China Sportswear and Sports Footwear - Case Study Example

China Sportswear and Sports Footwear Name Course Name and Code Instructor’s Name Date Table of Contents Table of Contents 2 Executive Summary 3 Consequences of globalization 4 Economic trends 5 Environmental and ecological challenges 5 Political, legal and governmental challenges 6 Influences of technological advances 6 Significance of culture and society to the industry 8 Recommendations and Conclusion 8 Reference 10 Executive Summary Globalization entails sharing and communicating traditional, cultural and economic values including products, services, and information among different communities and countries the world over. Footwear and Sportswear industry is vital in the entire Chinese economy. Globalization of the sportswear products from China will ultimately improve the general economic status of the country. Consequently, the latter will open new opportunities for foreign investment. The economic trends in the country are highly promising; with regard to this, sportswear industry is bound to grow at a tremendous rate. The business environment in the country is conducive, given the fact that the political, economical, sociological, technological, and legal environments are favorable for any business to thrive. Introduction This papers entails report findings of an assessment done for the sport wear and sport footwear which is an industry located in china. The assessment identified vital current trends in the industry specifically in china. Some of the specific factors clearly dealt with include the consequences of continuing with globalization on this industry in the same country, some of the main economic trends as well as forecasts and their impacts in that country which is china and the possible changes they may bring in the future. It has also an assessment of the environmental and ecological challenges that the industry experiences in china and their consequences in future as they evolve. It has also political legal and governmental factors important affecting the industry. Technological issues have also been addressed and how the affect the growth and development in the industry and finally an assessment of the significance of the culture in the country and its influence and effects in the industry. Consequences of globalization Globalization refers to the process of sharing and communicating traditional, cultural and economic among different countries in the world. It is continuous process that is helpful for a country in the process of growth and development (Armstrong & Kotler, 2007). Through the process of globalization people are able to mingle and share their culture with each other and exchange ideas. Trade and business are other factors that entail globalization whereby different countries in the world share a link hence market globalization. Globalization is one of the factors that have lead to growth of markets in china. Globalization in the sport wear and sport footwear industry in china will lead to improvement of market for their products. This will also lead to increase in supply and demand of the sport wear. The reason for that will be due to the fact that globalization will enable the industry to meet the needs of the people in other parts of the world. Globalization will give china an opportunity to be ranked on of the best organizations in terms of purchasing power parity. It will also have an opportunity to enjoy an increase in gross domestic product. The issue of globalization will also raise the economic annual growth rate. It will also increase the foreign market because most of the countries will be willing to invest in the country especially in the sport wear and sport footwear industry (Dennis, 2001). Globalization will also lead to increase in the quality of products, environmental protection and increase in yield. Economic trends Economic trends in a particular country are presented by some factors like the value of the currency, economic recession and downturn, rates of interest especially inflationary figures and consumers confidence. Currently the economic trend is not badly off. The rate of interest in the country is fair , the taxation is changing due to the fact that excise duty for the exporters had been reduced which has enabled many sport wear and sport footwear companies to produce their products for export in bulk. The rate of exchange is also likely to be lower since the country has bee involved in business with other country. Another very important aspect that is likely to change is inflation. The production will improve the foreign earning for the country hence ensuring there is no inflation taking place in the country (Finlay, 2000). The decrease in the interest rate will ensure. The stronger the currency of the country will become the more difficulty it will be for the country to export its products but since there is a good relationship with other countries the currency is not affected. Inflation leads to the employees to demand a salary increase and due to the increase in the country’s income then the demand for the products is increased. Environmental and ecological challenges Ecological and environmental factors are some of the challenges that are affecting the progress of the industry (Hill & Jones, 2007). Some of these factors include the climate and weather of the country. China is a country that is known to experience very harsh climatic climate whereby it gets very hot. This affects the productivity of the employees who are not able to function well during the day. This is one of the factors that bring down the productivity of the industry. China is also one of the countries that is experiencing adverse effects of climate change due to global warming. Issues of transportation during bad weather lead to increased expenses due to taxes. The industry r also incurs expenses in trying to adopt ways that will make the processes of the industry r more environmental friendly. Political, legal and governmental challenges Politics and the governance of china is yet another factor likely to cause an effect in the production (Hisrich, 2000). This is because most activities are governed politically. For instance, the office of the prime minister has been bestowed a great responsibility. Also the issues of finances (treasury) are politically sorted. In the recent past there have be en many legal changes in the governance which are likely to affect the productivity in the industry. The increase of legislature catering for the less fortunate and the disabled in the country has affected the industry. This is because the government has increased the possibility of more sport wear production by including sports for the disabled in the legislature. The industry r has therefore be en able to produce much more than before the law. Influences of technological advances The industry has five major companies around the country which are involved in mass production. The modern technology used by the industry r has also been a major boost to the quality of products. The process of producing the end product complies fully with the requirements of the regulation of the authority. This is done from the very first step of choosing raw materials, through processing up to packaging of the very final end products. The industry r ensures there are as many critical points as possible. The grow rate of the industry has been alarming. Actually, it is not only having expansion of its market in terms of its products but also in terms of the percentage of its shares in the market and also new branches opening. In other word, the industry r has great plans to expand further in other parts of the world. It has been adding new brands very frequently and this means that with the growth in the technology it is even working harder in its technology position to come up with better brands. It has been expanding its market by introduction of new types of products. The year 2007 new businesses were established but with a different product range as compared to the previous. One of the products introduced was the sport footwear for the ladies. The introduction of these products meant new market or rather growth in its market. The industry is also doing online market. This is one of the strategies done the year towards the end of the year 2009 with an aim of improving the industry’s future market (Hisrich, 2000). This is because people are able to purchase the products online and then they wait for the delivery of the products without necessarily travelling to the factory. This is a very important marketing strategy especially for the future because technology is also dynamic. In today’s world, much of the purchases especially when involving far distance parties will be done online and so the industry had the future in mind by the introduction of such strategy. The future opportunity of the industry to grow is also improved by the fact that the industry deals with sports foot wear. Sports are always taking place and many other countries are even embracing sports like skating by setting up special artificial skating ground for the sports. This means that their products will actually get more markets due to that fact. Another great opportunity for its growth is the self-advertisement it does by sponsoring the sport activities (Thompson & Martin 2005). This is whereby the sports foot wears are likely to be bought in the industry as a way of promoting it products. The need for the industry to saturate its products globally and expand its brands by innovations is another very important way for the industry to experience growth in the future. The industry has also aimed at adhering always to all of its core values. As a result, many people have gained much confident with its products hence creating a platform for it to expand in the future. Financial Summary of the company Year to Jun NPAT Rep $M NPAT1 Adj $M EPS c EPS chg % PER x PER rel All Ords x PER rel Sector x DPS c Yield % Franking % ROE % 2008 176.4 176.4 81.3 5.4 10.3 1.0 0.8 53.0 6.3 100.0 22.2 2009 152.8 159.5 71.7 -11.8 11.6 0.5 1.0 45.0 5.4 47.0 13.6 2010 146.0 146.0 57.8 -19.4 14.4 1.4 0.2 36.0 4.3 50.0 12.0 Significance of culture and society to the industry The culture of the people of china is favorable for the organization and especially because most of the people values ports. This has increased the demand for the sport wear and foot wear in the organization. People are the country’s population is made up of people who are suffering from lifestyle diseases like diabetes, hypertension and obesity. This explains why many wan to get involved in sport as a way of keeping fit. This has increase the demand for the sport wear. Recommendations and Conclusion Globalization entails increasing the customer base by expanding the company’s market. In this regard, Chinese Sportswear and Footwear companies are called upon to invest in mass production in order to meet the market demands. Consequently, they need improve their marketing strategies for them to attract new customers and penetrate into new markets across the globe. Furthermore, they should use low cost production strategy for them to cut on their production costs. In conclusion for any business to thrive and take lead in today’s business world, no matter which industry it is, there is need for a market analysis. The tool of analysis called PESTLE is very important. It will be beneficial for such firms to use both the past as well as the current techniques of an effective analysis to be able to maximize their profit, make better decisions and come up with perfect solutions for their problems. This means that the analysis is a very important component of any business. The process of globalization is more beneficial to a company in an international level rather than in a national level. This is because it gives a company an international platform to market its goods and services. This means that globalization is of great benefit to the industry. Reference Armstrong, G. & Kotler, P. 2007. Marketing: an introduction (8th Ed). New Jersey: Pearson Prentice Hall. Dennis, A. 2001. Marketing: principles and practice (4th Ed.). Financial Times, New Jersey: Prentice Hall. Finlay, P. 2000. Strategic management: an introduction to business and corporate strategy. New York: Pearson Education. Hill, C. & Jones, G. 2007. Strategic Management: An Integrated Approach (8th Ed.). California: Cengage Learning. Hisrich R. 2000. Marketing (2nd Ed.). New York: Barron's Educational Series. Thompson, J. & Martin, F., 2005. Strategic management: awareness and change (5th Ed.). California: Cengage Learning EMEA. Appendix Market Scale of China Sporting Goods Industry, 2006-2013F（RMB bn）   China Sporting Goods Industry Report, 2010-2011 Read More