Most impressive topic - GLOBALIZATION

For me, the most impressive topic is Globalization as it is a controversial issue.  It affect a lot on polities, cultural and economic. I am quite concern about the effect of economic globalization. Some people think this help to improve economy in the world while others argue it is harmful to society.

The book “Boddy” define the economic globalization as “Increasing integration of internationally dispersed economic activities.” (Boody, 2011, 125)

    

      I think it is good for economy rather than bad, since it closer the relationship between countries.

Examples

Apple

Apple - products designed in the US, but produced in China

 This chart revealed apple's product sell worldwide.

McDonald

McDonaldization transform the fast food culture in global society of McDonald.

 Nowadays, there are more than 3,4000 in the world.

Coco-cola

Without globalization, we cannot drink coca-cola at anywhere.

Thus I think globalization is very important to economy.

My home country - Hong Kong 

As I come from Hong Kong, so I want to talk a bit about my home country.

Before globalization:

Hong Kong could be defined as low living standard city since there are low level of scientific and education and    low wage labor force.

Then Globalization attracted people to do business and build manufactory

After globalization:

High technology was imported, and employment opportunities was increased since companies need to hire more workers, some of the manufactory even moved to other low wage countries or cities so as to lower their production costs.

So globalization does improved our living standard and help to opening up to global markets.        

   

There are many others benefit of improving economy:

• Increased trading

This book mentioned Globalisation is "Invisible hand”, to regulate markets and competition in a global market place (Gangopadhyay and Chatterji, 2005, p. 165)

But how can globalization increase trading?

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•      Decreased trade barriers

Without global trading, nations would be limited to the goods and services produced within their own borders.

I watched an article'The gated lobe' from a magazine "The economist" on Oct 12th 2013, it

talk about the trade barriers have been decreased.  

From the magazine:

In 2013: the value of goods-and-services exports run to 31.7% of global GDP.

Moreover, the big emerging markets like Brazil, Russia, India and China have displayed a more interventionist approach to globalisation, they relies on industrial policy, so that they can lower their cost of tariffs and quotas. 

  Examples:

General Agreement on Tariffs and Trade (GATT) help to reduce international restriction

and tax problem

From a report:

According to the Global Enabling Trade Report 2012. Reducing Supply Chain Barrier , it stated that reducing supply chain barriers can increase global GDP.

•  Decreasing poverty 

It might be quite hard to say why globalization decrease poverty, it seems the poverty was increasing, so let me explain more.

      

Globalization brings developing nations into the world marke such as US, China. 

Also, richer nations are spreading wealth to poorer ones.

Examples: Export growth & incoming foreign investment reduced poverty from Mexico to India & Poland 

From the research:

More important is that,  A research showed the world poverty rates have steadily fallen over the past 20 years. 

Decreased poverty in the world showed the economy was improved

•        Labour availability and skill

Lower labour costs and High skill levels from others countries

Examples: India has low labour costs (about a third of that of the UK), the clothing industry in Europe hire workers in India, so the productivity costs can be decreased by taking advantage of cheaper labour costs

The idea of example was taken from this BBC News, as it mentioned people will hire workers in India.

 However, Globalization bring negative effect as well.

 Globalisation is widening the poverty gap, which leads to economic inequality.

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• Poverty doesn’t decreased in all countries

Currency crises can cripple the poor

Example: Indonesia: poverty rates increased by at least 50 percent after the 1997 currency crisis

      Meanwhile, rich nations profit come from the expense of the poor

      And it harm third-world farmers as the removal of trade barrier, prices are too low so they cannot support agriculture

So this will increases economic inequality in the world

• Only serves the interest of powerful states and capitalist elites

     

    The New technology has only moved to elite nations in order to serve an economic interest

     

       Some countries still suffers from deepening poverty cycles

   Examples: Africa is not powerful at all, so they untouched the effects of globalization

   
   This is not fair to those poor countries and larger the poverty gab.

Among those advantages and disadvantages, I still think globalization helping our world but not destructing it. 

• Improve economy in the world

As it moved countries away from agriculture to manufacturing, Unemployment has decreased significantly in poorer nations, especially in Asia

It increase social mobility & trade and prosperity extended to developing regions

So I think the world is brought closer together through the consciousness of shared global space.

SWOT analysis

As my last blog used PESTEL to analysis British airway (BA), but it can only analyze the how external environment affect BA, now I want to use SWOT to analyze the internal environment, so as to see how strong are their competitiveness on the market. SWOT stands for strength, weakness, opportunities and threats.

Strength:

• Focus on both short and long haul flight

BA has both the short haul flight and long haul flight while many airlines only focus on local or long haul flight such as easy-jet, Flybe. BA has been the third biggest airline in the world on long haul aircraft in the world. 

Their long haul flight goes to various parts of the world like India, Paris, Sydney and New York. And there are multiple aircraft types.

This video talks about BA have more flight to India as they understand the family matters.

• Strong brand image

And BA has managed to establish a fantastic reputation, they established brand with high levels of consumer recognition and trust.

The profit per passengers is the highest. They carry out the most passengers in 2008. Now, they carry more than 50 million passengers worldwide.

• Expanse aircraft fleet

Expansion of aircraft fleet, which access to around 238 aircarfts comprising 57 Boeing 747s, 42 Boeing 777s, 21 Boeing 767s, 13 Boeing 757s, 69 Airbus A319/320/321s, 33 Boeing 737s and 10 smaller aircraft being used in the company’s regional business.

•  Skilled staff

The staffs are trained 1200 hours, so they are skilld.

•  The sole airline occupant of Heathrow Terminal 5 

They are strong presence at London Heathrow International airport. In March 2008, they help to boost the service offers customers in the UK.

The company principally conducts its business operations in the Europe and the Americas region, besides serving major routes across the Middle East and Asia-Pacific. British Airways is headquartered at Harmondsworth in the UK.

• Powerful alliance

From the corporate responsibility report showed that in 2012, British Airways is a member of the oneworld alliance, along with other major players such as AMR Corp and Cathay Pacific, boosting its competitive powerat the global level. The alliance is powerful.

Weakness

• High maintenance cost

The multiple aircraft types could cause high maintenance costs, such as fuel costs is one of them.

When the fuel prices rise or the pricing competition increase, they are vulnerable to these problems, since they rely heavily on the airline industry, accounted for 99.7% of its total operating profit in fiscal 2007. 

• Complex work due to multiple locations

Multiple locations served by BA could affect the work efficiency of them as different locations like local, regional, national and international have different business model. The works are much more complex.

• Effect of cabin crew strike

Moreover, the problem with cabin crew in BA cost the business a lot of money, and it damaged the reputation due to cabin crew strikes, it affects on passengers, as they will think the airline is not reliable.

The survey showed less customers are likely to book BA flight.

• Short haul business strategies

They don’t have continuity of strategies in short haul business.
They use large Boings during the short distance flight, this would increase their costs as it is unprofitable flight.

 Suggestion: They can join these flight with other airline, so as to reduce their cost and not be wasted.

• Poor cost-control

Their cost-control is poor. Top managers are given in high salaries and bonus.

Opportunities

• Globalization

The increase in globalization cause the downturn in the business of BA, but this can also be opportunities as BA will persist the process of invention and innovation in order to be more competitive in the market, and new technologies are adopted to attract customers, such as the self-service check in, It lower the cost, which estimated saving at around $3.5 per person.

• New technology

 It predicted that the online travel booking of flight will be approximately 55% in 2014

And they created an outdoor campaign using new technology

My thought: I think this is quite interesting and creative, the little girl and boy act as looking on the sky and interact with aircraft flying overhead. This can attract more awareness of people.

• Growth of the traveling trend

On the other hand, the trend of traveling is growing. This is benefit for increasing customers. Growing in emerging markets like China and India is a way to develop their international business. China and India are seeing investment in the travel infrastructure, so rising foreign tourism or expand in middle class can help to create opportunities.

• Growing Asia Pacific market

According to the World Tourism Organization (UNWTO), international tourist arrivals grew by 4% in 2012 to a total 1,035 million, up from 996 million in 2011. In terms of regions, Asia Pacific was the best performer with a 7% growth in arrivals.

Furthermore, UNWTO forecasts international tourism to continue growing in 2013. Arrivals are expected to increase by 3% to 4% globally.

BA with its strong operational base and expertise, is well positioned to benefit from increasing global tourism industry. This can help to generate additional revenues.

Threats

• Change in customer behavior

The change in customer behavior is threat to BA, as there are lots of service provider, which will provide better services and low fare to attract the customers.

Suggestion: they can improve their market programme to attract new customers.

• Raising fuel prices

And the raising fuel prices will also affect the future of BA. Their cost will then be higher. In fiscal 2007, the rising fuel price leads the companies fall in operating profit.

• Strong competitive

Since there are many airlines focus on low-cost, easyJet and Ryanai are the examples, so the competitive is quite intense.

• Weaken economic

In the US and Eurozone, the economic outlook become weak. BA may loss on these two markets.

Suggestion: They can try to enter new market, the potential countries such as China can be their choice.

As China have highly development growth, and more people in China choose to study abroad in England and travel here.

• Unexpected events

The events happened unexpectedly, such as political instability and terrorist attacks, BA is vulnerable to those events.