutions, an active media, a strengthened judiciary, and stronger property rights” (Daniels, Radebaugh & Sullivan, 2007, p. 96, Trends in Political Systems, para. 1). Government received a reality check and realized that state-controlled economies does not work, therefore, the next step was to transition over to the market-based approach. By moving toward the market-based approach, countries have witnessed further foreign direct investment. This new approach improves communication technology, allowing access to information. The liberating of communication has led to constraining governments’ ability to regulate information flows. The benefits of the public with access to the media and Internet allow not only freedom of speech but also easy access to information. Democracy is thought to provide greater political freedoms leading to economic freedom and “higher standards of living and greater wealth accumulation” (p. 98, para. 2).
Economic Environment
Economic development and potential vary from country to country. For this reason, management needs to understand the economic environment to predict trends that might affect the company’s performance. Therefore, the assessment of “the attractiveness of a country as a place to do business … making prudent investment and operational decisions depends on how well managers understand the impact of economic changes” (Daniels, Radebaugh & Sullivan, 2007, p. 122, Introduction, para. 1).When planning on doing business in another country, questions need to be asked such as the wealth, stability, poverty, and income. Monitoring trends in the balance of payments (BOP) gives managers more data to analyze in determining whether or not to do business in the country. The BOP lends to the instability of the country and strategies used by the country. Besides the BOP analysis, other qualifying indicators are “GNI, GNI per capita, purchasing power parity …, growth rate, distribution of income, and degree of human development” (2007, p. 151, ‘Summary, para. 6).
Global and Regional Business Benefits to Stakeholders
Stakeholders are groups and individuals who affect and are affected by the achievements of a company’s mission, goals, and objectives. One objective paramount to the success of an organization is to “create and deliver value to … stakeholders” (Mohammed, Shankar & Banwet, 2008, Introduction, para. 1). Business organizations need focus on how value is delivered to customers while broadening value for all stakeholders. This success lends to benefits allowing organizations to create better products for lower costs and be introduced to new markets.
When a company starts to think strategically and begin the process of analyzing value chains benefits will be realized by customers, stakeholders, and suppliers. Each of these stakeholders gains when a company improves the value chain.
The common key processes that should be used to improve the value and supply chain revolve around the customer, stakeholder, and supplier. Strategic planning to change management to customer service all serve a purpose. That purpose is to enable companies and partners to do business in such a different way that creates competitive advantage. When performance is elevated to a level in which success is imminent the company not only sees increase in profits but also sees new levels in customer service, inventory, production, and synchronization of key operations.
Country Risk Analysis – Starbucks Entering Japan
Any number of risks can affect an organization’s global operations and the way to overcome these risks is by implementing advantageous strategic goals and strategies.
In any new business venture a firm must take risks to achieve objectives set. When expanding into a new country a higher degree of risk must be taken. However, a higher degree of risk does not mean the company will be venerable to losses because of changes in the economies or political situations in countries in which they are investing. Understanding the types of risk involved and properly planning for these risks will allow the company to mitigate most problems and prevent losses. As described by A.M. Best’s assessment (2009) of the three categories of risk, Japan has been rated low in economic, political, and financial …show more content…
systems.
Economic Environment
Japan is the second largest economy in the world behind the United States. Yet, revised figures for the final quarter of 2009 grew by less than what was estimated, 1.1 percent. “Japan continues to face the problem of deflation” (BBC News, 2010, para. 6). Because deflation is bad for the economy, the tendency is for consumers and businesses to delay in making major purchases. With the value of currency rising all buying behaviors stopped. People do not want to spend money and prefer to wait for the higher value of currency to purchase more. Bank of Japan board members during their February meeting had mixed views on the economy. Some members believe that upside and downside risks were becoming balanced, whereas others felt “considerable downside risks to the economy” (Otsuma, 2010, para. 2).
Believing that brand recognition alone could aid in the success of expansion into Japan was not a good move for Starbucks. Because the Japanese have a taste for everything western Starbucks was sure about the marketability of the Japanese. Unfortunately, Starbucks suffered because of “bad predictions” (Zatorska, 2009, para. 20) and not enough information gathered on Japan’s economy.
Political Environment
Presently, Japanese Prime Minister Taro Aso is struggling to implement strategies to bolster Japan’s economy. The Liberal Democratic Party (LDP) has not passed a supplemental budget needed to fund the first economic stimulus package discussed back in October 2008 (Hayashi, 2009). The political paralysis of Japan takes part in the global financial crisis causing the eroding of consumer product purchases.
Once a business is up and running the worry becomes entering and enforcing contracts with buyers and sellers. Even with guidelines set in formulating and enforcing contracts variations are still placed on certain ways a country views the legal system.
Japan is a civil law system country encouraging shorter and less specific contracts because the general civic code deals with many pertinent issues (Daniels, Radebaugh & Sullivan, 2007). The wealth of the country decides on what business regulation procedures are required when opening a business.
With free trade becoming more popular in countries that at one time placed strict regulations on foreign businesses the increase in capital has effected multinational and international companies to expand outside their home countries. The relaxed restrictions result in opportunities for people to experience global products and brands.
Components of a Global Business Plan
A business plan tells a story about a company’s strategies and goals. Along with this information, a business plan also requires specific components. The first section must start with an executive summary. The executive summary is a brief synopsis of the business plan that includes a description of the nature of the business, a reason products or services is needed, description of the organization and management team, and a brief explanation on the sales and marketing approach. The next section is more detailed information taken from the executive summary including the business, market analysis, financing, and management sections.
Conclusion
Stakeholders can be anyone directly and indirectly associated with the company, such as customers, suppliers, employees, and shareholders. Each can benefit as well as lose. The key is making sure all activities are streamlined and work in a synchronized manner. When this happens stakeholders benefit by lower costs, new product design and development, and trustworthiness of the company.
Economic exposure is defined as, “the extent to which a firm 's market value is sensitive to unexpected changes in foreign currency” (Perry, 2009, Three Types of Foreign Exchange Exposure for MNCs, para.
1). Before expanding into another country, researching the economic structure of the country is important. Economic risk comes from the inability of a country to meet financial obligations. The political system of a country integrates different groups into a functioning, self-sustaining, and self-governing society (Daniels, Radebaugh, & Sullivan, 2007, para. 1). Creating a majority of people in society that accepts present political views can result in positive benefits including the attraction of foreign investment and international trade. When turmoil among the people and the roles of government exists, friction occur creating unpleasant unrest. This unrest becomes a deterrent to foreign companies doing business or about to do business within the country.
Over the past few decades an increase has been seen toward greater economic freedom. Neither geography nor size of a country has dampened the ability of transitioning to market economies with economic freedom. Countries with economic freedom have a substantially higher level of long-term growth. Economies have grown primarily because of global markets and global
competitors.
References
AMB Country Risk Report. (2009, August 31). Japan. Retrieved March 21, 2010, from http://docs.google.com/viewer?a=v&q=cache:tH3oVQVyXaMJ:www3.ambest.com/ratings/cr/reports/Japan.pdf+country+risk+analysis+japan&hl=en&gl=us&pid=bl&srcid=ADGEESg68iBFEAF2bFLtDmMnQmGnPHuy8y0h1hgflddU2TnwGPMBzymt-bOjX6hhE9VsDFPElEl5FtdJk2EMplDIWivBkWaYdviOBNLgKCLsMeJeF3MU-w9rtBpYbleXgekptV1hkXrL&sig=AHIEtbRuZ5FHPrS4EaT6JeFsh7I89STLaA
BBC News. (2010, March 11). Japan’s economic growth rate revised down. Retrieved March 22, 2010, from http://news.bbc.co.uk/2/hi/business/8561394.stm
Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2007). Chapter 1: Globalization and international business. International Business: Environments and Operations. [University of Phoenix Custom Edition e-text]. Prentice Hall, Inc. Retrieved March 19, 2010, from University of Phoenix, rEsource, GBM/480 – Global Business Environment and Strategy Course Web site: https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h
Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2007). Chapter 3: The political and legal environments facing business. International Business: Environments and Operations. [University of Phoenix Custom Edition e-text]. Prentice Hall, Inc. Retrieved March 19, 2010, from University of Phoenix, rEsource, GBM/480 – Global Business Environment and Strategy Course Web site: https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h
Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2007). Chapter 4: The economic environment. International Business: Environments and Operations. [University of Phoenix Custom Edition e-text]. Prentice Hall, Inc. Retrieved March 19, 2010, from University of Phoenix, rEsource, GBM/480 – Global Business Environment and Strategy Course Web site: https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h
FW9-Global Trends. (2005). Introduction. Retrieved March 20, 2010, from http://www.freeworldacademy.com/newbizzadviser/fw9.htm
Hayashi, Y. Politics slow Japan stimulus plan. Retrieved March 20, 2010, from http://online.wsj.com/article/SB123240106177195321.html#articleTabs%3Darticle
Mohammed, I. R., Shankar, R. & Banwet, D.K. (2008). Creating flex-lean-agile value chain by outsourcing: An ISM-based interventional roadmap. Business Process Management. 14(3). Retrieved March 21, 2010, from Emerald database.
Otsuma, M. (2010, March 22). Bank of Japan members split on economic outlook, minutes show. Retrieved March 22, 2010, from http://www.businessweek.com/news/2010-03-22/bank-of-japan-should-act-swiftly-if-needed-some-members-said.html
Perry, M.J. (2009, September 28). Chapter 9: Management of economic exposure. Retrieved March 17, 2010, from http://spruce.flint.umich.edu/~mjperry/466-9.doc
Zatorska, M. (2009, Listopad 5). International marketing strategy of Starbucks in Japan. Success or failure? Retrieved March 20, 2010, from http://azjatycka.wordpress.com/2009/11/05/international-marketing-strategy-of-starbucks-in-japan-success-or-a-failure/
Debra Elliott
University of Phoenix
Strategic Topics in Global Business Management/GBM/489
Dr. Joanne Nesbitt
March 22, 2009
Global Trends
Globalization trends contribute a significant impact toward society and the development of specific markets. The entire world continues to experience the process of globalization and the effect on the country and society. No matter if the country is seen as developed or developing, by keeping apprised of trends in any market will affect a company’s performance (Daniels, Radebaugh & Sullivan, 2007).
Management and Functional Areas of Business
Management identifies global trends by researching “demographics, economics, politics …” of a country (FW9-Global Trends, 2005, Introduction, …show more content…
para. 1). Although trend patterns of globalization exist in every country, the effects can be quite different because of economics, politics, and culture.
Demograghics
Demographics are the characteristics of a human population. Demographic trends describe changes in demographics in a population over time. Demographics are used in marketing analysis that assists in determining subgroups existing in the population and characteristics within these subgroups. By gathering this information, marketing analysis keeps track of trend demographics with determining specific segments based on age, gender, income level, race, and ethnicity.
Political Environment
Democratic states have grown throughout the world resulting in “progress toward freer civic institutions, an active media, a strengthened judiciary, and stronger property rights” (Daniels, Radebaugh & Sullivan, 2007, p. 96, Trends in Political Systems, para. 1). Government received a reality check and realized that state-controlled economies does not work, therefore, the next step was to transition over to the market-based approach. By moving toward the market-based approach, countries have witnessed further foreign direct investment. This new approach improves communication technology, allowing access to information. The liberating of communication has led to constraining governments’ ability to regulate information flows. The benefits of the public with access to the media and Internet allow not only freedom of speech but also easy access to information. Democracy is thought to provide greater political freedoms leading to economic freedom and “higher standards of living and greater wealth accumulation” (p. 98, para. 2).
Economic Environment
Economic development and potential vary from country to country. For this reason, management needs to understand the economic environment to predict trends that might affect the company’s performance. Therefore, the assessment of “the attractiveness of a country as a place to do business … making prudent investment and operational decisions depends on how well managers understand the impact of economic changes” (Daniels, Radebaugh & Sullivan, 2007, p. 122, Introduction, para. 1).When planning on doing business in another country, questions need to be asked such as the wealth, stability, poverty, and income. Monitoring trends in the balance of payments (BOP) gives managers more data to analyze in determining whether or not to do business in the country. The BOP lends to the instability of the country and strategies used by the country. Besides the BOP analysis, other qualifying indicators are “GNI, GNI per capita, purchasing power parity …, growth rate, distribution of income, and degree of human development” (2007, p. 151, ‘Summary, para. 6).
Global and Regional Business Benefits to Stakeholders
Stakeholders are groups and individuals who affect and are affected by the achievements of a company’s mission, goals, and objectives. One objective paramount to the success of an organization is to “create and deliver value to … stakeholders” (Mohammed, Shankar & Banwet, 2008, Introduction, para. 1). Business organizations need focus on how value is delivered to customers while broadening value for all stakeholders. This success lends to benefits allowing organizations to create better products for lower costs and be introduced to new markets.
When a company starts to think strategically and begin the process of analyzing value chains benefits will be realized by customers, stakeholders, and suppliers. Each of these stakeholders gains when a company improves the value chain.
The common key processes that should be used to improve the value and supply chain revolve around the customer, stakeholder, and supplier. Strategic planning to change management to customer service all serve a purpose. That purpose is to enable companies and partners to do business in such a different way that creates competitive advantage. When performance is elevated to a level in which success is imminent the company not only sees increase in profits but also sees new levels in customer service, inventory, production, and synchronization of key operations.
Country Risk Analysis – Starbucks Entering Japan
Any number of risks can affect an organization’s global operations and the way to overcome these risks is by implementing advantageous strategic goals and strategies.
In any new business venture a firm must take risks to achieve objectives set. When expanding into a new country a higher degree of risk must be taken. However, a higher degree of risk does not mean the company will be venerable to losses because of changes in the economies or political situations in countries in which they are investing. Understanding the types of risk involved and properly planning for these risks will allow the company to mitigate most problems and prevent losses. As described by A.M. Best’s assessment (2009) of the three categories of risk, Japan has been rated low in economic, political, and financial …show more content…
systems.
Economic Environment
Japan is the second largest economy in the world behind the United States. Yet, revised figures for the final quarter of 2009 grew by less than what was estimated, 1.1 percent. “Japan continues to face the problem of deflation” (BBC News, 2010, para. 6). Because deflation is bad for the economy, the tendency is for consumers and businesses to delay in making major purchases. With the value of currency rising all buying behaviors stopped. People do not want to spend money and prefer to wait for the higher value of currency to purchase more. Bank of Japan board members during their February meeting had mixed views on the economy. Some members believe that upside and downside risks were becoming balanced, whereas others felt “considerable downside risks to the economy” (Otsuma, 2010, para. 2).
Believing that brand recognition alone could aid in the success of expansion into Japan was not a good move for Starbucks. Because the Japanese have a taste for everything western Starbucks was sure about the marketability of the Japanese. Unfortunately, Starbucks suffered because of “bad predictions” (Zatorska, 2009, para. 20) and not enough information gathered on Japan’s economy.
Political Environment
Presently, Japanese Prime Minister Taro Aso is struggling to implement strategies to bolster Japan’s economy. The Liberal Democratic Party (LDP) has not passed a supplemental budget needed to fund the first economic stimulus package discussed back in October 2008 (Hayashi, 2009). The political paralysis of Japan takes part in the global financial crisis causing the eroding of consumer product purchases.
Once a business is up and running the worry becomes entering and enforcing contracts with buyers and sellers. Even with guidelines set in formulating and enforcing contracts variations are still placed on certain ways a country views the legal system.
Japan is a civil law system country encouraging shorter and less specific contracts because the general civic code deals with many pertinent issues (Daniels, Radebaugh & Sullivan, 2007). The wealth of the country decides on what business regulation procedures are required when opening a business.
With free trade becoming more popular in countries that at one time placed strict regulations on foreign businesses the increase in capital has effected multinational and international companies to expand outside their home countries. The relaxed restrictions result in opportunities for people to experience global products and brands.
Components of a Global Business Plan
A business plan tells a story about a company’s strategies and goals. Along with this information, a business plan also requires specific components. The first section must start with an executive summary. The executive summary is a brief synopsis of the business plan that includes a description of the nature of the business, a reason products or services is needed, description of the organization and management team, and a brief explanation on the sales and marketing approach. The next section is more detailed information taken from the executive summary including the business, market analysis, financing, and management sections.
Conclusion
Stakeholders can be anyone directly and indirectly associated with the company, such as customers, suppliers, employees, and shareholders. Each can benefit as well as lose. The key is making sure all activities are streamlined and work in a synchronized manner. When this happens stakeholders benefit by lower costs, new product design and development, and trustworthiness of the company.
Economic exposure is defined as, “the extent to which a firm 's market value is sensitive to unexpected changes in foreign currency” (Perry, 2009, Three Types of Foreign Exchange Exposure for MNCs, para.
1). Before expanding into another country, researching the economic structure of the country is important. Economic risk comes from the inability of a country to meet financial obligations. The political system of a country integrates different groups into a functioning, self-sustaining, and self-governing society (Daniels, Radebaugh, & Sullivan, 2007, para. 1). Creating a majority of people in society that accepts present political views can result in positive benefits including the attraction of foreign investment and international trade. When turmoil among the people and the roles of government exists, friction occur creating unpleasant unrest. This unrest becomes a deterrent to foreign companies doing business or about to do business within the country.
Over the past few decades an increase has been seen toward greater economic freedom. Neither geography nor size of a country has dampened the ability of transitioning to market economies with economic freedom. Countries with economic freedom have a substantially higher level of long-term growth. Economies have grown primarily because of global markets and global
competitors.
References
AMB Country Risk Report. (2009, August 31). Japan. Retrieved March 21, 2010, from http://docs.google.com/viewer?a=v&q=cache:tH3oVQVyXaMJ:www3.ambest.com/ratings/cr/reports/Japan.pdf+country+risk+analysis+japan&hl=en&gl=us&pid=bl&srcid=ADGEESg68iBFEAF2bFLtDmMnQmGnPHuy8y0h1hgflddU2TnwGPMBzymt-bOjX6hhE9VsDFPElEl5FtdJk2EMplDIWivBkWaYdviOBNLgKCLsMeJeF3MU-w9rtBpYbleXgekptV1hkXrL&sig=AHIEtbRuZ5FHPrS4EaT6JeFsh7I89STLaA
BBC News. (2010, March 11). Japan’s economic growth rate revised down. Retrieved March 22, 2010, from http://news.bbc.co.uk/2/hi/business/8561394.stm
Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2007). Chapter 1: Globalization and international business. International Business: Environments and Operations. [University of Phoenix Custom Edition e-text]. Prentice Hall, Inc. Retrieved March 19, 2010, from University of Phoenix, rEsource, GBM/480 – Global Business Environment and Strategy Course Web site: https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h
Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2007). Chapter 3: The political and legal environments facing business. International Business: Environments and Operations. [University of Phoenix Custom Edition e-text]. Prentice Hall, Inc. Retrieved March 19, 2010, from University of Phoenix, rEsource, GBM/480 – Global Business Environment and Strategy Course Web site: https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h
Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2007). Chapter 4: The economic environment. International Business: Environments and Operations. [University of Phoenix Custom Edition e-text]. Prentice Hall, Inc. Retrieved March 19, 2010, from University of Phoenix, rEsource, GBM/480 – Global Business Environment and Strategy Course Web site: https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h
FW9-Global Trends. (2005). Introduction. Retrieved March 20, 2010, from http://www.freeworldacademy.com/newbizzadviser/fw9.htm
Hayashi, Y. Politics slow Japan stimulus plan. Retrieved March 20, 2010, from http://online.wsj.com/article/SB123240106177195321.html#articleTabs%3Darticle
Mohammed, I. R., Shankar, R. & Banwet, D.K. (2008). Creating flex-lean-agile value chain by outsourcing: An ISM-based interventional roadmap. Business Process Management. 14(3). Retrieved March 21, 2010, from Emerald database.
Otsuma, M. (2010, March 22). Bank of Japan members split on economic outlook, minutes show. Retrieved March 22, 2010, from http://www.businessweek.com/news/2010-03-22/bank-of-japan-should-act-swiftly-if-needed-some-members-said.html
Perry, M.J. (2009, September 28). Chapter 9: Management of economic exposure. Retrieved March 17, 2010, from http://spruce.flint.umich.edu/~mjperry/466-9.doc
Zatorska, M. (2009, Listopad 5). International marketing strategy of Starbucks in Japan. Success or failure? Retrieved March 20, 2010, from http://azjatycka.wordpress.com/2009/11/05/international-marketing-strategy-of-starbucks-in-japan-success-or-a-failure/