Globalisation on the Indian Economy

Globalisation on the Indian Economy Introduction Recent events on the financial markets show how interdependent the world is. Common value should not be forbidden but what about common losses. Who should be responsible for them? Many blame globalisation. But what is globalisation and does the world have any other alternatives to develop? Should we return to the strategies of the past? Or should we continue to live in an age of essential economic revolution? The term globalisation generates constant debates and controversies. But most of those who talk about globalisation are not even aware of its fundamentals. Globalisation is the one specific modality of international integration. Technology has definitely changed the way we live and also the ways in which the business is done. The countries by means of internet connection and enthusiastic workers can have access to unlimited jobs and industries. Lets imagine a picture of a world where all limitations are disappearing. A world where there are no boundaries and where competition can come from anywhere. Thats the world where our future lies. To make this world a healthier place globalisation is going to play a very important role. There are some people in developed world who believe that we must try to turn our back on this novel rapidly changing and integrated world. They also think that the chance to preserve ones living standard is to make a fortress around ones country, stop trading with other countries and depend only on own industries. But at present it is impossible to turn back the waves of globalisation but in doing so we can actually make ourselves worst off. So in my opinion, instead of fearing the future we should embrace it. Globalisation and Structure of Indian Economy Globalisation has been expressed beautifully through a poem by Canadian economist Gerald Helleiner- The poor complain, they always do, but that is just idle chatter. Our system (globalisation) brings reward to all, at least to all who matter. Broadly speaking the term globalisation is an economic process. Even though it is modeled as a way of bringing the world together, globalisation is all about the business community breaking down the remaining barriers to the free flow of its capital around the world. It fundamentally means opening up of any country economy system and its integration among the other economies of the world. It involves liberalism and implementation of economic liberalization policies and reforms to promote the progression of private sector. The word globalisation itself means something new is happening to the world. The world is becoming a Flat and experiencing global practices, values and technologies that are shaping people lives. For India, there are ample confusions about the costs and benefits of globalisation. Data Source Projection: VMW Analytic Services Figure 1: Indian Economy since its Independence at Constant Prices (Projected up to FY 2012)Indias population has already crossed the billion mark; this fact is easy to read but much more difficult to absorb one thousand million people, each of whom sees the world in a slightly or radically different way from the other. Since Indian independence in 1947, the economy of India has increased almost exponentially (Refer Fig. 1). From early 1990s, different governments have adopted inward oriented development strategies i.e. the state encouraging an economy through self sufficiency and a dominant role in the economy via state planning. Forces of demand and supply were not allowed to play a key role in resource allocation. After 1991 balance-of-payments crisis, where foreign currency reserves fell to $1 billion inflation went high to 17%, India laid numbers of stabilization-cum-structural adjustment measures with widespread effects. The main aim was to remerge the Indian economy with the world economy by reducing barriers to trade and investment, and deregulation of a highly bureaucratized economy. The Foreign Direct Investment was also encouraged to reduce the countrys reliance on debt-creating capital inflows, simultaneously renovating Indias ancient technologies and advancing easily into global markets. Figure 2: India GDP growth from 1991 2007Regardless of the unfinished reform agenda, Indias GDP growth (Refer Fig. 2) has increased >9% over the past 3 years, by an average of 5.8% annually during the period 1991-2004. It contributes nearly 2% to world GDP and around 1% to world exports of goods and services (Source: World Development Indicators). Consistent with excellent growth, per capita incomes were doubled from 1990 to 2007 and poverty dropped from 46% in 1986 to 36% in 2000. However, still poverty remains a grave problem. Recently several economists and lobbyists have compared Indian economy with that of Chinese economy but Indias progress path has been significantly different from Chinas. Indeed, it has been also very different from that followed earlier by Japan, Korea and the other Asian giants. Firstly, the recent economic rise in India is largely due to services rather than manufacturing sector. India has became a global player in several services such as IT and business process outsourcing, while its manufacturing sector keep suffering from low productivity. Secondly, the majority of Indias population still relies on agriculture for a living as compared with Asian countries and thirdly, India tried to remain closed to trade in comparison to other developing and emerging countries. Even FDI inflows have also ten folded in last two decades. It has been tripled since 2005 and in 2007 it was around $23 billion (Data Source: Government of India, Ministry of Finance, Economic survey). But India is not yet as present in the Central and Eastern Europe markets as China is. Its share in the European market was 0.7% (2006), almost unchanged from 1990s. However, Chinas share in these markets has increased sharply from 1.3% in 1992 to 5.7% in 2006 (Data Source: OECD). Indian economy has the potential and should make the efforts to move from good growth to rapid constant growth. The problem in India lies in the spurring productivity which is badly affected by the low education and poor health system and also by the petite openness of the Indian economy. Indias weak infrastructure has hurt the booming potential of Indian production. From undependable energy, lacking water supply to bad roads and train conditions, infrastructure shortages have created high business costs across the sectors (Source : OECD, 2007c). Benefits and Costs of Globalisation on Indian Economy Globalisation has been a classical process with ups and downs. Its growth has been largely led by the technological forces in the fields of transport and communication. The flow of trade has been frequent and there are lesser barriers for the people across the geographical boundaries. There are less tax barriers and fewer limitations on fund flows. India is no exception to globalisation. In year 1991, when India was neck-deep in financial deficit, very high inflation (around 17%), balance of payments crisis and low industrial production, the World Bank and the International Monetary Fund (IMF) bailed India out through significant loans with assistant Structural Adjustment Program (SAP). This led to Liberalisation, Privatisation and Globalisation. Indian Economy has undergone many important reforms in the 1990s. The LPG model has helped the Indian economy to grow rapidly and become internationally competitive. From early 1991, a new epoch has dawned for India and its huge population. This formidable phase of economic evolution has had a wonderful impact on the overall Indias economic development. All major sectors of the economy have improved dramatically and its effects over the last decade can hardly be ignored. Moreover, it has marked the dawn of the real integration of Indias economy into the Worlds economy. Globalisation has created employment bought large investments to India. Indian economy has been on the rise at good rates for the past few years many new prospects have opened up for India. It has highly benefited from economies of scale. The change in global barriers has permitted the companies to profit from the largest cheapest labor market, raw material and technology. Foreign businesses have significantly augmented their investments in Indian industries. The salaries of industrial labor have improved largely; therefore, the lock outs and strikes have declined sharply as labor class is happy. Now days business market has no boundaries and companies can promote their products globally. This has helped the Indian companies to lay hand on global technologies which has certainly increased our living qualities standards. Indian Entrepreneurs has become more aware about their competitors, recent trends and quality of products. The competition between the global companies can be seen in the improve quality of the brands and services to the customer. Presently, we can talk about the story of two Indias: It has the best of times; it has the worst of times. There is bright prosperity, there is high poverty. We have stunning 5 star hotels and near by these big hotels homes without electricity. The following phrase is perfect to describe the situation in India Globalisation gave us everything, globalisation gave us nothing. Although Rajiv Gandhi government, the sixth prime minister of India, introduced some economic reforms between 1985 -1989 but it was the Narasimha Rao government, ninth prime minister of India from 1991-1996, that gave a exact shape and started the novel economic reforms in India. Below are the highlights of some extreme benefits of globalisation on Indian Economy: Figure 3: The sector wise contribution to Indian GDP (Source: MOSPI Statistics (Ministry of Statistics and Programme Implementation)) Gross Domestic Product (GDP) growth rate: The rate of increase of Indias real GDP was low during 1980-90 (5.6%) to 1993-2001 (7%). But in the last few years, the GDP annual growth rate in India has been remarkable i.e. 7.5% (2003-2004), 8.5% (2004-2005), 9% (2005-2006) and 9.2% (2006-2007). Present P.M. Dr. Manmohan Singh is certain to have a 10% increase in the GDP for 11th five year plan (2007 2012). In 2006-2007, the sectors contributing highest in GDP growth are Industry sector (26%); Service sector (55%) and Agriculture sector (19%) (Ref Fig. 3). The increase in GDP has in fact helped to increase the foreign exchange reserves from $39 billion (2000-01), $107 billion (2003-04), $145 billion (2005-06), $200 billion (2007-2008) to around $268 billion on 1st February 2011 (Source: IMF). Figure 4: An overview of Indias top cities which contributed heavily in FDI equity inflows. Foreign Direct Investment (FDI): Since early 2003, Indias FDI promotion board is officially run by government i.e. Ministries of Economic and Finance. Since then there have been drastic reforms in the rules and regulations of FDI in India. The FDI is now acknowledged as a key driver of development in the country. India is ranked 2nd in international FDI in year 2010 behind 1st ranked China and ahead of Brazil Russia and it will continue to be in the top 5 destinations to draw global investors during 2010-12 (Source: World Investment Prospects Survey 2009-2012 by UNCTAD (United Nations Conference on Trade and Development)). India attracted cumulative FDI equity inflows of $122.68 billion from mid 2000 to end 2010, according to the data released by the Department of Industrial Policy and Promotion (DIPP). In October 2010, the FDI inflows were $1,392 million. The figure 4 shows Indias top cities and sectors which attracted the highest FDI inflows in Jan 2008 (Source: DIPP India). The main attractive sectors have been information technology, telecom, services, healthcare and telecommunications. India controls almost 45% of the global outsourcing market with income more than $50 billion. Foreign shareholders are getting good returns in India. The possibility for FDI in India is endless. Foreign investors are offered fair packages of fiscal incentives for exports and industrial investments. Imports and Exports: The general idea of the independence movement in India (year 1940s), led by great M. Gandhi, was based on the dislike for anything foreign, especially the one originating from Britain. The imported goods were burnt on regular basis and everyone believed that everything can be produced home. The belief was that we can be self reliant and self dependent and import of goods can bring the foreign dominance. In 2009, 7 decades later India is ranked 15th in world in terms of import volume and 22nd in the terms of export volume. In 2004 2005 our imports were $107 billion (Ref Table 1), a record increase of around 36% as compared to $79 billion in 2003 2004. The exports also jumped by 24% recording $79 billion as compared to $63 billion the previous fiscal. The oil imports increased by 19% and the import bill zoomed from $21 billion to $29 billion in two fiscal years. Other imports excluding oil were $77 billion in 2004 2005 that is 34% higher than $58 billion in 2003 2004. Poverty: Though globalisation has drastically improved our living standards but still it doesnt have the significant effect in improving the poverty. The 2005 World Bank estimation was that 41% of Indian population live below the international poverty line of $1.25 a day. The figure 5 shows the Indian population living below poverty line from 1973-2000. We can see that since 1973 -1974 (54.9%), Indian population living below the poverty line has improved a lot (26.1% in 1999-2000). Nevertheless, Indian government is still making lots of efforts to remove poverty in rural areas. It is trying to provide more facilities to the poorer. India government Figure 5: Indian population below poverty line. (Source: Planning Commission of India) has still a long way to go to improve the poverty situation of India. Other Benefits: Information Technology (IT) and outsourcing has been given a special status in the growth of Indian economy. The reason may be that the government desires to present India as a technologically advanced nation and to achieve this they must encourage the IT sector. The term special status means that the sector and global / local investors will get many special advantages from the government. Furthermore, the impact of the global economies has influenced the Indian education system over the last few years. Improved educational institutions, high technology colleges, developed schools are the fruits of globalisation. The colleges have implemented the urbanized teaching technologies so that students can be aware of the latest developments. India is in the 4th position in respect to market capitalization with $894 billion after the US ($17,000 billion), Japan ($4800 billion) and China ($1000billion). India will soon cross the trillion $ mark. Even though we have not so far reached the end of history but globalisation has sure took us closer to the end of geography. The globalisation has not always been fair. The cash flow over the last two decades has been very unsymmetrical. For $1 of aid money to poor countries, the rich countries get $10. It has deepened the poverty and inequality. It has affected both the social and political stability among and within states. Capital rights are given more advantages over the labor rights. The trade and finance rule are unfair and this has had mixed effects on rich and poor countries. In India, the main casualties of globalisation are the poverty and the agriculture sector. Here are some costs which India paid because of globalisation: Agriculture Sector: Agriculture has always been the strength of the Indian economy. It plays crucial part by not only in providing food to people, but also supplying of raw material to industries and to export trade. 60% of the Indian population works in agriculture sector and however its contribution in GDP is only 20.6%. India agricultural growth continued to drop down from 4.70% in 1991 to 1% in 2003 (Source: agricoop.nic.in/Agristatistics). The seeds are most important component for farmers. Before globalisation, Indian farmers got seeds from state government institutions. The states were producing their own seeds and they were maintaining the good quality and lower prices for seeds. Even the private seed quality was very good as the seed market was well regulated. But with globalisation, the seed market has been opened to global agribusinesses and more than half of the government processing units have been closed in 2003 due to IMF deregulation guidelines. This had hit the farme rs very badly as due to open market the prices have raised sharply and bad quality seed has made its way to market. Moreover with the devaluation of Indian currency rupee in 1991, more and more farmers were attracted towards export and hence they started producing much more of cash crops like tobacco than traditional crops. Indian farmers are offered zero subsidiaries and very less help from government. The Indian government has taken no significant measures to negotiate with foreign companies to set up technologies for the farmers assistance. All these factors have led to decrease in the income of the farmers and have increased the rural debts. In 2000, the farmer suicides were registered to 12% of total suicides in the country. Industry: The globalisation has raised a high competition between the foreign companies and domestic companies. As the foreign products being better, people prefer to buy them instead of Indian ones. This has reduced significantly the amount of profit for Indian companies. The new technology has reduced the requirement of labor and thus resulted in job losses. No doubt that the effects have been both positive as well as negative but the Indian government should make such economic policies related to industries that are beneficial and not harmful. Human trafficking and increase in diseases like HIV are also the very high cost paid for globalisation. And the pity is that womens and childrens are among the most exposed to it. Conclusions Globalisation has provided India the opportunity to grow substantially. Though through globalisation all the economies are linked together and crisis in one have drastic effect on the others and recent events have confirmed so. Though India sailed through the crisis without being too affected due to its balanced and resilient macro structures but it has surely given India a wake up call to focus on the challenges and opportunities to shape its developing economy. Nevertheless, globalisation has definitely helped India to become a better economy, improve and unleash it potential. It has the ability and skills to adapt and change according to the flow of global market. In my opinion, for the betterment and the bright future of India it is imperative that India should go out and face this globalising world. I am certain that India of 2025 will be a different place. It will be much more leading force in the world economy, than it was 25 years ago or even at the start of the 21st century.

Etta James Essay

Born as Jamesetta Hawkins January 20, 1938 in Los Angeles, California music legend Etta James came into this world. Etta’s mother Dorothy Hawkins was only 14 at the time she had Etta which was a factor of the young girl being moved around to foster homes multiple times. She never knew her dad and when vocal coach James Earl Hines took her in to sing at the church and teach her, he would sometimes get Etta out of bed and beat her to force her to sing for people. This is looked at to be the reason Etta never liked singing on demand. Etta moved to San Francisco where she created her first musical group named The Creolettes at the age of 14. Multitalented Johnny Otis found the girls one day singing at a nightclub and took the girls under his wing. Otis changed the Creolettes name to The Peaches, signed them to Modern Records, and changed Etta’s stage name from her birth name Jamesetta Hawkins to Etta James. Etta was a very spunky girl with an enormous attitude. When Georgina Gibbs covered James’ single â€Å"Dance with me, Henry† and it reached number one on the Billboard Hot 100 Etta was very angered. A similar incident happened when Beyonce Knowles, who portrayed Etta James in the 2008 movie Cadillac Records, performed James’ single â€Å"At Last† at the 2009 presidential inauguration ball. Etta expressed her distaste and anger at this at a Seattle concert. After James’ time with Modern Records ended in 1960 she then signed onto the Chess label Argo where she recorded her debut album At Last! Where her signature hit â€Å"At Last† was featured on. An interesting thing about her most popular song â€Å"At Last† that few people are aware of is that it was actually not her most rewarded piece of work. Etta James faced many obstacles throughout her life from being a foster child, facing a heroin addiction, and sadly suffering from Alzheimer’s and leukemia which eventually led to her death on January 20, 2012. Etta’s heroin addiction took a big toll on her career as she was in and out of rehabilitation centers during the early 1970’s. She avoided prison time when her husband and she were caught in possession of heroin and he took the fall having to serve a 10 year prison sentence. Etta was then forced to stay at the Tarzana psychiatric center for 17 months. Unfortunately her addiction was not conquered and she continued to battle it until she died. Etta James success was only later recognized in the early 2000’s where she was inducted into the Blues Hall of Fame and the Rockabilly Hall of Fame. In 2003 Etta was awarded the Grammy Lifetime Achievement award and soon came out with a new album â€Å"Blue Gardenia† in 2004. Her second to last album â€Å"Let’s Roll† was released in 2005 and won her the Grammy for Best contemporary blues album. In May, 2009 at age 71 Etta James was awarded the Soul/Blues Female Artist of the Year award from the Blues Foundation for the ninth time! The very next year while she was touring, she was forced to cancel many of her shows due to her gradually failing health after it was revealed that she was suffering from Dementia and Leukemia. Etta released her final album in November 2011, which was critically acclaimed and soon after died two months later. After listening to the song â€Å"I’d Rather go Blind† you can’t help but have an appreciation for Etta. You can sense the despair in her voice like she really does not want that man to leave her. I love the way it crescendo’s or builds up the emotion throughout the song. I also love the song â€Å"I just want to make love to you.† The way she goes into her gravelly voice is really unique.

Sentence Type Basics for English Learners

There are four sentence types in English: Declarative, Imperative, Interrogative and Exclamatory.   Declarative: Tomll come to the meeting tomorrow.Imperative: Turn to page 232 in your science book.Interrogative: Where do you live?Exclamatory: Thats awesome! Declarative A declarative sentence declares or states a fact, arrangement or opinion. Declarative sentences can be either positive or negative. A declarative sentence  ends with a period (.). Ill meet you at the train station.The sun rises in the East.He doesnt get up early. Imperative The imperative form instructs (or sometimes requests). The imperative takes no subject as you is the implied subject. The imperative form ends with either a period (.) or an exclamation point (!). Open the door.Finish your homeworkPick up that mess. Interrogative The interrogative asks a question. In the interrogative form, the auxiliary verb precedes the subject which is then followed by the main verb (i.e., Are you coming ....?). The interrogative form ends with a question mark (?). How long have you lived in France?When does the bus leave?Do you enjoy listening to classical music? Exclamatory The exclamatory form emphasizes a statement (either declarative or imperative) with an exclamation point (!). Hurry up!That sounds fantastic!I cant believe you said that! Sentence Structures Writing in English begins with the sentence. Sentences are then combined into paragraphs. Finally, paragraphs are used to write longer structures such as essays,  business reports, etc.  The first sentence structure is the most common: Simple Sentences Simple sentences contain no conjunction (i.e., and, but, or, etc.). Frank ate his dinner quickly.Peter and Sue visited the museum last Saturday.Are you coming to the party? Compound Sentences Compound sentences contain two statements that are connected by a conjunction (i.e., and, but, or, etc.). Practice writing compound sentences with this compound sentence  writing exercise. I wanted to come, but it was late.The company had an excellent year, so they gave everyone a bonus.I went shopping, and my wife went to her classes. Complex Sentences Complex sentences contain a dependent clause and at least one independent clause. The two clauses are connected by a subordinator (i.e, which, who, although, despite, if, since, etc.). My daughter, who was late for class, arrived shortly after the bell rang.Thats the man who bought our houseAlthough it was difficult, the class passed the test with excellent marks. Compound/Complex Sentences Compound/complex sentences contain at least one dependent clause and more than one independent clause. The clauses are connected by both conjunctions (i.e., but, so, and, etc.) and subordinators (i.e., who, because, although, etc.) John, who briefly visited last month, won the prize, and he took a short vacation.Jack forgot his friends birthday, so he sent him a card when he finally remembered.The report which Tom compiled was presented to the board, but it was rejected because it was too complex.

The Legacy Of John Ireland - 1420 Words

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Examining Abraham Maslow and Carl Rogers Theories - 863 Words

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Starbucks Case Analysis Free Essays

string(130) " an effective cost leadership strategy depends on careful monitoring of a firm’s internal operations and its customers’ need\." Starbucks corporation| Starbucks Corporation Vision- Founded in 1971 Starbucks vision statement is;† To establish Starbucks as the most recognized and respected coffee brand inthe  world  and  become  a  national  company  with  values  and  guidingprinciples that employee could be proud of   The vision statement clearly describes the dream or the future of the company that is to be the world’s most well known coffeehouse and also to be the most appreciated and positively graded brand by all levels of people around the world. The  company also  focuses  its  vision  to  employee  satisfactions,  so  that  the employees will be happy. It was an abstract vision that reflected the vision of the founders. We will write a custom essay sample on Starbucks Case Analysis or any similar topic only for you Order Now Mission Their mission statement from the company profile is as follows: â€Å"Our mission is to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time. † Their core competencies can be defined as high quality coffee and products at accessible locations and affordable prices, provided a community to share in the coffee drinking experience, and variety of choices. Their mission statement includes six elements which they regard as part of their core competencies. Our Coffee It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done. Our Partners We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard. Our Customers When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection. Our Stores When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life – sometimes slow and savored, sometimes faster. Always full of humanity. Our Neighborhood Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action – bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility – and our potential for good – is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead. Our Shareholders We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so that Starbucks – and everyone it touches – can endure and thrive Competitive advantage The advantage a business has over its competition which allows it to reap greater profit margins, retain customers and remains sustainable is referred to as its competitive advantage. Businesses have to have some form of competitive advantage to be successful in the long run. Competitive advantage can take one of three forms that reflect basic customer values: customers want goods and services (1) better, (2) cheaper and (3) faster. These forms of competitive are known as (1) differentiation, (2) cost leadership and (3) quick response respectively. Research has proven that having some form of competitive advantage increases profitability of a firm , having two forms combined leads to highest profitability and firms that have neither form perform poorly or generate just ‘normal’ profits. Competitive advantages that are gained because the pioneer was on the first to enter a market are sometimes called ‘first movers advantages. ’ The three forms of competitive advantage are described below Differentiation Creating a unique bundle of products and/or services that will be highly valued by customers constitutes competitive advantage based on differentiation. Product features, after-sales service, desirable image, technological innovation, reputation, manufacturing consistency, status symbol are attributes that can differentiate products. Each of these features can be considered a form of quality. Differentiation allows firms to reap higher-than-typical returns because competitive rivalry maybe lessened as firms successfully distinguish themselves; brand loyal customers are less price sensitive, new entrants entering the market have to overcome the barriers to entry. However, if many firms adopt a differentiation strategy then they are all perceived as equals and specialists operating in niche markets may be more successful at differentiation and a continuous attempt to stay ahead of customers may result in ‘gold plating’ ( the development of features which are not valued by consumers but add to the price). Successful differentiation depends on (1) understanding what customers value, (2) being uniquely able to provide that value, and (3) being able to charge a premium price for it. Cost leadership This competitive advantage requires achieving a low-cost position relative to one’s competition. Classic cost leadership strategy involves creating a no-frills product aimed at the most typical customer in a large target market. Standardization of products and services is looked for in cost leadership and targeting a large market segment for these standard products allows for mass production techniques which create greatest possible benefits from economies of scale and experience curve effects. Cost leadership addresses competitive forces in the following ways; holding the low-cost position convinces rivals to hold a price war, low-cost producers are protected from customer pressures of lowering prices, because of higher margins low-cost producers are better able to withstand pressures from increasing in suppliers’ costs, barriers to entry exist for new entrants and manufacturers use price to threaten substitute products. However, cost leadership has some drawbacks namely ; cost leadership can be called an ‘all-or-nothing strategy’, cost cutting that leads to loss of desirable roduct attributes can be ruinous, it is easily duplicated by competitors, and dedication to cost cutting limits a firm’s abilities to remain competitive in other ways. Use of an effective cost leadership strategy depends on careful monitoring of a firm’s internal operations and its customers’ need. You read "Starbucks Case Analysis" in category "Papers" Quick r esponse This form of competitive advantage stresses on the provision of the quality and cost the customer wants faster than the competition does. Quick response refers to the speed with which a new product, a product improvement, or even a managerial decision that affects the customers can be made. It is a way of looking at a firm’s flexibility. Competitive advantage can be achieved through quick response in which such as faster development of new products, customizing products, improving existing products, delivery of ordered products,, adjusting marketing efforts, answering customers’ questions. Firms with quick response can avoid head-to-head rivalry, faster forms can charge a premium pricing, faster firms encourage quick response from suppliers, and quick response deals with the threats of new entrants and substitute products by leading in innovation themselves. However it must be kept in mind, speed is not equally important to all markets or customers, speed creates stress, and speed for speed’s sake does not create competitive advantage. Starbucks Competitive Advantage Starbucks competitive advantage is a mixture of differentiation and quick response. Since their coffee is priced at $4 a cup; they are clearly not competing on costs here. In fact at Starbucks’ it’s the opposite. The brand image that has been created due to the strong differentiated marketing efforts, the ambience of their outlets has created a brand loyalty in Starbucks customers. They are willing to pay a premium price because they feel they are having the best coffee made with the finest quality ingredients. Starbucks achieved the first movers advantage as they were among the pioneers of coffee houses in America, also they have maintained their leadership in the market by launching new variants and varieties faster than competition does and have upgraded their menu from time to time. Their supply chain is integrated vertically and horizontally allowing for a faster response time among suppliers and with customers. They have used elebrities to endorse their brand further enhancing their differentiation strategy. Because Starbucks has successfully differentiated itself, developed a strong brand following, has opened up outlets to cater to their target market both in U. S. A. and globally, has always strived to serve its customers faster, and focused on innovation, it is able to reap higher-than-average returns. They have also been quick in realizing their fail ures as the case mentions them closing down stores that were not functioning. Thus this shows that the corporation is quite flexible in its operating decisions. Starbucks Corporate Strategy- how they have used it to create a successful business model The corporate strategy for Starbucks was an expansion strategy based on opening new outlets in U. S. and expanding overseas. Operations: They looked for diversification and vertical and horizontal integration to maximize control over their supply chain and maintain satisfied customers. They launched new products and variants to maintain their leadership in the market. A differentiation and quick response strategy is used. HR: Starbucks looks for diversity in its employees. They employ people from various backgrounds and give them independence and freedom to make decisions. This has enabled Starbucks to address customers faster and reduced their response time. Also hiring people form diversified backgrounds helps them in their expansion strategy and improves their communication in new countries of expansion. Marketing: Their marketing has always been coffee centric. They have strived to create a strong brand identity and brand loyalty. Starbucks is not just about coffee. It is about providing that experience of comfort, socializing and happiness. This is what they build on. The firm has been successful in maintaining premium pricing because of the creation of a brand image that allows for it. Finance: The expansions have been sensible and not based on intangible goodwill or long term debts. The firm has invested a lot in fixed assets and their debt to asset ratio is low. The management started closing down low operational stores; instead of letting they operate at losses, indicating the management’s concentration on financial efficiency and having good financial ratios. The following strategies have enabled Starbucks to maximize its reach to its consumers by opening up different outlets globally hich have lead to market development and increased profitability. Starbucks expansions have all been well financed and done sensibly. Also their quickness to act in areas where they were reporting losses further shows that their Corporate strategy has lead to successful business development model. The product variety offered at Starbucks has enabled it to remain market leader thus showing that RD efforts are paying off. The exceptional customer service due to the employment of a diversified labor force has facilitated business expansion and increased the size of the pie for Starbucks. Starbucks thus has transformed the image of ‘coffee. ’ The strong brand loyalty supported by a well managed expansion plan which allows them to be present where their customers want them has made the business a success. Need analysis A need analysis is the process of identifying what the users need and want. It related to the goals, inspirations and objectives of the users. Following shows the factors that contribute to customer satisfaction at Starbucks. Thus Starbucks needs to discover what consumers want regarding the product quality, price and service. Following are SWOT ands PESTLE analysis of Starbucks which give a clearer picture of the strengths and environment within which the firm is operating. SWOT Analysis Strengths †¢ Brand recognition and consumer loyalty †¢ Diverse product portfolio catering to all tastes and ages, including non? coffee beverages and food items †¢ Excellent customer service and the value of the Starbucks experience †¢ Licensing relationships with top? brands such as Pepsi? Cola and Kraft that minimize costs and leverage the strategic advantages of those companiesxviii †¢ Strong employee relationships Economies of scale providing superior distribution networks and supplier power †¢ Primly? located retail stores †¢ Positive image attributed to socialresponsibility Weaknesses †¢ Pay 23% more for coffee than market prices †¢ Saturation of the market diminishes long? term growth prospects †¢ No monetary switching costs for consumers †¢ Negative large corp oration image †¢ Potential limitations of international expansion due to cultural clashes with American coffee experiences. Opportunities †¢ Have the ability to reduce premiums paid for coffee Room forinternational expansion (78% ofrevenues came from the United States in fiscal 2007 and international same? store sales growth is strong)xix †¢ Room to compete on multiple fronts including quality and price †¢ Increase licensing relationships to further utilize brand strength to capture profits at little cost to the company Threats †¢ Increasing coffee and dairy prices †¢ Intense competition in the specialty coffee beverage business †¢ Unfavorable economic conditions that lowerthe demand for expensive beverages †¢ Community resistance to store expansion The possibility that the demand for specialty coffee is a fad †¢ Diverging from the Starbucks experience †¢ Further diversification of fast food restaurants that cuts into market share. P ESTLE ANALYSIS The PESTLE analysis of Starbucks. Political: Taxation policy High taxation imposed on farmers in those countries producing the coffee bean will usually mean Starbucks pay a higher price for the coffee they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately passed on to the consumer Deregulation A decade ago, the USA pulled out of the ICA (international Coffee Agreement) hat set export quotas for producing nations and kept the price of coffee fairly stable. Coffee quotas and  price controls ended. Since the deregulation farmers have suffered and their earnings have dropped. Many have struggled to make a living so have given up. International trade regulations/tariffs – Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country’s government imposes a tariff it not only results in an efficiency loss for Starbucks but large income transfers can become inconsistent wit h equity. This extra charge can turn a bargain into a rip-off. Also, since 9/11, trade relations have been adversely affected between the USA and some other countries. International  stability The international economy must be brought into  consideration as it can affect Starbucks’ sales and markets. The aftermath of 9/11 was an example of an economic downturn that affected the world market. If the world market is in a slump it is not usually the ideal time for a  business to look at grand expansion. Employment law A reduction in licensing and permit costs in those countries producing the coffee bean for  Starbucks would lower production costs for farmers. This saving would in turn be passed on to the purchaser. Economic: * Interest rates – A rise in interest rates means investment and expansion plans are put off resulting in falling sales for Starbucks and their suppliers. Also mortgage repayments rise so consumers have less disposable income to spend on luxury  products such as coffee. Low interest rates should have the opposite effect. * Economic Growth – If growth is low in the nation of location of Starbucks then sales may also fall. Consumer incomes tend to fall in periods of negative growth leaving less disposable income. Consumer confidence in products can also fall if the economic ‘mood’ is low* Inflation rates – Inflation is a condition of increasing prices. It is measured using the Retail Price Index (RPI) in the UK. Business costs will rise for Starbucks through inflation, as will shoe-leather costs as they shop around for new ‘best prices’ of  materials, menu costs will rise as Starbucks have to create new price lists. Also, uncertainty is created when making decisions not least because inflation redistributes money from lenders to borrowers. Competitors pricing – Competitive pricing from competitors can start a price war for  Starbucks that can drive down profits and profit margins as they attempt to increase, or at least maintain, their share of the market. * Globalisation – Globalisation of the coffee market has meant farmers of the bean now earn less money than they used to. This can result in a decrease of people willing to do it for a livi ng, which will mean a decrease in coffee produced, resulting in a drop in Starbucks supply levels and probably profits. * Exchange rates – Starbucks are affected by exchange rates when dealing with international trade. If the value of the currency falls in the country of a coffee supplier  this enables Starbucks to get more for their $ or L when importing the goods to their  country. This saving can be passed along to the customer. Exchange rates are forever  changing throughout the world in today’s market. Social: Population demographics – Population demographics are a very important factor for  Starbucks as they identify what parts of the population they need to aim their products at or which parts of the population they need to encourage to visit their stores more than they presently do. Looking at the table in the case study demonstrating the  percentage of the age groups that drink coffee or specialty coffee it can be seen that the age groups that Starbucks should be aiming their marketing at are the people  between 35 and 54. They should consider targeting the 18-24 age group as they drink  the least amount comparatively and by encouraging this segment to choose Starbucks coffee now, there is a chance they may continue to drink it long into the future. Income distribution – Where income is distributed is another factor that Starbucks should look at as this also demonstrates the ideal place to aim their marketing or to locate their stores. Coffee is more of a luxury product so it is those people/places with the most amount of disposable income to spend that should be targeted the most intensely. * Attitude to work – Starbucks would not want to locate to an area where the local  population have a poor attitude to work. Recruitment would be difficult, training arduous, and staff turnover would be high. Attitudes to work are important in other  ways. A large number of workers in large cities now go out for their lunch rather than use an internal canteen. Starbucks can use this to their advantage and promote the shop as a place where people can meet up and so it will mean that they will get alarger amount of people in their stores at this time of the day. * Standard of education/skills – When Starbucks are deciding upon new premises they must look at the standards of education and skills locally. They must be sure there are  people who live there with sufficient skills to ensure successful operation of the  business, or at least the potential to learn that comes with a good education. Working conditions/safety – Those people with the most disposable income, e. g. young single professionals etc, will be accustomed to high standards. Starbucks must ensure its shops are clean and comfortable, service is of the highest order and health and safety issues are fully addressed * Location – Transport needs to the p remises must be considered for both staff and customers. Easy access is vital to ensure there is no excuse for staff to arrive late or  for customers not to visit. Age distribution – Research shows the average age of the population is getting older  and birth rates are stagnating. Starbucks is presently aiming it’s product at young  people but maybe these views will change in the long-term as the market proportion for young people diminishes. The most profitable way forward may be to widen their  target market despite the risk of alienating present customers. * Health consciousness – Good health and foodstuffs associated with healthy living are important I today’s market place, as this is a trend that is occurring at the moment in western societies. Starbucks can use this information when deciding the additional  products to sell, as well as coffee, as a large number of their customers are looking for  healthy alternatives to cakes and biscuits, which have been associated with coffee in the past. Technological: * IT development – Starbucks is always looking to develop and improve its Internet facilities. Starbucks launched its first-generation e-commerce Web site in 1998. In late1999, Starbucks decided the site needed a major upgrade to enable new functionality and prepare for long-term growth. To achieve these goals, Starbucks upgraded to Microsoft Commerce Server 2000, one of the key Microsoft . NET Enterprise Servers. As a result, scalability and performance have improved, and the company now has the tools it needs to profile and target customers, analyze site data, and deliver new features to the market in the shortest time possible. * New materials and processes – Developments in the technology of coffee making machines and the computers that Starbucks use to run their cash registers will enable their staff to work more quickly and efficiently. This will result in customers being served quicker and create the potential to serve more customers in a day. This will  prevent customers from having to wait around for long periods thus improving customer relations along with increasing the customer base. * Software upgrades – In the short-term, Starbucks must identify the most efficient software upgrades to use to keep up with the competition. This applies to the improving the accessibility of their website (www. starbucks. com) and also improving the speed and quality of the service provided on the shop floor. Research and Development activity – As a multi-national business empire, Starbucks has the budget and the resources to have a cutting-edge R+D department. The website is very accessible, the facilities are state of the art but more importantly new ideas are consistently being tried in terms of a constantly updating menu. * Rate of technological change – The rate of technological change in the current world market is high, much higher than, say, thirty years ago. Much of this is down to the Internet and the speed with which information can be communicated around the globe. Starbucks will need to invest heavily just to stand still in their ever expanding and developing market, and even more so to try to stay ahead of competitors. Legal: * Trade and product restrictions – Starbucks need to be aware of the trade laws in the various countries they occupy and do business with. They need to ensure they are not in violation of e. g. , religious laws. Also, certain countries impose a tariff that has to be  paid when goods are imported/exported so this must be taken into account. * Employment law – Each country has varying employment laws. Some may have aSabbath day, diwali,some may have a limit on the number of hours an employee may work  Ã‚  per week, all will have varying levels of minimum wage. Starbucks should consider  these factors when deciding on relocation. * Health and Safety regulations – Starbucks may find these regulations are not as stringent or well enforced in certain countries. It would be wise though to enforce universally high standard of health and safety throughout all it’s shops to maintain a good global image and ensure all laws are abided by. Also, by not maintaining high standards they will be liable for a large amount of civil cases as it is a legal requirement for them to enable that their staff and customers are safe when they are intheir stores. * Monopolies commission – If Starbucks consider expanding their operations further  to control an even larger percentage of the market than they already have they will have to consider the possibility of breaking monopolies legislation as they may have a share of the market that is too large. This would mean that they would have unfair  advantage over other companies in the same market. This would mean that they could  benefit from economies of scale and would also be able to charge prices that were not competitive in the market and get away with it due to the lack of competition. * Land use – Starbucks may have to abide by local planning regulations when building shops or altering purchased sites, as certain areas of land may be protected or  unsuitable. All matters would be addressed by the local government. Environmental: Pollution problems – Starbucks customers create a lot of waste as they often leave the shop with their cup of coffee and then dispose of it in the street. The packaging for  this cup must be carefully considered to make it as biologically degradable as  possible. Certain other materials can be very harmful to the natural environment. * Planning permissions – Planning permission may not be granted if Starbucks wish to  build in an area that could be harmful to the environment. The land may be protected. * Work disposal – Starbucks need to carefully consider the methods in which they dispose of their waste as there are strict laws in most countries to ensure a firm trading in their country disposes of the waste that is created in their business in a specific and efficient way. If they do not follow these laws they may find themselves being sanctioned, which not only affects them financially but also tarnishes the reputation of  the brand name, as most of the waste created will bear the logo of Starbucks. * Environmental pressure groups – Starbucks should be aware of the physical and influential power of groups such as Greenpeace and Friends of the Earth. Any violation of animal or environmental rights by a company is usually followed by a swift and attention-drawing protest from one of the groups. Brand image and customer bases are often irreconcilably tarnished due to the actions of these groups Porter’s five forces Barriers to Entry: Medium-High –  Low  capital requirement:  It can be varied depend  on  the location, but  it would be safe to say  coffee industry   still  requires low capital compared to other industries. –  Little  product  differentiation: It is difficult to establish a certain unique flavor for coffee. – can be offered at restaurants which normally don’t serve coffee as a beverage; this will allow for even lesser investment. Threat of Substitutes: High – Soda, fresh fruit juice, healthy juice for drink and tea are all direct substitutes for coffee. – Alcohol drink- beer, wine,  cocktail,  and more can be indirect substitutes. ( Alcohol drinks will be sold in only a few selected places,  so it is  too early  to  get rid of alcohol drinks in the threat of substitution part. ) Bargaining power of Buyer: Medium-high – Even though the price goes up, the buyers who like only  Starbucks would still come. The brand has generated enormous brand loyalty.   Buyers can  buy their coffee from various  places: Starbucks has their stores  all over the nation, so as other major companies do. Buyers have a lot of substitutes to choose from. Supplier Power: Low-Medium – Starbucks is a global coffee chain and many suppliers are eager to work with them. The company has successfully established vertical integration to make suppliers loyal to its supply chain. –  It c an be problematic if  a certain product  suppliers raise the price of their product, such as green tea powder or coffee bean. Although Starbucks decided to  change their suppliers because it still takes some time to inform  to the customer and price changes will be inevitable. Industry Rivalry: High –  Many companies: Coffee Bean, Mcdonald’s, Dunkin Donuts, and local  cafe. –  Also; McDonald’s had started an advertising attack aimed directly at Starbuck’s saying ‘$4 coffee is dumb. ’Thus; rivalry was high. –  Many people started to look for  more  healthy  and fresh  juice instead of coffee, so there is little chance that demand is growing at the same rate as it was earlier. How to cite Starbucks Case Analysis, Papers

Emerging economical trends

Questions: 1. 5 Most Emerging economic trends shaping up the global business today? 2. Identify 5 technologies in India which have direct influence with political decision-making? Answers: 1. Emerging economical trends shaping Global business Globalization has reduced restriction and allowed transfer of technology and knowedge reducing the World to a mere global village. This has changed the way business carry out their operations. The following are emerging economic trends that are shaping global businesses today; Technology: Technology is disrupting business models that have been in existence and generating new business models. Technology is making it easy for customers and businesses to connect. Technology has also changed traditional means of payments. For example, the Uber taxi service technology has disrupted and continues to disrupt the traditional taxi business model. Converging tastes and preferences: As a result of globalization, consumer tastes and preferences are converging requiring global business to produce the same products for larger world market. Customers from different parts of the world are requiring the same products. Increasing middle class: The world middle class has been broadening. This is increasing the purchasing power of the world market as a result of increase in disposable income. This is necessitating global business to increase their production to meet the increasing demand. Decreasing production cost: Global businesses are attaining low production cost as a result of automation of the process and use of robots in production department. This factor is making the products in the global market to be cheaper. E commerce: Global businesses are trading through the internet. They sell their products and outsource labour through the internet (Sharma and Loh, 2009). Global business are outsourcing labour through the internet. Instead of hiring employees on permanent basis, companies are outsources services from the global labour market. This has reduced the cost of operations of the global businesses. 2. Technology creates interfaces that connect people allowing the share, contribute and get information while in different locations (McGregor and Mourao, 2016). When people connect, they discuss issues that affect them including politics. India being a democratic country, it political decisions are influenced by information trending on technologies. The following are technologies that have direct influence on political decision; Social media: The social media include Twitter, Facebook, Linkedin, Instagram and WhatApp. The social media enable citizen to post issues and then the information can be shared, commented or liked (Ortuoste, 2015). This makes the information to trend on the social media. The government is influenced by the opinion of citizen on matters that are discussed on social media. YouTube: This technology enable posting of videos. These videos contain information shared for certain objectives. These videos are watched by all individual on YouTube and they give their feedback on the comment section. Blogs: These are internet pages owned by individual or group that write on different topic. These blogs express the opinion and occurrences on the country. These information influence political decisions made because political leader want to make decisions that directly relate to citizen in order to gain popularity. Online mass media: These include online TVs stations, electronic journals and online news papers. This technology informs citizens on the current events and allows them to make their opinion. News is quickly spread to citizens through these mass media. Websites: These are pages that are owned by specific organizations or individual. Owners update information that is visible by anybody accessing the website. This influence decisions made as it providing information to political leaders. References McGregor, S. and Mourao, R. (2016). Talking Politics on Twitter: Gender, Elections, and Social Networks. Social Media + Society, 2(3). Ortuoste, M. (2015). Social Media, Public Discourse, and Governance. Asian Politics Policy, 7(3), pp.497-502. Sharma, A. and Loh, P. (2009). Emerging trends in sourcing of business services. Business Process Management Journal, 15(2), pp.149-165.