Elecdyne - Issues Affecting Global Business Environment from the Point of View of the SME - Report Example

Management Report Analysing the Issues Affecting the Global Business Environment from the Point Of View of the Case Study SME (Elecdyne) Table of Contents Introduction 3 Current and Future Business Environment 4 Choice for Company 7 China 7 India 8 UK (United Kingdom) 9 Internal and External Corporate Analysis 10 Internal Analysis 10 External Analysis 11 Internationalisation Options 13 Conclusion 14 References 16 Introduction Based on the case study provided, Elecdyne is a SME, which was established in the year 1990 in Japan. It is a Tokyo based company, which produces electronic products such as CD players, televisions and DVD players among others. The company was started with only five workers or employees and now the same has reached around 100. Notably, the company purchase raw materials from the suppliers of Tokyo. The market of Elecdyne is fundamentally based on the Japanese market therefore; the company faces the problem in raising the sales of its products. From the previous two decades, the company is unable to make profits, which is duly considered to be one of its major issues (Researchomatic, 2015). Based on the current situation of the prevailing business environment, it can be affirmed that the company also face several threats in terms of strong competition, innovation as well as technological changes. The company is unable to provide better opportunities to the employees based on their requirement therefore, it faces the problem in hiring qualified employees for the improvement in its overall performance. Due to increasing level of operating costs, the company faces the problem to compete with the local competitors in Tokyo (Davidson, 2014). In relation to the above context, the assignment intends to prepare a management report examining the issues affecting the global business setting from the standpoint of the provided case study relating to Elecdyne. While preparing this report, various significant aspects including the assessment of the current as well as future environment related to the business of the company by using STEEP analysis and conducting internal analysis based on strengths along with external analysis based on PEST factors have been duly considered. Current and Future Business Environment Through effective incorporation of STEEP (Social, Technological, Economical, Environmental, Political) examination structure, it is possible to measure the current as well as the future business setting of companies operating in any industry. STEEP investigation structure is also regarded as an important framework to assess several external factors that can affect the overall performance of businesses (CIMA, 2007). It is thus essential for the companies to understand the conduct of STEEP analysis and consider certain external factors for the improvement of the strategic plan and the decision-making procedure. The STEEP analysis framework has been used only at the time of determining the uncertainties prevailing in the market in order to evaluate about how these uncertainties can affect the entire business process (Research Methodology, 21015). The STEEP analysis framework in relation to Elecdyne based on the provided case study has been explained in detail in the following. Elecdyne’s STEEP Analysis Social Due to lower labour costs, fewer numbers of people are employed in the company, which is one of the negative attributes of the company Wider use of tablets and other related technological devices may lessen the demand of the products of Elecdyne Education system has improved after the Second World War. The people as well as the students desire to seek information about the electronic products, which is beneficial for the electronic business of Elecdyne Technological Due to wider development in advanced technologies, the electronic business has improved at large Japan is regarded as one of the famous countries possessing greater automated system, which might help to improve the effectiveness of the electronic business of Elecdyne Japan can be duly considered as the third leading broadband country, which is one of the advantages for Elecdyne to conduct its business effectively. By using the internet medium, the company can perform its operations through online Economical Japan is reckoned to be the third leading economic country in the world. The increasing level of economic growth certainly helps the electronic industry of the nation to improve the business and decision-making procedure for increasing profits In recent trends, due to worse economic condition, the company i.e. Elecdyne faced problems in increasing sales of its products in Japan Earthquake is one of the major reasons for having worse economic conditions in Japan Environmental Japan is also reckoned to be a cultural variety nation in the world The changes in climate have significant impact on the electronic business in Japan There is high risk of earthquake and landslides, which can affect the improvement of Elecdyne’s electronic business in Japan Based on the environmental policy, Japan is unable to manage balance amid environmental policy and economic development, affecting greater level of development in the overall business process Japan is duly considered as the largest importer in terms of energy resources. Therefore, the price of energy resources might have greater impact on the transportation costs of products and goods Political The government of Japan has introduced and changed certain policies for the improvement of the electronic business, which could be reckoned as one of the positive impacts in the business of Elecdyne Source: (Scribd Inc., 2015) From the above STEEP analysis framework, it can evaluated that the above mentioned factors are essential to consider for recognising the market trends of Japan. With the help of STEEP analysis, the current business environment of electronic industry prevailing in Japan can be better understood along with making future planning for the improvement of the business of Elecdyne in other business markets like China, India and the UK. Choice for Company China In recent times, the electronic industry in China plays an indispensable part in increasing the national GDP growth. In the year 2009, China witnessed worldwide financial crisis, which eventually triggered the need for improving its economic growth. The electronic industry in China is observed to get developed in the year 2012 (Export Government, 2010). Identifiably, China imports the electronic products from various partners such as the US, Japan and South Korea among others. The import value of electronic products in China has decreased because of the occurrence of financial crisis in the global economy. More importantly, the rural areas of China are becoming more developed due to increasing demand of electronic products in the respective business markets of the nation. The electronic industry in China has been developed by implementing innovative as well as new technologies (Cho, 2009). In this modern contemporary world, China is regarded as one of the biggest hubs for manufacturing wide assortment of electronic products. In recent trends, the people of China pay utmost attention on maintaining the quality of the products that they receive from the markets. Therefore, to improve the electronic industry, the respective government of China developed policies about maintaining the quality of the products in accordance with the requirements of the customers. In addition, the government of China also emphasised developing the quality of the domestic brands of the electronic products (Zhongwen, 2006). India The electronics industry in India was developed since in the year 1965. In earlier times, the electronic business in India got developed with the introduction of radios, calculators, black and white televisions and other audio products. With the passing years, the industry in the nation developed gradually. This can be justified with the introduction of colour television in the year 1982. The year 1990 was deemed to be regarded as the golden period for India due to rapid growth of electronic business (CCI, 2015). In this present day context, India has improved its market position in the electronics market by producing new and electronic hardware products based on the requirements of the customers. It is evident that use of advanced technologies is essential for the improvement of electronic business in any nation, which was not available in earlier times in India. Thus, with greater availability of advanced technologies, India used advanced and innovative mechanisms for developing new and good quality electronic products for making improvements in the overall performance of electronic business (Modak, 2006). There are certain threats as well as opportunities in the electronic industry of India. One of such challenges or threats faced by India in terms of electronic business was infrastructure Therefore, there lays the requirement of improving the prevailing infrastructure to make the foreign investment process more easy. The governmental policies of India related to electronic industry are clear-cut and though the expenditure of R & D department is kept as quite low, this can affect the development of electronic business in the nation. In spite of various threats, there also exist opportunities for future development of electronic business in India. These opportunities could be obtained by making greater use of manpower in order to suffice the market demands of the electronic products (Small, 2015). UK (United Kingdom) UK is regarded as the second biggest leading countries throughout the globe, which offers several opportunities to the UK based companies or foreign companies. UK provides facilities to the foreign companies in relation to taxation rate along with the regulatory business environment for the improvement of its electronic industry. The respective government of the UK focuses on providing attractive opportunities to the employees for enhancing the performance of electronic industry in the UK business markets. UK can also be duly considered as the strong place for making favourable investments (Shepherd & et. al., 2003). There lay several opportunities for Elecdyne to produce different sorts of electronic products and compete with others. Identifiably, high competition exists in the electronic business in the UK market. The technologies used in the electronics industry in the UK are seemed to be much advanced and innovative therefore; the business markets of the nation could be regarded as the influential factors for the development of the business of Elecdyne. UK supplies the electronic products from the US and Europe among others. The business markets of the UK are found to be flexible in comparison with other countries therefore, it is possible for the company i.e. Elecdyne to conduct electronic business in the UK effectively and expand the same to other regions as well (BIS, 2010). Internal and External Corporate Analysis Internal Analysis Based on determining the strengths along with the weaknesses, the internal analysis of Elecdyne can be assessed. In relation to the provided case study, it can be affirmed that Elecdyne is an electronic based company in Japan, which provides distinct sorts of electronic products to the customers based on their needs. The company possesses certain strengths as well as weaknesses, based on which, the performance of Elecdyne can be measured. In this regard, one of the major strengths of the company can be apparently observed as lower production costs. There is diversification in the products offer by the company with having greater level of management experience. This is one of the strengths of the company, which can lead towards future improvement. The company supplies electronic products or raw materials from the local places such as Tokyo. Therefore, it can be affirmed that the brand image of the company is strong in the local place and the people of Tokyo are much aware about its brand name (Davidson, 2015). Along with the above discussed strengths, Elecdyne also possesses certain weaknesses. The major weaknesses of the company can be low market share and unsatisfied conditions of R&D department that have affect the business of Elecdyne. Moreover, the management team of the company does not have any experience in relation to the conduct of international business. Therefore, it is unable to take strategic decisions towards making significant improvements in the business (Davidson, 2015). External Analysis In order to conduct external analysis, a rating method has been developed wherein each of the factors discussed above will be rated amid the selected nations against Japan. In this regard, the factors including PEST (Political, Economic, Social, Technological) have been taken into concern for the conduct of external analysis. It is worth mentioning that based on the conduct of external analysis, it is possible to assess the future improvement of Elecdyne in terms of gaining opportunities (Peng & Nunes, 2007). The comparison amid the nations by the inclusion of rating method has been presented in the form of tabular representation in the following: From the above presented comparison tables, it can be affirmed that China is an appropriate country for the expansion of the business of Elecdyne. This can be justified with reference to the fact that after Japan, China has scored maximum point in relation to India and UK based on the PEST factors analysed above. Other evidences also suggest that China might be the appropriate nation wherein the company i.e. Elecdyne can expand its business (Peng & Nunes, 2007). It is worth mentioning in relation to the above context that the people of China possess adequate knowledge about innovation and technology. Consequently, they are able to produce new design and good quality of electronic products as per the requirements. From the above tables, it can also be apparently observed that in comparison with India and the UK, wide availability of labours with reasonable costs still persist in China, which would prove much beneficial for Elecdyne to expand its business in China. The respective government of China pays utmost attention on preserving the quality of products as compared to the governments of other countries like India and the UK (Peng & Nunes, 2007). Therefore, it can be affirmed that after Japan, China is the appropriate country for Elecdyne to start its electronic business. Internationalisation Options There are certain strategies through which the company i.e. Elecdyne will be able to enter into the international markets in China. In this similar context, Joint Venture, Greenfield sites and Merger or Acquisitions are the major strategies that can be helpful for the improvement of the business of the company in the international markets. The strategies are identified to be quite different from one another that have been discussed in detail hereunder with elaborating their respective advantages as well as disadvantages. Strategies Advantages Disadvantages Joint Venture In Joint venture, the risk is low and it can be shared among the partners With the help of joint venture, it is possible to share the resources and technology for the improvement of the business High chances of making profits based on the innovative idea of joint venture The investment amounts can be low There cannot be any consistence decision in term of determining business objectives Conflicts may be created amid the partners and their relationship There can be difficulties in maintaining the management Greenfield sites The cost of local labour is low It can be helpful for reducing high amount of tax With the help of Greenfield sites, the transportation costs can be reduced It is possible to increase the number of local labours for improving the business and making profits Required huge funds for making investments There is no loyalty in terms of brand name There are low chances to enter into the new market Sources: (Willey, 2015; Lexis Nexis, 2011; Crown, 2010; Jorgensen & Jorgensen, 2010; Claeys & Hainz, 2006; Lee & Pennings 1996; Monks, K. & et. al., n.d.). Conclusion From the above analysis and discussion, it can be ascertained that the business of Elecdyne was developed in Japan in the year 1990. With regards to the case study provided, it can be found that the company faced certain issues in terms of making profit, as it depended mostly on the business markets of Japan. The Company also faced problems in getting highly qualified employees due to having low infrastructure and inability to deliver better opportunities to them. From the conduct of STEEP analysis, the conditions that can provide benefits and also disadvantages towards the improvement of the business of Elecdyne have been determined. While performing the analysis, it can be noted that the labour cost is low in Japan, hence the company is not getting highly skilled employees and proper human resources for making significant improvements in its. However, on the other hand, Japan is duly considered to be the third economic country and its respective government has introduced as well as changed certain policies for enhancing the performance of electronics industry, which can be benefited for Elecdyne. Three countries have been selected such as China, India and UK (United Kingdom) for expanding the business if the company i.e. Elecdyne. In comparison with Japan from China, India and the UK, after Japan, China is reckoned to be the most appropriate country to establish the electronic business rather than India, as China is nearby country of Japan and the population growth of this nation is also high. Throughout the conduct of internal as well as external analysis, it was also found that the strategies including joint venture, Greenfield sites and merger or acquisitions will play a major role for Elecdyne to internationalise its business in the international markets and also holding strong position in the same. 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