What is the impact of Japan’s Tsunami crisis on the world economy?
[10 marks]
Japan the third largest economy in the world behind china and US has been suffering from world’s largest and costliest natural disaster of a deadly earthquake and huge tsunami. This not only affected Japanese economy but the impact is being felt on the world economy. Before this disaster Japan was contributing 18% to the world’s economy which fell to only 9% after this problem.
Process of exports and imports the major dependence business is affected by this disaster and raised fear of high interest rates. Various numbers of manufacturing companies are in Japan which is not able to produce and trade hence not able to fulfill the needs of various economies. The various sector in which Japan faced a trouble are car industry, electronics etc. this disaster halted the orders because of no production which may increase the prices also for the products in near future.
Panic on trading can also be felt on Tokyo’s stock exchange which is hammering markets worldwide.
The industry of smart phones and computers are also harmed because Japan supplies chips for making these products and in turn affected tech companies all over.
Global oil markets are also hampered as Japan was the biggest importer of oil because of presence of more industries but after the disaster many of the companies are shut down hence consumption of oil is near to nil due to which prices of barrel decreased.
Reconstruction of Japan economy and the northeastern coast of Japan could even strike heavily on the growth of economy
In order to combat with the problem and to raise money Japan will be selling some of holdings of US government debts which would push the prices of US treasury bonds down which may raise interest rates of US.
Even steel mills are also expected to suffer as demand is likely to reduce as industries are shut down which affects iron ore industry. There may be also problem arise of fuel in Asian countries as Japan is main exporter of fuel.
Toyota decided to manufacture its products in ASEAN countries. What factors do you think Toyota considered in selecting ASEAN countries as the site for the factories? Who benefits and who losses from the new plant in ASEAN? Is the firm’s decision consistent with OLMA model?
[10 marks]
ASEAN is the name given to the Association of Southeast Asian Countries. It was formed on 8th August, 1967 and till date the total number of countries in this association has gone up to 19. Some of the major countries in this association are Singapore, Indonesia, Thailand, and Malaysia. The business philosophy of Toyota Company is stable and a long term growth by developing those activities which focus on the importance of close relationships between society, individuals, the global environment and also the world economy. As Toyota is planning to consider an ASEAN country for its new manufacturing plant, it will go in favor of the company strategy. The people or the customers in these countries also have the same vision as the company has. Not only this , the vehicles produced by Toyota is within the buying level of the citizens in these countries than any other European company. One can observe considerable increase in the sale of Toyota automobile in ASEAN countries. Moreover the culture of these countries is somewhat similar to Japan and hence there is no distance problem for the company even. Moreover, the trade integration between Asian nations also makes the business of Toyota move smoothly. After going through all the above points, it seems that this new business strategy will go in the positive direction for the profit of Toyota. The major loss from this step will be to the competitors of the company, basically European cars. The European countries are expensive than the cars produced by Toyota and the major population living in ASEAN countries comprises of middle level income. So, more people will prefer to buy cheaper product having good quality. This is what Toyota is providing to the masses. Though it will be a bit difficult for the company to replace the competitor completely but if with some new technologies and ways, it gets replaced then ASEAN countries will be the major contributor in the company’s profits
How are the components of international strategy (scope of operation, resource deployment, distinct competency) likely to vary across different types of corporate strategy (single business, related diversification and unrelated diversification)
[10 marks]
In today’s turbulent business environment, corporate should be flexible and responsive. Corporate parent in a multi firm organization can facilitate creating strategically organization, which have cascading effect on divisions under its control, which can become a true value driver. From the last fifty years, there has been a rapid change in the global economy. There has been a tremendous development in the world economic integration and some of the standardized products. The prime components of international strategy of any business organization are the scope of its business operation, resource deployment of the product and most important its competitors across the international boundaries. International business strategy can be defined as all those set of activities which can help in managing organizational business at both national and international level. It helps in the achievement of competitive advantage over its competitors at both the levels. As the corporate culture, basic culture varies across the world; it becomes entirely necessary for the organization to make its strategy as per the demand of the country in which the operation is going on. Customers today expect these things, making it necessary for firms to adopt strategic responses that emphasize speed, innovation, cooperation, quality, and cost effectiveness. The foreign policy of any country is one of the important policies of a country. There are number of terms and decisions regarding the foreign trade, foreign investments and relationship between the countries. Today is the time of globalization. If the economy of a country is good the only the country will be capable to establish profitable trade relations with the foreign countries. Otherwise due to any reason, if the country is facing slum in economy or if its economic growth rate is low, then the foreign countries will think whether they should trade with that country or not. In this way the economy affects a lot in foreign policy making decisions.
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