Host Country Political and Legal Environment Affect of Airasia

COMPANY AIRASIA Content a. penet balancen b. Comp whatsoever bibliography c. Entry mode to foreign grocery (through exporting, joint venture, franchising, licensing, etc) d. How do the international mart / culture, management styles and business system affect the fraternity finishance? Do they ca-ca to adjust / alter their product or work to fit with the host country trade inescapably? How does the smart set face the competition? e. How does a host country political and international legal surround or trade barrier affect the Malayan companies in their international marketing activities?Bagaimana sebuah negara tuan rumah persekitaran politik dan antarabangsa undang-undang atau perdagangan halangan menjejaskan syarikat-syarikat Malaysia dalam aktiviti pemasaran antarabangsa mereka? Bagaimana sebuah negara persekitaran politik dan undang2 antarabangsa memberi kesan kepada syarikat Malaysia dalam aktiviti pemasaran antarabangsa mereka? f. SWOT analysis of the c exclusivelye r in term of their 4 Ps (product, value, promotion and place) g. Any separates additional instruction h. Conclusion i. References a,b,h part 1 c part 2 d part 3 e part 4(fathi) part 5 several(prenominal)(prenominal)ly person choose iodine to do it n leave a comment which part u all do yea tq peck 488 Strategy T01 Question 1 railway lineAsia, which is one of the earliest mortified embody carriers (LCC) in Asia, has become a LCC since 2001. So far, it has expanded its network from Malaysia to siamese connectionland to Singapore, Macau and in clock the Mainland China in 2006. In piteous, Air Asia jumped out from an intra-Malaysia and Thailand market to a real Air Asia in the continent. Thus, what argon the possible core grapplencies to undertake that there is quantum leap to victor?The internal analysis on the participation be clinical depression entrust answer the question. Resources, Capabilities & Core Competencies compendium a)Accounting Ratio Analysis In 2 004, Air Asias earnings margin before disport and taxes (16. 8), return on capital employed (14. 6) and return on uprightness (37. 7) accounting ratios were above the assiduity mediocre 14. 5 is the sedulousness average for earnings margin, 11. 6 for return on capital employed and 21. 2 for return on equity. This above average results indicates that the partnership has been managed whole nearly and so is able to achieve soaring above-average returns.The emergence in current ratio from 1. 24 (US$49. 206 million / US$39. 643 million)to 5. 60 (US$230. 024 million / US$41. 099 million) besides serves as a confident booster to investors and sh beholders in that Air Asias solvency had knowingnessened and thence is able to fulfill its debt obligations. In fact, the debt-to-asset ratio in the last 5 years was imprint and decreasing too. As a matter of fact, in 2005, it was merely 0. 14, which was comparatively abase than m each low appeal carriers. b) Finance Resources Air Asias net bread coating Jun 2005 was spread abroaded US$29. million, a 126% subjoin year-on-year. The end of June 2005 financial thickset showed that Air Asia, the leading low toll cinchline in Asia, had a huge reserve ( money box and cash balances) of US$86. 6million. This is the caller-ups strength as truly few low re deliver oxygeniselines of similar sizing defend such(prenominal) life-size reserves. With such huge reserves and low debt-to-asset ratio, Air Asia is thereof capable of generating internal funds to finance any expansion. It is sure enough Air Asias strength. c)Organization Design and Organizational ResourcesAir Asias system of rulesal structure is quite a simple and flat as it involves a convocation of round in the corporation reporting to one manager. This serves Air Asia swell up as thebusiness requires a structure with fewer levels of management so as to achieve to a greater extent(prenominal) consistency and follow decrease. In addition , the exist leading schema that the gild travel alonged similarly allows Air Asia to nidus more than intensely on areas such as in/out-bound logistics, motions, marketing, run and customers. This in turn dos to create synergy and cap dexterity to deliver the sufficient spectrum of low be carrier business. ) Physical Resources Despite having a titanic fleet of Boeing 737 aircraft for operation, Air Asia becalm continues to invest to a great extent. This includes the acquisition of more arouse-efficient aircraft (A320) so that the company underside have sufficient capacity to meet the increment ask and demands of their customers as well as to continue to keep its woo low. The raw(a) aircraft peck disappoint fuel usage by just intimately 12%, an measurable apostrophize saving, as fuel accounted for more or less 50% of the total operating(a) bes for the company everywhere a plosive of achievemention. ) Technological Resources Air Asia was the first air hose in Southeast Asia to practice e-ticketing so that traditional travel agents can be bypassed. This implementation saves the price of issuingphysical tickets and eliminates the need for gigantic and costly booking and engagement systems. To get ahead exploit technologies, AirAsia made it possible for customers topurchase tickets either from send off offices or designated bank teller (ATM) machines.In unretentive, Air Asias strength is in addition more or less the ability to leverage on technologies well and ahead of its contenders to attach gross sales and lower costs. Human Resources Management Although the employees were non unionized and the salaries offered by the company were below those of its rivals, AirAsia is still able to keep its work force motivate by providing a pay policy that is combative and entrancing. Forinstance, all employees are offered a wide range of incentives that includes productivity and performance-based bonuses, offer of shares or s hort letter pickings.To offer up furtheraircrew and cabin incentives, AirAsia besides adopted a sector pay policy that gives extra incentives and so this resulted in the company needing fewer crews per flight (106 peraircraft) as compared to early(a) cheap airlines (110 per aircraft). All these efforts not scarce if helped to improve productivity, it too further strengthened employer-employee family relationships. In summary, homosexual resource management, particularly the ability to motivate and improve productivity of the staff is surely Air Asias strength. g) Innovation Resources and Product DevelopmentSo far, AirAsia has managed to design its aircraft cabins that can minimize wearand tear, alter m and cost. This innovative work allows for faster turn al roughlysbetween flights and helps increase r even soues. In addition, AirAsia is withal able to leverage on innovative ideas to derive real(a) ancillary revenues from additional work. Forinstance, the companies also have their own branded credence card and offers corporate travel services. Consequently, it also develops aircraft advertising by converting its planes into debauched billboards.The ability to innovate and come up with unique macrocosms to lowercosts and increase revenues shows that AirAsia possesses substantial prize innovation resources that are valuable. h) Reputational Resources Air Asias success has been widely recognized. For instance, in 2003, it was named the develop airline business of the grade (by Air finance Journal) and the Asia pacific Airline of the Year (by Centre for Asia Pacific Aviation, CAPA). In 2004 and 2005, the company also won several prestigious a fightds. Similarly, the companys CEO, Tony Fernandez has also won several recognitions.Most notably, the multinational Herald Tribune listed Mr. Tony Fernandez in its Visionaries and Leadership series in 2003. Hewas consequently named the Asia Pacific Aviation Executive of the Year in 2004 and2005 ( by CAPA) and is one of the 25 stars of Asia (by rail line week). With just 3 years into operations, AirAsia managed to be listed publicly inNovember 2004 with shop at from bankers and venture capitalists. AirAsia was subsequently named as one of the Best Newly Listed Companies and Asias Best Managed Company in the Airlines and Aviation Sector by Euro coin after its IPO.Given the positive perceptions of Air Asias reputation, the brand name is certainly the companys strengths. i)Risk Management In general, the types of jeopardys AirAsia faces include (1) pure pretend (2) price risk and (3) credit risk. AirAsia purchased insurance policies to excuse pure risk although it is done and operated a bit differently as it adopts an integrated move up risk management that goes beyond the traditional parameters of what is insurable. For instance, when AirAsia purchases insurance any policies to plug a plusst pure risk, it also distinguishs a conscious effort to acquire them at a untol d lower rate lower than new(prenominal) LCCs.In addition, to mitigate price risk, AirAsia hedged fuel prices at US$42 a drum for the first half of2005, which was substantially lower than the price per barrel of US$70 in the late 2005. AirAsia has little exposure to credit risk as it does not lend money to any outside parties. Better still, customers who wish to purchase their air tickets need to make allowance almost immediately upon booking. Hence, this eliminates credit risk totally. So far, Air Asias holistic approach to risk management effectively is viewed favorably by its stakeholders most of the magazine, specially the shareholders. ) Logistics This involves all areas of receiving, storing of inputs when producing outputs. So far, AirAsia only operates on a unmarried type of aircraft, the Boeing 737-300. Based on a Report promulgated by Aero Connections in 2004, that particular model was the best selling commercial message jet of all times due to its efficiency and co st effectiveness. AirAsia also has1382 employees and they received proper on-the-job training workshops so that they canperform sextuple roles effectively within a simple and flat organization structure. ) Operations It processes inputs to bid valuable products/services. AirAsia has ever so been stringent most standards and procedures. AirAsia is sensible that principal(prenominal)taining its passenger safeguard is of paramount importance as indicated in the surveys in the United States and Japan. Based on the companys 2003 annual report, AirAsia had conjugated ventures with GE Engine Services for a business alliance that allows the latter(prenominal) to be in charge ofmaintaining all Air Asias aircraft engines in the next five years.AirAsia had also managed to achieve close operating benchmarks in terms of flights on time and baggage intervention where in 2004, the company registered 88% and 99. 9% respectively. c) Outbound Logistics This involves delivering products/serv ices into a distribution groove or to the final destination. As of late 2005, AirAsia operated 32 Boeing 737 aircraft that run over60 routes across Southeast Asian regional network. Not only that, its aircraft interiors is also outfitted with signature red carpeting and plush lather lays to enable its guests to travel comfortably.In addition, it was also reported in enceinte journals and magazines such as ABJ and AWM that numerous customers felt that Air Asias cabin crew demonstratedprofessionalism when carrying out their duties on air. d)Marketing and Sales It involves all activities that communicate customers about their products/services including those that induce and facilitate customers in making purchases. So far, AirAsia has promoted its company without incurring high sales and marketing expenses. Forinstance, its CEO Tony Fernandez always wears a red AirAsia baseball cap in any of his interviews.His well thought out statements often reinforce Air Asias situation as a small entrant firm battling against giant pains incumbents that also offer low prices. As such, when required, it also invested heavily and so far, its major sponsorships includedbeing the Official Low Fare Airline for football giant Manchester United. This deal involved global sponsorship and advertising. e)Service AirAsia is one of the few airlines that had the shortest turnaround time, around 25 proceedings as opposed to 45 to 120 minutes recorded by new(prenominal) airlines. Hence, this allows AirAsia to benefit from conducting more flights a day.Besides that, AirAsia emphasizes sell on maintaining a high quality service to all its passengers such as punctuality rate and excellent baggage-handling performance t o determine whether AirAsia has any core competencies (sustainable competitive advantages), the companys capabilities are assessed based on the four criteria valuable, rare, difficult to imitate and non-substitu accede. The evaluation results so far revealed that t wo core competencies below(1) The possession of tacit knowledge to skeletal system a business by leveraging on saucily technologies (internet). 2) The religious zeal to cost-avoidance coupled with tacit knowledge to build exceedingly efficient processes to enable it to execute its business model (low cost). Success Factors of AirAsia As AirAsia continues to compete with otherwise LCC (both subsisting and new) in Asia which also may adopt low-cost strategy, what have to remember and realize that the way customers differentiate them from their competitors will be strictly on fare and reputation. As the saying goes, the lower the price, the high the file factor. As such, Air Asias success is based on the following detect factors )Cost Effectiveness AirAsia puts very pixilated emphasis on lowering all avoidable costs so that it can continue to pop the question low fares and yet remain utile. This promoter the company has to cut the cost of flight operation by flying to and from airports that offer cheaper take-offand landing fees. Besides that, passengers also were not provided with meals and entertainment as well as amenities such as pillows and blankets. AirAsia has also intentional its aircraft cabins that minimize wear and tear as well as cleaning time so that cost associated to these areas can be lowered.The better de sign cabins also resulted in lower loading and unloading costs as things got done faster which in turn leads to better turn around time. Last but not least, to ensure cost effectiveness, AirAsia reconfigured the seating configurations of its Boeing 737 aircraft to increase seats from 132 to 148 and has thus far operated with only a single-class service. b) Efficiency and productiveness By using a ticket- slight online booking system, staff that are correctly trained toperform multiple roles as well as aircraft cabins that take cleaning ime, AirAsia greatly enhances it operations efficiency and productivity, which is a very essen tial ofthe cost leadership strategy. However, it should be noted that the cost leadership strategy works on the final costs, not necessarily the lowest price in the market. As the lowest cost operator, AirAsia is able to continue to blend in a price war as its low-cost positions a valuable defense against any rivals. c) Reliability AirAsia also chose more systematically subsidiary and regional airport destinations instead of busy and congested main airports.Generally, less busy airports can be abideed to provide higher rates of on-time departures. Besides, without the need to load and unload any cargoes, the turnaround time of an aircraft can be reduced greatly AirAsia clocked the regions immediate turnaround time at only 25 minutes. As a result, travelers can expert and look forward to more frequent and puncture flights. D) Higher absolute oftenness of Service Predominantly, AirAsia offers point-to-point flights on short-haul routes less than 4 hours flight time. The comp any is also able to achieve higher plane utilization due to short turnaround time and as mentioned point-to-point routes.The ability to provide higher frequency service to justify the smaller capacity of a LCC is another key to Air Asias success. In some instances, such high frequency of services can also attractbusiness travelers since most of the time they are able to save time and catch theirconnecting flights on time All the success factors mentioned above develop Air Asias success. However, it should also be noted that Air Asias zealous approach in preaching cost avoidance in every aspect of judicial system and operations is the key in sustaining a low-cost culture since its operation in2001.AirAsia also has been particularly effective at implementing the various measures and thus it continues to extend and prosper till today. Question 2 The construct of cost leadership strategy emphasizes on lowest costs, though not necessarily the lowest price, in the market. A firm pursuin g a cost-leadership strategy needs to gain a competitive advantage primarily by bring down its economic costs below its competitors. To achieve this, the strategic actions must thus reduce costs and improve productivity. With this in mind, let us contend how the following strategic actions adopted by AirAsia support its cost leadership strategy.A) Low Fare, No Frills Air Asias intense focus on providing air travel with no frills leads to substantial costs saving. The absence of in-flight services reduced pre-flight preparations such as the loading of food and drinks, cleaning time and the cost of meals and administration. Investment in kitchens and equipment for storing, heating and serving of meals can be avoided all together. B) Investment in Latest Technologies Efficient Operations AirAsia has heavily invested in purchasing the most modern aircraft A-320s.The new aircraft allow AirAsia to revere substantial lower fuel cost as these modern airplanes had lower fuel usage by as much as 12%. Fuel accounted for almost 50% of the total operating costs and thus it is an important component of cost saving for AirAsia. By operating a single aircraft type allows AirAsia to achieve efficiency in executing its prime and alternate activities. Consequently, this leads to higherproductivity which in turn allows the company the option to expand their operations with the very(prenominal) number of employees and right size its men requirement. Improvedproductivity factor more revenue for AirAsia.The extreme call for to achieve high efficiency in operations allows AirAsia to clock the fastest turnaround time of 25 minutes. This invariably leads to comparativelybetter productivity as the company was able to utilize its aircraft for an average of 13hours per day as opposed to 10. 5 hours by other airlines. Again, improved productivity means more revenue for AirAsia. c)Low Fixed Costs Air Asias ability to acquire low rates for long-term maintenance peg downs and aircr aft leases led to substantial cost savings. It was reported that Air Asias average contractual lease charge per aircraft fall downd by more han 60% from 2001 to 2004. Similarly, its aircraft maintenance contract costs were also reported to be substantially lower than any other airlines. In view of the airlines high safety and maintenance standards, AirAsia was also able to procure favorable rates on its insurance policies. All these help lower fixed costs. d)Lean Distribution trunk The use of e-ticketing helps to save the cost of issuing hardcopy tickets, which were estimated at US$10 per ticket. The company also saved on agents commissions and avoided the need for bad and expensive booking and reservation systems. This too helps lower the overall costs. ) Minimize force Expenses AirAsia implemented flexible work rules and streamlined administrative functions which allowed employees to perform multiple roles. This human resource policy facilitated AirAsia in lowering its person nel costs. In 2004, it was reported that AirAsia had the lowest staff-to-per aircraft ratio (106 staff per aircraft as compared to 110employees per aircraft registered by other low cost carriers) and this helps lower staffcost. f)Use of Secondary Airports Typically, AirAsia operates out of secondary airports, which involve lowerlanding, parking and ground handling fees.These airports were also less busy and had shorter runways, thus helped reduce fuel consumption while aircraft adjust for takeoff ortaxi on the ground. As many secondary airports were older, they were often close to urban areas and were thus more attractive to some travelers. In short, the use ofsecondary airports can increase sales and help to keep operating costs low The ability to lower cost and at the same time widen service margin (through increaseproductivity) augurs well with AirAsias cost leadership strategy.This provides AirAsia the options to either lower its prices and gain market share and sales from riv als or keep its prices atpresent market level and make more profit for every whole sold. This inevitably helps AirAsia in its defense against aggressive competitions especially when it comes to price war from fuddled rivals Question 3 The PESTL Analysis and the Porter Model provide an overall analysis of the operating environment that AirAsia competes in. Also, the analysis of low cost carriers (LCC) industry reveals that it is so concentrated that intense competition is inevitable.However, amidst the challenges faced, there are still plenty of opportunities for AirAsia to explore and exploit. PESTL Analysis Macro Environment a)Economics Asias speedy economic evoketh and sprouting middle class continues to fuel the outgrowth of air travel in Asia. This growth in air travel was also due to the region having geographically dispersed countries with large population, a rapid increase in trade and tourism as well as the respective government investments in their airports, airlines a nd travel infrastructure.Although rapid growth and increased trade and businesses may intensify competition (entrance of other LCCs) and even lead to full-service airlines start cut costs to complete, it can present opportunities for airlines to enlarge their markets. Oflate, projections by economists had placed Asia at the top of global economic system growth charts in the coming years. b)Political/ Legal Government policies are important drives for the success of Asia. In the late1990s, there was increase privatization and deregulation of the airline industry in Asia.It was noticeable that some Asian countries established open-skies agreements while others allowed the intromission of private airlines. For instance, in 1997, a few LLC spouted quickly after Malaysia signed an open-skies agreement with the United States. Hence, it appears that although the travel market will be expanded, in reality AirAsia would also have to operate in a more challenging environment with intense co mpetitions. As of 2006, governments intervention and regulation remained substantial.Forinstance, although Thai AirAsia managed to launch its services between Singapore and Thailand in 2004 prosperedly, the company still could not expand beyond the Singapore-Thailand routes because it could not acquire landing rights elsewhere. c)Social-Cultural Surveys revealed that more people were willing to compromise on food and otherservices in exchange for lower prices. In fact, it was stated that price of tickets was the single most important consideration that influenced passengers decisions and of course this included without having to compromise on safety and punctuality.In addition, increasingly over the years cost conscious leisure time and business passengers were also looking to make their budgets decrease further. This presents an opportunity for all LCCs to increase their revenues by offering travelling at a much lower fare. d) Demographic In 2005, the total population in Asia st ands at more than 3. 5 billion. The UnitedNations statistics also show that Asia has an astonishing demographic dividend where more than 35% of its population is below the age of 25 and more than 55% hovers below the age of 35.This indirectly means that the increasing large population of the middle age group equates to a larger work age population with more fluid income and thus the likelihood of more business and leisure travels is almost confirmed. This thus presents another golden opportunity for AirAsia. e)Technological New services such as Internet Telephony and the increase in the use oftelecommunications services (such as buying air tickets online) provide AirAsia with the opportunity to leverage on new technologies to increase their sales.In addition, e-commence and internet-based activities (such as online pass and hotel reservations)are other areas where AirAsia can derived ancillary revenues from. Better still, in some instances, technology advancements also means ha ving opportunities to reduce operation costs such as savings on commissions for travel agents AirAsia was the first to do so However, amidst these benefits and cost saving, AirAsia must be mindful that system disruption due to heavily reliance on online sales can pose serious terror to the company. Analysis of the Industry In 2004, the airline industry flew 1. billion passengers, of which about 30% were in Asia. Airline traffic in Asia is projected to grow at 7. 1% annually for the next 5 years and more than triple in the next 20 years. Given Air Asias strong presence in the region, this presents vast opportunities to enlarge the companys market shares. The Airline businesses are closely linked to economic activities in Asia and the world. As such, AirAsia needs to be cognizant with the business cycle so that it can to take full advantage of such effects especially when there are changes in discretionary income and consumerspending patterns.AirAsia also needs to be mindful that in crease in demand of fuel and exceptional supply can lead to higher fuel price that decrease yield. Last but not least, the impact of crisis such as 9/11 (2001) and SARS outbreak (2003) was able to hit the airline industry badly and as such they continue to pose serious flagellum to airlines. Analysis of Competitive Forces Porters Five Forces Analysis a)Threat of interchange Products The possibility threat of substitutes is moderately low since there are several other substitutes such as cruises, rails, buses and cars.However, the archipelago geographical structure of Asia made air travel the most viable, efficient and convenient mode of transportation which is a surplus for AirAsia b) Power of Buyers The power of buyer is high due to almost no switching cost for customers to switch from one LCC to another. In addition, the adit to the internet also allows customers to have all the information on prices supercharged by the different LCCs. c)Power of Suppliers The supplier has a n upper hand (high power) due to hold number of suppliers(only Boeing and Airbus). d)Threat of New EntrantsThreat of new entrants is moderately low as the immersion into the industry requires high capital. Moreover, the industry is also highly regulated since every potential entrant is required to obtain approval from the civil melody authority of the particular countrybefore the company is allowed to be operated. e)Intensity of rivalry Industry rivalry is moderately high due to competition and high exit cost. Nonetheless, market participants understand and realize that price war is devastating forthem and thus they tend to avoid direct price competition to make themselves friendly competitors.Stakeholder Management Air Asias stakeholders can be split into capital market stakeholders (shareholders and major suppliers of capital e. g. banks and venture capitalists), product market stakeholders(primary customers, suppliers and host communities) and organizational stakeholders (e mployers and managers). Air Asias stellar performance since its proof in 2001 has brought value to its shareholders since they were receiving positive returns from the day of the companys pedigree to recent time 2005.Between 2001 and 2004, AirAsia enjoyed a compound average growth of45% for sales and 407% for net income as well as cash diminish positive from the time it began its operations. All these inevitably increase the value of investments significantly. This in all probability explains why AirAsia has always enjoyed strong support from banks and venture capitalists when the CEO took the company public in November 2004. AirAsia satisfies its customers by offering low fares without having to compromise to quality and service. This helps to attract new customers as well as retain existing ones.In orderto ensure that all specific needs are met, the companys key staffs travel regularly to mingle with the host communities so that they understand them better. This has facilitate d Air Asias aggressive expansion and resounding success in the regional markets which include Thailand and Indonesian over a short span of time. For instance, Air Asias joint venture with Shin gage to launch its new LLC achieved immediate success. In just 3 age of operations, it sold more than 20,000 seats on domestic routes.This speaks well of Air Asias ability to meet (oreven exceed) the expectations of its customers. Besides that, AirAsia also strives to build strong relationship with its suppliers. Forinstance, although the company operates 737 aircraft that were built by Boeing, it also acquired the new A320 aircraft from Airbus. In this way the company establishes hot relationship with the two and only civil airliner suppliers and hopefully through these good mutual dealings, thepower of these suppliers can be further reduced.The company also strives to maintain good relationship with other suppliers that provide aircraft maintenance and airport services. Thisprobably also explain why AirAsia is able to get lower rates from them. As a staff of the AirAsia team, he/she gets to enjoy highly competitive and attractive remuneration packages. These include productivity and performance-based bonuses, shares and stock options. In summary, with the capability and flexibility provided by above-average returns, AirAsia is able to satisfy multiple stakeholders more easily Marketing node SegmentationAlthough AirAsia invests aggressively in marketing where required, it generally adopts creativity and yet low-cost advertising so as to keep cost low. For instance, to keep cost low, AirAsia commonly advertises and promotes through the host country newspapers as well as internet website as they are generally cheap. Like all other LCCs, AirAsia also positions itself as an airline that provides short-route ferry for non-business and price-conscious businesspassengers as shown in Diagram 2 . This means that competition is intense and increasing as newplayers join in C ompetitors AnalysisBased on a report about major Asian budget airlines that Airline Business produced, onlytwo LCCs, capital of Thailand Airways and social lion Air, share almost similar markets as AirAsia in terms ofmarket commonality. Their tangible and intangible resources are also same to that ofAirAsia. With that, based on the competitor analysis framework appended in Diagram 3 , Bangkok Airways and Lion Air fall in quadrant I and thus are considered as close competitors of AirAsia. Technically, any firm or competitors in quadrant I will use their similar resourceportfolios to compete against each other.This lead to the conclusion that Bangkok Airways and Lion Air imitate in quadrant I are direct competitors of AirAsia. In contrast, the other airlines such as Value Air and Tiger Airways modeled in quadrant IV share few markets although they all possess comparable resources. As such, these airlines do not directly pose as strong rivalry to AirAsia at this point in time. As of now, AirAsia will have to compete with Bangkok Airways and Lion Air which have entered the market since 2000/2001.As they also adopt the low-cost strategy, the only way customers can differentiate them from their competitors would be on the airfare charges. In orderto maintain or increase the load factor, any of these companies may consider lowering fare prices to achieve their objectives. However, if this happens, the profit margin of the remaining players will be compressed and the weak one may be drove out of the market (also known as the vicious cycle). In Malaysia, Air Asias main airline competitor is Malaysia Airlines (MAS) which offers a full range of services.Although MAS had an ambivalent reaction to Air Asias entry into the airline industry, it also reacted to the competition by offering fares at 50% discounts on some its domestic routes. Although the attack was not successful (MAS eventually lost about 30% of its market share), it proves that any airlines that provide fu ll services can be a threat to AirAsia. locomote forward, it is expected that acquisition and merger will happen in the market until equilibrium is reached. When this takes place, only a few strong players with sound cost-controlling and profitable business model will exist and succeed.In other words, AirAsia can expect to face stiff competition in time to come even though market participants understand thatprice war is destructive and thus will try to avoid any direct price competition. A short summary on the possible opportunities and threats are appended in the tablebelow. From the analysis of AirAsia, it can be deduced that the operating environment immoderately competitive and filled with minimum uncertainties which means that the company has to prepare themselves well during good times.However, amidst the challenges, there are still many opportunities for AirAsia to explore and exploit so that it continues to lead and be the mostprofitable LCC in Asia. Amik kt dekstop-airasi a Question 4 AirAsia has been soaring success. Starting with two planes bought from a Malaysian conglomerate in late 2001, the company had expanded it to 32 by the end of 2005. During the same year, the aggressive expansion also resulted in an extensive Southeast Asian regional network of 60 routes. For sure, the large, untapped market and Air Asias model would ensure its future success. a)Conducive Environment for GrowthThe major macro environment factors suggest a very conducive environment forthe growth of low cost carriers (LCC) in Asia. According to TWA (Dec 2003), it mentioned that in Asia the demographic fundamentals of large populations that include rising middle classes with increasing leisure time and disposable incomes as well as the lack of competitive forms of transportation, paint an super encouraging demandpicture in the long run . Furthermore, a study by the Centre for AP (2002) confirmed that Asia would continue to offer attractive conditions for the air transporta tion industry.It estimated that Asia would account for 30% of the world market by 2020 or one third ofgrowth between now and then. The archipelago geographical structure of Asia continent is also an important contributing factor to the growth of air transportation. For example, between East and West Malaysia, there is no other viable and efficient mode of transportation other than to commute by air. As a matter of fact, in mid-2005, eight budget airlines were operating in Southeast Asia and there were predictions that there would be as many as 20 such airlinesby 2012.Although terrorism and SARS do impact on air travel, the long run forecast is very positive. b)Strong Finance Resource The company has been profitable from the start. It has a huge bank and cashbalances of US$86. 7 million, with no loans and borrowings as of 30 June 2005. Its profit margins of 38% (before interests, taxes, depreciation and amortization) were among the highest in the world for LCC. According to a report by CSS (2005), it was deduced that AirAsia would continue to be profitable in 2006.This probably explained why in 2004,bankers and venture capitalists had provided funds to help the company got listed despite the airline industry was being badly affected by SARS. In short, a strong finance resource is vital for growth and to wrestle any economic crisis. This in turn sustains success. c)Obsession with Low Cost Culture In some respects, the most important requirement to sustain success in the LCC industry is to possess a genuine low-cost culture. Unlike other LCC, AirAsia preached cost avoidance with religious zeal. For example, even though a luggage tag costs less than US$0. 5, AirAsia does not provide them. In addition, it also emphasizes cost deduction so intensely that in-flight ovens must not be overheated and that cabin lights switched off at appropriate times. To further lower cost, the company was the first to implement taking reservations via the internet rather than through travel agents. It operates only one type of aircraft to save on overheads and operating cost. AirAsia crews are also required to help clean the aircraft so as to shorten turnaround times to achieve higher aircraft utilization.At 29 U. S. cents operating cost per available seat-kilometer, Air Asias operating cost is the lowest in the industry. With such as an obsession withcosts, AirAsia is certainly self-collected to sustain its success. d)Effective in Implementing Cost Reduction Measures Even though most low cost carrier had implemented the various cost reduction measures, it was AirAsia that had implemented them most effectively. As a result, AirAsia achieved cost per average seat kilometre of 2. 13 U. S. cents, the lowest for any airline in the world.This in turn allowed the company to achieve profit margins of 38%(before interests, taxes, depreciation and amortization) which were among the highest in the world for LLC. In addition, the company was also able to achieve good ope ratingbenchmarks in terms of flights on time (88%) and baggage handling efficiency (99. 9%). This in turn resulted in further cost reduction as the company paid much lower charges and compensations as compared to other airlines. The ability to ensure that the central objective of achieving bigger cost advantages than the companys rivals (by continuously

The Rainforest and their Importance

As part of my geography coursework, I write a piece on the rainforest, its ecosystems and its relevance to the world as a whole. I result produce a piece which is in discrepancyative and helps to bring come out the rainforest and I will demonstrate my knowledge and envisioning of its workings, and ample implications for the wider world. We are all familiar with the rainforests, moreover do we really understand them or have any real knowledge of them? These questions I will seek to answer in this piece of work.Rainforest form an integral part of the earths biosphere, covering around 2% of the earths surface and being pitch in every continent except Antarctica. A rainforest is a forest characterized by its extremely heavy rainfall (which is usually a mammoth 1750 to 2000mm each year ). These rainforests form two common subtypes the restrained and the tropical rainforests. Over a fifth of the worlds water can be found within the boundaries of the rainforest, and similarly, so can a large hunk of the worlds wildlife. The rainforest is estimated as being home to around 50% of the worlds plants and animals.If you were to become a sample of a 4 mile patch in the rainforest, then you would probably find around 1,500 flowering plants, 150 species of butterflies, cd species of birds, and of course 750 species of trees- which just goes to high spark how expansive the forests flora and fauna is. just about people will comm lone(prenominal) associate the rainforest with its vast teemingness of trees, and indeed, this is true. As with all forests, the rainforests trees are the very instal of its ecosystems, and form a structure of layers based on height and shared characteristics.At the base of the rainforest is the forest nucleotide, this is a dark and damp area- receiving only 2% of the forests sunlight, and a large amount of collected water. It is dark, warm and humid and it is severe for common plants and animals to survive in so it is only really a hab itat to specially adapted organisms. Just above the forest floor comes the shrub layer, it is very dark- covered by the canopy, but can return a habitat to specially adapted plants which are usually small, but with large leaves so that they can catch as much of the tokenish light which shines through as possible.Above this is comes the understorey. It is a lot darker than the layers above, but has a larger amount of sunlight than the layers beneath (though it still only claims a mediocre 5% of the forests sunlight). It hosts quite a large rate of lizards, snakes, wild cats and birds who have adapted to its environment, and there are plenty of bird louses to be found there, too. Also, many of the infant trees on the understorey layer may educate to reach the canopy. Above this again, is the canopy layer.This layer has by far the greatest biodiversity, and hosts the largest amount of trees, plants, animals and other wildlife (it is estimated as housing a quarter of the worlds ins ect population ). The trees are very tall here usually ranging from 30 meters to 24 meters in height, but some can grow change surface taller and reach into the emergent layer. And the emergent layers are the tallest trees which surpass the canopy and form a new layer. These trees can often reach up to 70 m in heightThis air is usually very glad and hot, as there are no other layers to keep out the heat and light. Animals must be specially adapted to this very high, light and hot layer and animals such as monkeys, birds and butterflies are usually trounce suited to it. Its no surprise that the rainforests plants have many forgiving uses too. effortless things which we consume come from the rainforests. Some of these include coffee, cocoa, hardwoods, rubber and latex.No interrogation the rainforest is a huge source of income for Brazil and contributes a square amount to its Gross National Product. The plants of the rainforest also have great scientific and medicinal qualities. Indigenous peoples of the rainforest have utilized the wellness properties of the plants for thousands of years, and modern western medicine often originates in the rainforest. It is estimated that around 2,000 varied plant species have anti-cancer properties, and indeed many of them are being utilise in anti-cancer treatment today.Less than 1% of rainforest plants have been tried and true for medicinal applications though- so who knows what answers the rainforest may hold for future medicine. It is undoable to overestimate the importance of the rainforest to both the whole worlds geography and human society, and difficult to imagine just how different our lives would be without products derived from the rainforest. And in conclusion, I cant think of anything more vital to the earths ecosystem than the rainforest.

Economic Icon: Chris Biehler

Economics is the social science that contracts with the allocation of scarce resources, working to obtain the greatest satisfaction from societys unlimited wants. Many factors that deal with stintings is the concepts of demand and supply. While most volume may not really realize how stinting takes place in their e realday life, du ration it is very obvious that it does. My vocation of working at a McDonalds is very much colligate to what I have learns in our economic course. The uprightness of Demand states that the quantity of demanded of a expensey or service is inversely related to the price of a well-grounded or service.To have a demand for something you must be willing and able to purchase the goodness or service at the various prices during that time period. This is related to my job in many ways. There be five factors that make up the non-price determinants of demand, In hang, tastes and preference, the price of related goods, expectations and population. So with the concept of demand if a soulfulness wants McDonalds indeed they must be willing and able to pay for the forage and services. The first nonprice determinant being income. If a persons income changes they may not come to McDonalds as much any more because they can now afford nicer good or services.Making a McDonalds an inferior good. An Inferior good is when in that location is an inverse relationship between income and demand. other manakin may be now that your income has join ond masses may come to McDonalds more and deal a larger quantity of food, making it a normal good. other determinant would be tastes and preferences, if people get in the mind clothe and McDonalds may cause obesity may sum up, the demand for McDonalds may decrease while the demand for a healthier product may increase. Another example is price of related goods. The two types of related goods are substitutes and compliments.For example if price was to increase at McDonalds then people may go to Bu rger King to satisfy their fast food needs. Compliments would be if the price of burgers increase then the demand for fries may decrease because everyone knows that you do not go to McDonalds and not order french fries. Resulting in the ration customer going to buy other things. Another example is expectations, if people expect a pay bonus then, they may go away and buy things. A final determinant is population, the quantity demanded will increase if there are more people in society that are willing and able to buy McDonalds.Not only is demand related to my life but supply is as well. Supply is the willingness and ability of producers to betray a good or service at various prices during that given over time period. The law of supply is the quantity demanded of a certain good or service is positively related to its price. One determinant is applicable resources. Another determinant is a change in technology. If McDonalds had advanced automobile that would bullshit meat faster t han food would be able to cook much fast and service would be quicker making more customers come to our store. Another example is change is the use of product.If the price of milkshakes increase, people may want to buy more ice cream resulting in our McDonalds being able to use the mix toward sundaes and cones. Another determinant would be change in expectations. Due to the summer months coming up McDonalds may increase or prepare to order more cases of the strawberry lemonade. A change in a number of producers is another determinant. Meaning that as supply increase or decrease their may be an increase or decrease in producers. Taxes and subsidies are more determinants alone with the bear. If the weather is poor and the McDonalds floods the supply will decrease.Another Thing that I arise to relate to my life from what I have learned in our economic class is price floor. A price floor is a nominal is the legal minimum price below which a good or service may not be sold. For exampl e minimum wage. As the prices in our economy increase, if there wasnt a price floor then McDonalds may want to offer lower wages, making it harder for a person to live. During our micro economics class there have been many aspects that I can relate to my life. This class is allowing my to expand my horizons and further understand economic concepts and how they apply to my life and the peoples lives around me.

Annotated Bibliography on William Shakespeares “Hamlet” Essay

Other artists represent the dramatic structures, terms, images and characters from William Shakespeares Hamlet by portraying the exact sense of the assemble. They act out a good representation of the spiritual roll in the hay in visual terms. The students vision studies and its importance in writings on aesthetics and representation. Adams, Joseph Quincy, Arrival in London. A Life of William Shakespeare. S. I Houghton, 1923 126-128. in that location were three classes of persons at the goldbrickhouse besides musicians. There were sharers, hirelings, and servants. The sharers were the close grave agents.According to their merits, they enjoyed either half-sharers or whole-sharers as indicated by Hamlet. Below the sharers in rank were the hirelings who did not profit by large ta barons of the theatre. The trine and final class, the servants, was the prompters, stagehands, property keepers, and caretakers. Chute, Marchette, Hamlet. Stories from Shakespeare. Cleveland World, 1 956 157-160 Hamlet is perhaps one of the most noteworthy of only of William Shakespeares tragedies. It is known alone over the world and has kept a compelling fascination wherever it goes.The hero is so palpable and his dilemma is very basic to human living that people in every country recognize him. Hamlet is not only the most brilliant of the tragedies simply one of the saddest. It is the saddest tragedy because the hero is not destruct or killed by any evil in his nature but by kind misplaced good. Coleridge, Samuel Taylor, Lectures and Notes on Shakespeare and other English Poets. Online. Internet. unattached http//shakespearean. org. uk/haml-col. htm. (6 February 2004) Hamlets character is the prevalence of the abstracting and generalizing habit over the practical.He does not want courage, skill, will, or opportunity but every hazard sets him thinking and it is curious, and at the same time strictly natural, that Hamlet, who all the depend seems reason itself, shoul d be impelled, at last, by mere accident, to effect his object. Lamb, Gregory M. A sweet, gentle, inspired Hamlet. Christian Science Monitor 20 April 2001. (6 February 2004). T. S. Eliot called Hamlet the Mona Lisa of literature. No matter how hard we look at the play, it never yields all its secrets. We have become fascinated by it.This being Shakespeare, a rive good story unfolds, of course, from the moment a creepy ghost walks the castles parapet on through murders, suicide, and enough plot round and complex relationships for any soap-opera fan. This is all topped with a dramatic trade name fight. Hamlet is no Bruce Willis tale of an action hero on a payback mission. Shakespeare Britannica, 1989 During Shakespeares early career dramatists sold their play to an actor company, who then takes charge of them, prepared working prompt books, and did whatever it takes to shake up sure other companies did not take their work.This way they could exploit the play itself for as long as it drew an audience. Some plays did get promulgated into smaller books called quartos. Hamlet quartos are a good example of plays that were pirated or bad text. Shakespeare, William The World Book Encyclopedia, 1979 Shakespeare wrote his greatest tragedies during the third period (1601-1608) of his tasteful development. Of all the tragedy plays, Hamlet has to be the most dramatic and saddest of all the plays. The role of Hamlet in particular is considered one of the theaters greatest acting challenges.Shakespeare focused the play on the deep participation within the thoughtful and idealistic Hamlet as he is tear between the demands of his emotions and the hesitant skepticism of his mind. Thorndike, Ashley Horace. Shakespeares Theater. New York The MacMillian Company, 1916246-251. Records of court exertion are abundant and descriptions of performances of traveling actors before noble or king may be found in Hamlet. The traditions and standards of acting accumulated by a genera tion of practice before an increasing audience. This made the play more exciting to watch every time it was portrayed.

International Business Entry Modes

Introduction An international insertion panache is an institutional agreement necessary for the door of a communitys crops, engineering science and human capital into a foreign pastoral or grocery. The reluctance of firms to change entry expressive styles once they ar in place, and the difficulty abstrexercising in doing so, substantiate the mode of entry determination a key strategic issue for firms operating in at presents rapidly internationalizing merchandise place.The choice of mode al imprint see on home(a) characteristics (eg firm size, international experience) and international characteristics (eg the sociocultural remoteness between the host rural argona and the home country) as well as the trade-off between desired mode characteristics ( adventure adverse, train and flexibility). The diagram under conveys 3 broad categories of modes of entry, and their fundamental trade offs.Further to the issues discussed above, no matter which of tercet of the m erchandise modes the shaper physical exercises in a market, it is important to think approximately what level of mindsh atomic number 18 the shaper occupies in the mind of the trade partner, as at that place has been a strong proven correlation between mindsh be levels and how pull up stakesing the exporting intermediary is to place on ac caller brand in drift of another, or how likely the intermediary is to defect. Good mind sh be will see on scoring well across the tierce drivers of loading and trust, collaboration and mutuality of interest & common purpose.Control Key and denomination Text and Graphics.Export Modes Baring in mind the factors discussed above we will out re start out review the different types of entry modes, beginning with export modes, as they are typically the modes phthisisd in initial entry to international markets, as they require a busteder financial investment than other modes and behind be viewed as a toe in the water for in experien ced and smaller firms or where at that place may be ventures (eg political, frugal environmental) preventing FDI. The three major types of exporting are indirect, direct and cooperative.Indirect export modes are modes in which the exporting manufacturer manipulations independent organizations located in a producers country, they imply the use of an export buying agent, a broker, an export house, a trading familiarity, or a piggyback. Indirect export modes may be portion for firms with limited- rather than long term- international intricacy objectives. For example, if international sales are primarily used as a means of disposing of surplus outturn. The lack of contact with firms abroad will abide limited information to develop a plan for international intricacy.In the use of such modes, in that location is limited go out over the marketing immingle (other than mathematical product). A direct export mode may be more than than trance in gaining a little more deter mine, in which the manufacturer sells directly to an importer, agent or distributor in the foreign home run market. The local party will use up the advantage of existing scattering networks, and will depict good local market k directledge. However, a company must be careful in entering into contracts as they elicit be difficult and costly to terminate, and post go wrong when on that point is a conflict in interests (e. . it may sell rivals goods or competing product lines). Similarly, in that respect is a serious disincentive for the agent/distributor in that if it performs well and develops the market, it risks being replaced by a subsidiary of the principal. negociate modes As a firm gradually evolves towards more foreign based trading trading operations, arbitrate modes will become more suitable modes of entry. This will likely accept firms possessing some sort of competitive advantage that are unable to figure out this advantage because of resource constraints.Inte rmediate modes take the form of contract manufacturing, licencing, franchising, a reefer venture or a strategic alliance. Contract manufacturing- where manufacturing is contracted to an orthogonal foreign partner provides a downcast risk and potentially low-down cost mode of entry. Benetton and Ikea are a good example of companies who successfully rely on a contractual network of small afield manufacturers. Benetton has over 80% of its output outsourced to 450 contractors (located in low cost production countries such as India and China).As a result of the money saved on labour, Benetton bay window sell products 20% cheaper, helping it to maintain a low cost position in comparison to competitors. Of course, this method may not be appropriate for every company as on that point is a loss of knowledge and intellectual property sets, and the transaction costs complicated must also be considered. Licensing differs from contract manufacturing in that more cheer chain functions fix been transferred to the licensee. In outsourcing production and downstream activities a licensor irm potbelly concentrate on its core competences and and so will remain technologically superior in its product development- for example Apple licenses its brand to manufacturers of accessary products, and the BBC licenses rights to broadcast TV shows around the world. However a lack of retain over licensor operations and consequently quality may lead a company to use franchising (a sub variant of licensing) in which the franchisor gives a right to the claime against a payment, EG a right to use a total logical argument concept/system, including the use of trademarks/brands, against some agreed royalty.Franchising not only provides a greater degree of control than licensing, but It laughingstock also be seen as low cost and low risk as the certify are the ones investing in the necessary equipment and know-how. This entry mode has been seen to mystify great successes for com panies such as McDonalds who now franchises 25000 restaurants globally. However, it should be noted that there is still a lack of full control over franchisees operations, which can result in problems with cooperation, communications, quality control etc, and a risk of damage to the companys international reputation if some franchisees do (free-riding).Another intermediary mode that will allow greater control is a joystick venture, in which 2 parent companies create a raw child company. This high degree of control and local knowledge is a clear advantage of such an entry mode. The shared knowledge and resources gained by a JV as compared with tout ensemble owned subsidiaries will start many advantages such as economies of scale. However of course there is a loss of confidentiality and flexibility, and the use of double management will raise questions slightly how the company is split- 50/50?If 50/50, it is difficult for the board to subscribe stopping points, if at all Hier archical modes of entry allow the highest degree of control for a firm, while at the same time, the highest degree of risk as the firm completely owns and controls the foreign entry mode. To take hold a alone owned subsidiary a firm can either consider an existing company (acquisition) or build on its own operations from scratch (greenfield/brownfield investment). An acquisition will provide rapid entry, access to scattering channel, an existing customer base.This may be the only feasible mode of establishing a base in the host country in alter markets, or where there are substantial entry barrier and therefore little room for a revolutionary entrant. Of course, as with intermediary modes, there is the issue of contracts, negotiation and the different management styles between companies. If difficulties (eg no appropriate acquisition) are encountered with acquisitions, it may lead firms to prefer to establish greenfield (new facility) and brownfield (existing facilities) oper ations.Out of the two- greenfield is seen as an expedient option because the new plant will involve the latest applied science and equipment, avoiding the problem of trying to change the traditional practices of an established concern. Although this is a high-risk investment for a company involving slow entry into the foreign market, the returns are long term and the firm has control over the entire operation. shutting It cannot be stated categorically which alternative is the best.There are many immanent and external conditions which affect this choice and it should be emphasized that a manufacturer wanting to engage in global marketing may use more than one of these methods at the same time (Petersen and Welch, 2002). Such mode packages may take the form of a concerted use of some(prenominal) operation modes in an integrated, complementary focussing. Zara is a good example of this- in markets where the hierarchical model is used, there is high growth potential and congenat or low sociocultural standoffishness between the home country of Spain and intent market.The intermediate modes (usually joint venture and franchising) are mainly used in countries where the sociocultural distance is congressly high. For example in 1999, Zara entered into a 50-50 JV with the German firm OTTO Versand, which had experience in the diffusion sector and market knowledge in one of Europes largest markets, Germany. Whereas franchising is used by Zara in high risk countries which are socio-culturally distant or have small markets which allow sales forecast such as Andorra, Puerto anti-racketeering law or the Philippines.International Business Entry ModesIntroduction An international entry mode is an institutional agreement necessary for the entry of a companys products, technology and human capital into a foreign country or market. The reluctance of firms to change entry modes once they are in place, and the difficulty involved in doing so, make the mode of entry decisi on a key strategic issue for firms operating in right aways rapidly internationalizing market place.The choice of mode will depend on internal characteristics (eg firm size, international experience) and external characteristics (eg the sociocultural distance between the host country and the home country) as well as the trade-off between desired mode characteristics (risk adverse, control and flexibility). The diagram downstairs conveys 3 broad categories of modes of entry, and their fundamental trade offs.Further to the issues discussed above, no matter which of three of the export modes the manufacturer uses in a market, it is important to think almost what level of mindshare the manufacturer occupies in the mind of the export partner, as there has been a strong proven correlation between mindshare levels and how willing the export intermediary is to place on company brand in calculate of another, or how likely the intermediary is to defect. Good mind share will depend on scor ing well across the three drivers of lading and trust, collaboration and mutuality of interest & common purpose.Control Key and word Text and Graphics.Export Modes Baring in mind the factors discussed above we will now review the different types of entry modes, beginning with export modes, as they are typically the modes used in initial entry to international markets, as they require a lower financial investment than other modes and can be viewed as a toe in the water for in experienced and smaller firms or where there may be risks (eg political, economic environmental) preventing FDI. The three major types of exporting are indirect, direct and cooperative.Indirect export modes are modes in which the exporting manufacturer uses independent organizations located in a producers country, they include the use of an export buying agent, a broker, an export house, a trading company, or a piggyback. Indirect export modes may be appropriate for firms with limited- rather than long term- international expansion objectives. For example, if international sales are primarily used as a means of disposing of surplus production. The lack of contact with firms abroad will provide limited information to develop a plan for international expansion.In the use of such modes, there is limited control over the marketing shamble (other than product). A direct export mode may be more appropriate in gaining a little more control, in which the manufacturer sells directly to an importer, agent or distributor in the foreign orchestrate market. The local party will bring the advantage of existing dispersion networks, and will provide good local market knowledge. However, a company must be careful in entering into contracts as they can be difficult and costly to terminate, and can go wrong when there is a conflict in interests (e. . it may sell rivals goods or competing product lines). Similarly, there is a serious disincentive for the agent/distributor in that if it performs well and develops the market, it risks being replaced by a subsidiary of the principal. Intermediate modes As a firm gradually evolves towards more foreign based operations, Intermediate modes will become more suitable modes of entry. This will likely include firms possessing some sort of competitive advantage that are unable to ferment this advantage because of resource constraints.Intermediate modes take the form of contract manufacturing, licencing, franchising, a joint venture or a strategic alliance. Contract manufacturing- where manufacturing is contracted to an external foreign partner provides a low risk and potentially low cost mode of entry. Benetton and Ikea are a good example of companies who successfully rely on a contractual network of small foreign manufacturers. Benetton has over 80% of its production outsourced to 450 contractors (located in low cost production countries such as India and China).As a result of the money saved on labour, Benetton can sell products 20% chea per, helping it to maintain a low cost position in comparison to competitors. Of course, this method may not be appropriate for every company as there is a loss of knowledge and intellectual property rights, and the transaction costs involved must also be considered. Licensing differs from contract manufacturing in that more comfort chain functions have been transferred to the licensee. In outsourcing production and downstream activities a licensor irm can concentrate on its core competences and therefore will remain technologically superior in its product development- for example Apple licenses its brand to manufacturers of abetter _or_ abettor products, and the BBC licenses rights to broadcast TV shows around the world. However a lack of control over licensor operations and therefore quality may lead a company to use franchising (a sub variant of licensing) in which the franchisor gives a right to the franchisee against a payment, EG a right to use a total pipeline concept/syst em, including the use of trademarks/brands, against some agreed royalty.Franchising not only provides a greater degree of control than licensing, but It can also be seen as low cost and low risk as the franchise are the ones investing in the necessary equipment and know-how. This entry mode has been seen to generate great successes for companies such as McDonalds who now franchises 25000 restaurants globally. However, it should be noted that there is still a lack of full control over franchisees operations, which can result in problems with cooperation, communications, quality control etc, and a risk of damage to the companys international reputation if some franchisees underachieve (free-riding).Another intermediary mode that will allow greater control is a joint venture, in which 2 parent companies create a new child company. This high degree of control and local knowledge is a clear advantage of such an entry mode. The shared knowledge and resources gained done a JV as compared with wholly owned subsidiaries will bring many advantages such as economies of scale. However of course there is a loss of confidentiality and flexibility, and the use of double management will raise questions active how the company is split- 50/50?If 50/50, it is difficult for the board to make decisions, if at all Hierarchical modes of entry allow the highest degree of control for a firm, while at the same time, the highest degree of risk as the firm completely owns and controls the foreign entry mode. To have a wholly owned subsidiary a firm can either start an existing company (acquisition) or build on its own operations from scratch (greenfield/brownfield investment). An acquisition will provide rapid entry, access to distribution channel, an existing customer base.This may be the only feasible way of establishing a base in the host country in alter markets, or where there are substantial entry barrier and therefore little room for a new entrant. Of course, as with intermed iary modes, there is the issue of contracts, negotiation and the different management styles between companies. If difficulties (eg no appropriate acquisition) are encountered with acquisitions, it may lead firms to prefer to establish greenfield (new facility) and brownfield (existing facilities) operations.Out of the two- greenfield is seen as an positive option because the new plant will involve the latest technology and equipment, avoiding the problem of trying to change the traditional practices of an established concern. Although this is a grownup investment for a company involving slow entry into the foreign market, the returns are long term and the firm has control over the entire operation. finding It cannot be stated categorically which alternative is the best.There are many internal and external conditions which affect this choice and it should be emphasized that a manufacturer wanting to engage in global marketing may use more than one of these methods at the same tim e (Petersen and Welch, 2002). Such mode packages may take the form of a concerted use of some(prenominal) operation modes in an integrated, complementary way. Zara is a good example of this- in markets where the hierarchical model is used, there is high growth potential and relative low sociocultural distance between the home country of Spain and butt end market.The intermediate modes (usually joint venture and franchising) are mainly used in countries where the sociocultural distance is relatively high. For example in 1999, Zara entered into a 50-50 JV with the German firm OTTO Versand, which had experience in the distribution sector and market knowledge in one of Europes largest markets, Germany. Whereas franchising is used by Zara in high risk countries which are socio-culturally distant or have small markets which allow sales forecast such as Andorra, Puerto anti-racketeering law or the Philippines.

Ethical Compensation

Employees expect companies to stick to certain standards that represent fairness (Compensation Dilemmas An economic consumption In Ethical Decision-Making 1995). Early efforts of economic views have studied salary systems over the years. The all-encompassing view at the time was that the best potential salary systems met the fair long time wage for a fair days work criteria. The key for managers and others who design pay systems Is to ensure that pay accurately reflected the economic value added to the firm by a worker.This is where fairness is uttered only in economic terms. Since that time management scholars have essential a much richer understanding of what fairness immorals to employees and how views of fairness fall their attitudes and behaviors. Compensation systems alike play Important social and representational characters in organizations and through these roles pay systems affect a physical body of Important outcomes such(prenominal) as the nature of employee com mitment and performance and work relationships.Given the essential role that compensation systems play in employment relationships, it is also very possible hat they play an important role in shaping whether people feel they are treated with respect, trust, and dignity and whether they believe the values and tradition of the organization are worthy of their fullest commitment and highest efforts (Bloom, M. 2004). Could executive director compensation be re delimit by performance management? When no performance measures are defined and documented for company executives, this places no duty on the CEO to assign measurable results.On the other hand, if performance measures are defined, documented and accountability is interlace on the CEO and is tied to compensation this could prove to be honest for all involved. While employees are paid based on formal Job classification systems, Coos however arbitrarily negotiate salaries where there Is no cap, but benefactor. The company is injured by way of a calumnious image in the eyes of the industry. The consumers of the companys products or services are also hurt. The company may also experience retention problems and stockholders may raise from monetary loss.Also employees are left to deal with disappointment, bitterness and owe team spirit (Carter, C. 2009). Ameri dirty dogs are fuming right now. Pummel by the bind of a abominable recession and furious over oversized executive compensation packages at the very Wall Street firms widely blamed for the economic chaos, they gradually distrust key establishments and individual leaders. Americans are angered at the financial services region. They believe that these institutions have rigged the game so that slip away level executives are rewarded substantially even when they fail. Americans want action to get fairness to the system and get pay back in line.The variety of experts and activists of political leaders and ordinary citizens, there is a belief that executive incentives have exaggerated short-term performance, supported unnecessary risk-taking, and failed to discipline vile performance. Many believe that incentive plans have tempted some Coos to put own(prenominal) financial interests in front of good stewardship that provides the long-term interests of their organizations (Ethics Resource Center, 2010). In recent years it has become common for corporate board of directors to resume a star chief executive officer with an executive rupture cage.The severance agreement becomes part of a contractual commitment that is often unrelated to the circumstances of the executives eventual firing. To complicate matters, severance is often coordinate as deferred compensation for an executives earlier successes, before things would eventually fall apart. When a CEO is discredited they always argue that they were not overpaid at marches because the rise in share price they achieved for stockholders during their tenure with the company . Companies should not chance on severance commitments when hiring executives.This will come back to haunt them. This style could become it difficult for firms trying to hire top talent. A CEO with moral philosophy would be embarrassed when receiving an abundant severance after their decisions caused severe concern to the employees and shareholders (Kipling, K. 2008). Addressing particularised errors in compensation plans is deprecative and identifying the best metrics for amount performance is part of the answer. Maybe creating an ethical organization is a critical first step that sets the stage for effective compensation plans.Ethical performance should be one of the metrics for determining compelsensation. Many of the problems credited to failed compensation plans are really about ethical slip ups. Im not reflexion that executives intentionally engage in bad conduct. But it can mean that a lack of continuous focus on ethics can induce bad behavior. This behavior can turn into rationalizing decisions without truly management on the allegations for the long-term well-being of the customers, its employees, shareholders and the company as a wholly (Ethics Resource Center, 2010).Executive compensation is not illegal. However the actions of some Coos and executives can be ethically questionable. From the viewpoint of economic effectiveness, restructuring or even downsizing may be required in order to arrive at specific business goals. Although, making the decision to eliminate Jobs while the CEO is besides compensated for providing inadequate performance is not only feeble trade name a incredible impact by educating board of directors on accountability in executive packages, compensation and incorporating strategic performance management initiativ

Background of the ethical issue

The ethical jazz in question involves the Walter Reed Army Medical Center shit emanating from various anyegations of appalling living conditions, and managework forcet at the health check exam exam gist in Washington D. C. This is as account by Washington touch in February 2007. Washington Post reported cases of brush aside of veterans which be chthonian investigation ever since 2004. After the case was reported, various ethical issues emerged in that the soldiers were treated un-ethically.Initial exposure of the neglect by hospital administration was reported by a series of articles beginning 18th February 2007. These articles startlined cases of neglect at Walter Reed Medical Center, as reported by wounded soldiers and their relatives. The complaints embroild the disengaged clerks, unqualified platoon sergeants and over-worked managers who made it difficult for the soldiers to convey appropriate health check care at the center (Celia V, 2007).In this way, the soldi ers found themselves in a checkup examination limbo, living in building plagued by mold, peeling paint and rodents as they wait endlessly for health check appointments and government paperwork that would help them get their lives book binding in order (Celia V, 2007). This in effect provoked a great coverage from the media, prompted house hearings, and caused the firing of the top brass at the medical center and the resignation of the army secretary (Celia V, 2007). Resolving the problem apply the five I set up Identifying the problemFrom the report, the care and the steering of the wounded men and women in uniform is chthonic responsibility of unqualified people. Moreover, the building of the medical center is reported as rodent and cockroach-infested, poor beddings, plagued by mold, with dye carpet and with no heat and water. The care and welfare of wounded soldiers need the highest standards of excellence and treatment by those who are responsible. When this is not met , it violates the ethical principles which under laid by the U. S government as it is the sole component for the care of the soldiers.Investigating the problem The government should ensure that the care of wounded soldiers is carried out mighty and also with set criteria of restoring those hurt. It is unethical to find that the soldiers once hurt in duty were not given the good medical fear they required. Further, the living conditions are at bad state. The army officials should investigate and obtain the root cause of the problem, whether it is due to lack of resources to repair the buildings, or if the center is under poor management. This can be done by displace some officers from the U.S army to evaluate the situation at the ground, as substantially as by conducting interview with the patients and their relatives. In this way, it is affirmable to go down up with clear solutions to the problems affecting the army medical center. Innovating the solution From the findings of the investigations, the management should come up with resolutions geared towards elevating the problems which the medical facility is experiencing. Such solutions may include allocating resources to repair the roofing, procure of quality beddings, re-painting the walls, and also putting freshly carpet.Moreover, the management should look in to the issues concerning the individuals who are responsible in running the medical facility in an effort to determine their competence, and effectiveness while punish their roles. Those found not competent enough should be sacked and replaced by more vibrant staff capable of providing quality care to the wound soldiers. Management should also think of alternatives such as residential care. This is whereby the injured soldiers could be discharged to a home care.This care would involve family members and solid others to take care of the needs of the injured soldiers. Additionally, the government should provide currency and other resourc es to facilitate proper care while the injured soldiers are at the residential home care. Isolating the solution From the analysis of the findings, the special problem in this case is poor management of the army medical center. Implementing the solution The president should appoint a team from the United States plane section of Veterans Affairs to look into the issues regarding this medical center.This team should sack all the medical management staff whom they find not competent enough, and replace with new ones. The teams should also source funds and other resources for the repair of the facility, and also purchase new equipments. Further, the team should also consider alternatives such as residential care as explained above. Evaluating the decision taken By implementing the above decision, the medical facility will be restored to its effectiveness and thereby enable it to properly take care of the injured soldiers.This is because this decision was taken out of proper criteria o f handling a problem, that is, five I format. Five I format helps a decision maker to critically evaluate a specific problem and come out with an informed solution. This is because it thoroughly examines all possible alternatives in an effort to come out with the best possible solution. It looks into all factors, moral, social-economical and ethical, while dealing with a particular problem. Reference Celia Viggo Wexler (2007). Walter Reed outrage How Mainstream Media Let Us Down. Washington Post.