Group Exercise Global Economics

Both the assets of the central bank and the liabilities will be benefited. B) The Central Bank raises the required reserves ratio. The change in the reserves ratio will affect the bank credits, will reduce the volume of the deposits that are supported by the reserves and this will reduce the monetary base by raising the cost of the credits and loan interests making it less accessible to the public. C) The Central Bank decreases the discount rate and banks respond by borrowing from the Central Bank.
According to the easy monetary policy, when the central bank educes its discount rate, the interest rate in the currency in circulation and bonds markets will go down. Therefore People will be more interested in getting a loan from the bank as it is going to be easier to make profits. D) The Central Bank buys foreign currency from a domestic foreign exchange dealer. The country makes many trades in the international market, therefore instead of fixing their exchange rate they decide to buy or sell foreign currency, by doing this the money supply will increase because of the exchange reserves and this could create inflation. There are rumors about a computer virus attack on Atoms and people retrieve cash from the Atoms. The virus can have access to the information of account holders as pin numbers and amount of money. This action wont affect the monetary base nor the money multiplier but the money supply may increase as peoples financial identity may be stolen and used for online transactions, purchases and other movements in account holders. 2. (20 points) From 2007 to 20011 the U. S. Monetary base increased by 200 percent, but MI and MM increased by 40 percent and 25 recent respectively.
What caused this explosion in the monetary base? Why didn’t MI and MM increase by the same percentage as the monetary base? 3. (25 points) It is estimated that the U. S. Financial crisis of 2008 led to a loss of $7 trillion in the real estate industry due to the decline in housing prices. The stock market decline brought another $1 1 trillion in losses, and retirement accounts lost $3. 4 trillion. Describe the effect of these losses on the Real Alienable Funds market: a) to the supply of real alienable funds? Why? What will happen to the equilibrium real risk-free interest rate? Explain and graph your answers. 4. (25 points) The United States federal budget deficit fell to $1. 1 trillion in the 2012 fiscal year, down from about $1. 3 trillion a year earlier. Describe the effect of this fall in the deficit on the real alienable funds market: What will happen to the demand for real alienable funds? Why? What will happen to the supply of real alienable funds? Why? What will happen to the equilibrium real risk-free interest rate? Explain and graph your answers

Whether the Economy Growing or Receding

The UK has been in recession since the second quarter of 2008, a recession is when the economy is in economic decline for 2 or more consecutive quarters. This could affect them both positively and negatively. Consumers may have less disposable income; due to fears of unemployment and the threat of workers hours being cut back. If companies are not doing well then companies will not give their employees wage raises or bonuses. The recession creates uncertainty for consumers, as they are not sure whether the business they are working for will survive throughout the recession.
In booms people generally take out loans due to credit being readily available therefore people decide that they need to pay them back when we hit recession; causing them to have less income. This is bad for Barbour as people will be less inclined to buy products from their stores as they are quite expensive causing sales revenue and profits to decrease. This therefore means that they’ll be unable to expand and may loose out on market share. Loosing out on market share may mean that they have to cut back on employees therefore increasing unemployment levels.
Keith Ian has surprisingly had a good recession this is due to it being a prestigious estate agency and the middle class not being effected as much as any other class. Middle class are the main buyers of houses in a town like Ware. Ware is also deemed as a very desirable place to live therefore people are still willing to buy house in the local area. Other businesses during the recession are unable to survive therefore having to close down; this is a great opportunity for Keith Ian as they may in fact receive the flow of customers that were one going to its competitors.

The term savvy shopper is associated with people who are very careful with their money and what they spend it on. These labelled consumers are a highly influential in the sales revenue and profitability of Keith Ian. They may generally in these economic conditions looking to buy a new house, as they know they are going to live there for a long time. These types of shoppers will help to push up sales revenue therefore increasing there profitability.
Government policies can either be positive or negative for a business like Keith Ian. One of the recent policies the government has put in place is the reduction in spending; this can have an indirect effect to Keith Ian. In the spending cuts they’ve decreased the amount of spending on education. This therefore means that schools aren’t going to have high quality up to date facilities due to the fact that they aren’t receiving a big enough income to be able to afford it.
This would make Ware a less desirable place to live, due to Ware having undermanaged schools. People may feel like they don’t want to move to the local area because the schools aren’t up to scratch and they want their children to have the best possible advantage of education. They have also cut spending on roads this will have a negative affect on Keith Ian. People won’t want to move to Ware and will decide to live elsewhere due to the fact that the roads won’t be maintained leaving horrible pot holes all over the roads.
This could mean that people want to move out of Ware and relocate if they do so they may have to sell their house than less than they were originally planning to due to the fact the demand for houses in Ware will be decreased. This will mean that they’ll receive less revenue from it making the business less profitable. If the government were to increase stamp duties, but this doesn’t have a big affect on starter homes due to the fact that they have scrapped stamp duty for first time buyers.
This therefore will encourage first time buyers to enter the market, as it’ll be cheaper for them. This could be a good thing for Keith Ian due to the fact that first time buyer’s increases there demand for buying houses. This therefore increases there sales revenue, and Keith Ian’s profitability. But stamp duty isn’t a big amount of money so this may not make a lot of difference to the housing market. Unemployment Levels Unemployment at the moment is a major problem for the UK economy.
Which can affect Keith Ian, both positive and negatively. Unemployment usually means that people will have less income coming in as they will solely live off benefits. This therefore means that people are going to be less inclined to want to spend there money. But if many jobs are lost people may be likely to not be able to afford to buy houses which are an expensive item which will last longer but may have to go for the cheaper options to save money to buy other necessities for example rental accommodation.
This could in fact turn into a good thing for Keith Ian as it’ll increase their rental sales but selling houses gives them more revenue. Some situations when unemployment gets so bad businesses in fact may not be able to sell enough houses to cover their costs of running the business, therefore causing them to have to shut down. This is a good thing for Keith Ian due to the fact that I stated above, Keith Ian may actually take in the market share in which was once owned by the businesses which have closed.
This is because the amount of estate agencies in the area would have been restricted therefore leading to Keith Ian being one of the highest names in Ware town. Having high unemployment creates uncertainty with workers; they are hesitant to spend money because it could be likely that they are in threat of loosing their job. They then decide that they don’t want to make large scale purchase which could then effect the level of income coming in even more as there mortgage may increase or they may be first time buyers and not want to get into large debt when unemployment is a risk.
Therefore this has a hugely negative effect for Keith Ian because there sales will decrease massively due to the prospects of many job cuts especially in the public sector. Keith Ian may in fact have to go along with the job cuts and cut some of there workers, as I found out from a visit there they had to cut their cleaners as they just didn’t have the spare money to be able to fund them.
This affects Barbour due to the fact that people aren’t buying the high priced goods in which they were when they didn’t have a risk of unemployment; they feel like they have to save money, because the day may come when suddenly they are made unemployed. On the other hand this may be a good thing as people decide that they want to buy expensive durable clothing that they know will last a long time and won’t have to keep replacing them.

Eco Economy Week

Our current economy ND civilization is unstable. The CA emissions, reproduction rates, and food production is alarming. In the lecture it stated that “estimates are that global demand is now 30% higher than that which is sustainable. ” That means we are short food, and it is not looking good for the future. We are unable to produce food quickly, the temperatures are rising, and people are still uneducated about how the things they are doing impact our future. I think in times like these it would only take a small trigger to push people over the edge, which could impact civilization as we know it. ) How feasible Is It to change from “business as usual” to a more sustainable CEO- economy? How long will this process take? It Is feasible to change the way we do things. How long It takes will be determined by how quickly we can get everybody on board. We can accomplish the four mall things listed In Plan B in regard to securing civilization. To reduce CA emissions, stabilize population growth, reducing poverty and restore the earth’s natural systems, it is going to take every individual and every group of people to see it through.
A lot of things like changing driving habits, coming p with alternate transportation, recycling, spending money wisely, and being responsible about having children are things we need to do on a personal level, and should be backed up by our governments. In today’s world where money rules everything around us, It owns our politicians, and decides what laws are passed, we need to ensure that the decisions that need to be made In our best interest, and not in the best Interest of those who have the most. If we can manage that I think the change will be very feasible. ) What Is meant by the Indirect costs of goods and arrives? What are the consequences of not Including these In the market price? The indirect cost of goods and services is everything that goes into a product or service that does not cost money. This includes damage to the environment that cannot be restored. The lecture stated that we are using the Earth’s resources to meet our demands instead of living off its interest. We are doing a lot of harm to the Earth, and not replenishing it which will end up hurting us in the end. 5) What changes can you make as an individual to help turn things around?
I try to implement CEO-friendly ideals, but it is hard to stay at it because it is tiring and too much work. Every day a new study that shows you should not do something you have been doing for years, and it is tiring to keep up with. When the study about how harmful plastic bottles, everything comes In plastic now though. In my workplace we buy high efficiency light bulbs, recycle everything Imaginable, drive CEO-friendly cars, and support local greenhouses. My personal finances are not the same. I try to do most of that, but my and I try to teach my children to do the same.

Economic Review: J.C. Penny

J. C. Penney is an American department store chain based in Plano, Texas. The store was founded in 1902, in Kemmerer, Wyoming, by James Cash Penney and William McManus, and it moved to Salt Lake City in 1909. The store remained a somewhat low-key retailer until the 1960s, when it went national. After that, the company began to expanded, buying smaller corporations, and practicing discount merchandizing. After a period of success, J. C. Penney stores invaded urban and suburban shopping malls, which made the chain one of the most powerful discount merchandise and general retail companies in the country.
Recent History of J.C. Penney In 1962, J. C. Penney gained the rights to The Treasury, which was a chain of discount stores throughout the United States, which then went under the J. C. Penney name. This helped the company enter the market, and popularized the company enough for it to begin a mail-order service. Magazines that displayed the retailer’s products were nationally distributed, making the store popular nationwide. And in 1963, the store opened its first full-line department stores, in New Jersey, and Pennsylvania, which sold various items, such as sporting goods products, appliances, clothes, tools, auto parts, and many more items.
In 1969, J. C. Penney gained the rights to Thrift Drug, which put another major corporation under the J. C. Penney label. Over the next decade, the store began expanding, opening at new locations, and accepting major credit cards. It continued to buy out smaller companies, which then went under its name, offering the products that the company had before. It went on to take over as the largest catalog business after Sears discontinued its monthly catalogues, and the stores became present in nearly every major metropolis nationwide.

It bought up drug stores, auto parts stores, appliance companies, and other smaller retailers which were having business problems, and remarketed the products under the famous J. C. Penney name. The company also moved its headquarters around several times, eventually settling in Texas, where it remains today. Success at the Turn of the Century J. C. Penney began an internet store around the turn of the century, and began sponsoring television shows about home furnishings.
The company has always, since its early history, practiced a policy where it closes stores that are not performing as well, which means that all of its active stores at all times are profiting the company greatly. But although the cataloguing of the company proved a major success, other major retailers offer J. C. Penney with sharp competition, even though the markets vary a little. Wal-Mart, Kmart, Target, Big Lots, and other such stores are in the same basic market as J. C. Penney. Although the company exhibits much higher grosses after buying out a number of smaller corporations, the profit J.
C. Penney experiences after selling those corporation’s products under its own name are not as great, as much of the earnings are due to the manufacturers and original corporations. And the recent economic woes have also taken a serious toll on the J. C. Penney organization, as consumers are not as plentiful as they were just a few years ago, J. C. Penney continues, however, to offer new products, and merge with older companies that are experiencing monetary difficulties, hoping that some of these processes might prove to be beneficial for the corporation.
But as the economy is currently struggling, J. C. Penney has experienced economic setbacks in recent times, which not only directly impacts the company in a negative way, but it scares off investors, causing stock prices to plummet, which decreases the overall value of the corporation. And for a company that has always been quick to close down a location where performances are not up to par, there will certainly be store closings to come during these harsh economic times. Economic Woes for the Corporation “Penney (J. C.
) (NYSE: JCP) is a little timid right now in the face of the recession,” Steven Mallas reports in his article, entitled J. C. Penney is scared of the economy. “According to this AP piece, CEO Mike Ullman, speaking at an analysts’ meeting, is reducing the number of new locations he plans to debut this year — look for 36 instead of 50. The CEO said that he doesn’t like the unpredictability that currently exists in the macroeconomic world. ” This is just one effect of the company’s recent economic performance due to economic conditions.
“He’s right to be careful,” Mallas continues, saying that “Consumer confidence might head lower from here. And considering that J. C. Penney reported terrible comps for March — the retailer saw a decline of 12. 3% — now is probably not the time to be in expansion mode. Instead, management needs to figure out how best to connect with the mall traffic. ” Such decline will not only force the store to cut back on the number of new locations, but it will influence the company to close some existing locations as well, which serves as a major setback for the J.
C. Penney corporation. “This will necessitate new marketing campaigns that aggressively promote the brand and the shopping experience, and differentiate the chain from competitors such as Sears (NASDAQ: SHLD) and Macy’s (NYSE: M). Retailers, in my opinion, often underestimate the value of investing in creative campaigns that focus more on the experience a consumer receives when he or she is in the store rather than the perceived value that a consumer has regarding the inventory portfolio. ” Mallas is on the right track, because J.
C. Penney has a history of closing stores that were not disadvantaging the company. Any store that is not greatly benefiting the company- even if it increases public opinion and spreads the J. C. Penney name, has historically been game for a closure by the company. So even when a store is not hurting the company (not losing money) it may be closed because of its lack of sharp production, which demonstrates that the corporation is far less concerned with consumer experience than it is with its own monetary gain.
“J. C. Penney Co. said Friday that its first-quarter profit tumbled 79 percent because of a big pension expense, but it narrowly beat analysts’ estimates as its expenses fell and demand remained strong for the Sephora cosmetics and American Living merchandise it sells,” Betsy Verecky wrote for her Orlando Sentinel article, entitled JC Penney 1st-quarter profit falls on pension expense; will miss Wall St. full-year estimates on May 15.
“Looking ahead, the department store chain said it will miss Wall Street’s full-year forecast because of soft consumer spending and weak mall traffic. Plano, Texas-based J. C. Penney earned $25 million, or 11 cents per share, for the quarter that ended May 2. That compares with $120 million, or 54 cents per share, a year earlier. Penney’s sales dropped 6 percent to $3. 88 billion from $4. 13 billion in the period a year earlier. ”
But this should not be considered a reason for the chain to drop many existing locations that do not take that much to maintain, as similar economic conditions are impacting nearly ever major retailer in the country. J. C. Penney in the Market “The J. C. Penney Company, the department store chain, reported a 51 percent decline in fourth-quarter profit on Friday as customers reduced spending on clothing and other discretionary items,” an article by the Associated Press reported at the end of February.
“The company also projected a wider first-quarter loss than analysts had predicted. J. C. Penney earned $211 million, or 95 cents a share, for the three months ended Jan. 31, compared with $430 million, or $1. 93 a share, in the period a year earlier. Sales dropped almost 10 percent, to $5. 76 billion from $6. 39 billion. ” And this is all due to the corporations lack of basic sales, or, more fundamentally, the lack of consumer interest, which is impacting every major corporation during these economic times.
“Sales at stores open at least a year fell 10. 8 percent. Analysts surveyed by Thomson Reuters expected the company to earn 92 cents a share on revenue of $5. 76 billion. Department store chains like J. C. Penney and Macy’s have been among the hardest hit retailers in the recession as shoppers have focused on necessities. To adjust, Penney is opening fewer stores and reducing its inventory,” the Associated Press article, entitled Penney’s Profit Was Down 51% in Its 4th Quarter. Although J. C.
Penney began small, and worked its way to the top of America’s major department store chains, it has in no way been immune from the effects of the economy. Lack of consumer spending is causing the organization to rethink its current structure, and causing various store openings and closures, along with numerous employee layoffs. It is likely that the corporation will continue to experience economic difficulties until this economic recession has ended, no matter what the company does to try an increase its economic success.
Works Cited Fox, K. A. (1994). Urban-regional economics, social system accounts, and eco-behavioral science: selected writings. Ames, IA : Iowa State University Press. Hare, Bill. Celebration of Fools: An Inside Look at the Rise and Fall of JC Penney. New York: Amacom. 2000. Orley, Amos. Economic Literacy. Hawthornel, New Jersey: Career Press, 1994. Verecky, Betsy. JC Penney 1st-quarter profit falls on pension expense; will miss Wall St. full-year Estimates. Orlando Sentinel, 15, May, 2009.

Because of postmodernist changes in economic conditions

The current business environment is characterized by a considerable level of competitive rivalry and therefore businesses have to constantly reengineer their internal processes in order to build and maintain a competitive advantage. In this respect, a business organization has three strategies at its disposal: differentiation, cost-minimization and focus (cited in Dess, 2007).

Because of postmodernist changes in economic conditions, businesses have been globalizing their operations in order to implement the strategy of cost minimization. This is because in some countries lower labor costs reduce the cost of operations. This enables businesses to build a competitive advantage.

However given the high state of competitive rivalry in the current business environment, achieving sustainability is the critical success factor. Strategies of differentiation, cost minimization and focus cannot meet this objective of achieving sustainability. In order to meet this objective, the top management has to build the right organizational culture.
Organizations structures must adapt constantly to the changes taking place in the external environment. As a result, the process of managing change becomes a critical success factor in the organizational context. When it comes to managing change involving an IT project, the strategic alignment process becomes relevant.
This alignment takes place between IT strategy, business strategy, organizational issues and information systems issues. Managing change is a difficult process because alignment with strategic focus must be maintained. Otherwise the value of managing change will have been lost.
In this regard, the critical consideration is to minimize the level of employee resistance. Most change management projects fail because of employee resistance. However the management can avoid this problem by involving the employees in the process from the beginning. In this respect, building an organizational culture based on ownership, responsibility and accountability is the critical success factor.
This enables the management to enhance employee motivation.
According to Hammer & Champy 1994, the process of reengineering internal business processes is best facilitated through implementing the balanced scorecard methodology. This methodology becomes particularly relevant in the context of David Harvey’s account of post-modernity. According to David Harvey’s account of post-modernity, the process of international business has facilitated the high speed of labor mobility.
This means that working conditions cannot be monitored sufficiently. This is because businesses are reengineering their internal business processes in terms of globalizing their operations. The balanced scorecard methodology views the organization from four perspectives: financial, customer, learning and growth, and internal business processes.
The advantage in managing change under the framework of the balanced scorecard is that this process emphasizes the interconnectedness between different process chains. This facilitates the development of the project management team.
Because the different process chains are interconnected, managing change means that more than one department will be affected. This enhances the complexities of managing change. However the management must maintain the continuous improvement program as a result of post-modernity as described by David Harvey.
This is because the rising level of competitive rivalry forces businesses to seek new segments of the market in order to maximize shareholder wealth. This leads to the process of globalization. Normally this would increase the cost of production since the supply chain must be managed on an international basis.
However in the context of post-modernity as described by David Harvey, the management in an international business can conduct the process of global segmentation in order to standardize operations across political boundaries. This facilitates the implementation of the strategy of cost minimization.
This confirms the need for business process reengineering as described by Hammer & Champy, 1994. As a result of this framework for strategy formulation, the competitive advantage becomes sustainable.
One of the critical considerations when it comes to globalization is the need for delegation of authority. This is because consumer tastes and preferences vary across political boundaries. As a result, businesses have to vary their strategies in order to target the local market effectively. However the international business environment is characterized by a fast pace of change and therefore, local business units must be given the autonomy to formulate their own strategies.
However these strategies must be in alignment with the corporate strategic focus. For this reason, delegation of authority must be supported by an efficient and effective world-wide communications structure. However in the business environment characterized by post-modernity, businesses have to reengineer their internal operations in order to meet the demands of consumerism.
This standardizes demand patterns to some extent and as a result reduces the cost of operations. This also leads to the development of a sustainable competitive advantage.

Engineers Need to Know About Economics

Title of presentation Engineering students should learn economics. I chose this topic because it related directly to my audience whom are mostly engineering students. Audience Knowledge level of audience My audience and I will graduated in a few years and the topic that I will deliver closely linked to my audience. Every student should aware about their challenges that they will face in the future. I hope the speech that I will convey could give some basic preparation in the future especially in managing their wealth and for preparation to start a business.
How I plan to gain the audience’s attention I would like to start the presentation by sharing the statistic of bankruptcy in Malaysia due to poor managing the wealth. Mostly, the fresh graduates encounter this problem because they want to have luxury car and home at young age. Presentation 1) Introduction Purpose and importance of this topic To persuade my audience especially engineering students that they should prepare themselves with economic skills because they need both to become good engineer. Great ideas of engineering but do not have money to implement is a failure.
How the topic relevant to the audience In the modern world of today filled with the latest technology one can ever dream of, competing with others to have a good qualification in education is not an unusual phenomena. Having just engineering based knowledge is not enough to become a good engineer. It is because money is one of important factor in completing a project. Furthermore, fresh graduates also need to manage their wealth well since a lot of graduates facing problem because lack of information about the loans that they have made. Thesis statement:

Engineers students should prepared themselves with economic empowerment so that they could manage their wealth, help them in starting their own business or during managerial period. Main points: * Economics is important in helping fresh graduates to manage their money well. * To prepare engineers before they get promotion as a manager. * Engineering graduates need good economics skills to start their own business. Establish credibility In this semester, I am taking Engineering Economics & Entrepreneurship course. This course were related to this topic.
I also have read and researched that engineers need more than engineering based knowledge to a job in today’s world. Apart from that, many of my seniors, acquaintances have shared their experience that having a good managing money for ourselves or for company is important for working in comfort. 2) Body Organisational pattern I will use problem-cause- solution order as my organizational pattern for this presentation. Many graduates faced financial problems such as loans from bank and after that I will shared the solution to the audience.
Supporting ideas for each main point. * Economics is important in helping fresh graduates manage their money well. * Of more than 1. 7 Million bankrupts in Malaysia, there are more than 90,000 civil servants of the Malaysian government that are made bankrupt just because they failed to pay on their car loans or being a guarantor to one. * Fresh graduates should be equipped with economics so that they know where to invest their money and helping them in making decision during making loans to buy a car or house. To prepare engineers before they get promotion as a manager. * Manage cash flow well is one of the important duty of a manager. * To become a good manager of company, engineering graduates need both engineering and business skills to avoid them from be tricked. * Engineering graduates need good economics and business skills to start their own company. * Engineering graduates need both engineering specialties and good managing the money to have a competent business. * The number of unemployed persons in this country rose to around 402,300 in July from 388,500 in June.
If engineering graduates were thought how to make money from the engineering skills that they already learnt, they will have confident to start their own company and directly will decrease the number of unemployment. Transition from one point to next point I will ensure that there is coherent transition from one main point to the next main point by mentioning the order of the main points at the beginning of the presentation. In addition, to enhance the understanding about the topic, I will use linkers in my presentation such as “furthermore”, “in addition”, and “on top of that”.
Summaries each point I will repeat the problem that fresh graduate will face in the future and the solutions that could help them. By doing that, audience could remember the main issue in each point. The audience should remember that managing wealth is important to live happily in future. 3) Conclusion Summaries of entire presentation I will summaries the entire presentation by recalled my audience with all the main points that I already presented. Every problem and solutions will be repeated so that my audience will remember what my speech is all about until the end of the speech.
I will show great some entrepreneurs that have both specialties in engineering and business. Describe on reiterate the purpose and importance of the whole presentation to relate to your audience. I will reiterate this presentation to my audience by explaining to them that there is very important for us to start changing the myths that the knowledge that were thought in university right know are enough. It is because everyone including engineering student should well prepared themselves with basic economic skills. Q&A session
Questions that I anticipate from the audience * What type of knowledge that student should prepared? * What type of challenges that students will face in the future? Practice session How did I practice my speech? * I practice my speech mostly in my room roughly about 10 times. Sometimes I also practice in front my friends. Area of my speech needed improvement * I need improvement in delivery especially in pronunciation. Time limit Without consider the environmental effect that I will have during the presentation, from the practices, I managed to stay within the time limit.

Welfare of economics

Advertising Is form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some actions upon products, Ideals or services. It includes the name of a product or service and how that product or service could benefits the consumer, to persuade a target market to purchase or to could benefits the consumer, to persuade a target market to purchase or to consume that particular band.
These messages are usually paid for by sponsors and viewed via various media. Advertising can also to communicate an idea to a large number of people In an attempt to convince them to take a certain action. Marketing or selling costs Marketing or selling costs include all costs necessary to secure customer orders and get the finished product into the hands of customers. These costs are often called order getting or order filling costs.
Examples of marketing or selling costs include advertising costs, shipping costs, sales commission and sales salary. Administrative Administrative costs Include all executive, organizational and clerical costs associated with general management of an organization rather than with manufacturing racketing pr selling. Examples of administrative costs include executive compensation general accounting secretarial public relations and similar costs involved in the overall general administration of the organization as whole (Thompson 1985).

Non Profit organizations may rely on free modes of persuasion such as a public services announcement. Advertising, In Its non- commercial guise, is a powerful educational tool capable of reaching and motivating large audiences. “Advertising justifies its existence when used in the public interest – it is much too powerful a tool to use solely for commercial purposes.
Public service advertising, non-commercial advertising, public interest advertising, cause marketing, and social marketing are different terms for (or aspects of) the use of sophisticated advertising and marketing communications techniques (generally associated with commercial enterprise) on behalf of non-commercial, public Interest Issues and initiatives. Virtually any medium can be used for advertising.
Commercial advertising media can include wall paintings, billboards, street furniture components, printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, web opus, skywriting, bus stop benches, human billboards and forehead advertising, magazines, newspapers, town criers, sides of on setback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens, musical stage shows, subway platforms and trains, elastic bands on disposable diapers, doors of bathroom stalls, stickers on apples in supermarkets, shopping cart handles (exacerbating), the opening section of streaming audio and video, posters, and the backs of event tickets and supermarket receipts. Any place an identified” sponsor pays to deliver their message through a medium is advertising.
Digital Advertising Television advertising The television commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices television networks charge for commercial airtime during popular events. The annual Super Bowl football game in the United States is known as the most prominent advertising event on television. The average cost of a single thirty-second television spot during this game reached IIS$3. 5 million in 2012. Virtual advertisements may be inserted into regular arrogating through computer graphics. It is typically inserted into otherwise blank backdrops or used to replace local billboards that are not relevant to the remote broadcast audience. More controversially, virtual billboards may be inserted into the background where none exist in real-life.
This technique is especially used in televised sporting events. Virtual product placement is also possible. Radio advertising Radio advertising is a form of advertising via the medium of radio. Radio advertisements are broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving device. Airtime is purchased from a station or network in exchange for airing the commercials. While radio has the limitation of being restricted to sound, proponents of radio advertising often cite this as an advantage. Radio is an expanding medium that can be found not only on air, but also online. According to Arbitration, radio has approximately 241. Million weekly listeners, or more than 93 percent of the U. S. Population. Online advertising Online advertising is a form of promotion that uses the Internet and World Wide Web or the expressed purpose of delivering marketing messages to attract customers. Online ads are delivered by an ad server. Examples of online advertising include contextual ads that appear on search engine results pages, banner ads, in text ads, Rich Media Ads, Social network advertising, online classified advertising, advertising networks and e-mail marketing, including e-mail spam. Product placements Covert advertising is when a product or brand is embedded in entertainment and media.
For example, in a film, the main character can use an item or other of a finite brand, as in the movie Minority Report, where Tom Cruiser’s character John Anderson owns a phone with the Monika logo clearly written in the top corner, or his watch engraved with the Bulgaria logo. Another example of advertising in film is in l, Robot, where main character played by Will Smith mentions his Converse shoes several times, calling them “classics”, because the film is set far in the future. L, Robot and Spacewalks also showcase futuristic cars with the Audio and Mercedes-Benz logos clearly displayed on the front of the vehicles. Cadillac chose to advertise in the movie were used

Transforming of South Korean Economy and the “Chaebols”’ Riddle

Nadezhda Sarelska ID: 10210680317 EMA- Chinese Economy School of Economics Fudan University Transforming of South Korean Economy and the “Chaebols”’ riddle Political Economy of East Asia Term Paper Professor Dingping Guo October, 2012 Shanghai, China Table of contents: 1. Introduction 3 2. The beginning of Korea 4 2. 1. Collective will for success of South Korea 6 3.
South Korea and modern economy 7 3. 1 Reasons behind Economic growth 8 4. The Birth of “Chaebols” 9 4. 1 Factors of Development of “Chaebols 10 4. 2 “Chaebol” and 1977 Asian Crisis 14 5. Case Study of Samsung Group 15 6. Conclusion and Recommendation 19 . Reference List 21 1. Introduction South Koreas ‘s significant transformation – an evolution from impoverished to high-income economy during three decades starting from 1960s to 1990s is one of Asian phenomena famous as -“Four Asian Tigers”- a term used to describe the tremendous performance of four Asian economies – Hong Kong, Singapore, Taiwan and South Korea. Between the early 1960s and 1997s, the four Tigers rapidly industrialized and maintained sustained high growth rates (Ref*1).
Today, Korea is an example for a market economy, one highly developed country which ranks 15th in the world by nominal GDP and 12th by purchasing power parity (PPP), identifying it as one of the G-20 major economies(Ref*2). In 2010, Korea’s trade volume amounted to US$892 billion, ranking the country the 7th largest exporter in the world(Ref*2). Korea’s shipbuilding sector currently accounts for about 34% of the world’s total shipbuilding orders. As a major auto manufacturer, Korea produces over 4. 2 million vehicles annually.

The success of South Korea is often called “The Miracle on the Han River” and it has been identified by several factors where the presidency of Park Chung-Hee (1961-1979) played a vital role. Under the President Park Chung-Hee’s era, the government played a dominating role in a country’s economy. His policies of shifting away the focus from import substitution strategies towards export- orientated industrialization and technical progress, favored the development of South Korean economy and establishment of a strong business environment appeared with a result of large conglomerates called “Chaebols”.
To be defined as a “Chaebol”, an organization should satisfy two conditions: it should be owned by family /relatives members and it should have a diversified business operations ( REF*3). The “Chaebols” have created such a diversification that, as Anna Fifield said in her article, – “You can be born in a Samsung hospital and end up in a Samsung mortuary” (Ref*4). The giants of yesterday are one of today’s best brands in technology field as Samsung, Hyundai and LG. They and the other “Chaebols” was the core of Korean spectacular growth and still their success can be accepted as South Korea’s success.
How and why Korean’s economy was shaped by historical events and what are the reasons behind “Chaebol” establishment? What was the impact they have created over South Korean economy and could we say “Chaebols”are the reason for “the Miracle on the Han River. “? Case study of Samsung will be performed in order to give us better understanding of one of the largest and famous “Chaebol” ever and its influence over South Korean economy. 2. The Beginning of Korea The land of the morning calm“–this is the meaning of Korea’s original name “Choson”.
The time of establishment of this country and its exact geographic location is still a matter of scientific research even it often believed that human activity in Korea can be traced far into the Pal eolithic period, about 500,000 years ago (Ref*5). In Asia, Korean’s history is known to be second longest following that only of China. (Ref*6) But there is a belief, according to the Korean legend, that the God-King Tangun – a legendary figure born of the son of Heaven, (which existence is still disputable among scholars) and a woman from a bear-totem tribe founded the Korean nation in BC 2333(Ref* 7).
Not many present- day nations can be praised with so long and rich history even this country’s time has been shaped by difficult and frequent invasions ( as many as 900 by some accounts)( Ref*6), wars and influence from its neighbors. The beginning was often said to be the time of “The Three Kingdoms” – “Silla” “Goguryeo” and “Baekche” where “Goguryeo” was known to occupy the Northern part of the peninsula from the Chinese border to the Han River, while “Silla” and “Baekche” have dominated the Southern regions (Ref. 11).
But in 668 AD “Silla” (668-935) unified the Korean peninsula and start developing a country with an economy, a culture and Buddhist philosophy. ” Koryo dynasty” from which the English name “Korea” originates succeeded “Silla” in 935 and the country’s boundaries reached level which is very similar to its current size today. “The Choson dynasty” displaced “Koryo dynasty” in 1392 and moved the capital to Hanyang-gun (today’s Seoul) in 1394. Soon after Confucianism replaced Buddhist philosophy and was adopted as the country’s official religion and “Hangul” -the Korean alphabet was invented.
Korea’s history was filled with prosperity, but also a lot of suffering coming from external forces like Japan, Mongolia and China and this provoked Korean closed-door policy, famous as “Hermit kingdom”. In the beginning in 1876, the Japanese forced a series of Western-style trade agreements on Korea, leading to Japan’s annexation of the country in 1910. Due to growing anti-Japanese sentiment, in 1897 King Kojong declared himself to be emperor of the Taehan Empire, an independent Korea (Ref*9). Eventually this move helped Korea to preserve its own language, culture, traditions and sense of identity (Ref*6).
However, during the Russo-Japanese War (1904-1905), Japanese forces moved onto the peninsula despite Korean declarations of neutrality and Japan-Korea Protection Treaty in 1905 gave Japan virtual control over Korea. Korea was colonized by Japan in 1910 year, but exactly at that time many modern aspects of Korean society emerged included rapid urban growth and infrastructure, the expansion of commerce, and forms of mass culture such as radio and cinema, which became widespread for the first time. Later had to endure the Korean War (1950-53), but it has achieved amazing economic growth in a short period, dubbed “the Miracle on the Han River. (Ref* 2) 2. 1 Collective will for success of South Korea During Japanese influence starting 1920 and later (1937-45) – harsh measured reintroduced by Japanese, Korea had to go through a lot of confusion coming from changes in values and social order after Japanese colonial rules was introduced (Ref* 6&10). During its occupation, Japan built up Korea’s infrastructure, especially the street and railroad systems. However, the Japanese ruled with an iron fist and attempted to root out all elements of Korean culture from society.
People were forced to adopt Japanese names, convert to the Shinto (native Japanese) religion, and were forbidden to use Korean language in schools and business. Also the temp of development was rapid and the country’s population was inexperienced and unprepared in economic aspects and knowledge because was coming for monarchy of over 1000years compared to Europe and Japan. Ideological confrontation was visible in Korean society and soon after status of families with long traditions; history and wealth were no more subjects of respect and power, society followed the “money ideology” which was a way of survival.
Soon after the democracy was introduced by USA in August 15, 1945, with the end of World War II, The Soviets and Americans failed to reach an agreement on one unified country and government, so in 1948 two separate governments were established – the Republic of Korea in Seoul called -“The American zone”, and the Democratic People’s Republic of Korea in Pyongyang, North Korea called -“The Soviet zone” (Ref* 10).
This is how the challenge for South Korea and “The American zone” has started with era of knowledge, where an investment of fond and solid education and hard work were again respectable, thus offered an equal chance to success to everybody despite their origin and status. The whole society desired a better life and this is how they have adopted the concept that “economic development is a cultural product representing the collective will of the people” (Ref*6). 3. South Korea’s modern economy
In July 1953, after three years of bloody fighting in which around three million Koreans, one million Chinese, 54 000 Americans and several other nations including Turkish were killed, the Korean War ended in a truce with Korea still divided into two mutually antagonistic states – American influenced zone in South and Soviet influenced in North, which were separated by a line called “De-Militarized Zone” (DMZ). Korea has remained divided ever since(Ref*10). After the official division of Korean peninsula, a modern economy study was introduced by USA in South Korea which was differentiated from Marxism idea popular in Japan.
However, after 1965 when Japan and South Korea improved their diplomatic relationships, Marxism prevailed into their economy simply because was more community oriented, instead individualistic – something which was and it is a basic concept of Confucianism which was influenced South Korea in their earlier stages of history. The ideas of individualistic consumer with no intervention of government for business were too far away of Japan’s model of successful rapid grow which later in years South Korea adopted and adapted into their economic situation Table 1 – Comparison between USA and East Asian capitalism 3. 1 Reasons behind Economic growth
Mutual desire for better standard of living and a chance for success were deeply rooted into society’s mind, after the country was left in poverty in the end of Korean War in 1953. The significant growth of South Korea’s economy which became independent in 1945 began in May of 1960 – when Park Chung Hee and a group of other military officers of the South Korean army took over the control of the government or “coup d’etat”(Ref* 11). Soon after that in 1961 Mr. Park Chung Lee became president of South Korea and the strategic planning for economic development started – focusing on lifting up the South Korean economy out of poverty.
The strategy Park Chung Lee developed was based on that of South Korea’s nearest rivals Japan rather than Western policy advisers. (Ref*12) Export –oriented policies were implementing as a tool trying to focus the shift into international business. South Korea simply had to survive and find a way to expand economically, but looking outside of its peninsula because with its small and limited land and natural resources caused from its mountainous terrain and climate, as well the small size of the domestic market shaped the Paradigm shift in their economy”. (Ref*13) The emphasis was added on communal productivity, education and quality as Japan did with examples of so called Keiretsu. Another measure was the military-dominated government which installed itself after the coup in 1961 quickly announced an end to the corruption of the First Republic and its intention to use economic growth and development through industrialization to legitimize its authority (Ref* 14) and implementing state policies providing the basis for successful late industrialization( Ref*15).
Twenty four of the leading businessmen were arrested. The founder of Samsung, Lee Byung Chull, escaped this treatment only because he was out of the country at the time. When Lee Byung Chull returned to Korea he met with Park and agreed to cooperate with Park’s economic development program. Later Lee and other prominent business leaders offered to donate all or a substantial portion of their fortunes to the government. They ended up paying fines but not giving up their businesses (Ref* 15). 4. The Birth of “Chaebols”
In the process of export-led market economy the government ruled by President Park Chung Lee for 18 years reign (1961-1979) decided to work with five- year’s plans, starting the first one in 1962 which was focused on developing the industrial base and setting the stage for South Korea’s economic prosperity. (Ref* 16) After this step, the government encouraged their local, domestic business enterprises to work and expand by choosing which markets must be developed and allow entry only to several of those local companies.
To be accepted as “Chaebol” a company need to be family-owned and usually this type of organization is influenced by growth-oriented family-centered business, where family male has the dominant role in a hierarchy and almost unlimited power to which his subordinates are loyal (Ref*17). This idea of Pyramid frame of working had an origin of Confucianism which teached several concepts as social hierarchy, harmony and “the concept of saving face”, kindness and care; modesty and diligence.
For instance, in Japanese companies “had more visible mutual obligation which is unlikely to be seen in “Chaebol” structure, where the boss is superior compared to employees. As an incentive for local companies, financial motivations were offered such as low- interest loan, tax breaks and others simply because all the banks were nationalized as well for the purpose of economic development. This is how so called “Chaebols” -which literally mean “business association”, were born into South Korean history. 4. 1 Factors of Development of “Chaebols”
With its fast speed of industrialization, the economy nourished and supported heavily “Chaebols” which were often “family-centered” enterprises. Their brands, products and companies diversified quickly and soon they were responsible for the majority of the exported products which simply meant that private owned companies were responsible for biggest share of South Korea economic development. Not only have they expanded in international level, but also started to grow bigger in local land. Brands like Samsung, Hyundai and LG were a measure for quality, technology and innovation.
We could say that even today the same conglomerates are still driver force in Korea. Another “significant economic decision made by government’s planners was to focus market development through export-oriented industrialization “(Ref* 18). Because of its enough to produce, but less to consume population and still not existing local markets, all efforts were putting into creating international markets where South Korea could have an advantage and generate a profit. The results started to be visible in fast digit rate at average 10% annual growth between 1962 and 1994.
The large and fast expanding multinational conglomerates enjoyed strong support from government and good success of foreign markets. While the contribution of agriculture to the economy declined from 37% in 1965 to 3% in 2008, the industrial sector increased its contribution from 20% to 37%, that of services from 43% to 60% and exports remain the cornerstone of this economic development with their share in GDP accelerating from 8% in 1965 to a whopping 53% in 2008(Ref* 13). Table 2 Share of Top 30 “Chaebols” in South Korea’s GDP
Source “Chaebol Powered Industrial Transformation” by Ahn Choong-yong, Korea Institute of Public Administration and Korea Times. April 2010 All the conglomerates were liberally permitted to access foreign loans promoted by the government to support fast-paced economic development, while in contrast outflows of domestic capital were effectively curbed ( Ref* 19). The Foreign Direct Investment (FDI) was also restricted in order to keep positive economic growth, except in cases where technology and know-how were involved.
In exchange of this, all the “Chaebols” were obliged to fulfill ambitious plans and to develop for the next three decades. This financial help actually protected the companies from bankruptcy and soon they turned on into “octopus”, regulating and expanding into more and more branches, industries and brands, even not related to their core scope of business; increasing their power and wealth into public level and became too difficult their decisions to be influenced. For example, a ship building company could decide to enter into a market of cosmetics products or pharmaceutical industry.
Of course, simultaneously they opened more factories, created jobs and promoted economic boom. Basically they became a voice in South Korea. In this manner they grew so large that the top fifty “Chaebols” had sales equivalent to almost 94% of the total national GDP by 1984( Ref*20). In fact as a second measure introduced from President Park Chung Lee was diversifying of “Chaebol” into heavy and chemical industries, simply to be protected from North Korea . ( Ref*21)As we can see on Table 2, their share in GDP increased dramatically from 9,8 % in 1973 to 29,6% 1989
Table 3 The Growth Rate and Total Factor Productivity by country According to International Institute for Management, South Korea is ranked 5th in terms of education level, with 40 percent of the population completing higher education after high school. This movement into very strong foundation of education was resulted of democracy brought by USA , President Park Chung Lee’s reforms, but also Confucianism’s which, was earlier in history, influenced the social mind of South Korea. Understanding that high level of education and qualified human resources are powerful driver of economy and quality was one of the best tools for sustainable growth. Education system which was a resource highly appreciated by traditional values in the society and was a chance for everybody in quest of success. Moreover, South Korean workers work more hours of the day than most countries reflecting 10 to 13 percent increases in productivity per year( Ref*22). The willingness of hard-working and co-operating were very important for the efficacy and quality of the economic boom.
Krugman (1994) claims that the “Four tigers” achieved the rapid growth rate because they successfully managed the resources associated with high employment share to population, efficacy of work, up-graded educational standards and the high rate of investment(Ref*19). Looking into Table 3, it is clear that South Korea achieved the highest grow rate of 8,5% per cent annually from 1960 to1994. Table 4 Domestic Saving per GDP (per cent) Another tool which helped “Chaebols” to flourish was high-saving ratio, which was initially originated from uncertain life conditions and missing social system.
In Korea the social welfare system was not well established (Ref*23). In this kind of situation, similar to China’s beginning, individuals are trying to save as much as they can in order to ensure their future. Furthermore, high savings and investments also contribute to capital accumulation. For example, Kim and Lau (1996) extend their input-analysis which covers Indonesia, Malaysia, Thailand and the Philippines reveal that capital accumulation associated with high domestic saving and investment level significantly contributed to strong growth in East Asia.
Also, Collins and Bosworth (1996) emphasize that saving, investment and government policy are the main contributor to high capital accumulation ( Ref. 19) 4. 2. “Chaebols” and 1997 Asian Crisis The financial crisis that hit Asian countries in early July 1997 was an unexpected situation for “Four Tigers” including South Korea which were witnessed a rapid and sustainable growth in several decades in row, offering high standard of living into their citizens, high annual growth and successful export economy. They were accepted and perceived as models of economic boom.
A lot of foreign investment were flowing and then government help like bank loan , preferential policies and incentives which were used to stimulate the economy through so called multinational companies “Chaebols” . All this led to excessive diversification, a debt, a difficulty to be measured the credibility of a company and its real proportion due to unlimited bank loan with 0 interest they were given; lack of business transparency, superior managerial behavior and more. All these reasons led to so called” “Asian Contagion”, this was a series of currency devaluations and other events that spread through many Asian markets.
As a result of the crisis, South Korea adopted different protectionist measures, government and financial reforms to ensure the stability of their own currency and reforms inside of “Chaebols” structures. ( Ref*24). 5. Case of Samsung Group Samsung Electronics integral part of is a multinational, family-owned company with headquarters located in Samsung Town in Seoul called “Samsung Group”. Samsung Group has grown to become one of the world’s leading and respectuful electronics companies, specializing in digital appliances and media, scycrapers, petrochemicals, fashion, medicine, hotels, semiconductors, memory, and system integration. Ref *25). As journalist Anna Fifield said in her article, – “You can be born in a Samsung hospital and end up in a Samsung mortuary” (Ref*4). They operate in more than 65 different countries as sales and plants; also they are responsible for appointing for more than 170,000 employees worldwide. In 2009 the company was classified as largest IT Company in world with biggest sales revenue of memory chips, LCD and LED displays. For TV and smart phones devices markets, Samsung is in top position, especially after launching Galaxy 2 Note competing with Apple and theirs I pad mini and I phone.
Its growing share in smart phones and tablet’s market is very high with around 20% for the first quarter in 2011 compared to 16, 1% in same time previous year. [pic] Brief history and Economic Overview The Samsung Group was established in 1938 in Taegu, Korea by Byung Chull Lee and its main scope of business was export of fish, vegetables and fruits to Mainland China. In 1951, Samsung Corporation was officially established with name Samsung Moolsan which means “Three Stars” (Ref*25).
The company started to grow and later in 1958 when Ankuk Fire& Marine Insurance as well DongBang Life Insurance in 1963 was acquired, the name was changed into Samsung Fire& Marine Insurance and respectfully Samsung Life Insurance. In 1969 Samsung Electronics and Samsung Sanyo Electronics were established, but in 1977 they also merged and diversifying started into heavy, chemical, shipbuilding, IT and other industries. The reasons behind such a diversification could be the same between all “Chaebols” examples, but very true for Samsung.
They assumed that if investing into new business or a product will avoid potential risk of a single bankrupt, gaining knowledge for a technology and know-how patents; competitions and bigger market share and another factor could be because of persuading better wealth in order to ensure all the family members. ( Ref* 21) Thanks to its clever moves and business/political decisions Samsung developed excellent domestic and international market and 1974 they bought 50% of share of Korea Semiconductors, which gave them the first place of semiconductor manufacture SWOT ANALYSIS
Samsung Group is one of the largest “Chaebols” in South Korea with world-class quality products and brand. The company has dominance into digital and electronic components markets, with more than 40 existing affiliated companies. Fig. 1 SWOT ANALYSES – Samsung Group STRENGTHS Strong brand and loyal customers; Leader in several markets as IT and electronics; Excellent supply chain; Capital; Confidence; Trustworthy and Credibility; Innovation; Technology level and skilled worker HR; Product Strategy WEAKNESS Serious Competition; High Marketing cost; Managerial Behavior; Centralization; Corruption
OPPORTUNITIES Good economic conditions; highly disposable income local market; Government support; International relations and business expanse; Technology development THREATS Patent’s legislations; Regulatory issues; Technological changes; Economic Crisis; China Table 5 Samsung Electronics Marketing Expenses Marketing Mix for Samsung Group – 4P Product Strategy – Samsung’s diversified line of products in 3D market for example which is offering LTD, LED and Plasma TV is one of best positioned into product strategy.
Their electronic market is also very good example for product strategy which is one of their strengths in SWOT analyses Focusing on unique products and innovation to compete like 3D Plasma TV with unique design and functionality allowed Samsung to became a leader into this direction. Another very well presented idea of their product strategy is smart phone Galaxy Note 2 which competes directly with Apple’s I pad mini. Among some of the benefits of Galaxy Note 2 is its display, price, Android operating system, Bluetooth, slightly lighter, removable memory, flash, front camera/rear camera and few more. Ref* 26). At the moment this is the best tablet produced by Samsung and as product strategy unique was chosen and improvement inside of the functionality. Price strategy – Samsung strategy according their pricing is being available for more consumers than I pad mini/ I phone, which is persuaded as a luxury and fashionable product, thus its price differentiates – sometimes even double less expensive. Another factor regarding price is that Samsung produce a big amount of it’s and also Apple’s components’ which results into higher cost and price for Apple’s products on market.
Thanks to diversification mentioned earlier we can see that Samsung actually have the advantage to produce by themselves most of the electronic components of their smart phones/ tablets, but also to their competitors, so they became superior in the Pyramid. Promotion strategy: This is one of most weak part of SWOT Analyses of Samsung, because it cost billions of USD in advertisements and promotions which are conducted in three continents – Europe, Asia and USA. 8 billion USD were spending in Europe compared to 3 billion in Asia and 12 billion in North America.
Using famous American singer/groups such as Black Eyes Peas into their promotion strategy is adding high cost for the “Chaebol”. Product Placement: The strategic idea here is that Samsung tablets Galaxy 2 Note are not positioned on the luxury market, but at the same time will not be sold in low-level stores as Wal-Mart. Targeting young people across three continents, Samsung focused on uniqueness, creativity, design and promotion. Apple’s product focuses on luxury and fashionable segment of the market where consumers are ready to pay more premiums. Conclusion and Recommendations Transforming South Korea’s economy was an experiment and example of “Tiger measures” conducted by the government of President Park Chung Hee in quest of best way to expand the economy in sustainable way and improve the quality of people equally. Focusing on export-oriented economy with solid foundation of education, willingness of hard-work, high saving ratio and allowance of private family- own enterprises in national sectors and important industries helped “The Miracle on the Han River” to become history of success. Chaebols” were and still are enormous part of South Korean Economy, which for three decades created a country -an example for a market economy, which ranks 15th in the world by nominal GDP and 12th by purchasing power parity (PPP), identifying it as one of the G-20 major economies (Ref*2). In 2010, Korea’s trade volume amounted to US$892 billion, ranking the country the 7th largest exporter in the world(Ref*2). Korea’s shipbuilding sector currently accounts for about 34% of the world’s total shipbuilding orders. As a major auto manufacturer, Korea produces over 4. million vehicles annually. The majority of export related goods are produced by top “Chaebols” companies which appeared in late 60s after government of Park Chung Hee offered them unlimited incentives and industries in exchange of economic growth with 10% on average. The impact of those conglomerates was measurable and visible, even though 1997 Asian crisis shaped up them and reformed these “octopus” inner structures by implementing more transparent policies and less corruption. Nowadays “Chaebols” are still the driver of South Korean’s income and economy.
As recommendation for the largest “Chaebol” at the moments, Samsung Group- focusing on innovation and technology improvement will be useful, because China is starting to emerge and also other competitors are weak point for Samsung. Combing their efforts could be a good strategy in order to protect South Korean’s reputation and export share. Focusing on domestic market and not being so dependent on export. Or being sure that export is enough diversified to keep the profit. Reducing Marketing cost via cheaper, but creative techniques to attract and keep customers. Because for quality there is always a market! Reference List: . Fogel, R. W. (2005). Reconsidering expectations of economic growth after World War II fromthe perspective of 2004. IMF Staff Papers, Vol. 52 Special Issues, Washington, DC:International Monetary Fund. 2. Published by Korean Culture and Information Service Retrieved October 2, 2012, from http://www. scribd. com/doc/85568568/Facts-about-Korea-English 3. Retrieved October 3, 2012, from https://www. fsb. muohio. edu/mis399/student/Reading%20files/history-china-korea-japan. htm . 4. Fifield, A. (March 26, 2008). http://www. ft. com. In Korea’s Bulldozer must clean up the Chaebol. Retrieved October 14, 2012, from http://www. t. com/intl/cms/s/0/97182b8e-fb3f-11dc-8c3e-000077b07658. html#axzz2LbBBYYrW. 5. http://www. lifeinkorea. com/information/history1. cfm 6. Choo, Myung-Gun. 2000. Chapter 4: South Korea: the Tragedy of Partition and the Response, in The New Asia in Global Perspective, p. 74-5 7. https://www. fsb. muohio. edu/mis399/student/Reading%20files/history-china-korea-japan. htm. Retrieved October 3, 2012 8. ,, 9. http://www. lifeinkorea. com/information/history1. cfm 10. http://afe. easia. columbia. edu/main_pop/kpct/kp_koreaimperialism. htm 11. Education, Wikipedia , Retrieved October 9, 2012, from http://en. wikipedia. rg/wiki/Park_Chung-hee 12. Hattori, T. ,1986 “Comparison of Large Corporations in Korea and Japan, “ in Hakjon Lee and Kuhyun Chung, eds. , The structure and strategy of Korean Corporation ( Seoul, Korea: Bupmunsa, 1986)p. 151 13. November,2010. , The Chaebol in South Korea: Spearheading Economic Growth. ,Thomas White International, Ltd, Retrieved October 12, 2012, from http://www. thomaswhite. com/explore-the-world/emerging-market-spotlight/2010/south-korea-chaebols. aspx p. 2 14. Kae H. Chung, Hak Chong Lee, and Ku Hyun Jung, Korean Management: Global Strategy and Cultural Transformation ( Berlin: Walter de Gruyter, 1997) p. 15. Retrieved October 15,2012, from http://www. sjsu. edu/faculty/watkins/park. htm Sources: • Clifford, L. M. Troubled Tiger: Businessmen, Bureaucrats, and Generals in South Korea, M. E. Sharpe, Armonk, New York, 1994. • Hee, C. P. To Build a Nation, Acropolis Books, Washington, D. C. , 1971. • Hee, C. P. The Country, The Revolution and I, Hollym Corporation Publishers, Seoul, Korea, 1970. • Hee, C. P. Our Nation’s Path: Ideology of Social Reconstruction, Hollym Corporation Publishers, Seoul, Korea, 1970. 16. Jasper, Kim Crisis and Change : South Korea in a Post-1997 New Era ( Seoul: Ehwa Womans University Press, 2005)p. 7 17. March, 2006. , The Case of Chaebol Cult, Asian Management, Retrieved October 5, 2012, from . PDF version 18. Jasper, Kim Crisis and Change : South Korea in a Post-1997 New Era ( Seoul: Ehwa Womans University Press, 2005)p. 17 19. http://ecostat. wordpress. com/2012/08/19/capital-accumulation-or-total-factor-productivity/ 20. Fields. J. K. , Enterprise and the State in Korea and Taiwan ( Cornall University Press, 1995) p. 35 21. Ahn(2001), pg420and Pn, E. ,”South Korea’s role in a dangerous neighbourhood” http://www. nytimes. com/cfr/international/slot3_021106. html 22. (2006, 03). Korean Economy. StudyMode. com.
Retrieved October 15, 2011, from http://www. studymode. com/essays/Korean-Economy-83006. html 23. Choo, Myung-Gun. 2000. Chapter 4: South Korea: the Tragedy of Partition and the Response, in The New Asia in Global Perspective, p. 79 24. Education, Investopedia Retrieved October 18, 2012, from http://www. investopedia. com/terms/a/asian-financial-crisis. asp#axzz29i6XywR2 25. SAMSUNG Group Official WebPage, Retrieved October 3, 2101 from http://www. samsung. com/us/aboutsamsung/corporateprofile/history06. html 26. http://tablets. venturebeat. com/compare/46-123/Apple-iPad-2-with-Wi-Fi-3G-vs-Samsung-Galaxy-Note-10-1

PEST Analysis of Australia

PEST analysis: Political: Australia is a type of democratic country and it is stable politically. The characteristics of Australian government such as transparency and having low level of corruption, and being internationally competitiveness helps Australia to have the lowest rank of political instability in Asia-Pacific and it standing on bottom fourth position in the world in political instability (Australian government 2009). Therefore this factor is an advantage and an opportunity for the companies that operate within Australia and for the people who invest in these kinds of companies. Economic:
Australia has one of the most stable economies in the world. According to Economist magazine Australia’s GDP in 2012 was about 1. 5 trillion USD and it becomes the 12th country in the world. During the last global financial crisis in 2007 most of the countries such as US, and European countries were suffering and their economic factors such as GDP, Interest rate, growth, inflation went downwards and were in recession, but Australian government could control the situation by implementing strategies that helped small businesses and individuals and kept the economy stable (Economist magazine 2013).
So the Australian government made an opportunity out of the financial crisis which was a threat for the whole economy and now is one of the best countries for investment with a very low risk. Social: According to Australian Bureau of Statistics census in 2011 there was 3. 5 million student in this country both international and domestics (Australian Bureau of Statistics 2013). So these students are the customer base for Mynetfone at the moment as residential customers and they can be the potential business users in near future.

As Australia has a good rate of economy growth, more businesses wanted to operate in this country and as a result they will need more services for their business such as internet, phone etc. Technological: Mynetfone owned Symbio network in 2009 which has the largest VoIP network providing wholesale carrier service to Australian industry in Australia that using number porting, cloud based hosted PBX service, call termination, call origination and many other infrastructure enable services. The Symbio work in wholesale and Mynetfone work on retail sections (Mynetfone 2013).

Hypermarket Impact on Small Retailer

ABSTRACT Kedai runcit or sundry shops have been a standard feature of our housing estate landscape ever since there were housing estates. These mom-and-pop operations have been selling to their surrounding residents everyday essentials such as groceries, fresh produce, poultry, toiletries, etc. Their reasonable price and close distance have made them popular among residents of the housing estates in which they are located. Lately, though, their popularity has been on the decline due to competition from wholesale markets or hypermarkets which can offer the same items cheaper and conveniently under one roof.
Local and foreign-bred hypermarkets such as Giants, Tesco and Carrefour have been invading our towns, big and small, leaving the traditional sundry shops fighting for their business. Many of these small-scale individually-owned shops have since closed their operations permanently or moved them a little further outskirt of town, away from the hypermarket catchment. Just how serious is the impact of these hypermarkets on the operation of the sundry shops has so far not been fully investigated in Malaysia although many studies have been carried out elsewhere.
Thus, this paper presents a study that has been carried out by the authors to investigate how serious the impact is in Johor Bahru. A sample of three hypermarkets was chosen for this study. Using GIS, we spatially showed the annual changes in the density of sundry shop licenses issued by the local authority within the catchment of each hypermarket, three years before as well as three years after the inaugural date of the hypermarket. Also using GIS, we corroborated the decline in the number of sundry shops within the surrounding housing estates with the residing addresses of the surveyed customers of the hypermarkets.

The results obtained confirmed that the operation of hypermarkets does contribute to the decline in the number of sundry shops and the degree of the decline decreases radially outward from the location of the hypermarkets. The findings from this study suggest that some rethinking needs to be done about the manner in which hypermarket licenses, or sundry shop licenses for that matter, are issued. Even our current policy of allowing a certain percentage of new housing development to be set aside for shoplots may also need to be reviewed.
Keywords: Hypermarkets, sundry shops, GIS spatial analysis 1. INTRODUCTION Kedai runcit or a sundry shop is any shop that sells groceries and other daily items directly to its customers in small quantity (Osman, 1988). Normally, sundry shops are owned by individuals or shared by several individuals and offer limited number of items and quantity. In Malaysia one can find sundry shops in almost every housing estates and villages and they normally have a limited cathment area.
A hypermarket, in contrast, is a big-scale retail store that offers a variety of goods and services all conveniently under one roof (Duncan, Hollander and Savitt, 1983). A hypermarket commands a wide catchment area and it is normally owned by big companies who have numerous branches of the hypermarkets in many places. Among the more-popular chains of hypermarket operating in Malaysia are the locally-owned Giant Hypermarkets, and foreign-owned Tesco Hypermarkets and Carrefour Hypermarkets.
Like in any modern country, hypermarkets in Malaysia have been expanding their operation to meet the demand of current generation for quality, convenience, product variety and long operation hours (Malaysian Ninth Plan, 2006). However, there are ever growing concern on the negative impacts of hypermarkets on the business of nearby neighborhood sundry shops (Johor Structure Plan 2002-2020, 2005). This is supported by Bennison & Davies (1980) and Seiders & Tigert (2000) whose study concluded that a hypermarket did have a negative impact on the growth of small sundry shops in the area.
In spite of the same concern in Malaysia, there have been no study to investigate the spatial extent of the impact. Thus, a study was set up by the authors to investigate the spatial extent of the impact and also to find out the factors that attract customers to hypermakets, leaving their neighborhood sundry shops struggling for business. 2. OBJECTIVES The objective of the study was to spatially investigate the impact of a hypermarket on the operation of the surrounding sundry shops.
In order to achieve the objectives the following tasks needed to be carried out: 1) identifying the suitable samples of hypermarkets; 2) identifying the market catchment of the hypermarkets; 3) collection of data pertaining to the number of business licenses issued to sundry shop operators within the catchment areas three years before as well as three years after the operation of the hypermarkets; 4) identifying factors that influence the decisions by the customers to shop at these hypermarkets.
The method used to conduct the study is discussed in details in the following section. 3. METHOD The first step of the study was to choose a number of hypermarkets as units of analysis. Among the criteria taken into consideration in choosing the hypermarkets were: 1) the year they were opened for business to ensure that the chosen hypermarkets have been operating for at least three years; 2) the distances between each other to avoid overlapping of the market catchments; and 3) the types of goods sold at the hypermarkets so that they match those sold at the neighborhood sundry shops.
Of the total of about ten hypermarkets in the City of Johor Bahru, three hypermarkets met these criteria and were chosen for the study. The three hypermarkets were from a locallygrown hypermarket chain known as Giant Hypermarket that are located in Southern City (in Johor Bahru City Centre), in Plentong and in Skudai (10km outskirt of Johor Bahru) (Refer Figure 1. 0). These three hypermarkets served a number of residential areas, known in Malaysia as taman perumahan or housing estates, located between 0 – 20km surrounding them.
The next step was the distribution of questionaire sets to 200 customers per hypermarket (100 during weekday and 100 during weekend) containing questions concerning their home addresses and the reasons for choosing to shop at the hypermarkets. Their home addresses were then inputted into the city plan in GIS format to dertermine the extent of each hypermarket’s cathment area. One way to measure the impact of a hypermarket on the neighborhood sundry shops is to actually count the number of sundry shops that are in business several years before and after the hypermarket is in operation.
This is difficult to conduct since the monitoring would take as long as the number of years that we are interested in investigating. One way to expedite the process is to actually study the records of the number of annual business licenses issued to sundry shops and assume that each sundry shop that holds such license is actually operating a sundry shop. On this basis, the number of business licenses issued to sundry shops within three years before and after a hypermarket was in operation were obtained from the local authority (Johor Bahru Tengah Municipal Council).
The locations of the business premises of these licenses were then plotted on the city map and then rasterised into a 50m grid format to give a density of sundry shop licenses per fifty square meters for each of the three years before and after the operation of the hypermarkets. The changes in the sundry shop density were then used to explain the impact of the hypermatkets on the business of the sundry shops. 2. Impact on Neighbourhood Sundry Shops
If most of the customers that patronize these hypermarkets come from the surrounding housing estates as described previously, what is the impact on the sundry shops within those housing estates? The least impact would be slowing down of business for these neighborhood sundry shops while the worst impact would be closing down of business. While business slowdown can be investigated, this study only looked at the closing down of business by tracking the number of sundry shop licenses issued annualy by the local authority.
Since the impact normally materializes a few years after the opening of a hypermarket, records of licenses three years before and after the opening of the hypermarket were inventoried. Changes in the number of sundry shops were investigated by studying the changes in the density of sundry shop licenses for every 50m2 area surrounding each hypermarket. This is done spatially in GIS by rasterising the 50m2 area into grids and varying the color of the grids according to the number of licenses within the grids for each particular year. Figures 5. 0 – 7. show the annual changes in the density of licenses within the grids for all the three hypermarkets studied. In general, the figures show the decreasing trend in the densities of sundry shops even before the opening of these hypermarkets except for the Plentong Giant Hypermarket. The decreasing number of sundry shops surrounding the Southern City Hypermarket (Figure 5. 0) could be attributed to competition among themselves and the operation of another hypermarket chain at the very building occupied by the Giant Hypermarket before it took over the operation.
Meanwhile the decreasing number of sundry shops surrounding the Skudai Hypermarket (Figure 7. 0) could be attributed to the opening of another Giant Hypermarket just 4km away the year before the Skudai Hypermarket opened, apart from competition among themselves. The number of sundry shops surrounding the Plentong Hypermarket (Figure 6. 0) on the other hand was on the increase prior to the opening of the hypermarket. Investigation revealed that this was due to the opening of several new housing estates in the area which normally, as the case is in Malaysia, come with a number of shoplots.