Economic Globalization Essay Example for Free

Economic Globalization Essay Economic globalisation is a concept that has become common in the recent times and it is popularity is growing overtime. It virtually implies the process by which two or more countries economically integrate with an aim of enabling a global marketplace or in other words creating a global single market (Fung, 2006, pp 1). The main purpose for economic integration is to enable the expansion of the market, that is, corporations are enabled to operate beyond the borders of their country of origin. The concept of economic globalization can be perceived to posses both positives and negatives depending on the context over which is being analyzed from (Gardner, 2005, pp 67) The concept of economic globalization can be traced back to the ancient days during the trans-national trade period, which is several thousand years ago. The process of economic globalization is in control of the world trade organisation that provide rules that need to be followed in enhancing effective trade interactions between various countries of the world (Stalker, 1998, pp3),. The main goal of the WTO is to enable the producers of goods and services, the exporters of the goods and the importers of goods to conduct their business with much easy. The rules are based on the agreements that are set among the trading nations, where the agreements are expected to be ratified by the parliament of respective nations (Gu, 2006, pp 157). The WTO membership is currently 153 world countries with also a number of observers. The admission date into the organization of various nations vary from one country to other as it is a voluntary participation. For example, China joined the organization on 11 December 2001 (Peerenboom, 2007, pp 145). This proposal is based on carrying a research concerning the effects of Economic globalization and Chinas accession to WTO on domestic companies. The proposal starts at first providing the background information concerning economic globalization in china and its effect on the Chinese Economy. The research questions and objectives are then provided, the scope of the study and the significance of the study as the part of introduction. Literature review will then follow methodology and lastly the time plan. The research will use the Shenzhen Energy Corporation in China as one of the Chinas domestic energy enterprises in analyzing the effects of economic globalization on domestic companies and the response of these companies to the competition that arises from economic globalization in ensuring market sustainability. 1. 1 Background Economic globalisation is perceived to have enhanced China to attain an accelerated economic growth following the expansion of its market size, which enables the country to produce more following the increased demand for their products and services (Kotler, 2005, pp 37). The country is perceived to be benefiting from the global market in a reasonable manner following the countrys comparative advantage of cheap labour (Lu, 2003, pp 567). The cheap labour is enhanced through the high population of the country that implies abundant supply of labour (Prigoff, 1999, pp 89). This situation provides the country with a competitive advantage in the world market on the reason that its products are likely to bear a low price compared to the ones of their competitors who experiences high costs of production (Allan, 2004, pp 17). Following the encouraging of economic globalization by China becoming a member of WTO, the volume of foreign investments grew in China that were likely to compete with the local producers of goods and services (Hopper, 2006, pp 297). Shenzhen Energy is one of the domestic companies that felt the impact of the foreign investment competition and responded to it accordingly in enabling market sustainability. Shenzhen Energy Corporation was established through a fund raising in 1993 on it being approved by the peoples government office in the city of Shenzhen. The company was listed in the Shenzhen stock exchange market in September 1993, and it was the first large shareholding enterprise in the national electric powers to be listed in the stock market. The company was also the first public service stock company to be listed in the Shenzhen stock market (http://www. sec. com. cn/en/about/index. aspx? ModuleNo=080102 ). The company is controlled by the shareholder, Shenzhen Energy group company that was founded in 1993 as a state owned power company. The controlling company had been growing rapidly in proportionate to the economic growth of Shenzhen economy. The scope of business for the company is to develop, produce, purchase and market the various convectional energies and new energies within China. The company engages in investments and carries operations that are meant to enhance development. It participates in the transporting raw materials that are energy related and also involves itself in port, dock and storage industry. The company has investments and operations that are related to energy in the land industry, real estate industry and also the leasing industry. The companys investments and operations are also extended to high technology industries that are meant to improve the efficiency in the utilization of energy. The companys operations go beyond the border of China, that is, it involves in the import and the export of various goods. The goods that are exported and imported by the company include the set of equipment, supporting equipment, machines tools and also the vehicles that are to be used in energy projects. The company is also engaged in providing services that are related to the energy industry that include the designing, construction, management and providing the day to day operating services to energy projects. The company also provides service that includes staff training, consultation among other services that are mean to enable improved performance of the human resources in the energy industry and the making of informed decisions. The participation in developing environmental protection technology is a task that is carried by the company following the pollution claims that are raised concerning the consumption of energy. From the accounting reporting of the companys performance in 2007, the company had a total asset base worth 24. 5 billion Yuan. The larger proportion of the companys market is based in Shenzhen where it also hold majority of the share value of the plants. Its operations are mainly concentrated in Shenzhen and its surrounding. Some of these plants in which it holds shares include Shenzhen Mawan General Plant, Shenzhen Yuelianngwan Power plant, Dongguan Zhangyang Power Plant, Huizhou Fengda Power Plant, Guangdong heyuan Power Plant, and Ghana Combustion Engine Power Plant. The last two plants as provided in the list above are under construction. The companys performance as been desirable overtime. Shenzhen Energy Corporation has consistently been awarded various tittles that include outstanding enterprise, Advanced party committee and the law abiding tax payer. Therefore, Shenzhen energy Corporation can be perceived as being a local company in China that is likely to be affected by the foreign investors in china in the energy industry as a result of economic globalization. 1. 2 Problem Statement Following the participation of China in the economic globalization as an avenue over which economic growth can be enhanced and the Chinas accession to WTO can be perceived to have posed some effects on the domestic companies in China. The effect on the domestic companies arises from fact that a number of foreign companies are likely to be established in China to compete with the domestic companies. The competition between the domestic and the foreign companies in a given industry imply that the market for some industry is likely to be divided among the competitors with respect to their competitive advantages. The companies that produce their goods and services within the market standards and price will stand a better chance of taking a larger marker share compared to the companies that are less competent. In the wake for economic globalization and Chinas accession to WTO, there has been quite a large inflow of foreign companies into the Chinese economy. The energy industry has not been the exemption. A large number of power enterprises have been flowing into the economy, and they are characterized by having a large capital base, they are of high technology and possess management efficiency. These characteristics enable these foreign power enterprises to compete favorably with the domestic power enterprises like Shenzhen power corporation. The competition has been tight between the domestic power enterprises and the foreign power enterprises that require respective enterprises to undertake some strategies in enabling them to survive in the market. Shenzhen power corporation has not been an exemption in the competition that is posed by both foreign power enterprises and the local enterprises. The corporation has been thriving despite the increased and tight competition in the energy industry. Therefore, the aim of the study is to bring the strategies that have been taken by Shenzhen power corporation in enhancing the capability of being influential and profitable in the energy industry that seem to be flooded by the foreign power enterprises that have a large capital base, operate with high technology and posses effective management skills. 1. 3 Research questions The main research question of the study is to explain the marketing strategies that have been taken by Shenzhen power corporation in enhancing market sustainability in an industry that is dominated by foreign power enterprises. The questions to be answered in the reach for answering the main question include; i. How does the corporation gather information that is meant to aid in designing marketing strategies? ii. What are the companys target groups? iii. How does the company do its pricing? iv. To what level is customer satisfaction used as a marketing strategy? v. The nature of public relation of the corporation? 1. 4 Research objectives The main objective of the study is to establish the kind of marketing strategies that have been undertaken by Shenzhen power corporation in enabling market sustainability in foreign enterprises dominated industry. The auxiliary objectives that will enable to attain the main objective of the study include i. Identify the various means in which the corporations gather information that is used in designing marketing strategies ii. Identify the target groups for the companys products and services. iii. Identify the criteria that the company uses to set its prices in ensuring effective price setting. iv. Establish the level of customer satisfaction by the corporations v. Establish the nature of the products and services provided by the corporation to the market and their uniqueness compared to the products of the competitors. 1. 5 Scope of the study The study will be based on the looking at the practices adapted by Shenzhen power corporation in relation to the attempt of the corporation to ensure market sustainability in tight competition offered by the foreign power enterprises that are characterized by a large capital base, operate with the application of high technology, and inherent with effective management. Therefore, the study is meant to address the responses from Shenzhen power corporation following the tight competition in the industry that enable the company to thrive in the industry. 1. 6 Significance of the study The significance of the study follows from the argument that economic globalization is certain to disadvantage the domestic industries, that will have an adverse impact of retarding economic growth. Following the economic globalization of China and the example of Shenzhen power corporation, the above statement seem to be invalid because Shenzhen power corporation is still profitable regardless of the economic globalization as a Chinas domestic company. This implies that, there are lessons that are to be learnt from the practices of Shenzhen power corporation following its enhanced market sustainability. The lessons will be applied by other corporations that associate their failure to the concept to economic globalization. 1. 7 Hypothesis of the study The hypothesis of the study is that domestic companies are not affected negatively by economic globalization, but it is their economic inefficiency that makes them incompetent in competing with the foreign companies. Therefore, the companies poor performance after economic globalization is not as a result of the many competitors, it is because of their inefficiency that makes them less competitive. Competitive advantage is earned by designing relevant strategies and not by reducing the number of competitor. Competition is required in the economy in avoiding the excesses that are associated with the monopolies, because the inefficient companies are certain to exit the market due to their inability to compete favorable. Therefore, competition is likely to ensure efficient utilization of resources in meeting the needs of the society. Domestic companies should thus design strategies that are meant to enable them withstand the competition in the market, and that will also promote efficient utilization of the national wealth in meeting the needs of the society. 2. 0 Literature Review 2. 1 Gathering information for strategy designing On ensuring effective strategy designing, an organization is required to gather information that is meant to be used as a tool for strategy designing. This act is meant to eliminate the act of designing strategies arbitrary as it posses the possibility of the strategies becoming irrelevant. Therefore, an organisation requires to lay some measures in ensuring that information that is available and to be used for designing strategy is representational of the real market situation, otherwise the expected results from the strategies will never be realized (Hiebing, 2004, pp 2). The source for information that will be useful for designing the strategies varies in relation to the nature of the industry, the operations of organisation and purpose to which the information will be put into. For example gathering information that is meant to be used in designing the marketing strategies, an organisation is required to get the information concerning the market condition (Boone, 2005, pp 37) The information concerning the market condition may include the desires of the customers, the market price of some products as provided by the demand and the supply forces, and practices of competitors. The right source for information that is to be used in designing marketing strategies should be obtained from the various agencies of the organisation who interact with the customers, because they are the ones who are accessible to the customers, hence likely to understand the customer desires than the managers who are responsible of administration related matters (Cundiff, 2007, pp 48) On ensuring effective designing of strategies that are meant to improve the organisations competence, an organisation is supposed to base its redesigning using the past experience. This will enable an organization to avoid the possibility of repeating the errors that were committed in the previous designs (Bradley, 2005, pp231) 2. 2 Pricing. The pricing mechanism normally depends on the nature of the market structure. A market structure can either be a monopoly, an oligopoly or a competitive market (Gummesson, 2002, pp 137) Price setting in each market structure vary depending characteristics in each market. For example, in the competitive market, every firm in the market is a price taker. They are price takers on the reason that none of the firms can determine the price in the, otherwise the price in the market is influenced by the price mechanism. In a monopoly market, a firm has the powers to determine the price of its goods through the controlling of the supply (Luck, 1985, pp 132). For a firm to survive in the competitive market, the firm is expected to sell at the market price as provided by the market mechanism, otherwise its products are likely to experience a low demand compared to the products of the competitors (Adcock, 2001, pp 102). This follows from the demand law, that explains that when the price of a good increases, the demand of the good is likely to decline. The decline of the demand follows from the consumer either switching to the consumption of a substitute good that will benefit a competitor or reduce the consumption of the good due to the budget constraint (Hisrich, 2000, pp 112) In the competitive market, a firm that is likely to produce its goods and services at the lowest costs is the one that is likely to earn a competitive advantage over the other competitors in the industry. This follows from the fact that the production of goods with low costs will have an impact of increasing the profit margin of the company when selling the goods at the market price (Kotler, 1988, pp 199). This will also enable the firm to compete favorably in the price war in enhancing the demand of the its products, because the company will be able to realize the desired profits level even when selling the goods at the price below the market price (Gualtianan, 1995, pp 89). A firm will only attain the low costs of production if it produces the goods with a lot of efficiency in avoiding waste, that is, the firm should enhance optimal allocation and utilization of the resources in attaining an optimal amount of output at a given the specific level of technology. Organizations can enhance the efficient utilization of the resources by adaptation the various practices that are meant to optimally utilize the resources that include human resource development and the adaptation of the appropriate technology that is certain to enable efficient utilization of the resources owned by a firm (Webster, 1995, pp 47) 2. 3 Customer Satisfaction. Customer satisfaction plays an important role in creating consumer loyalties. The creating of loyalties will rescue the firm from incurring a lot of expenses in advertisement on the look for customers (Davenport, 2001, pp 69). The created consumer loyalty will retain the customers, as they are likely to consume the products of the company in the future. Therefore, it can be perceived as an investment that is meant to benefit the firm to realize the flow of income in the future following the enhanced loyalty. Consumer loyalty is maintained by the firm providing high standard goods to their customers and listening to the desires of the customers, otherwise, the firm is certain to loose the already created loyalties in the future if it does not meet the desires of the customers. The firm is also required to engage in product innovations overtime that are supposed to improve the quality of the products in factoring in the desires of the customers (Hutt, 1981, pp 201). This will reinforce the existing loyalties and also create other more loyalties that are certain to ensure the future demand for the products and services provided by the firm. There normally exist variations in the desires of the customers, implying that the providing of standardized services and products to customers is certain to satisfy the customers in varied ways. In such a situation, a firm is required to either provide a wide range of products that is meant to meet the varied desires or provide customized products and services that are meant to improve the level of customer satisfaction. The advantage for creating customer loyalties through customer satisfaction is that the firm is likely to reduce the costs in advertisement and other promotions because the customers that are retained are aware of the operations of the firm and its operations (Godin, 1999, pp 32). This will enable the company to reduce its cost of operation that will be reflected as an increased marginal profits, hence a positive step towards profit maximization. 2. 4 Product differentiation and patenting. Product differentiation can be perceived as being a strategy that is meant to make the products of some firm unique compared to the products that are offered by the competitors. It will enable the customers to identify the products easily without mistaking it for the ones offered by the competitors. Differentiation may include the adding of some features to the products offered to the market that is meant to sway the customers in enhancing high demand. The differentiations that make the product unique can be copyrighted to avoid the competitors from imitating the design of the product (Sandshoes, 2000, pp43). The patents will bar the competitors from imitating the products, thus a marketing strategy that is meant to enable the firm to minimize competition. 3. 0 Methodology 3. 1 Design The research will involve the collection of information concerning the organisation in question, evaluate its performance over time, and mostly by focusing at its profitability over time in relation to the various strategies that were taken by the organisation to enhance the performance. The study will look at the marketing strategies that are adapted by the organisation and their effects on performance of the organisation. The evaluation of the effects of the strategies on the organization will be identified on using the theories that have been established in relationship to the impact of various changes that are done within the organisation on the performance of the organisation. Therefore, the study will rather use qualitative data than quantitative given the nature of the topic addressed. 3. 2 Participants The main participant in the research is the shenzhen Energy corporation. The company is chosen as a representational of the domestic companies in evaluating the impact of economic globalization on domestic companies and on how best the companies should responding through the designing of marketing strategies in enhancing competence. Shenzhen energy corporation has been used as a representational following its ability to withstand the competition from foreign companies in the energy industry in China. 3. 3 Data collection Following the design of the research, the data that will be collected should be related to the marketing strategies that the Shenzhen energy corporation had taken in enhancing competitive advantage. The strategies that need to be identified include, how the company is enhancing customer Satisfaction, how does the company do pricing, how does the company reach the target group, how does the company gather information that is to be used in decision making concerning the design of marketing strategies, and how the company make its products competitive in the market. 3. 4. Data analysis Data analysis will be done by confronting the identified marketing strategies with the existing marketing theory as provided in literature. This will enable the study to bring out the logic behind the strategies that were taken by Schenzhen energy corporation is ensuring its success. 4. 0 Time Plan. The research will take a time frame of ten weeks, where each week will be allocated its tasks as provided by the schedule below: Task Week Making contacts on places where data and literature will be collected 1 Literature Reviewing 2-3 Collection of Data 4 Data Validation 5 Data Analysis and Interpretation 6-7 writing a draft report 8 Third party reading of the report 9 writing the final report 10 Bibliography Adcock, Dennis. Marketing: Principals and Practice. Financial Times/Prentice hall. 2001. Allan, Clement. Economic Globalization: Social Conflict. labour and Environmental Issues. Edward Elgar Publishing. 2004. Bradley, Frank. International Marketing strategy. Financial Times/ Prentice hall. 2005. Boone, Louis and Kurtz, David. Contemporary Marketing. Thomson South-Western. 2005. Cundiff, Edward and Govoni, Norman. 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