The State of the Global Market System - Essay Example

The of the Global Market System Introduction There is a consensus that the needs of the average consumer are similar, if not the same, throughout the global market. On the other hand, there are people who do not share this belief, and instead believe that the marketplace and individuals are unique. Ultimately, the question arises as to whether market differentiation or market similarity is the best way to classify the present state of the global marketplace. Within each country there is the potential for differences in the creation of products and the global marketing of those products. To a certain extent, there can be some similarities in the ways that corporate leaders move to achieve their goals. There can also be a similar movement exhibited by consumers from individual nations to attain the goods. The products observed in this paper will consist of electronic products, specifically cellular phones, and transportation products, specifically automobiles. In the United States, the competition in the marketplace within both cellular phones producers and automobile manufacturers is quite fierce. From the standpoint of the global marketplace, the countries for consideration relative to consumption of both cellular phones and automobiles would be China, Mexico, and Japan. The international marketplace for cellular phones and automobiles in these nations as compared to use within the United States will be explored in this paper. Cellular Phones in the Global Marketplace System The high cellular phone usage stems from the busy life of the average consumer. Modern consumers are forced to be more mobile in today’s society. To take advantage of this consumer need, leaders of companies such as Motorola and Nextel have extensive advertising budgets. They use advertising to increase their corporate customer base, and to maintain the loyalty of their existing customers. Within the United States, the market for cellular phones is considerable and experts do not anticipate a decline in the market or usage in the foreseeable future. The improvements made to cell phone design and function are done, so that customers are able to get more uses out of the phone which they possess. In busy lives, multitasking becomes crucial and the multitasking nature of the cell phones that many use, has become very instrumental to the countless users who subscribe to the service to begin with. In the case of those who live in China, Jing Wang, in a speech given to the MIT Communications Forum on November 17, 2005 on Cell Phone Culture, says the following, “By 2008, there will be close to 500 million Chinese mobile phone subscribers. Currently, Short Message Service dominates mobile data transfers. Multimedia content has achieved very little market penetration so far. Music on mobile phones is still quite rare. Motorolas task, then is to find a way to integrate mobile multimedia content into peoples daily habits,” (Wang, 11/17/05). The usage of cell phones has impacted Chinese society with the same depth that has been experienced within the United States. This fact is evidenced from the number of cell phone users in compared to the overall population size of the nation. The United States has a considerable number of cell phone users relative to the overall population as well. In order to tap into the large population of cell phone users, the cellular phone marketers in the United States have also included multimedia players in their products. For the U. S. consumer, the ability to keep track of personal schedules is equally as important as being able to listen to music, or view video programming while in transit. However, for Chinese consumers, the capability of listening to music on cellular phones is not as common. Unlike the citizens in the United States that use their cellular phones for entertainment, as well as communication, the people who live in China from everything that has been observed through actions, do not feel the same way about cell phones and use them primarily for talking to people and nothing else. Mexico is another country in which there is a notable difference in cell phone usage and function as compared to the U.S market. In the U.S., the most prevalent cell phone user has a set monthly plan with service provided through a company that regulates cellular usage. In Mexico, the most prevalent type of cell phone is one in which the consumer prepay for minutes. While this option is also offered in the U.S., many Americans tend to go to their local Verizon Wireless, or AT& T and arrange to have their cellular phones be set up for whatever monthly plan that is offered. In the end, monthly plans are in many ways far more reliable than those phones that use other forms of minute options. With the popularity of monthly cellular service, as well as the offering of pre-paid cellular phones, it could lead some to believe that there is substantial difference to be had between the two options. Ultimately, the prepaid and monthly planned cellular phones differ primarily in accessories offered, rather than in any utilitarian capacity. Malkin (2002) stated, “The vast majority of the explosive growth in Mexican cell phone use--it has grown more than eightfold in four years--has come in prepaid service. Users pay in advance for a set number of calling minutes by buying a calling card. That system lets lower income people control carefully how much they spend on the phone, and it relieves the phone provider of most of the credit risk,” (Malkin, p.1). The third and final marketplace to consider is Japan. With a highly competitive market for cellular phone technology, Japanese consumers hold a firm market in technology. Japan is a leader in mobile phone technology. Approximately 75% of the population owns and uses cell phones. Cell phones are everywhere. Manufacturers are continually adding new features such as Internet browsers, games, cameras, televisions, electronic wallets/train passes, GPS/navigation systems, and music players. Thus, it can be concluded that accessories and features of cell phones in Japan are similar to those features and accessories found in phones in the United States. “The biggest mobile phone companies in Japan are NTT Docomo, AU by KDDI, and Softbank (formerly Vodafone, and before that J-phone). Docomo is the most popular company with about 50 million subscribers. Au is next with about 30 million subscribers, while Softbank has about 15 million subscribers,” (“Cell phones in Japan”, p.1). Automobiles in the Global Marketplace System The automobile industry is another market where comparisons can be made between countries. Consumers may have different or similar expectations of automobiles depending on the country. Many people in the United States are accustomed to the sight of automobiles in mass numbers. Consumers in the U.S. have developed a sense that bicycles are transportation to be used for leisurely trips and vehicles meet their daily transportation needs. These needs are fulfilled by such industry giants as Ford, Chrysler and Japanese manufactured, Toyota. Americans lead, to a very large degree, busy lives and those lives create a need for fast moving vehicles goes beyond the desires to be had while leisurely taking a Sunday stroll around the neighborhood on the trusty 10-speed bicycle, or making a shorter trip that may not require such fast movement. With the growth of the Chinese population and the strength of its economy, many analysts have posited that marketing of the automotive industry would do well in the highly dense population centers of China. Within the last few years, projections have been made regarding where the Chinese consumers would seek vehicles. However, the recent volatility the international economy has been felt in the Chinese auto industry. The result has been a steep decline in consumer demand which has forced automobile manufacturers to shift in the way of marketing automobiles. The economic crisis worldwide has impacted manufacturers. As a result, manufacturing officials are questioning if there is a consumer base for vehicles in China. Segolene Allemandou, in their news report for France 24, International News 24/7, suggests the following, “It’s unanimous: the honeymoon is over in China. After experiencing spectacular growth exceeding 20% in the past two years, the automobile sector is in the doldrums. Chinese car manufacturers are announcing job cuts. According to reports published by JD Power, the increase in auto sales has slowed down to 6.7% this year, as opposed to 22% in 2007 and 26% in 2006. Auto manufacturers have announced a reduction in mass production. PSA Peugeot Citroën, an affiliate of Dongfeng Motor in China, has decided not to renew the contracts of 1,000 temporary workers on their Wuhan site,” (Allemandou, 11/16/08). Allemandou goes on to say that, “Volkswagen, which counts on China for 15% of its worldwide auto sales, announced in September that it was closing 700 jobs, after reduced production in its Changchun factory. Chinese media have reported that Ford (US), BMW (Germany) and Chery (China) have also reduced their staff, over the last few weeks. Ford Motor China only reported a 6% annual increase for personal cars for the first nine months of 2008. Volkswagen China fared better, with a 13.1% rise in the past 12 months,” (Allemandou, 11/16/08). Further looking at the Chinese auto industry, Allemandou writes that, “The Chinese auto sector, while still more robust than its counterpart in Europe and in the US, is expected to stagnate in 2009. China, which has 1.3 billion inhabitants, only has 168 million auto vehicles, of which only 40.18 million are private cars,” (Allemandou, 11/16/08). For those who live in Mexico, they too have found a place in the greater market for automobiles. According to the U.S. Commercial Service, part of the US Department of Commerce, “The automotive industry continues to be the one of the most important industrial and manufacturing sectors in Mexico. Between 2006 and 2007, the Mexican auto parts industry and vehicle production and assembly reached record production levels even after signs of economic slowdown in the principal export market in the United States. In 2001, Mexico was the ninth largest producer of automotive vehicles in the world, manufacturing 1.92 million units (including trucks and busses), however after a slowdown in production due to economic events, it came back and grew to 1.6 million in 2005 and to over 2.1 million in 2007. Mexico surpassed the two million-unit annual production mark during 2006. As a result of new investments in their assembly lines and the launching of innovative vehicle platforms, Ford, Volkswagen, and Nissan significantly increased their production. General Motors announced that they will start operations of their new plant in the city of San Luis Potosi in the month of April with a production of 30 automobiles per hour and could be increased to 60 units per hour by the end of 2008. The city of Aguascalientes will be the headquarters of a plant to be built by European investors to produce hybrid and fully electric ecological cars for the Mexican and U.S. markets. This provides an extraordinary opportunity for further growth for U.S. first and second tier suppliers, and especially for providers of raw materials, technological advancement, parts, machinery, and consumable supplies. Automotive assembly plants are now requiring their basic suppliers to be very near the plant installations so that they can reduce inventory investment and control and be able to supply just in time (JIT),” (US Commercial Service, p.1). In the case of the Japanese market, “Japan’s automakers might be ramping up sales and market share in the U.S. quicker than you can say Prius Hybrid, but things aren’t quite so rosy back home. Despite Japan’s economic recovery sending the Nikkei stock market index to five year highs, confidence has yet to reach car buyers. In 2005, auto sales in Japan fell 0.9%, while sales at Toyota (not including the recently introduced Lexus brand) dipped 3.2%. Honda did almost as badly registering a 2.9% fall. While Nissan managed a relatively healthy 2.2% increase, the prognosis for 2006 isn’t looking much better. The Japan Automobile Manufacturers Association reckon sales in Japan will stay more or less flat in 2006, although Toyota is hoping that new models like the recently launched bB (the eventual replacement for the Scion xB in the U.S.) pictured above will provide a welcome boost. All of which is a big contrast to the U.S. market where figures released this week showed Japanese automakers, led by Toyota, achieved their best ever market share in 2005. Before long, Toyota will sell more cars in the US than it does in Japan. Last month, Toyota CEO Katsuaki Watanabe outlined plans to increase sales in the U.S. by 10% to 2.46 million in 2006 aided by a raft of new releases including the Lexus GS hybrid sedan, the Yaris compact, and at yearend Tundra trucks from the new San Antonio plant. That’s just a shade less than the 2.47 million vehicles Toyota expects to sell in Japan through 2006,” (Rowley, 01/06). With the desire of consumers to have the most reliable vehicle as possible, Toyota has become quite popular with US consumers over the years. With the reliability that the company has been highly regarded for as it comes to their models such as the Camry, the Corolla, or the Prius, Japan has placed itself in a firm position of being a primary global player on the world stage as it comes to automobile purchasing by other world nations. Despite their projected decrease in sales in their own country, Japan, according to the previous source by Rowley, looks to be moving towards further increasing of their market game plan in regards to the number of cars that they sell in the United States. Conclusion Products sold internationally go beyond cultural boundaries. Products sold in Japan, Mexico, or China, can have a great deal of similarity to American products. When considering the products of cell phones and automobiles, there can be both similarities and differences internationally. Cell phones can differ in prepaid or monthly plans, and manufacturers can focus on features or utility. Poorer, more rural people see using cell phones as more of a luxury, rather than an affordable necessity. Manufacturers have found that in the Mexican market, using a prepaid plan approach allows poorer people to afford cell phones and allows the manufacturers to increase their market share. Conversely, monthly contracts are much more popular in the U.S. and Japan. While pre-paid phones allow people to stay within their monetary limits, monthly structured phones are set up allow convenience and to acquire as many consumers as possible for the company, resulting in the highest profit margin to the cell phone provider. For a product to become more prominent in the market place, the company that produces the product itself is faced with many challenges that come with finding the ways necessary to increase the all important financial bottom line of the company itself. The draw to use technology is similar worldwide. The nature of the consumer to feel compelled to use a cell phone regardless of features is something that appears to be universal. With similar desires come similar products, even if those with the desires take dissimilar approaches to using those products. In comparison the automobile industry is impacted more by the global economy overall, rather than the desires and features of the products. The economical differences between consumers in China, Japan, Mexico and the U.S. have a greater impact on the overall use and market of automobiles. The global marketplace system has seen an evolution of growth over the decades, which to a considerable degree is directly in line with the demand for the products by the consumers who choose to use them in the first place. Products like cellular phones, as well as automobiles, have reached farther into the consumer spectrum of consumption requirements. Sociological, as well as, economical concerns, still come into play for many consumers to a considerable degree when it has to do with those choices to make in regards to the car they choose to drive, or whether or not they have a cell phone to go along with them as they do daily tasks. To some consumers, cell phones are more of an extravagance, rather than a necessity. A mentality that has given way to a solid grouping of the population, whether they live in the United States, Japan, China, or Mexico, that have not to fallen into the global demand for such a device. With that being said, no matter how many people elect to not have cellular phones, there are a considerable amount of people who fall into the larger group of the total global family by having one cell phone in their home at least. Automobiles have become a primary component for many homes, both nationally within the United States, as well as internationally. From a global standpoint, the need for automobiles has been considerable in the United States, with the demand filtering to varying degrees to international neighbors like Japan, China and also Mexico. For the automotive marketplace, sociological and economical concerns also play a factor for those who purchase the vehicles. Nations can see their level of exportation of vehicles impacted by the markets of those nations that they wish to do business with. An economic downturn can greatly impact the rate at which products are able to be marketed on a global stage and essentially, impact the number of products that are sold period. Despite the economic turn of events, automobiles are fundamentally a global force that have lasted the test of time. A creation that has become global in the fact that many utilize automobiles to perform tasks that come with day-to day lifestyles. The localized nature of the automotive industry comes from the rate at which nations see the exportation of their automobiles to other world neighbors. Competition has become very fierce within the industry to produce the best possible product in the end. References Allemandou, S. (2008, November 16). “Honeymoon over for the Chinese auto market.” France24: International News 24/7. Retrieved from http://www.france24.com/en/20081116-honeymoon- over-chinese-auto-market-automobiles “Cell phones in Japan.” Japan-Guide.com. Retrieved from: http://www.japan-guide.com/e/e2223.html Malkin, E. (2002, November 8). “Debt crisis for venture in cell phones in Mexico.” The New York Times. Retrieved from http://query.nytimes.com/gst/fullpage.html?res=9406E1DD1631F93BA35752C1A9649C8B63 Rowley, I. (2006, January). “Japans shrinking auto market.” Business Week. Retrieved from http://www.businessweek.com/autos/autobeat/archives/ 2006/01/japans_shrinkin.html US Commercial Service: United States of America Department of Commerce. “Automotive Manufacturing Industry- Market Overview.” Retrieved from: http://www.buyusa.gov/ mexico/en/automotive_manufacturing.html Wang, Jing (Speaker). MIT Communications Forum. “Cell Phone Culture.” Date held: Thursday November, 17 2005. Location: Bartos Theater. Retrieved from: http://web.mit.edu/comm-forum/forums/cell_phone_culture.htm Read More