FedEx International Aviation Policy - Research Paper Example

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FedEx International Aviation Policy Table of Contents FedEx International Aviation Policy Table of Contents 2 INTRODUCTION 4 Competitive 4 Distributive 5 Economic Variables of China and Canada 6 GNP of China 6 GNP of Canada 7 Personal Consumption Expenditure of China and Canada 7 Socioeconomic Condition of China 8 Characteristics of Population of China 8 Distribution of Population of China 9 Socioeconomic Condition of Canada 10 Characteristics of Population in Canada 10 Distribution of Population of Canada 10 Financial Structure of China 11 Interest Rate of China 11 Inflation Rate of China 11 Taxation System of China 12 Financial Structure of Canada 13 Interest Rate of Canada 13 Inflation Rate of Canada 14 Taxation System in Canada 15 Legal System of China & Canada 16 Foreign and Domestic Law of China 16 Foreign and Domestic Law of Canada 16 Physical Elements of China 17 Topography of China 17 Climate of China 17 Natural Resources of China 18 Physical Elements of Canada 19 Topography of Canada 19 Climate of Canada 19 Natural Resources of Canada 19 Political Climate of China 20 Political Climate of Canada 21 Socio Cultural Environment of China 21 Socio Cultural Environment of Canada 22 Labor of China 22 Labor of Canada 23 Technological skills in China and Canada 24 Conclusion 25 References 26 INTRODUCTION FedEx is one of the biggest logistics and express delivery providing companies in the world. It has expanded in more than 220 nations. The company has successfully placed itself as a dominant player in the logistics and shipping network. Presently, FedEx possesses strong international consignment network, through which it can rapidly deliver the packages globally. In the international arena, there are many competitors of FedEx who are also striving to achieve the leading position in the logistics and shipping market. Thus, it is essential for FedEx to keep expanding and developing new markets to maintain its position in the market (Smirt & Et. Al., 2007). Competitive One of the biggest competitors of FedEx is UPS (United Parcel Service). UPS is renowned as one of the biggest global courier enterprises. It has a capacity of shipping 15 million packages per day to approximately 6.1 million people in more than 200 nations. Besides UPS the other competitors of FedEx are Japan Post, TNT N.V., Deutsche Post, Royal Mail, India Post, and others. In the domestic market the major competitor of FedEx is USPS (United States Postal Service). FedEx had expanded its business operations in the year 1998 by acquisition of RPS (Roadway Package System) and rebranded it to FedEx Ground in the year 2000. In the year 2003, FedEx’s competitor DHL had entered the US market by taking over Airborne Express and thus developed its strong presence in the logistics and shipping market. This acquisition had increased the competition in the ground delivery market. To maintain their position, UPS had made partnership with USPS. This affiliation had allowed UPS to pick up mail and deliver to USPS for final distribution (Gomez, 2009). For many years, FedEx and UPS have expanded their business operations. There are little differences in the operation of these two rivals. UPS depends mainly on the ground delivery system and FedEx focuses on air delivery system. FedEx can reach almost every international business destination in less period of time (Anton, 2010). Distributive National and International Agencies Available In China There are four kinds of companies available for distributing goods and services in China which are ‘state owned transport and warehouse companies’, private domestic logistics enterprises, overseas logistic enterprises and in-house logistics enterprises. The top state owned agencies of China are COSCO logistics, Sinotrans Limited, China National Port Logistics, and others (Chin & Kim, ND). National and International Agencies Available in Canada Besides FedEx there are other national and international agencies which provide quality distribution solution to customers in Canada. The renowned logistics companies include UPS, DHL, J.B. Hunt Transport Services, Ceva Logistics, Schenker Inc, APL Logistics, and others (Transport Topic News, 2008). Economic Variables of China and Canada GNP of China GNP (Gross National Product) is also known as GNI (Gross National Income) which is the sum of value of the products or services that are produced in any country. It also includes the imported products or services and excludes the exports of the economy. With regard to GNI, china is known as the second biggest economy internationally. In last 30 years, China’s economy has shown tremendous growth as it has opened to international trade. Its growth is highly centered in the export sector. In the year 2008, the GNI of China was calculated as approximately 4 trillion USD and is expected to increase. Source: (Trading Economics, 2011). GNP of Canada With regard to GNP, Canada has varied economic scenario. Canada’s economy is established by the US and it is based on foreign business. The foreign business accounts for almost 45% of Canada’s GDP. The financial system of Canada is extremely developed and according to World Bank the GNP of Canada was approx. 1.4 trillion USD in the year 2008. Source: (Trading Economics, 2011). Personal Consumption Expenditure of China and Canada Personal consumption expenditure is the extent of how much people expend on products and services such as health, food, education, housing and others. It has a direct influence on the inflation and economy. A low expenditure signifies that the economy is going down and the productivity is reducing. Table Showing Annual Personal Consumption Expenditure in the year 2005 (USD) Country Total Health Housing Food Apparel Education Transport China 2292 159 440 932 191 N/A 249 Canada 15094 575 5613 2271 823 387 2886 Source: (Worldsalaries, 2008). Socioeconomic Condition of China Characteristics of Population of China China stands for almost 20% of the world’s population. Due to the ‘One Child Policy’ imposed by China in the year 1979, China had experienced slow population growth. China’s fertility rate is almost 1.7. It represents that every woman of China gives birth to 1.7 kids per life. The fertility rate of China is less than the requisite rate. The standard fertility rate for a steady population is 2.1. The mortality rate of China was 6.81 per year in 2006. In the year 2008, the total population of China was calculated as 1.3 billion. Due to the low mortality rate and migration it was expected that the population will increase and reach almost 1.4 billion by 2010 (Rosenberg, 2010). Source: (Chan, 2008). Distribution of Population of China In the year 2002, the population density of China was 134 people per square kilometer (Countryquest, 2002). There was intense dissimilarity of population distribution in the different parts of China. The majority of population was in the historic places of China. In the alluvial floodplains, where the soil is fertile and water resource is plenty is the most productive place of China. The high productivity is replicated by high population density. In the urban area, the population density was greater than 2200 people per square kilometer and in the mountain area where the weather is quite rough the population density is low, about 10 people per square kilometer. The distribution of population is unbalanced where almost 90% of the total population of China resides on less than 40% of land (University of Washington, ND). Socioeconomic Condition of Canada Characteristics of Population in Canada The population of Canada as on 2011 is 33 million. The usual growth rate of Canada is 0.3% and the general growth rate is 0.9%. Unlike China, Canada has ‘Open Immigration Policy’. Thus, if this rate continues the forecasted population will be almost 66 million by the year 2083 (Rosenberg, 2011). Distribution of Population of Canada In the year 2008, the population density of Canada was almost 3.66 per square kilometer. Majority of Canadian people live in the southern part of the nation. The Northwest region is relatively less populated area of Canada. Source: (Trading Economics, 2011). Financial Structure of China Interest Rate of China The interest rate of China is controlled by ‘People’s Bank of China Monetary Policy Committee’. China has kept the mean interest rate within 6.49% from 1996–2010. In the year 1996, the interest rate of China was highest, about 10.98% and the lowest rate was seen in the year 2002 which was about 5.31%. Source: (Trading Economics, 2011). Inflation Rate of China The average rate of inflation in China was calculated at almost 4.25% in between 1994–2010. Inflation rate is the general increase in cost which is calculated against an average level of people’s purchasing power. The maximum inflation was recorded as 27.70% in the year 1994 and the minimum was -2.20 in the year of 1999. As of 2011, the inflation rate of China is 5.5%. In three years this is the highest inflation rate China has experienced. The rate has increased mainly due to high cost of food, export demand, high interest rate and other factors of troubled economy. Source: (Trading Economics, 2011). Taxation System of China Tax is the major source of income in China. It has the major role in the improvement of financial system and society. Since China had opened up in the world economy the tax collection has helped China to make revenue and create a strong economy. China has almost 26 types of taxes and these are further divided into seven categories which are: sales tax, income tax, resource tax, property tax, individual tax, activities tax and agricultural tax (State Administration of Taxation, 2007). Source: (Trading Economics, 2011). Financial Structure of Canada Interest Rate of Canada The interest rate of Canada is determined by Bank of Canada. The bank rate is regarded as ‘official interest rate’. The mean interest rate of Canada was 6.12%. The maximum interest rate of Canada was in the year 1991 about 16% and the lowest rate is recorded as 0.25% in the year 2009. Source: (Trading Economics, 2011). Inflation Rate of Canada Canada has maintained its inflation rate as 3.26% from 1915–2010. The maximum inflation rate was recorded as 21.60% in the year 1920 and the minimum inflation rate was almost -17.80% in the corresponding year i.e. 1921. Source: (Trading Economics, 2011). Taxation System in Canada Canadian taxation system is controlled by CRA (Canadian Revenue Agency). The tax rate of Canada is comparatively high than other OECD nations. Tax encompasses 70% revenue of Canada. There are 8 types of taxes in Canada namely: Sales tax, property tax, excise duty, income tax, corporate tax, heritage tax, payroll tax and health & prescription tax (Stanley St Labs, ND). Source: (Trading Economics, 2011). Legal System of China & Canada Foreign and Domestic Law of China Traditionally, China has two different laws for domestic and foreign business operations. The government of China puts much effort for promoting rules and laws. After the civilizing revolution, China focused to build up a legal system to control abuses of official rights and radical excesses. Since 1979, China has created in excess of 300 laws and regulations and maximum laws are for economic area. In the year 1994, china had endorsed FTA (Free Trade Agreement) to govern the foreign trade. FTA has changed the former rules and successfully discharges the WTO requirements. The modification of FTA had bought important changes in foreign and domestic trade laws of China. It enabled individuals to engage in the foreign trade dealings. Because of the alterations in laws many foreign trade dealers include the individual people to perform business of importing and exporting products and services. Before the alteration in laws only legal personnel could engage in the export and import business. The new laws of FTA have made trade more transparent, equal, fair and efficient. In addition FTA includes certain extra provisions on trading, licensing, security of trade related factors, foreign trade surveys, foreign trade remedies and intellectual property rights which were ignored in the traditional laws (Heng, 2005) & (Bureau of Public Affairs, 2010). Foreign and Domestic Law of Canada Canada provides liberal business environment for foreign companies. With the negotiation of WTO, Canada had applied striving strategy to enlarge its network and business agreements. Canada has positive business environment, open access to market, and liberalizing prospects for foreign companies. However, Canada has many domestic laws and regulations (Fraser Milner Casgrain LLP, 2011). Their law ranges from the environmental protection to free business that must be abided by any company operating in Canada. Canada has also modified their patent laws to increase the safety of patent (Bureau of Public Affairs, 2011). Physical Elements of China Topography of China China possesses mixed topography. China has mountain region, highland and hill regions which covers almost two third of the total Chinese mainland. From East side to West side China’s topography falls in four steps. The highest among them is ‘Qinhai–Tibet’ highland which is about 4000 meters high from sea level and it is also renowned as ‘roof of the world’. The second step consists of Inner Mongolia, Yunnan–Guizhou highland, Loess, Tarim, Sichuan and Junggar area. Its height is about 1000–2000 meters above from the sea level. The lowest step of China’s topology starts from Greater Higgan and Xuefeng Mountain and expands from eastward to coast. The altitude of this region is almost 500–1000 meters above from sea level. The water level of China is 200 meters deep (AsianInfo, 2010). Climate of China China has ranges of continental monsoonal climate. The northerly wind reign in winter season and southerly wind exists in summer season. The rainy season overlaps with summer. China’s compound and diverse weather results in large diversity of temperature belts, and dry and wet zones. With regard to temperature, China can be divided from south to north which is ‘equatorial’, ‘tropical’, ‘sub–tropical’, ‘warm–temperature’, ‘temperate’ and ‘cold–temperature’ region. With regard to moisture, China can be divided into moist, semi–moist, partly–dry and dry areas (AsianInfo, 2010). . Source: (AsianInfo, 2010). Natural Resources of China China has wealthy source of natural resources. Almost every known natural resources can be found in mainland of China. The geologists have discovered 151 different resources in China which has made the country third in the whole world regarding total resources reserves. Confirmed natural resources in China include fuel, natural gas, oil shale, and coal, radioactive resource such as thorium, uranium, mercury, antimony, manganese, magnetite, iron ore, vanadium, aluminum, lead, zinc, tin and molybdenum. The coal stored in China is almost 1002.49 billion tons and it is situated in North China and Inner Mongolia area. The iron ore reserves are almost 46.35 billion tons and situated in mostly northeast and southwest of China (AsianInfo, 2010). Physical Elements of Canada Topography of Canada The area of Canada is almost 7730 kilometers which makes it the second biggest country internationally. Canada’s topography is diverse. It is bounded by seas, except in the southern zone. The northern area of Canada joins with Alaska and the Southern area joins with the US. Almost 25% of Canada is forest. The highest mountain of Canada is Logan with an altitude of 5951 meters above the sea level (ParadisePath, ND). Climate of Canada Majority of Canada possess cold climate. The winter season lasts almost 8–11 months in Canada and the duration of summer season is quite low. The southern region of Canada has diverse climate. The driest region of Canada is the Northwest region. The climate of Pacific Coast is cold summer and gentle winter. The average temperature of Canada is almost 40 C – 160 C from the months of January to July (ParadisePath, ND). Natural Resources of Canada Canada is famous as the biggest exporters of natural resources and minerals. The major natural resources of Canada includes potash, uranium, sulfur, titanium, platinum, copper, silver, gold, lead, nickel and magnesium. Canada has the biggest reserves of uranium and it has the second largest reserves of sulfur. In the year 2000, Canada had produced almost 9.36 million tons of sulfur. It has also stronger reserves of industrial diamonds. The following table describes the natural resources of Canada (ParadisePath, ND). Source: (Natural Resources Canada, 2011). Political Climate of China The Chinese Communist Party (CCP) controls the government of China. Compared to CCP, Chinese government possesses minor authority. Under the Chinese political structure the NPC (National People’s Congress) possesses the strong authority in China. NPC is a permanent board which exercises the state authority. NPC can evaluate and approve the important policies, laws, budgets, and any personnel alterations. These proposals are offered to the NPC for contemplation by the State Council after approval by the CCP committee. Political Climate of Canada Canada is a legitimate kingdom. Canada has parliamentary government with federal system. The leader of the state is Queen Elizabeth II, also known as ‘Queen of Canada’. She has the authority to assign the general governor as her spokesperson on the counsel of prime minister. The duration for the post of governor is maximum 5 years. The head of the political party is the prime minister. The parliament of Canada includes voted residence and allotted governing body. In the year 2006, the Conservative Party head named Stephen Harper was elected as the 22nd Prime Minister of Canada by overwhelming the Liberal Party which administered Canada for most of the time of 20th century (Bureau of Public Affairs, 2011). Socio Cultural Environment of China China’s culture is based on knowledge, beliefs, attitude, moral, ethics, talent, regulation, society and other attributes of people. The value and custom of China are the fundamental elements of their culture. The custom, social rules and strategy and suitable behavior of the Chinese culture are revealed in their presentation and body language. China highlights the individual as a group member and has strict social stratification. Any human being is considered as essential building block for community groups, achievements. The human rights are considered as secondary before needs of the group. The businesses of china are focused on faithfulness, mutual obligations, and sincerity in making any deal. The language of China indeed defines their culture. Chinese language is spoken by many people in the world i.e. almost 20% with regard to world population (Partin, 2006). Source: (Partin, 2006). Socio Cultural Environment of Canada Canada’s culture is varied. People of Canada are normally broadminded, respectful and extremely society oriented. They are individualistic regarding basic cultural behavior. Canadian people focus hugely on individual’s responsibility towards the society. They have strong loyalty towards their district which is in excess than their country. These cultures help to maintain a balance and also provide good lifestyle. The main language as well as official language of Canada is English and French which is accounted for almost 21.5% of total population in the year 2006. Other languages include Chinese, Spanish, Italian, Arabic and Punjabi (Kwintessential Ltd, 2010). Labor of China The supply of labor is quite high in China. It has been found that in the rural areas of china the labors possess low skills which have made them difficult to find a suitable job in urban areas. The illiteracy rate in the rural area is much higher. Fewer people of rural areas can complete the education of secondary school or college. About 15% of population of Western China had completed the primary education in 2001. The rate was 30–40% in Eastern region of China. In the northeastern regions of China the labor skills are quite low. In these areas, about one-fifth people have education beyond primary level. Majority of laid-off labors are middle aged workers who possess less skills and poor education. The Chinese authorities are focusing on providing training and education to the migrant and laid-off labors (Brooks & Tao, 2003). Labor of Canada The Canadian Labor market condition is different from China. In the year 1999, about 80% of adult people of Canada had finished the high school education and 19% of people aged between 25–64 years had completed the university level education. Source: (Riddell, 2004). The educational skill of Canada is high compared to international standards. Several studies reveal that Canadian people have less technical skills. The ICT (Information Communication and Technology) sector of Canada faces high amount of scarcity of skilled labor. There is need of skills such as analytical skill, marketing skill, operation management skill and HR (Human Resource) skill in employees which creates a situation of labor shortages (ITAC, 2011). Technological skills in China and Canada The technical skill is low in China in spite of high force of labor. The requirement for professional technicians is 31% more than the supply (People's Daily Online, 2002). Canada has deficiency of technical skilled labors. Though the labor supply has increased to 225000 people per annum, there is limited labor which encompasses the technical skills (CCTT, ND). Conclusion The above analysis depicts that China and Canada have diverse environment regarding economic, socio cultural, legal, physical, political and technical perspectives. The financial condition of Canada is highly developed and China has become the second strongest economy of the world. With regard to business, these countries possess good prospects and have good record in export of goods and services. A logistics company such as FedEx has great opportunity to expand their business in China as well as Canada. It can find appropriate labor, resources and infrastructure to carry their business operation efficiently. The legal, political and financial condition of both the countries is favorable for FedEx. References Anton, (2010). FedEx Vs UPS case Analysis. Retrieved from http://essays24.com/print/Fed-Ex-Vs-Ups-Case/6977.html AsianInfo, (2010). The Geography of China. Retrieved from. http://www.asianinfo.org/asianinfo/china/geography.htm#LAND AND MINERAL RESOURCES Bureau of Public Affairs. (2010). Background Note: China. Retrieved from http://www.state.gov/r/pa/ei/bgn/18902.htm Bureau of Public Affairs, (2011). Background Note: Canada. Retrieved from http://www.state.gov/r/pa/ei/bgn/2089.htm#profile Brooks, R., & Tao, R. (2003). 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