Business Groups And How Their Business Are Run To Generate A Profit - 3850 Words

Business Groups And How Their Business Are Run To Generate A Profit (Other (Not Listed) Sample) Content: DIFFERENCES BETWEEN SOES, PMCS AND FCCS Name: Course Title: Instructor: Date: Table of Contents TOC \o "1-3" \h \z \u INTRODUCTION PAGEREF _Toc444742785 \h 3STATE-OWNED ENTERPRISES (SOEs) PAGEREF _Toc444742786 \h 4Organizational Structure of Air China PAGEREF _Toc444742787 \h 5Company’s Mission PAGEREF _Toc444742788 \h 5Sustainable Competitive Advantage PAGEREF _Toc444742789 \h 5PESTEL Analysis PAGEREF _Toc444742790 \h 6PEOPLE-MANAGED COMPANIES (PMCs) PAGEREF _Toc444742791 \h 7Organisational Structure of Huawei Technologies PAGEREF _Toc444742792 \h 8Company Mission PAGEREF _Toc444742793 \h 8Sustainable Competitive Advantage PAGEREF _Toc444742794 \h 8PESTEL Analysis PAGEREF _Toc444742795 \h 9FOREIGN CAPITAL COMPANIES (FCCs) PAGEREF _Toc444742796 \h 10Organizational Structure of General Motors PAGEREF _Toc444742797 \h 11Company Mission PAGEREF _Toc444742798 \h 11Sustainable Competitive Advantage PAGEREF _Toc444742799 \h 11PESTEL Analysis PAGEREF _Toc444742800 \h 12THE FUTURE PAGEREF _Toc444742801 \h 12CONCLUSION PAGEREF _Toc444742802 \h 13Bibliography PAG EREF _Toc444742803 \h 15 INTRODUCTION In the 18th century, China had the largest and richest most advanced economy in the world. However, this economic performance began to dwindle in the nineteenth century and by early twentieth century, it was disastrous. China was among the poorest countries in the world by 1949 and urgent action was required. The Great Leap Forward, a series of famines where millions of people lost their lives, further worsened the Chinese economy.A number of economic strategies were adapted from 1949 all through to 1978 which saw the Chinese economy turn around. The first of these strategies was the big push strategy. This strategy saw the Chinese government allocate huge amount of its money to boost the construction of new factories.[1. Naughton, Barry. 2007. The Chinese Economy. Cambridge, Mass.: MIT Press., 34.] [2. Ibid., 69.] [3. Greenhalgh, Susan. 2008. Just One Child. Science and Policy in Deng’s China. Berkeley: University of California Press., 169.] Deng Xiaoping, after taking over power from Mao Zedong, pushed hard to lead economic reforms in China. The agricultural sector was the main target of Deng’s reforms. He introduced the household responsibility system in 1979 and it was a game changer. Under this system, he decollectivized agriculture by giving farmers reduced quotas and allowing them to sell any food beyond their quotas in the free market. This system was very successful as it raised the standard of living of many people within a very short period of time. Agricultural outputs rose by 8.2% annually after this reform compared by only 2.7% before the reform. Another reform in this sector was the increased production of cash crops instead of just concentrating on food crops such as grain and rice.The production of meat and vegetables also increased largely. In addition to this, agricultural trade was liberalized which saw China change from a country of food shortages and famines to a food exporter. Xiaoping also o pen up trade and did away with trade barriers that were hindering foreign investments.[4. Zhang, Xiaojing, and Xin Chang. 2013. The Logic Of Economic Reform In China., 15.] [5. Ibid., 241.] [6. Ibid., 240.] The dual-price system saw the Chinese industrial sector transform from being stagnant to being vibrant. The establishment of Town Village Enterprises (TVEs) contributed greatly to the growth of industries. TVEs referred to companies located in villages and townships. Before 1978, there were only 1.5 million TVEs in China but this number had risen to a whopping 12 million by 1985. The number of people employed by TVEs also increased from 28 million to 135 million. TVEs contributed heavily to the growth of the economy as by 1992, their output was 1.8 trillion yuan when compared to only 49 billion yuan in 1978.[7. Ibid,. 271.] [8. Ibid., 277.] China, just like most countries, has rules and laws which guide on how one can open, run and dissolve a company.These rules are almost similar to those of the United States although there are some notable differences. Initially, all Chinese companies were state-owned enterprises (SOEs) but as the economy grew, people-managed companies (PMCs) and foreign capital companies (FCCs) were introduced after the economic reforms. These three types of companies have varying culture and management styles and these differences will be discussed herein.[9. Ding, Min, and Jie Xu. 2014. The Chinese Way. Routledge.: New York., 259.] STATE-OWNED ENTERPRISES (SOEs) Companies in China are categorized depending on their ownership. Basically, there are three types of companies; state-owned enterprises (SOEs), foreign capital companies (FCCs) and people-managed companies (PMCs).A state-owned company refers to any company which is owned or run by the government, whether central or another level of government. Before the first phase of the economic revolution, all companies in China were SOEs and their objectives were to bring forth tax income, preserve and also increase the value of government assets and to contribute a portion of their profits to the government. Examples of SOEs are Air China, Bank of China and China Railway among others.[10. Gu, Minkang. 2010. Understanding Chinese Company Law. Hong Kong: Hong Kong University Press., 364.] [11. Ibid., 259.] Organizational Structure of Air China The organizational structure of Air China is hierarchical as there is a clear pathway of power and authority. The company’s management philosophy is the main guideline to the policies adopted by the company. Air China has a culture of teamwork and it views itself as one big team comprised of several smaller teams.[12. Fernandez, Juan Antonio, and Leila FernaÃŒ ndez-Stembridge. 2006. China's State Owned Enterprise Reforms. New York: Routledge., 270.] Company’s Mission Air China’s mission is â€Å"to meet customers’ demand and to create mutual value† (AIR CHINA). Air China has the responsibility of maximizing its profits for the sake of the shareholders. In order to do this, the company identifies the needs and preferences of the customer and meets them. This is referred to as customer centricity and it is much more than the old adage that â€Å"the customer is always right†. A company that is customer centric places the needs of the customers at the center of its business.All decisions that are made have to add value to the company by attracting new customers as well as retaining old ones.[13. Fader, Peter. 2012. "Customer Centricity : Focus On The Right Customers For Strategic Advantage, Second Edition"., 13.] Sustainable Competitive Advantage Air China has a number of competitive advantages over its rivals. * Network Strength- over the years, Air China has managed to build an international route network where there are key markets for airlines. These include Shanghai, North America, Japan, Europe and Korea. The network helps the company stay ahead of its competitors.[14. Yao, Shujie. 2011. Sustainable Reform And Development In Post-Olympic China. London: Routledge., 83.] * Brand- Air China has a strong brand as the country’s flag bearer and also the fact that it has emerged as the top Chinese airline over the past few years. This attracts new customers and also helps in gaining customer loyalty.[15. Chee, Harold, and Christopher West. 2007. Myths About Doing Business In China. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan., 32.] * Cost control- the airline uses effective methods which help to reduce expenses while at the same time maintaining the quality of its products. * Corporate social responsibility- Air China practices good CSR which further endears it to its customers which gives it a competitive advantage over its rivals.[16. Wang, Weiguang, Guoguang Zheng, and Jiahua Pan. Chinese Research Perspectives On The Environment., 82.] PESTEL Analysis Political * Instability in some countries causes travel bans * Strict regulations * Since Air China is an SOE, it receives support from the Chinese government. Economic * High cost of living * High fuel prices * Labor demands * High operation and maintenance costs * Global economic crisis * Competition from low-cost airlines Social * Change in customers’ preferences * Improved communication through the use of technology has reduced the need for physical meetings between business executives. Technological * Airlines must stay up to date with the latest technological advances * Use of technology reduces some expenses. * Leads to improved customer care services. PEOPLE-MANAGED COMPANIES (PMCs) The term people-managed company does not have any absolute definition in China as it is used to refer to any business which is not owned by the state or a foreign agency. Examples of PMCs in China include Huawei Technologies, Xinjiang Guanghui Industry Investment Group, Shandong Weiqiao Pioneering Group and Jiangsu Shagang Group.[17. Tubilewicz, Czeslaw. 2006. Critical Issues In Contemporary China. New York: Routledge., 267.] The traditional goal of a PMC is the creation of wealth and glory and passing them to the generations to come.This means that employees of PMC s focus on doing what the owners want. It is challenging to effectively manage a PMC in China since executives have to always consider the family’s interest. The old adage that blood is thicker than water highly influences the decisions of PMCs as the interests of the family have to be put into consideration.This aspect reflects negatively on PMCs and highly educated individuals avoid working for PMCs. The management style of most PMCs is also hierarchical and there is a clear line of authority in this type of companies. PMCs are the least trusted type of companies in China and there is need to build their credibility in the eyes of the consumers and also the government.[18. Ibid., 262....