Assigment 1 (MGT300) - Information Technology in Business (Diploma)

Assignment MGT300: Information Technology in Business

Title: Nike Sneakers

INTRODUCTION

The main purpose of this assignment is to discuss and to know the competitors of a product in a market that had been chose. Besides, I was assign to do some research about the cost strategy that had been used by this company in making sales of its products. An organization can follow Porter’s three generic strategies when entering a new market whereas Porter’s Five Forces will describe the barriers to entry for a new technology. Therefore, in this assignment, I choose one of sneakers industry as my topic for my assignment which is NIKE. Nike has always ruled the athletic apparel business with new styles and affordable performance gear. This company had previously divided the brand into three segments which are footwear, apparel, and equipment.

Nike Company use broad differentiation as their generic strategies. Broad differentiation is one of the three generic strategies in creating a business focus. Broad differentiation is consists of low cost and broad market. The price of this sneaker is at a high price because of a high quality of materials that had been used in making this sneaker. Although the price is high, it still affordable by most people to purchase it as compare to his current competitor which are Reebok, Adidas, Converse, and New Balance. Nike currently enjoys a 47% market share of the domestic footwear industry, with sales of $3.77 billion (Dusen, 1998). Because of many people preferred to choose Nike as their brand for footwear, and the price of sales is high, the company is placed under broad market and high cost.

DISCUSSION

Nike's new chief executive, Mark Parker explained to investors at Nike's annual analyst conference how the company aims to grow to $23 billion in revenue by 2011 by redefining Nike's relationship with its fast-changing, digitally driven consumer, and adding 100 new company stores worldwide in three years (Holmes, 2007).

The Porter’s Five Forces Model helps determine the relative attractiveness of an industry and includes the five forces which are buyer power, supplier power, threat of substitute products or services, threat of new entrants and rivalry among existing competitors. Rivalry among existing competitors achieving a highest cost position means that a company’s competitors will hesitate to compete on the basis of differentiation (Jaquier). The current competitors of Nike are Reebok, Adidas, Converse, and New Balance. They are competing with each other in the market. Because of increasing in supplier power, the buyer power is decrease. Buyer of the Nike sneaker is customers not only who involve in sport such as athletic but also for person who are not involve fully in sport. By making and adding some different on their goods, the number of customers can be increased and it can monopoly the market. “Product differentiation occurs when a company develops unique differences in its products with the intent to influence demand” (Baltzan & Phillips, 2010).

Achieving the high cost position provides more profit to the company especially after sales. The switching cost for this company is low because people still purchase their products even though the price is high. Nike’s buyers still stick to that brand because of the quality of sneaker which is last longer and comfortable when using it. The supplier power of Nike is low because the buying power is high. It means that, the volume of products to produce is in a big quantity. Treat to substitute the product is not existence because people only use sneakers during their sport. Treat of new entrants is low because it already exist the strong and well established brand name such as Nike, Reebok, Adidas, Puma, and other. 

The Porter’s three generic strategies are consists of broad cost leadership, broad differentiation, or a focused strategy. Nike Company applies broad differentiation in setting the product in market. Differentiation involves making products or services different from and more attractive than the competitors. “Organizations need a good research, development and innovation, the ability to deliver high-quality products or services and also the effectiveness of sales and marketing in order to make a success of a generic differentiation strategy” (About Us: Mind Tools, 2010). Differentiation strategies are focus in different kind of market segments. A company can earn fully above returns when it implements a broad differentiation strategy. In this broad differentiation, Nike is making some differences on their products, so that they are able to concurred the market area and win against their competitors easily.

Although Nike products are higher priced, it has done a great job of driving the perceived value of their products over the years through multi-product branding (About Us: Money Instructor). They are adding some additional value to their products so that it will be more different with their competitors such as making a light sneaker with multiple functions. In this generic strategic, their sensitivity on cost is low. They are focusing more on their products’ differences from their competitors. “With the introduction of dri-fit several years ago, they created the market for a type of specialty sweat resistant sportswear that enhanced performance. However, as long as Nike is first to market with these new product introductions, it will continue to enjoy the prestige and profits associated with an industry leader” (Smithson, 2007).

CONCLUSION

As a conclusion, Nike products are high price, and are in a broad market. Many people are already known about Nike when someone mentions about that brand. Nike has a higher level of consumers who have associated themselves with the brand, and will pay the higher price point to own something with the Nike Swoosh on it. Their customers already believing their products and stick to that product as they had experienced it themselves. Nike Company is a company that only gives and produces high quality of goods and products. This company is using broad differentiation as their generic strategic. In this generic strategic, the company are less or not sensitive about the changes of price in their products whether to increase or decrease. Nike Company is adding some different functions to their products in order to beat their competitors such as Reebok, Adidas, Converse, New Balance and other. Therefore, Nike is facing no or less problem during their sales such as when they want to increase their customers because their customer preferred their products more than their competitors’ products.

BIBLIOGRAPHY

About Us: Mind Tools. (2010). Retrieved February 19, 2010, from Mind Tools Web site: http://www.mindtools.com

About Us: Money Instructor. (n.d.). Retrieved January 25, 2010, from Money Instructor: http://www.moneyinstructor.com/art/pricingstrat.asp

Baltzan, P., & Phillips, A. (2010). Business Driven Technology. New York: McGraw-Hill/Irwin.

Dusen, S. V. (1998). About Us: Carolina. Retrieved January 25, 2010, from The University of North Carolina Web site: http://www.unc.edu

Holmes, S. (2007, February 7). About Us: Bloomberg Business Week. Retrieved February 19, 2010, from Bloomberg Business Week: http://www.businessweek.com

Jaquier, B. (n.d.). About Us. Ecofine. Retrieved January 25, 2010, from Ecofine Website: http://www.ecofine.com

Smithson, B. (2007, June 19). About Us: Seeking Alpha. Retrieved February 19, 2010, from Seeking Alpha Web site: http://www.seekingalpha.com

Prepared By:

Syahida Abd Aziz (2011)

Diploma in Business Studies

Universiti Teknologi Mara (UiTM) Perlis

Assignment 2 - Malaysian Economics (Diploma)

Question 1

Explain four (4) measures which may be undertaken by the government to overcome the problem of labour shortage in Malaysia.

Answer:

Because of high economic growth during the Sixth Plan Period, the demand for labour increased which finally lead to manpower shortage. The government implemented various measures in the Seventh Plan Period to overcome the problem of shortage of labour. The four measures to overcome labour shortage are:

Enhancing the productivity of labour

The productivity of labour could be enhancing through greater effort of skill training and retraining. The new workers or existing workers will be provided with relevant training skills that more in demand such as ICT and accountancy. As a result, the trainees will become productive workers and there will be no need for more manpower involved.

Improving the education and skill delivery system

Government plays important roles in providing and improving the education and skill delivery system as well as expanding education and training facilities to the labour. By doing this, the supply of skilled and knowledge manpower can be increased.

Increasing the supply of R&D personnel

The R&D personnel includes providing scientists and technological will help the government to overcome the problem of labour shortage. Even though the process in research and development (R&D) is in high cost, the government still need to supply R&D personnel to the labour so that they can increase their effectiveness in their productions.

Encouraging greater capital intensity of production

In order to save on the use of labour, the government encourage greater capital intensity of production. As a result, it can reduce the reliance on foreign labour. The reliance on foreign labour will reduce the job opportunities for local workers to apply for the job. Besides, high cost is needed in hiring foreign labour in an organization.

As a conclusion, these measures taken by government can overcome the problem of labour shortage. The government will not faced problem of labour shortage which also affects the economic growth in a country.

Question 2

Discuss four (4) advantages of Privatization Policy

Answer:

Privatization is defined as the transfer to the private sector of activities and functions which were traditionally vested with the public sector. Privatization in Malaysia had been implemented much earlier than 1983 but did not involve transfer of assets or personnel. In 1983, the government then introduced the Privatization Policy. There are many advantages of having Privatization Policy. The four advantages are:

Benefits to the public

The public benefited from the privatization program as the facilities provided were made available earlier than they would have been if they were undertaken by government. Besides, they also benefited through the provision of more efficient and wider coverage of services such as rail services which reduced travelling time and contributed to the alleviation of the urban traffic congestion.

Gains to the government

Saving in capital to the government and a total number of employees were transferred to the private sector will reduce the administrative burden of the government. These saving have reduced the government’s borrowing which could be used for other sectors and finally government will be able to provide better investment climate for local and foreign investors.

Economic growth

Economic growth can be accelerating through greater private sector investment. The efficiency and increased productivity which commonly practiced by the private sector will also generate the growth. Privatization also provides opportunities for development and through the multiplier generates further effects. Besides, the development of new townships with commercial, industrial and residential areas and also further develop the tourism and trade sectors.

Technology transfer

Privatization enabled Malaysians to acquire new technologies and expertise either through collaboration with foreign equity holders, management contract or consultancy services. The construction of the Kuala Lumpur Tower enabled Malaysians to adopt state-of-the-art design and construction techniques. Malaysians are now able to operate and manage new technologies in specific areas of telecommunications technology and in the construction of LRT, which were previously dominated by foreign companies.

As a conclusion, in privatization there is also a lot of potential to grow as the scope is broad. The introduction of privatization policy will provide a lot of benefits to the country such as to the public and government in term of economic growth, technology transfer and others. 

Prepared By:

Syahida Abd Aziz (2011)

UiTM Perlis

Diploma in Business Studies

Assignment 1 - Malaysian Economics UiTM (Diploma)

ASSIGNMENT 1 - ECO261 (Malaysian Economics)

Question 1

Discuss the New Dimensions of the National Vision Policy in order for Malaysia to shift economy from input driven to knowledge driven.

Economy has done well under the New Economic Policy (NEP) and the National Development Policy (NDP) prescriptions put in place over the years. But with the current challenges of globalization, liberalization and the emergence of the knowledge-based economy, the government has come up with the New Vision Policy (NVP).

One of the compositions of NVP is developing a knowledge-based economy as a strategic move to raise the value added of all economic sectors and optimizing the brain power of the nation. K-economy can be differentiating from production-based economy (P-economy) in three different aspects. First, K-economy focused on knowledge as the driver of the economy growth. This knowledge can increase the production capacity of the other factors’ of production. Second, K-economy encompassed both qualitative and quantitative changes which focus on investments in intangibles such as human-capital, R&D capacity, customers’ database, brand name and reputation. There are also three rationales for the transition to K-economy. First, reliance on accumulation of manufactured goods and the export of traditional goods will be insufficient to generate growth in future. Second, the development of IT resulted in the involvement of global electronic business such as e-commerce. This growth of e-commerce will give an impact on economy especially domestic economy. Third, the knowledge driven technology can result in increasing return to scale as new business takes into account knowledge as driver of growth.

The declining marginal productivity of its capital prompts the vision of moving to a knowledge-based economy by Malaysia. One would like to mention that Malaysia’s past growth was made possible by large capital investment in its economy. Briefly, if capital therefore is constantly flowing into the Malaysian economy for investment, overtime, the economy would keep growing but at a certain optimum, diminishing returns on capital invested would take place, according to the diminishing marginal productivity economic model.[i] In the case of Malaysia, this was reflected in its increasing incremental capital output ratios. Moving to the knowledge-based economy is the best way to increase productivity. This includes improvement of technology, know-how, innovation, superior management techniques, gains from specialization, and increased efficiency to mention a few. Innovation leads to the creation of intellectual property and intellectual property will be, in a knowledge economy, the hall mark of competitiveness.[ii]

The vision to move Malaysia from a production-based economy to a knowledge-based one would require a substantial amount of a knowledgeable workforce to fuel Malaysia’s sustainable growth and foster its competitiveness as it prepares itself to become a developed nation by the year 2020. The policy thrust to expand the supply of highly skilled and knowledge manpower to support the development of a knowledge-based economy. Malaysia knows that knowledge workers are important in its efforts to move to knowledge-based economy. According to Peter Drucker, knowledge workers are those whose work primarily required the up of mental power rather than muscle power (Zidle, 1998). All knowledge workers use their brains more rather than their brawn and that they combine both the tacit and the codified aspects of knowledge to unlock value for their organizations. It must expand opportunities in education and training. They must also be imbued with entrepreneurial skills. It can be concluded that the concept of a K-economy revolves around knowledge and information as the important contributors to economic growth and development.[iii]

If Malaysia is to prosper and survive in the knowledge-based economy era, access to quality education must be made available to all of its races. Thus, Malaysians of all races and religion has an important role to play in helping the country attain its vision of a developed nation status in the year 2020. Finally, having access to education and training opportunities alone are not enough to develop the requisite knowledge manpower to fuel the Malaysian economy in its move to a knowledge-based economy. Attention must also be paid to increase the effectiveness and efficiency of the education and training delivery system. These education and training should also touch on areas that instill in students skills such as effective communication, management and supervisory skills. Courses that teach the acquisition of skills in the area of new technologies should also be encouraged.

For Malaysia to benefit from the knowledge-based economy, it must first develop the requisite physical infrastructure, which is necessary and needed to support knowledge-based industries as well as activities related to such an economy. They must also begin to promote an information technology (IT) culture among its populace. Specific policies and programmers must be set up by the government to introduce new software and hardware and bring the Malaysian people up to date with technology and developing in IT industry.

Question 2

Explain the achievements of the New Economic Policy (NEP) 1971-1990.

The NEP which comprised five-year development plans was implemented from the Second to the Fifth Malaysia Plans covering a period of about twenty years. The overriding objective of the NEP was national unity which is a situation where in which all Malaysians have willingly accepted that loyalty and dedication to the nation override all other objectives. National unity is of utmost important for development in Malaysia. It is a situation in which all Malaysians have willingly accepted that loyalty and dedication to the nation override all other objectives. After the May 13 tragedy, the policy makers in Malaysia were of the view that national unity can be achieved under two-pronged strategies. First, it can be achieved by reducing absolute poverty with the intention of eventually eradicating it, regardless of race. Second, restructuring society that is to correct economic imbalances so as to reduce and eventually eliminate the identification of race with economic function.

There are many achievements of the NEP that had been achieved by government within twenty years which is from the year 1971 until year 1990. The achievements are:

Increase in GDP

For period (1971-1990), Malaysia’s real GDP growth averaged 7.1 percent annually. In the 60s, it averaged 5.2 percent. The GDP grew from RM22.2 billion in 1971 to RM79 billion in 1990. Corresponding to that, per capita GNP grew by about 8 times from RM1,109 to RM8,856 (US$860 to US$3,406). In spite of the increased incomes, the annual inflation rate remained low.[iv]

Decrease in poverty

The incident of poverty in rural areas had been reduced from 58.7 per cent to 19.3 per cent and that in urban areas from 21.3 per cent to 7.3 per cent respectively over the period. Among the races, the incidence of poverty was reduced for Bumiputera, Chinese and Indians between years 1970 to 1990. Overall the incidence of poverty in Malaysia had been reduced from 42.4 per cent in 1976 to 17.1 per cent in 1990.

Fairer distribution of income

Not only incomes of all races had increased but also urban-rural incomes. The mean monthly income of rural households increased from RM319 to RM1,541 over the period for the urban households. The income gap between the Chinese and the Malays had narrowed because of improved rural income and the emergence of a sizeable middle class Malay which resulted in a noticeable improvement in income distribution among them.

Increased employment opportunities

The economic rapid growth and the accompanying emphasis given to the creation of job resulted in a doubling of employment from about 3.4 million in 1970 to 6.7 million in 1990. The unemployment rate dropped from 7.7 per cent in 1970 to 5.1 per cent in 1990.

Change of economic structure

The economic structure had been changed from one dominated by the services and agriculture sectors to manufacturing sectors. Those remaining in the primary sector were mostly involved in modern agriculture activities by using the better appliances.

Improved quality of life

The various programmes which aim to improve the quality living of the poor in urban and rural areas had been successful. In 1990, life expectancy of both males and females had increased because of having healthy life style, infant mortality rates had decrease because of many parent are tend to work especially women, primary school enrollment had increased, teacher-pupil ratio as well as doctor-population ratio had also improved because of present of highly technology on appliances used by the doctors.

References:

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[i] Abdulai, D. (2004). Can Malaysia transit into the K-Economy? Selangor: Pelanduk  Publications.

[ii]  Chandra, A., & Khanijo, M. K. (2009). Knowledge Economy. New Delhi: SAGE Publications India.

[iii]  Abdulai, D. N. (2001). Malaysia and the K-Economy. Selangor: Pelanduk Publlications.

[iv] Lehar, H. (2008). The Malaysian Economy: Past and Present. Selangor: University Publication Centre (UPENA).


Prepared By:
Syahida Abd Aziz (2011)
UiTM Perlis

International Business - UiTM (Diploma in Business Studies)

MGT361: INTERNATIONAL BUSINESS 

Question 13

Honda of Japan has recently set up its new manufacturing plant in Alor Gajah, Malacca. It has bought land and constructed new facilities and even hired transferred managers from Japan. New employees are also being hired from Malaysia itself. 

a) What foreign direct investment method has Honda embarked on in Alor Gajah, Malacca? Define this method?

 b) Give two (2) advantages and three (3) disadvantages of this method. 

Answer: 

a) The foreign direct investment method that Honda use is international franchising. International franchising is a specialized form of licensing in which the franchisor not only sell intangible property but also insists that the franchisee agree to abide by strict rules and how to do a business. 

b) The two advantages of this method are:

1. Franchisees can enter the business. The franchisees can enter a business that has an established and proven product and operating system. For example, the company of Disney had opened a franchise in Singapore. The franchisees in Singapore can enter the market easily because the company of Disney is well established and well known by people around the world. Therefore, the franchisors can gain more profit rather than face losses. 

 2. Franchisors can obtain valuable information The franchisors can obtain valuable information about local market customs and cultures from host country entrepreneurs that are otherwise might have difficulty obtaining. It further can learn valuable lesson from the franchisees that apply to more than the host country. For example, franchisor who had a franchise in other country such as Japan can obtain all information regarding the market’s needs and wants in that country. In term of food, Japan’s local market preferred the healthy foods in their daily lifestyles. 

The three disadvantages of this method are:

1. Shared the revenues earned Both parties that are the franchisor and franchisee must according to agreement, share the profit earned at the franchised location. Even though the franchisee do all the work and franchisor did not do their job in the operation system, the franchisor will still get the profit because all profit earned will be shared together. This will give the franchisees feel the unfairness in term of their profit earned. 

2. More complicated International franchising is more complicated than domestic franchising. For example, if McDonald wants to expand their market and have a franchise in India, it had to learn about the Indian’s culture such as do not serves meat in their menu because the citizens in that country do not eat meat. Besides, to have an international franchise all regulations and laws in foreign countries need to be obeyed. The different level of taxes for a franchise to establish in foreign countries may also occur. 

3. Loss need to be settle by both parties When the franchisor’s business are not doing well and have to face a lot of losses, the franchisors have to involve with the settlement. For example, Ginvera’s company who had a franchise in Greenland faces losses because the Greenland’s local market did not need their products. Therefore, they need to settle all the losses with a fair settlement between both parties. Both parties had to settle all the loss even though the parties that do the wrong things were the franchisees and not the franchisors.

Prepared by: Syahida Abd Aziz (2011)

Diploma in Business Studies (UiTM Perlis)