Globalization of Air Conditioners - Assignment Example

Globalization of Air Conditioners Globalization has had major effect on the world economy. It has not only affected the nature of production of good but has transformed the whole nature of the business. For instance, in the air conditioner industry, globalization has led to more mergers and acquisition of small companies to form large companies (Topik et al, 24). This has been a way of making them strong and giving them power to compete with others big companies in the market. The use of air conditioning dates back to the ea of ancient Greek where the wealthy used to circulate cold water in their homes so as to bring the temperatures down. The Chinese used hand fans as coolant since time immemorial. In the 1800, American engineers made an attempt to create air conditioners as they had money and resources for doing this. The 20th century saw major development in this area majorly contributed by the discovery of electricity. Willis Carrier a 25 year old American invented the first model of air conditioning which was not designed for human comfort but was made to reduce humidity at his printing plant. It was made of mechanical unit that cooled air through circulating it in cooled water coils. He later added a centrifugal cooler to this unit greatly reducing its size. By 1930s, air conditioners were been used in offices, department and cars and this increased the workers productivity during the hot summer periods. This was a major development for Carrier Corporation which grew incredibly during these years. At some point the use of Air conditioning in the workplace was seen as an unnecessary luxury. However, evidence from several researches conducted showed that the use of air conditioning during the hot summers came with increased productivity. Organization therefore started getting the air conditioners for their offices in order to leap off benefits (Street et al 629). The air conditioners were not very common in homes with only 10% of the American homesteads using air conditioning. The rest of Europe and eastern countries slowly stated using the air conditioning mostly in the workplace. Outside work people still use the traditional methods of staying cool like dipping their underwear in iceboxes. Some of the popular air conditioning companies include Carrier Corps, Daikin Industries, LG and Samsung and lastly Haier, Midea and Gree. Carrier Corporation is the biggest layer in the market. This can be as a result of the fact that it was the pioneer in this industry and has therefore has the competitive advantage over the others that mushroomed after it was established. The company has established its operations in almost every part of the globe. It engages in the production of a wide varied range of products including indoor units, outdoor units, heaters of all kinds and HVAC equipment. It has several established brands such as the weathermaster, weathermaker, centurion, Byrant and Payne among others. Daikin Industries is based in Japan which is responsible for the creation of the Variable Refrigerator Flow HVAC systems. This is a special kind of system that is used to supply cooling or heating to a room depending on the demand. It can also provide cooling and heating simultaneously in different parts of a building. In order to get to its current position, the company has wielded to the wind of globalization. For instance in the year 2006, it acquired the OYL group company based in Malaysia. This expanded its scope and also increased the company’s brand giving it a stronghold in the market. Some of the brands associated with this company include the J& E hall and AAl (Ameen, 72). Acquisition has made Daikin the second largest company in the production of air condition equipments after Carrier Corporation. There are other players in this industry in Japan and they include Sanyo, Toshiba, Mitsubishi and Panasonic. LG and Samsung are the third largest companies in this industry both based in South Korea. In a united effort to have a large market share in the globe, these two companies have promoted the unitary production of their products. Their main competitive advantage has been the ability to product air conditioning equipment in large volume and thus benefit from the huge economies of scale. Haier, Midea and Gree are based in China. As has been observed in other industries, China has tried to have dominance in almost all industries. This is is because the country has the advantage of low cost of raw material and labor compared to other developed countries. The air conditioning industry is no exception. In china, the main air conditioner manufacturing firm is Haier which is based in Qingdao. Besides HVAC, the company also engages in the manufacture of other equipments such as the toaster, television, dish washer, refrigerators, microwave, ovens and Vacuum cleaners. Midea is also based in China and deals with the same kind of equipment that Haier manufactures (Street et al, 649). Its products are sold under the brand name Madea. Gree sells its product under the brand name Bree and produces HVAC and others appliances. Today, the air conditioners are in use in all parts of the globe including the third world countries. However, although this has been seen to have great effects in increasing worker performance during the hot summer seasons, it has been accused of having adverse effects on the environment. This is because it relies on non renewable fuel which has been seen to increase global warming. This means that its use aggravates the situation that it seeks to control (Topik et al, 261). Ne innovations have been made to create equipment that saves on fuel usage. From the discussion above, it can be observed that the air conditioning industry is one that has been greatly influenced by the forces of globalization. Being a product that was manly produced in America, it has now become a product being sold all over the globe with major players being huge company. The existence of major companies that have been formed through mergers and acquisition makes it hard for other smaller players to penetrate the market. It is evident that the effect of globalization is choking of small enterprises which would only have a chance to survive through merger with the larger companies. These mergers in most cases benefit the larger company with the smaller ones having to lose their control to the larger firm. China has however has an enabling climate for small business to blossom and grow. This is because the country has the advantage of having cheaply available material. China, which is most populated country in the globe with many people living below the poverty line. The minimum wage is quite low in comparison to other countries in the west. Companies in China therefore have the benefit over others because of the reduced production cost. They are therefore in a position to sell their products at competitively low prices and this gives them price leadership. Work Cited Ameen, Ahmadul. Refrigeration and Air Conditioning. New Delhi: Prentice-Hall of India, 2006. Print. Street, Nancy L, and Marilyn J. Matelski. American Businesses in China: Balancing Culture and Communication. Jefferson, N.C: McFarland & Co, 2008. Internet resource. Topik, Steven, Carlos Marichal, and Zephyr L. Frank. From Silver to Cocaine: Latin American Commodity Chains and the Building of the World Economy, 1500-2000. Durham, N.C: Duke University Press, 2006. Print. Read More