Descibe about strategic sanagement on retail and civil aviation industry?
Internationalization is rapidly increasing in various parts of the world, and this has given wide range of benefits to many industries. It is helpful in expanding their business in other country. There are many countries that have flexible international trade policies, which have helped in free trade practices in many countries. This report has discussed the retail and civil aviation industry, which are the major industries of New Zealand, and has create wide opportunities for various companies to expand their business in global market.
In this portfolio, the globalization extent in the area of global retailing and the manufacturing of civil aero engine is the main statement of discussion (Chomsky 2001). The CAGE distance, PESTEL, as well as Yip’s driver theory will be applied in order to support the discussion (Chomsky 2001). Moreover, there are various firms working in the two industries that will be illustrated in the discussion. CEAM will be sued for demonstrating the international retailing. In the other industry of civil aero manufacturing, GE Aviation will be applied for exemplifying (Chomsky 2001).
When the firms try to keep their development in the economic competitive environment, they should try to plan. This plan is actually not integrated with the conditions, which implies the company’s competence in the lying outside opportunities (Grossman and Helpman 2005). These factors also try to guide the internal resources management in order to operate in cooperation with various actions of management (Grossman and Helpman 2005).
The main purpose is to seek the values of the customers, select the correct strategy for business for improving the company’s competitive advantage and to make the benefits sustainable (Grossman and Helpman 2005). It’s the corporate strategy, which relates to the perception for long term for the managers in order to formulate the strategic decisions in order to take actions for changing the position of the company. Moreover, strategic management is considered as the way to catch the opportunities lying in the complicated environment, avoiding the risk in order to face the threats occurring in external environment for raising the strength and hiding the weakness (Grossman and Helpman 2005). Beside these, implementing the strategies and reviewing the performance will be undertaken. Finally, it will help the companies to make the profits and to hold the sustainable competitive benefits, expansion of market share (Grossman and Helpman 2005).
Strategic groups competing with each other
The industry of aerospace cover up the companies and authorities, which are involved in the manufacturing, operations, as well as maintenance of the aircraft, aircraft equipments and engines (Halliday 2000). There are various civil aviation stakeholders like governments, which includes federal aviation administration, New Zealand Civil aviation authority and administration (Halliday 2000). Other stakeholder is airlines, maintenance repairing organizations such as New Zealand Aircraft engineering company; manufacturers such as Airbus, Boeing, and Rolls Royce, and the last one is owners of private aircraft (Halliday 2000).
The industry of aviation could be divided in various strategic groups that include the huge scope for the business. There are various other strategic groups like, CFM International, Pratt & Whitney, Rolls Royce, as well as General Electric; these are the international top civil aero engine manufacturers, which has same business models as well as similar strategic combination (Halliday 2000).
Trends for GR & CAEM
In the year 2009, the total sales in New Zealand top supermarkets were around 575.6 billion, along with the CAGR that was 15.6% between the years 2006-2009. It’s noted that total outlets of supermarkets was 23814 (Hawken, Lovins and Lovins 1999). The supermarkets that are foreign funded entered in New Zealand in the year 2004, when the government tried to lift the restrictions from the overseas market entry in the retail industry (Hawken, Lovins and Lovins 1999). In the year 2009, the total overseas funded supermarkets cover up RT-Mart, Carrefour, and Wal-Mart that recorded the sales of 175.71 billion that has around 785 stores.
It’s noted that around 31 local supermarkets had the sales of 391.3 billion from around 23004 stores (Hawken, Lovins and Lovins 1999). In the sector of civil aviation, as per the forecast done by the New Zealand Aviation industry corporation, it was noted that there will an increase of 4583 aero planes for civilian in the coming 20 years. It’s evident that New Zealand commercial aero plane market is also expanding (Hawken, Lovins and Lovins 1999). By the coming 2030, the share of the country in the international aircraft fleet will get increase from 9% to around 15%.
Along with this, the jet market business holds the wide increased capacity in the international industry (Amore 1998). In the coming period, the New Zealand is still not able to produce the commercial aero engine for their jet business. It’s noted that every civil aero engines are actually imported from the overseas market. The main players in this market are: Rolls Royce, Pratt & Whitney, GE, as well as CFM International (Amore 1998).
Impact on internationalization on retail and civil aviation industries
In the civil aviation industry, the first globalization sign has emerged as the new availability of the market, which faces the limited possibilities of expanding at their home, and it’s noted that firms that were involved in the management of airport will try to seek the expansion of business (Amore 1998). They even appeared with many companies that lie outside the business of airport, and are interested in make use of opportunities in order to become the international player in the airport industry (Amore 1998). They even achieved the success, as they hold the ability to become global players.
The New Zealand retail industry is actually not considered as the most prestigious industry and therefore, it is not sanctioned similar to the state owned infrastructure along with the sector of heavy industry (Ashford and Moore 1999). It’s evident that local government of the country will try to upgrade the image of the city through closing down the wet street markets. As New Zealand economy is growing, they are exploring quality goods, services, as well as good brand names (Ashford and Moore 1999). The retailers that are funded from foreign market could easily fulfill the expectations of younger generations.
In order to support the client for understanding the variation in the market of China and New Zealand for the purpose of formulating the strategies, Ghemawat’s CAGE Distance Framework could be applied that identifies the Administrative, Cultural, Economic, as well as Geographic differences as well as distance among the two countries (Bauman 2002). The differences in society and culture like values and religions are significant factors, which impact the firms while entering in global markets (Bauman 2002). The traditional religion of China is the Buddhism, where else, New Zealand follows the Catholicism and Christianity.
Companies from both the countries conduct their business in different ways. In the traditional Chinese societies, relationships or contacts are based on the kinship as well as local networks, mainly within the retail industry (Bauman 2002). English is considered as the national language in New Zealand, where else in China, Mandarin is the popular language; these variations impacts on high end industry of civil aviation in comparison to retail industry (Bauman 2002).
Ghemawat has mentioned that political barriers will remain under the pictures for internationalization of their operations. New Zealand has adopted the close door policies, and the liberalization in the country has lead towards the political climate, which is less restrictive. Accession in New Zealand by the World Trade Organization is considered as the significant milestone for economy of the country (Button and Taylor 2000).
After becoming part of World Trade organization, New Zealand has started reforming the trading liberalize rights through reducing the tariff barriers, enhancing the goods and service access in the market, minimization of traffic rates and protecting the intellectual rights of property (Button and Taylor 2000). Although the government of the country has put its best efforts in order to promote the rules of laws, lack of transparency, systemic as well as endemic corruption, inconsistent regulations and laws, weak intellectual property, unreliable legal system are still the barriers for the business profitability in New Zealand (Button and Taylor 2000).
The state level involvement within the economy by the huge state owned enterprises remain as the high distortions within the market along with protectionist measures for the domestic as well as state enterprises for impeding the fair competition and trade (Button and Taylor 2000). After the financial crisis, it’s noted that there is a phenomenon that various private owned business are acquired through the state owned firms due to the reduction in liquidity (Button and Taylor 2000).
The time zone of China is right hours, which is ahead of London and the flying time of the country is between the two capitals, which is around ten hours. In China, the ongoing structural reforms such as export and investment growth have resulted in the yearly GDP growth rate, which is around 10% from the last 4 years (Doganis 2001). Sustainable growth has minimize the poverty and supported in creating the high demand for the consumer goods as well as air travel that supports in generating the opportunity for business in the retail and the aviation industry (Doganis 2001).
Compare drivers of internationalization in both industries
The retail industry is not actually referred as the prestigious industry by the government of New Zealand, and therefore it’s not sanctioned through the heavy industry sector as well as state owned infrastructure (Hanlon 2007). Local government of the country will try to upgrade the image of the city through closing the street wet markets. As the New Zealand economy is growing rapidly, they are looking for the better quality products, services, along with better brand name (Hanlon 2007). Retailers that are funded from overseas market try to fulfill the expectations of the young generation (Friedman 2005). After understanding the New Zealand macro environment, CR and CEAM will try to formulate the market strategy of the country (Hanlon 2007).
It’s evident that the industry of civil aviation has the highest rank in the market internationalization, due to its end users in various countries, which have the similar requirements for their products and the customers and try to search for the complete suppliers in global market (Button and McDougal 2006). The key players within the civil aero engine are the General Electric, CFM International, Pratt & Whitney, as well as Rolls Royce. It’s evident that competitive internationalization drivers are at high (Button and McDougal 2006). It’s also evident that cost globalization drivers in the industry of aero engines rank high, due to the high cost development as well as having the single national market, which is enough for paying back the investment (Button and McDougal 2006).
Driving internationalization in GR & CAEM
The entry of the big global players in the New Zealand in the present years has depicted that New Zealand is the current gold rush for the international companies, which try to expand their market share (Button and McDougal 2006). The international grocery retailing industry is noted to be one of the various business sectors, which has tried to come in China in order to make most out of the many consumers who avail products and services. CAEM continues to carry with the strategy of expansion through relying over the local distributors, who has tried to supervise the product delivery to the stores from the regional stores (Button and McDougal 2006). The company thinks that the flexibility is considered as the major priority mainly while operating in the new market (Hart 1975). The development cost is lesser, as the company is not able to build their network through the stores by considering the issues related to the service uniformity and the check quality controls (Button and Taylor 2000).
Why these industries internationalize / nature and extent of internationalization
George Yip has proposed the drivers model for the growth of global strategy between the corporate companies. They have introduced the four key category drivers, which are referred as the key for determining the globalization extent in the specific industry (Button and Taylor 2000). These are: drivers of cost globalization, market globalization, competitive globalization, along with the government globalization drivers (Levine 2002). A company that tries to exhibit these above mentioned drivers as being part of the local in terms of nature, or conversely the firm having the high number of drivers that become global in terms of operations and outlook (Button and Taylor 2000).
These drivers are not considered as stand-alone, however, due to the fact it tries to create influence on the cycle, which ultimately determines the corporate readiness of the organization to join in the rank of international companies (Button and Vega 2007). Otherwise, it’s stated that these globalization drivers are actually governed through four various factors like economic and political considerations, technology, politics and legislation, and the social and demographic considerations (Button and Vega 2007). Countries that have beneficial combination of various drivers as possible are preferred in international industry. Due to the high globalization tendency, various retail companies are starting with the possibility to expand their business in having the bigger customer base (Button and Vega 2007).
Conclusion
It’s noted from the research that through globalization, economic interdependence in the countries has increased with the enhancement in volume as well as cross border transaction in goods and services. Internationalization has powerful political, economic, social, as well as cultural dimensions. The research has discussed about GE and CAEM companies that are working in area of retail and civil aviation.
References
Amore, M. 1998. New airport, new opportunities, Marketing and Commercial Strategy Handbook. ACI-Europe.
Ashford, N. and Moore, C. 1999. Airport Finance. Loughborough Airport Consultancy.
Bauman, Y. 2002. Globalizarea ÅŸi efectele ei sociale. Editura Antet. London: British Airways, Global Scenarios. London: British Airways.
Button, K. and Taylor, S. 2000. International air transportation and economic development. Journal on Air Transport management, 6, pp. 1-12.
Button, K.J. and McDougal, G. 2006. Institutional and structural changes in air navigation service providing organizations. Journal of Air Traffic Management, 12(5), pp. 236-252.
Button, K.J. and Taylor, S.Y. 2000. “International air transport and economic development”. Journal of Air Transport Management, 6(4), pp. 209–222.
Button, K.J. and Vega, H. 2007. The uses of the “temporal-fares-offered curve” in air transportation‟. Journal of the Transportation Research Forum, 46(2), pp. 83-100.
Chomsky, N. 2001. Chomsky and Globalisation. Cambridge: Icon Books Ltd. Chomsky, N., 2002. Understanding Power: The Indispensible Chomsky. New York: Vintage.
Doganis, R. 2001. The Airline Business on the Twenty-first Century. Routledge
Friedman, T.L. 2005. The World Is Flat: A Brief History of the Twenty-first Century. New York: Farrar, Straus and Giroux.
Grossman, G. and Helpman, E. 2005. Outsourcing in a Global Economy. The Review of Economic Studies, 71(2), pp.135-159.
Halliday, F. 2000. Globalisation and its Discontents. Irish Studies in International Affairs, 11(1), pp.233-245.
Hanlon, P. 2007. Global Airlines. Competition in a transnational industry, Third Edition. Sage
Hart, R.A. 1975. “Interregional economic migration: some theoretical considerations (Part I)”. Journal of Regional Science, 15 (2), pp. 127-138
Hawken, P., Lovins, A. and Lovins, H. 1999. Can Capitalism Go Natural? A Review of Natural Capitalism: Creating the Next Industrial Revolution. New York: Little, Brown and Company.
Levine, M.E. 2002. “Price discrimination without market power”. Yale Journal on Regulation, 19(1), pp. 1- 36.
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