External Factors - Wal-Mart - Case Study Example

Name Class Unit 1.1.1 The four external factors that influence businesses are: economy, government, public pressure on business to act as good citizens and finally consumer trends. When the economy is performing well, people have lot money to spend. This implies that business at Wal-Mart and Ford will be booming as the customers have more to spend. People tend to spend more when the economy is strong. Consumer trends affect the preferences of certain goods and services. Consumers will buy certain products from Wal-Mart and Ford based on the current consumer trends. Government regulations will affect business at Wal-Mart as well as at Ford. For example, increase in taxes will make vehicles and products from Wal-Mart to be expensive. Businesses are forced by the consumers to act as good citizens. This is through engaging in community projects such as clean-ups (Pride, Hughes & Kapoor, 2012). 1.2.1 When starting production of surfboards, factors of production to be considered are: land and natural resources, labour, capital and entrepreneurship. Land and natural resources will be used to provide raw materials required. These will be obtained from other companies engaging in production of fibreboards and polyester resins. I will be required to employ workers as labour is required to come up with final product. My entrepreneurship skills will help me to put resources together and come up with the final product. The source of capital needed to pay the workers and buy materials can be obtained from bank loan or personal savings (Pride, Hughes & Kapoor, 2012). 1.2.2 Economists’ tries to answer three types of questions which are; What goods and services are supposed to be produced to meet the needs of consumers, the quantity to be produced and the time to be produced? How the goods and services are supposed to be produced? Who is supposed to receive the goods and services that are to be produced? The answer to these questions will differ based on the country. For example, the type of goods and services needed at a given time in different countries varies. The country economic system varies and hence the answer to these questions varies. The economic system in place in Cuba and US will determine the freedom of making decisions on these questions. For the US, the economy is based on free market system. There is limited government involvement in making decisions on economists’ questions. For Cuba, it is a planned economy where government have more control. The government in Cuba will be involved in dictating what to be produced, how it will be produced and who will receive. In America, competition in the market will dictate manner in which goods and services will be produced and allocated (Pride, Hughes & Kapoor, 2012). 1.3.1 . The supply of oil is affected by the demand. The demand of oil by the buyers is the major factor that will affect the supply. Oil is under natural monopoly and requires high investment. There is low competition but they are regulated by bodies such as OPEC. They cannot charge any price they want but must adhere to the set prices. This implies that the supply of the oil will be regulated by the bodies such as OPEC based on the demand in the market and the set price (Pride, Hughes & Kapoor, 2012). 1.3.2 . If the oil producers find additional reserves, the price of oil will go down. This is due to high supply of oil to the market. Bodies such as OPEC ensure that the price of oil does not go below a certain set point. This implies that with the discovery of additional oil reserves, the prices of oil will fall to a certain level. 1.3.3. If the oil producers must extract oil from costly well, the price will increase. This is due to the high price of production that will be incurred. The incurred price during extraction will be passed to consumers in form of high prices. 1.3.4 . With the rapid expansion of Chinese economy, the price of oil will increase. China has been a major consumer of oil and the economic growth has led to high consumption rates. The rapid expansion growth will lead to high demand. Based on the laws of supply and demand, the increase in demand will lead to high equilibrium price. The demand for oil is also income elastic. The growing middle class on China will own cars which will lead to high rise in demand for oil. 1.3.5 . Fuel efficient cars leads to low gas usage. US are a major consumer of oil and gas and reduction in their consumption will lead to significant decrease in demand. A decrease in demand with a constant supply implies that the gas prices will fall. Thus, use of fuel efficient cars in US will lead to cheaper cost of gas (Pride, Hughes & Kapoor, 2012). 1.3.6. In the short run, the suppliers will be able to produce enough oil to meet the demands of its related products. This is due to fact that oil and gas are fossil fuels which are not renewable. The production of oil and gas will be affected in the long run as the sources become depleted or uneconomical due to exploitation. This will lead to more focus on renewable sources of energy. 1.4.1 . The four types of completion are; perfect competition, monopolistic competition, oligopoly and monopoly. In a monopolistic competition, there are many sellers selling differentiated products. These are products that are perceived to be different despite the fact that they serve same purpose. In an oligopoly, there are few sellers supplying a huge portion of the industry. The entry cost to oligopoly is high making number of firms to be low. An example is Airbus and Boeing. In monopoly, there is only one seller in the market. There are natural and legal monopolies. An example of a legal monopoly is Microsoft while a natural monopoly is electricity companies in a country. Perfect competition exists when the consumers can buy standardised goods and services from numerous small businesses. An example of perfect competition is market traders (Pride, Hughes & Kapoor, 2012). 2.1.1 . Academic integrity is violated when one engages in academic dishonesty. Academic dishonesty is an attempt by a student to gain unfair academic advantage using dishonest methods. This includes submitting the work from another person as own. Copying or paraphrasing without acknowledging the source (plagiarism). Cheating or aiding to cheat in an exam and destruction of academic materials. Cheating involves copying other peoples work, collaborating in an independent exam or using unauthorised resources to complete an assignment. 2.1.2 . Academic dishonesty is not tolerated in learning institutions. Once a student is accused of academic dishonesty, adequate investigation is carried out by the relevant school bodies. If the violation of academic integrity was not intentional, the student is allowed to redo the work, given a diminished grade or given a full grade. If the act was intentional, the student is given a fail grade, deregistered from the class, suspended for the semester or dismissed from the educational institution. 2.1.3 . When one witness an incident of academic dishonesty, there is need to make an ethical decision. This involves reporting the case to the authorities in the institution. This is a case where one has to behave in perfect honesty and avoid losing integrity. The act of whistle blowing in this case will help in doing what is right and ensuring that one maintains their honour and integrity. This will involve refusing to rationalise and doing what is right. 2.2.1 . An ethical dilemma involves a situation where one has to pick between two opposing alternatives which are morally acceptable. Each of the alternatives is of importance to different groups. An example of an ethical dilemma is a situation where an employee in a company that have a policy against accepting gifts is awarded a gift by a customer. Ethical decisions occur when an individual decision are sensitive to the set ethical standards. An ethical decision involves right versus wrong decision. It involves choosing to make ethical or unethical choices. When one makes unethical choice, they are involved in ethical lapse. An example is using company properties for personal purposes (Pride, Hughes & Kapoor, 2012). 2.2.2 . Ethical lapse involves making unethical or illegal decision. It involves making a decision that is unfair to other parties and against the organisation standards. An example of ethical lapse is when a manager decides to award contract to a relative in a company without considering other tenders. 2.3.1 . Company properties should be used for the company activities only. It is unethical for the employees to use the organisation computers for personal purposes. Using computers for personal activities can put the company at risk by jeopardising its data, lead to harassment and reduction in productivity. A company should have standards set for ethical computer use. 2.3.2 . Employee computer monitoring has been a controversial issue despite its necessity. It would be ethical to monitor employee computer usage based on ethical standards. This by ensuring that one does not invade the employees’ privacy. When the employer monitors the employee computer using the set ethical standards, it is permissible and within the law. A code of ethics can be used to determine what is acceptable and what is not in an organisation computer usage. 2.3.3 . In some countries such as US, employee monitoring is legal. Despite this, it is a good practice to notify workers that they are being monitored. The employers are expected to have acceptable use policy which spells out what is acceptable and what is not. The computers and the work done in them is the property of the organisation hence one has a legal right to monitor. 2.3.4 . If I were to monitor computer usage in future, I would ensure that I have an acceptable use policy. The policy should spell out what the employee can use the computers for and what they cannot do with them. I would ensure that I comply with data protection and protect the employees’ privacy. The employee using the company email should only use it for improving customer’s service. To enforce this, company email is intended for business use only. Employee may access and use internet during their free time while at the same time complying with the policy. The company have right to access all information sent through company email system. All messages archived in company computer system are deemed as company property. Through the use of Acceptable Use policy, it will be possible to enforce these laws. 2.4.1 . Casey Sheahan who is the CEO of Patagonia is an ethical leader. The company which provides outdoor wear have been involved in various activities that have shown its commitment to ethics under his leadership. The company under his leadership have been involved in environmental protection. The company has been contributing to conservation for a long time. Under his leadership which ended in 2014, the company has been very ethical. He has been able to minimise the opportunities for wrongdoing and enforcing the company policies. 2.5.1 . The UC stakeholders include the employees, suppliers, government, community around, students and guardians. The university is expected to provide the employees with safe and healthy places of work. This is through ensuring that there is no discrimination and any form of harassment. The employees should also be provided with wages and other benefits. The students are supposed to be provided with a safe and well equipped environment for studying. The parents and guardians expect to have their students taught in a safe and well equipped learning environment. They pay for the education and hence expect quality services for their children. Communities are impacted by UC in a substantial manner. The university is expected to work with the community through volunteering and other philanthropic activities and supporting social causes. The suppliers are expected to be paid in time based on mutual agreement. 3.1.1 . John has absolute advantage in writing reports and preparing presentations. This is due to fact that he can prepare reports in 80 hours as compared to Jennifer who use 150 hours. He can also prepare a presentation in 40 hours as opposed to Jennifer who can do it in 80 hours. 3.1.2 . If john writes the report and Jennifer prepares the presentation, it would take a client 140 hours. If john prepares the presentation and Jennifer writes the report, it would take the client a total of 190 hours. This has a comparative advantage for Jennifer who would take 210 hours if she did the job alone. 3.1.3 . Based on the analysis, it would be recommendable that John writes a report while Jennifer prepares a presentation. 3.1.4 . Based on the analysis, John has a comparative advantage in both writing report and preparing a presentation. He can produce both at a lower opportunity cost than Jennifer. John should specialise on preparing specialisation. 3.1.4 . Jennifer does not have a specific comparative in either task. She should specialise on preparing a presentation. 3.2.1 . Franchising involves making agreements with foreign companies while expanding to international business. Licensing involves allowing a foreign company to sell the company products or use its intellectual rights for a fee. Under a franchise, a foreign company is granted the right to use the brand name of another company to sell its products. This is practiced by companies such as McDonalds in their global expansion. Importing involves buying goods and services overseas and selling them in one’s own country. Exporting involves selling goods and services to foreign customers. As a CEO of a large company, I would prefer using licensing. This is due to fact that this mode of international business involves limited financial and legal risks. The method is also quick (Pride, Hughes & Kapoor, 2012). 3.2.. Outsourcing to China is one of the ways in which a business can cut costs and increase profits. This is a strategic position for the company to meet its aspirations. Manufacturing in China have low costs compared to Australia. Outsourcing the operations on the other hand will hurt Australian economy. This is due to wage erosion through increase in unemployment. A lot of jobs will be lost in the process. The main beneficiary is the company since they will benefit from efficient costs of labour. Based on the implication of outsourcing, I would only outsource activities that will not hurt the workers or the firm (Pride, Hughes & Kapoor, 2012). 3.3.1 . When faced with such situation, the Australian engineering firm will be at a competitive disadvantage. This is due to fact that they are prohibited from giving bribes. Despite the fact that the firm is at a competitive disadvantage, section 70.2 should not be repealed. This is due to fact that giving bribes is unethical and illegal (Pride, Hughes & Kapoor, 2012). 3.3.2.1 . Multinationals have decided to help in combating aids due to fact that failure to do so will be self-defeating. If an organisation does nothing, employees and customers will eventually be victims of the epidemic. The company profits and productivity will be eventually affected. AIDS is a threat to global social and economic development hence a corporate social responsibility (Lewis et al. 2003). 3.3.2.2 . Some of the multinational organisation has failed to help address AIDS citing the high costs while others see it as unnecessary expenses. Some of the organisations may not have understood the implications of AIDS on their operations (Lewis et al. 2003). 3.3.2.3 . From a humanitarian perspective, the business is supposed to help in eliminating AIDS in areas of operation. This is due to the fact that AIDS is a human crisis and has a great impact on society well-being. From a business perspective, eliminating AIDS helps a lot in operations of the business. It enhances productivity and ensures business profits are not affected by absenteeism and ill health (Lewis et al. 2003). 3.3.2.4 . When working in a country that is unwilling or unable to control spread of aids, one is supposed to help in combating the epidemic. I would come up with aggressive tactics to combat AIDS. This would involve provision of Anti-retroviral and providing counselling services to employees (Lewis et al. 2003). 3.4.1 . There are a lot of firms which outsource the manufacture of their apparel. These include; Nike, Macy’s, Fubu, Wal-Mart, Sears, Disney, Gap, H&M, JC Penny, Target, Kik and Abercrombie & Fitch. 3.4.2.1 Textile manufacturers and workers in the following countries: China China textile industry serves a vital role in the economy. The country leads global production of textile. Textile is produced for both local and international consumption. China has an average of 23 million textile workers. There have been complaints on way textile manufacturers in China uses sweat shops and oppressive labour laws. The main textile manufacturers are; Shandong Jining Ruyi Woolen Textile Co Ltd, Jiangsu Hengli Group, Shangtex Holding Co Ltd, Weiqiao Textile Co Ltd and Jiangsu Sunshine Co Ltd (Singleton, 2013). 3.4.2.2 Indonesia Indonesia textile market is made up of both local and international manufacturers. The industry provides over 1.1 million jobs and accounts for more than 7% of the country’s export (Singleton, 2013). The major textile manufacturers in Indonesia are; Apac Inti Corpora, Ateja Multi Industria, Busana Apparel Group, Century Textile Industries (Centex), CMP, Dayani Garment Indonesia (DGI), Ever Shine Tex and Unitex. 3.4.2.3 Mexico Textile industry in Mexico is a major source of employment. The industry has made the country the 17th largest exporter of textiles. There are over 1700 textile companies in Mexico. The industry provides 800, 860 jobs in the country which is 5.4% of the employment (Singleton, 2013). 3.4.2.4 United States In United States, textile industry plays a major role in employment. The industry has over 232,000 workers which represent 2% of the manufacturing workforce. The major textile companies in the country are; Welspun USA Inc, WestPoint Home, American Enka Company, American Viscose Corporation, American Woolen Company and Fall River Manufactory (Singleton, 2013). 3.4.2.5 American Consumers American consumers of textiles have been very supportive to industry. the country is one of the major consumers of apparel. The consumers have been advocating for sweatshop free apparels in their consumption. This has been due to rise on ethical concerns on outsourcing. 3.5.1 What is NAFTA? Why was it formed? What has it accomplished? North America Free Trade Agreement was formed to boost interregional trade among USA, Mexico and Canada. NAFTA is a free trade agreement formed in 1994. It eliminates several tariffs between member countries in a gradual manner. This has helped a lot in broadening trade relations among the countries involved and stimulated economic growth. 3.5.2 . EU was formed in 1993 as an economic and political federation. The body makes common policies for the member countries in several areas. The body have promoted trade among the members, kept Europe together and established commitment to developing countries. The body have faced challenges in political integration which have been slow, meeting the provisions required for EU and Greece economic crisis. 4.1.1 . Based on my responses, I have attributes to be an entrepreneur. I can be a successful entrepreneur since I am innovative, can run a business and I enjoy taking risks. I usually come up with a business idea and commit myself to it. 4.2.1 . Most of the small businesses are found in the service sector. This is due to fact that the sector have been growing at a very fast rate than good producing sector. Small business found in good producing sectors that I patronise regularly are; food service, entertainment and saloon. Small businesses in good producing sector that I patronise regularly are; small scale farming and manufacturing (Pride, Hughes & Kapoor, 2012). 4.3.1 . Buying an existing business Advantages Proven conduct Have active suppliers Current customers Known location Easier to predict business future Trained workers Disadvantages Hard to determine how much to pay One inherits the existing business problems such as offended customers, bad works. The owner may set up a competing business New business Advantages One starts the business the way they want (decides on whom to hire, location and what to offer) Disadvantages Highly risky Takes time to build reputation Takes time to create a customer base Franchise Advantages Support from the company Help in picking a location One obtains a business with a successful name Ability to use brand name to sell products Shares operating costs and advertising costs. Disadvantages Some franchises are expensive Expected to buy products from the franchiser High control by franchiser It’s affected by franchiser reputation. References Lewis, P., Larsen, A. G., Groenningsaeter, A., Galeboe, M., & Taneka, S. (2003). Crossing borders to fight HIV/AIDS: the role of South African multinationals in the private sector response in Botswana. Botswana National Productivity Centre. Pride, W., Hughes, R., & Kapoor, J. (2012). Foundations of business. Cengage Learning. Singleton, J. (2013). World Textile Industry. Routledge. Read More