The the Integration of World Economy as brought about by increase in International Trade

(6172 words)

Unit 2

Trade can be simply defined as the exchange of goods and services and is relative to world output which can be defined as the value of products and services produced by countries. When world output grows, trade also grows because more products for trade are produced. Relatively, when the world output declines, there is also as significant decline on trade. Level of world trade today is increasing which is brought about by the falling cost of trade which includes transportation, communication, currency exchange and tariffs; productivity growth in tradable goods sector; and increasing income per head because as country’s income rises, consumers tend to shift their spending away from basics to more diversified products involved in international trade (Dean et al, 2004).             This paper discusses about the relationship between trade and world output as well as the pattern of international trade. Because of the increasing level of globalization or the economic interdependence of nation, countries today become more integrated not only the industrialized ones as well as the developing countries. Integration of the world economy has been brought about primarily by increased in international trade.

When goods and services are purchased across national borders (Banton, 2003) or between countries it is called international trade. International trade provides a country’s people with a greater choice of goods and services (Banton, 2003) and helps create more jobs for the people. Most goods being exchanged in international trade comprised of manufactured products, mining products and agricultural products. In the United States, they trade farm products, tobacco, aircraft, automobiles and parts, raw materials, chemicals, tourism, insurance and software (Schiller, 2002).

A country is said to have a comparative advantage when it is unable to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good (Banton, 2003). Countries will benefit by concentrating on the production of those goods in which they have relative advantage. For example, France has the climate and the expertise to produce better wine than Brazil. Brazil is better able to produce coffee than France. Each country benefits by specializing in the good it is most suited to making. France then creates a surplus of wine which it can trade for surplus Brazilian coffee (Young, 2006).

Currently, international trade is among the world’s high-income countries and trade between high-income countries, and low and middle-income countries. About 60% of the total world trade is among high-income nations; 34% is among high-income and low and middle-income nations and the remaining 6% of the total international trade is among low and middle income nations. Also, Western European trade is mostly intra-regional trade presumably led by economic integration towards the formation of single common market while North America imports twice as much from Asia as it exports to Asia (Anonymous, 2006).

The pattern of international trade is determined by the characteristics of global demand and supply as well as government policies (Arda, 2006). Global demand is basically what is produced and how it is produced and is influenced by the increasing consciousness by consumers of the social, environmental and health effects. Global demand influences the production structures and the choice of technologies and has implications for the social and environmental effects of production. On the other hand, global supply depends on the competitive advantage of firms and the comparative advantage of countries facing the global demand (Arda, 2006).

Trade is classified as inter-industry and the intra-industry (Dean, 2004). Inter-industry trade occurs between countries with different product specialization while intra-industry trade is between countries that produce the same product. For example, USA and Japan both manufacture automobiles but at the same time they both purchase automobiles from each other. Because of these types of trade especially in the intra-industry trade, differentiation strategy is important with regards to marketing of their products in order to have a competitive advantage and to gain market share.

With international trade, trade dependence and interdependence exist. For example, China and India trade in textiles in the US while China depends on US for aircraft and parts. The very core of international trade is to be able to purchase goods and services not available in a particular country due to limited resources, technology and skills required for manufacturing of those products.

Trade takes place because countries can buy foreign-made products or services at lower price than its costs to make the same goods locally. This has been the result of absolute advantage which is the ability of a nation to produce a good more efficiently than any other. A country with an absolute advantage can produce greater output of a good or service than other nations using the same amount of or fewer, resources (Banton, 2003).

However, there are also those which can prevent or restrict international trade. These are called trade barriers which can be in the form of quotas, tariffs, subsidies or import duties (Wikipedia, 2006). To address these barriers, countries formed regional trade blocs such as the ASEAN, NAFTA or MERCOSUR. These blocs are bounded by agreements which are advantages to its members.

If the nations of the world cut off trade with one another and at that moment I am living in Thailand where the number one imported product is food chemicals (AAFC, 2006) used for food processing, Thailand can no longer produce canned and snack foods. Also, automobile industry will have its market declined because most automobile parts used in Thailand are imported. In the Philippines, many products will no longer be obtained like mobile phones, software, and electronic products which are usually imported from Japan and the USA.

As affected by demand and supply, trade affects both production and consumption possibilities. Production possibilities are the alternative combinations of goods and services that could be produced in a given period with all available resources and technology (Schiller, 2003). In the absence of trade, a country cannot consume more than it produces. Consumption possibilities, on the other hand, are the alternative combinations of goods and services that a country could consume in a given period (Schiller, 2003).

Without trade, a country’s consumption possibilities equal its production possibilities but with trade, a country’s consumption possibilities exceed its production possibilities (Schiller, 2003). For example, a country which produces abundant amount of grapes sells or trades the excess to Japan where grapes are not easily grown with television or electronic products that that country lack of technology to manufacture television. This has been one of the benefits of trade: it allows a country to specialize in its comparative advantage goods, sells the excess and purchases the necessary imports (Lee and Foster, 1997).

When trade among countries does not exist, a country will have to be contented with what they can produce locally with the resources it has. Exchange of knowledge and information, communication and even transportation improvement will decline, causing slow growth in the economy locally and globally.

 

Discussion Board

In every country, there is an existing economic system which is a set of rules and institutions (Ebert and Griffin, 2003) that govern the allocation of a country’s resources to satisfy its people’s needs. Economic system is shaped by politics and social values in that certain country. There are basically three types of economic system: planned economy which is controlled by the central government and also known as communism; the other two types are market economy and mixed economy.

With market economy people are free to make choices regarding production and consumption of goods and services; businesses would have control of their financial wealth. It provides a wide variety of goods and services at the lowest prices. On the other hand, among its disadvantages is having lack of regulations that may result to greediness of capitalists. Free market economy is also affected by inflation because there is no government that will held prices artificially low. Investors are hurt of inflation because it reduces the value of their money.

Moreover, a mixed market economy is the combination of planned and market economy. It is basically a market economy with the intervention of government, imposing regulations on tax, wage, price, and other business activities. Its main advantage is that consumers as well as the environment are protected by laws.

By its definition, market economy is controlled by capitalists or the rich entrepreneurs that can afford for private ownership. In a market economy, investors often take advantage, maximizing profit rather than satisfying social needs, thus public goods such as street lighting, road construction and public education which are essential to improve a nation are not produced. Unlike in the mixed market system, taxes are imposed therefore investors had their fair share for the improvement of a country’s resources which they themselves utilized in order for their businesses to run.

In an economy like a pure market economy, who will set boundaries if the government has no control over businesses? When there are no boundaries, monopolies will be created (Lezcano, 2004) which would eliminate small businesses. Unlike in a mixed market economy, small, medium or large entrepreneurship are all regulated by laws creating equal opportunities and allocation of resources. Supporters of the free market economy argue that it is not true that a free market economy widens the gap between the rich and the poor. Instead it gives opportunities to everyone to compete in the market to have the best price and product which is also an advantage for the consumers. The truth about this is that it only gives opportunities to those who have capital, making only the large companies dominate the market.

Moreover, people in the market economy works within the minimum wage because there is no existing wage regulation, giving little stability to workers, while the greedy capitalists earn as much profit as they want, thus the rich become richer and the poor gets even poorer. But with the mixed market economy, workers are protected by wage laws thus giving them a better standard of living.

  

Unit 3 Discussion Board

            With the formation of regional trade blocs which aim to eliminate trade barriers or to have a common market within a certain region, countries want to become members for economic benefits: they expect higher economic growth to result from greater efficiency in production and increased trade (Read, 2003). With this goal and with some political goals of the government, they overlook the effects of trade blocs to small businesses. Because of the openness to trade of a certain country, small and even medium, local enterprises find it difficult to compete with larger, foreign-owned companies not only in terms of technology being utilized by these large companies but as well as with the ability to compete in terms of marketing and export capabilities.

Because of these, there is an urged for the government to help small businesses that seems to be eaten alive by large companies. The government can help them by implementing some regulations and programs specifically designed for the sustainability of small and medium local businesses.

One program that can help small businesses is a program that promotes locally made products. For example, a certain small business would sponsor a tourism program or activity of the government. In return, the government will promote the company’s product throughout the activities and never accept any sponsorship from bigger companies. These small companies may also form their organization like what huge companies do. For example, in the Philippines, large companies, foreign and locally owned formed, the Makati Business Club which usually has a voice on the government when it comes to the economy of the Philippines. Same with small and medium businesses, they can form organizations in which they can form plans on how they can help each other to take part on the export industry, or how they can help each other on technology or in research and development. The government should also have programs in which they will help in improving skills and technology of small companies.

In China, for example, the Chinese government protects their local companies by restricting foreign investments whose products are already developed in their country or prohibit other companies from entering the Chinese market when one of the Chinese businessmen has been monopolizing the market of that product. China has policy that non-Chinese companies and investors should share their technology and management skills to Chinese companies. This kind of policy may seem to be unfair for investors but on the other hand, Chinese people especially small Chinese businesses benefit from this kind of policy.

 

 

Unit 4 International Business    

This paper is a business plan of a Venezuelan business specifically a construction company. This plan presents the effects of MERCOSUR on the business now that Venezuela has been accepted as member of the said trade bloc. That paper analyzes the benefits and drawbacks of being a part of MERCOSUR not only for the business but for the entire Venezuelan economy. The paper also discusses the adjustments that the business must undertake in order to maximize the benefits and to address the drawbacks that being a MERCOSUR member bring.

 

Southern Steel is one of the leading steel companies in the country which produces steel and steel products, including hot-rolled steel, cold-rolled steel, steel joists, and metal buildings. A major recycler of scrap metal, Southern produces steel by melting scrap metal in electric arc furnaces. The majority of the steel Southern produces at its minimills is sold to steel service centers, manufacturers, and fabricators. It started in 1978, a locally owned business, has gained a position in the market of steel industry exporting its products to nearby countries and to the United States. The joining of Venezuela to MERCOSUR made the owner interested and at the same time alarmed on the effects of MECOSUR on the business and to the Venezuela economy that may impact the business.

MERCOSUR is basically a regional trade agreement between countries in Latin America that includes Argentina, Brazil, Paraguay, Uruguay, Chile, Bolivia and recently, Venezuela with about 240 million consumers (AAFC, 2002). Its main objective is to establish a common market. with a common market, there should be free transport of production of goods, services, and factors between members, eliminating the rights and lifting of non-tariff restrictions on the transit of goods; fixing a common external tariff and adopting a common market trade policy with regard to nonmember states and the coordination of positions in regional and international commercial and economic meetings; coordination of macroeconomic and sectorial policies of member states relating to foreign  trade, agriculture, industry, taxes, monetary system, exchange and capital,services, customs, transport and communications, and any others they may agree on, in order to ensure free competition between member states; and the commitment by the member states to make the necessary adjustments to their laws in pertinent areas to allow for the strengthening of the integration process (ILO, 2006).

With MERCOSUR, Venezuela is allowed to trade with tariffs that are three times lower (Guerrero, 2004). It would also facilitate special co-investment agreements in infrastructure and strategic projects such as satellites ships, a TV channel of the South, medicines, food and combustibles. There are also some negotiations between some foreign investors and Venezuelan authorities for projects to install laboratories and industrial plants (Guerrero, 2004).

 

For the benefits of the Venezuelan economy, Venezuela, as the world’s 5^th largest oil exporter (Gentile, 2005), oil exports to Latin American countries especially to Brazil, have a huge potential to grow. Also, according to Alfredo Toro-Hardy, Venezuelan Ambassador in Brazil, Venezuela may draw great benefits form its access to Brazil’s market. Venezuela is also attractive to foreign investments because of its low labor costs that may eventually lead to increase foreign direct investments that boost the economy. Membership in MERCOSUR opens opportunities for the country’s energy sector which is the oil and hydro-electric not only in Brazil but also to other countries. It will also provide greater negotiating capacity with Europe and would include them in other trade agreements where MERCOSUR members will be involved such as the American Free Trade Agreement (Petrash, 1996).

 

However, being a MERCOSUR member, Venezuela will allow big foreign investors from other countries member of MERCUSOR to enter the Venezuelan giving threat to smaller local business. Venezuelan industry is less developed than that of Argentina and Brazil. Therefore, Venezuela’s locally based businesses are not enthusiastic about the agreement. They are generally inefficient producers (EIU, 2005) compared to other MERCUSOR members so they are fearful of competition from more efficient Brazilian companies. Most businessmen look at MERCOSUR as an advantage only to the energy and oil sector but there is no clear advantage for other industrial sector.

 

Contrary to these, Southern Steel, though locally based and owned is a large business that has the ability to compete to other foreign-owned company. Being a member of MERCOSUR provides greater opportunity for the company to compete in a global level. Aside from this, being an exporter, Southern Steel can take advantage of lower tariff rates and the elimination of trade barriers, providing more opportunity to export on more countries like in Europe where there is an ongoing creation of transatlantic free-trade agreement (EIU, 2005).

 

The drawback of this is that more and tougher competition in the steel industry, locally and globally, is expected due to openness of Venezuelan market to trade. Because of these, the company should make necessary adjustments and implement some strategies in order to stay in the market and for the business to be able to compete in international market.

 

Due to the opportunities brought about by the benefits that can be gained from being a member of MERCOSUR, Southern Steel outline some adjustments and strategies that should be incorporated in the business to address the challenges and the anticipated problems that may arise.

 

One of the adjustments should be internally; employees and the entire organization should be well-educated and informed on the current economic situation and the global steel market. The business and the organization should be ready and open for changes brought about by going international. Sharing of information, from suppliers and internal and external customers should be reliable. The company should then have a standardized information system that would make information and transaction processing easier. Information system also helps the company with the research and development of new products.

Moreover, Southern Steel should provide itself a website for transactions as well as part of its marketing and promotions. Technology will really play an important role in international business.

Competing in international market should consider many aspects such as the annual consumption of possible new markets, historical steel prices in international market, and the competition from substitute materials (Mittal, 2005).

Another adjustment or strategy is that the company should consider putting up facilities or plant in key locations in the United States, in Europe or in other country where the company can capitalize and maximize the benefits from being a MERCOSUR member like in Mexico where labor costs are also lower. This strategy although will require the company to spend on the capital, it will also benefit the company because of lesser shipping costs and will also be covered by existing trade agreements in the country where the plant will be located. The company can also consider possible merger with other companies like a construction and engineering company.

Southern Steel will still study on the effective combinations of strategies mentioned above and implement them with considerations on cost reductions and operating efficiency improvements.

Conclusion

Large companies like Southern Steel can take advantage of the benefits from being part of the MERCOSUR by going international and imposing strategies for global companies. Large companies like Southern Steel that has the ability and capital help boost the economy of Venezuela. However, being a member of MERCOSUR put small and medium businesses in Venezuela at the losing end. Without much support and protection from Venezuelan government, these small businesses will be eaten by large foreign companies that will enter the country. MERCOSUR and other trade blocs are seem to be advantage only to exporting companies but definitely a disadvantage to companies that rely only on local market.

 

 

 

 

 

 

 

 

Discussion Board 

Since 1978, China has been practicing “Open Door Policy” to attract foreign investors. From then on foreign investors especially from Europe and the United States have been penetrating the attractive market of China. However, due to China’s effort to develop its local technologies, the country imposes rules and restrictions in the types of investment it will allow to enter the country. China gives priority and emphasis on industry-specific and high technology investments and imports such as electronics, transportation, energy and aerospace. China specifically encouraged foreign investments in areas in which China is seeking new technologies, higher quality products, assistance in building infrastructure, and more efficient use of domestic resources and raw materials (DFI, 1999). On the other hand, China restricts foreign investments in areas in which the country has developed a degree of domestic capability usually via previously imported technology, and in areas in which China is experimenting with investment liberalization or attempting to control foreign investment (DFI, 1999). China prohibits foreign investments in areas where a domestic Chinese industry or state monopoly exists or foreign investment would be potentially disruptive or threatening in some manner (DFI, 1999).

In many people’s perception this kind of regulations on foreign investments are unfair especially on companies who invested much on research and development to be able to come up with new technologies but are forced to share their technologies to be able to acquire market and sales in China. On the other hand, there are factors that influence foreign investments in China despite of this unfair policy.

Market size is the first attraction of China to foreign investors. The large market size of China makes European and American multinational companies set up operations in China with the aim to produce for the domestic market. There is also an abundant supply of cheap labor as well as developed infrastructure and transport links to external markets (Tseng et al, 2002). Moreover, foreign companies even bid for joint venture contracts and large-scale government funded infrastructure in China.

The kind of policy China has on foreign investment is not surprising because of the communism type of government it has. Its officials tend to be more protective and will always prioritize the country’s own interests.  Its policy seems to take advantage of the investors and seems to be an advantage on its people: having a good economy due to investors while developing technology at the expense of foreign investors. Foreign investors, no matter how attractive China’s market should not take the risks of sharing its technology to China. In the long run, when China has fully adopted and developed it technology, it may eventually form its own company that is a direct competitor of the investor. For example, Texas Instruments has shared most of its technology to China, after a decade or more China having the technology and resources they need, can now establish TI counterpart and imposed regulations on foreign companies that will make TI move from China. Due to technology transfer, China’s competitiveness will be enhanced therefore imposing a threat to foreign investors themselves.

 

 

 

Unit 5. Strategies

Company Profile

Ford Motor Company is an American-based leading manufacturer of automobiles; boasting automotive brands such as Ford Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, Aston Martin and automotive service brands like Motorcraft and Hertz. Each brand has a unique personality and holds a distinct place in the Ford Motor Company family. It was established on 1903 and has a great contribution to automotive manufacturing by developing the first moving assembly line using interchangeable parts, which made it possible to put the cars together at much lower cost and with greater reliability and repeatability, a technique that has been proven to be efficient and has helped the company increase production levels, surpassing their competitors and making vehicles more affordable.

Mission

Ford Motor Co. as a global company is passionately committed to providing personal mobility for people around the world and by anticipating consumer needs it delivers outstanding products and services that improve people’s lives.

Current Situation

The company operates primarily in the US, Mexico, South America, Canada and Asia Pacific. Its headquarter is located in Dearborn, Michigan and has 327,500 employees. In 2004, Ford has increased pre-tax profit, from $3.4 billion in 2003 to $5.8 billion; has cost reductions of almost $900 million and in total has improved automotive cost performance by more than $4 billion over the last two years. It also improved its revenues in North America and its market shares have increased in Europe, South America and Asia.  Half of its worldwide market is in North America and lesser in Asia (ABR, 2005).

During its early years, Ford wanted to produce the entire car and sell it to the other countries. But the shipping systems and trade barriers during that time hindered the company in doing so. So the company decided to design engineer and produce car parts centrally in Detroit and assemble the cars in remote locations (Womack, 2006).

Being the second largest producer of cars and trucks it has now active manufacturing, assembly or sales operations in 30 countries on 6 continents (Ford, 2000). In North America, Ford is concentrated within four countries: United States, Brazil, Canada and Mexico which is 95% of its total automobile production share. The company has three plants in Mexico, the Cuautitlan industrial complex plant, the Chihuahua engine plant and the Hermosillo stamping and assembly plant. Each plant produces different Ford brands and exports them in the United States and Canada. In Canada, there are 5 plants two of which export their products worldwide. Canada has accounted for the highest total of vehicles made outside the United States (Ford, 2006).

The United States where Ford Motor Co. originated is the center of the companies operation with concentration on assembly, stamping, research and engineering. Ford US has 37 manufacturing plants including 15 assembly and 13 powertrain operations, 25 research and engineering facilities and more than 20 automotive parts distribution centers.

In Europe, Ford has currently 5 major assembly facilities producing passenger cars for Ford in Europe and also in Asia such as the one in China which is the Jiangling Motors that produce light-duty Ford Transit trucks.

To be able to compete in the global market, Henry Ford, its founder, decided that economies of scale and a low cost product would be the key to competitive advantage. Therefore, from 1908 onwards, Ford builds and produces cars in mass scale. In 1908, Ford had the model T which design was most suitable for mass production and became successful until 1921. In 1981, Ford launched the Ford Escort which is called Mercury Lynx in Europe. In 1989, Ford started to design the CDW27 which was called Ford Mondeo in the European market and Ford Contour in the North American market. The company has lived with the idea of its founder and has plans to produce ‘world car’ or global car, a single model designed for all markets globally to optimize sale of production (Mol, 2001). World Car requires strong involvement from suppliers and heavy usage of new information technology to be able to build standardized products. Currently, Ford markets the so-called world cars such as the Mondeo and the Focus as well as the other brands in the Ford family from different acquisitions such as Volvo, Rover and Mazda.

Because of product standardization and mass production of Ford, it is necessary for the company to have centralized production facilities, implementing common manufacturing systems, centralized processing and IT system. The development of computer aided design, engineering, and manufacturing has enabled Ford to save money as well as time when it comes to manufacturing automobiles.  Additionally, IT such as the wireless real-time locating system that allows Ford to track inventory using low-power radio frequency tags and a communications network has enabled Ford to have critical information right at their fingertips.

Ford invested on networked computers for problem solving in the body structure design. Ford is hoping to gain competitive advantage with a new product they are using called C3P. C3P is an acronym that was derived from the strategy of using a product-information-management, PIM, system to integrate computer-aided design, CAD, computer-aided engineering, CAE, and computer-aided manufacturing, CAM, into global system of common data (Teresko, 1998). This product will allow Ford to do more tests electronically than wasting time and money on testing cars conventionally. A prototype car that is usually tested, costs around $200,000.  This system will allow employees to use “computer-aided simulation technology” and saves about 80% to 90% on what they would normally spend on test cars (Teresko, 1998).  Eventually all tests on cars will be done only by C3P and will cut costs for Ford even more.  Since C3P is all run electronically, it will reduce development time of vehicles from a 37 month period to a 24 month period.  The C3P system integrates parts of cars through the computer and it is tested electronically rather than done manually (Teresko, 1998).

Standardized products and centralized production facilities brought about by mass production provide the company with a lot of advantages. Economies of scale are the first advantage because the cost per unit of production is minimal. When products are standardized, there will also be lesser suppliers and parts needed unlike when a company has variety of products. It can also create a global image on customers, create new knowledge through a worldwide network and a reactive approach to the loss of market share in some markets.

Organizational Structure

Organizational structure of a company serves to allocate work and responsibilities in order to direct activities and achieve the organization’s goals. Structure enables managers to plan, direct, organize and control the activities of the organization (Mullins, 1993). Since organizational structure has direct relationship on a company’s activities, the type of organizational structure that a company must have aligned with its activities as well as with the company’s goals.

Before, Ford had a hierarchical, ethnocentric organization controlled by the Ford family. The automotive operations were divided into two, the Ford of North America and The Ford Europe. Operations on Asia Pacific and South America were run under North American operations. Europe and North America operated independently with separate functional departments such as design, manufacturing, marketing and sales, finance, supply and engineering while advanced activities and Research and Development being maintained centrally in Dearborn, Michigan. Each operation had very hierarchical structure with multiple managers superimposed on each department (Neish, 1994). Before a new design or any important matter to be incorporated in a platform, idea had to be channeled first through the hierarchy for approval and then reworked if necessary. This type of process with this type of organizational structure causes delay and inefficieny which was a disadvantage on the part of Ford.

On 1993, the company’s newly elected president and CEO Alex Trotman, decided to globalize Ford’s entire operations. With globalization, Trotman realized that the company needed significant change on its organization and came up with Ford 2000. Ford 2000 was a reorganization plan which included the consolidation of Ford North America and Ford Europe into a single entity, Ford Automotive Operations. The plan involved the replacement of vertical hierarchical management system with the matrix structure which consists of five vehicle centers, currently reduced to three matrixed with six functional departments (Penman, 1999).

The matrix type of organization aims to create synergism through shared responsibility between project and functional management. With matrix organization, information sharing is mandatory (Anonymous, 2006). At Ford, design efficiency has improved with the linking of Ford’s multiple global design centers through the use of computer networking and extensive video conferencing (Smith, 1994). The functional departments have functional responsibility to maintain technical excellence, with the leadership of department manager. Some advantages of matrix are that hierarchical referrals are easily resolved; there is a better balance between time, cost and performance; and authority and responsibility are shared (Anonymous, 2006).

With the new Ford management structure, there are plant vehicle teams consisting of quality, design, and production engineers and technicians. They design and implement solutions to problems recognized by dealer and customer feedback (Penman, 1999). Ford’s organizational structure is focus on teamwork, multiple reporting relationships, and technical expertise.

Strategies

As mentioned above, the primary strategy of Ford is mass production which has been proven to be successful in efficiently producing automobiles with the addition of innovative techniques that enables the company to standardized car parts.

Geographical dispersion of Ford especially the decision of putting up plants on Mexico, Canada and Europe has been one of the strategies of Ford to penetrate Latin American, Canada and European market at the most cost-effective way. By having manufacturing plants on these markets, the company has addressed trade barriers that prevented other companies to penetrate these markets.

Ford 2000 is another strategy of the company that enabled then to efficiently operate in international level. With Ford 2000, organizational change was done to seek balance between centralized strategic leadership and decentralized implementation (Bazak et al, 1998). With centralized leadership, the company now uses one process to develop cars while decentralized implementation allows the company to be flexible and response rapidly to changes. By eliminating several layers of management, there is now an improved communications and encouraged empowerment within the company.

Ford 2000 includes Total Cost Management, a system designed to eliminate excess costs. Ford has reduced its supplier base by cutting its number on non-production suppliers (McElroy et al, 1997).

Conclusion and Recommendation

Despite of the changes in the company and the fierce competition in the auto industry, Ford has managed to maintain its 2^nd position in the industry next to General Motors and is able to penetrate international market. Ford 2000 strategy has been effective and efficient in terms of cost. However, the company seems to have not gained much on the Asian market which is dominated by Japanese and Korean car manufacturers. It is therefore recommended that Ford focus a little more on targeting Asian and understanding its market to be truly successful in international market.

 

 

 

Unit 5 Discussion Board

           

The industry of internet retailing has emerged since the advent of technological advancements. Having a company website that features a company’s product is the trend for many industries today; it has been part of many company’s marketing strategy nowadays. We usually called it e-business. There are also internet retailers; these are e-business that has made the internet their only interface with the customers. There are a number of successful internet retailers like Yahoo, e-Bay and Amazon. These internet retailers have been successful due to their competitive advantage over the others. There are six main themes identified by internet retailers as essential to gaining competitive advantage. These are: multi-channel retailing; customer experience; loyalty; innovation; pricing and promotion strategies; and personalization and related online marketing strategies (Hofman and Novak, 2003). These strategies are achieved not only by having a merely attractive website but by making the site useful to the customer.

 

Moreover, internet retailing becomes successful when a retailer knows the basic reasons why people use the internet to shop. Know        ing these reasons will help the retailer determine the needs of the customer and how to meet these needs. Convenience and ease of use are the main reasons people but at websites (Nielsen, 1999). The convenience that is brought about by the internet is the main reason, so internet retailers should provide as much as possible convenience to the customers; convenience using the internet, convenience of paying when making purchases and convenience of getting the product on time. Almost 95% of website visits facilitate product research and cross-shopping which is an opportunity for retailers to attract customers and turn them into loyal customers (Nielsen, 1999).

Like any other companies, internet retailing needs effective marketing strategy. One of these marketing strategies is the affiliate marketing. Affiliate marketing can be simply defined as a commission based arrangement where referring sites (publishers) receive a commission on sales or leads by merchants (retailers) (Rigby, 2004). This type of marketing technique has what made Amazon.com increased its sales and stay in the internet retailing industry.

Furthermore, aside from marketing strategies to attract customers and increase sales, internet retailing is technology driven so retailers should have enough knowledge and resources to maximize the benefits of technology. For example, internet retailers of books should have the knowledge and technology to protect their books from unauthorized copying or from hackers. Internet retailers should have enough human resources and technology to update their system continuously making sure that it is secured and does not experience lockdown.

Generally, internet retiling is an international business for anyone in the world can access the website so there are more opportunities but at the same time tougher competition and more challenges.