Category: Economics

Canada is a country found in North America. She consists of ten provinces i.e. British Columbia, Newfoundland, Manitoba, New Brunswick, Alberta and Labrador, Ontario, Prince Edward Island, Nova Scotia and Saskatchewan and three territories: Northwest Territories, Nunavut territories and Yukon.

Canada is located between the Atlantic, the Pacific and lies on the north, it boarder Arctic Ocean. In regard to size, Canada is the second largest country. She covers an approximate land area of 3.511 million square meters and a total area of 3.855 million square meters.

In a federal system, as is the case with Canada, a states power is shared between two sets of governments, one national and another sub-national. The two powers operate directly upon the people. She has a democratic government by the parliament and a monarchy to govern her.

Constitutional division of power is established between democratic government and the monarchy. Queen Elizabeth II is Canadas sovereign leader. The governor-General since 2010 is David Lloyd Johnston and the Prime Minister has been Stephen Harper of the Conservative party since 2006 (Solusource par 1).

Canada has diverse cultures. She is multi ethnic country. Her population is approximately 34,300,083 with a growth rate of about 0.78%. Her birth rate is 10.28/1000. Canada has an infant mortality rate of 4.85/1000. Life expectancy in Canada is 81.48 and the population density is 3 persons per square kilometer, according to the 2012 population estimate (Infoplease par 2-3).

The currency in Canada is the Canadian dollar. She easily floats against major world currencies. The dollar runs almost at par with the US$. She has her coins as the toonie and loonie. Other denominations are available in $100, $20, $50, $10 and $5. Coins have replaced the smaller value bills.

The bills are brightly coloured and this makes them easily distinguished from others. Revolution has made exchange of foreign currency in Canada easy. It is done at the airports, authorized shops, banks and at crossings points along the borders. Credit and debit cards are easily accepted in Canada and the ATMs are easily accessible especially in urban centres (Mclean par3-6).

Canada has a democratic government by the parliament and a constitutional monarchy to govern her. She has three levels of government. Each level has an own specific mandate the governments are provincial, municipal and federal. Elections are held by way of voting where the citizens elect their representatives at the above named levels.

The Canadian Government is headed by a Governor General who represents the Queen of England. The Prime Minister appoints the Governor General. The post of a Governor General is a symbol of the British monarchy. Usually, the Prime Minister is elected by the people. Canadas parliament consists of elected representatives, also known as members of parliament. Their sittings are done in the House of Commons and conducts debates on issues of both regional and national importance (Infoplease par 2-3).

The Queen who is represented by the Governor General holds no real power. For an approval to all bills passed by the house of common, the governor general ascends by signing on behalf of the Queen.

A department called the Natural Resources Canada (NRCan) ensures good use of the natural resources. By working closely with other partners the department strengthens security, safety and sound environmental leadership for sustainable use of the resources for the Canadians (Natural Resource Canada, par 2-3). Canada is one of the member countries of economic blocks such as World trade Organization (WTO) among others (Fergusson 1).

Proposition

Interlink global solutions
China
Business Operations Department,
RE: ELECTRICAL AND ELECTRONICS IMPORTATION.

This letter comes to seek your partnership in business dealings. We as a company, specialize with overhaul importation and installation of electrical and electronics appliances here in Canada. However, due to increased customer demand and expanded market, we are not in a position to supply the required amount of the products.

After a good survey of our country and the market, we managed to write the accompanying report about Canada as a country, and the business dynamics associated. There is a fertile market for any company that would be interested in importing these products and after a thorough consideration, your company fits most.

This is because we are aware that this is your line of specialization in your country, China. As partners, our companies are better placed to tackle the shortage and there are already existing incentives to any company ready to explore this business niche.

Canada has an economic system commonly referred to as the capitalistic system. The system allows private ownership of capital that is used in production purposes. These include factories, production plants and equipments. Under this system, great efforts are being made to boost the private investment in the country by the government. The primary import commodities for Canada are durable consumer goods, crude oil, motor vehicle and parts, chemicals, electricity and machinery & equipments.

The accompanying report of our country will serve to enlighten you on the vast opportunities available in Canada. Our company hopes to here from you soon.

With regards
The Canada haulers company,
CANADA.

Benefits of import trade to Canada

As earlier said, Canada has an economic system commonly referred to as the capitalistic system. The system allows private ownership of capital that is used in production purposes. These include factories, production plants and equipments. Under this system, great efforts are being made to boost the private investment in the country by the government.

Diverse ways of involvement in productive work include importation as a form of economic activity. As already seen, Canada has invested a lot in service industry and this has made most of her export trade be dominated by the export trade of technology and the human labor.

This in turn has led to abandonment of primary production and heavy investment has been directed towards service industry. Canada also has a system commonly known as mixed economy. This system combines both private and government ownership and control of economic resources. Goods and services are produced and provided by the government and private companies.

The two systems, capitalistic and the mixed economy system are a good support for both import and export industry. Trade regulations are in play to regulate the trade and this minimizes illegal trade across the borders. There is a fairly stable balance of trade with Canada being a leading exporter of natural resources and technology according to the facts and figures 2010 (Natural Resources Canada, table 1).

In the year 2010, the Gross National income (GNI) in Canada was 24725 (constant 2000 US$).

GNI per capita, PPP was 38370 (current international $) in 2010 with a notable fluctuation of between 38490 and 10730 in the years 2008 and 1980 respectively (Index mundi par 1-2).

Canada is highly industrialized and urbanized. She has had great growth in mining, manufacturing, and service sectors since World War II. Canada has enormous riches in mineral deposits, water based resources and forests. Other resources include petroleum, wildlife, natural gas and hydropower.

Nevertheless, Canada like most other developed countries has dominance in service industry. She has moved from agrarian mode into services. Before the World War II, Canada specialized in agricultural production. Benefits from modern technology have been positively noted in retail business sector, health and education sectors both domestically and globally.

Import and export trade has thrived greatly between Canada and the US. Commodities dominate this trade. The US imports more food products from Canada while Canada imports nearly a fifth of USs food products. A challenge that Canada faces is the challenge to maintain her status as a world leader in sustainable development. She leads in contributing to the welfare of her people as well as other countries by her foreign trade in the worlds investment climate (Westervelt 8).

According to the 2011 statistics, the total value of imports in Canada was US$ 406.4 billion. Canada and the US are linked to each other. Their hydropower facilities, and national transmission grids are shared.

The primary import commodities for Canada are durable consumer goods, crude oil, motor vehicle and parts, chemicals, electricity and machinery & equipments. Canadas primary import partners are US, which amounts to 51.1% of her total imports, China amounting to 10.88 % of her total imports and Mexico amounting to 4.56 % of her total imports.

A number of advantages can be sited accruing from importation as is the case with Canada. These are: Comparative advantage where the importing country saves income through importing commodities as compared to domestic production, while in other situations, goods are lowly priced. Higher-quality products; where a country takes advantage of better quality standards in production of commodities from other countries. Private entrepreneurs realize higher returns while the government benefit from trade tariffs.

Moreover, Importing grants access to regionally exclusive resources and in the process, a country like Canada is able to save on depletable resources for future (Solusource 1-2).

In addition, chemical makers  say the LNG  imports gasoline in Canada to ease supply constraints in North America and also price volatility in the region. The imports doubled in metric tones between 2002 and 2003 following an agreement accented to by the Shell and Petro-Canada companies to import LNG from Russia. The agreement was a 20 year contract.

In conclusion, its therefore clear that importation as a way of trade is highly suited in Canada. Different points of analysis as developed above suits the mode of trade better than other forms. This is because the trade has already taken ground, production mode of the economy has also shifted from industrial production to the service and processing mode and finally the government has put into place strategies to encourage import trade.

Works Cited

Economy Watch. Canada Exports, Imports & Trade. Economy watch. Web.

Fergusson, Ian, United States-Canada Trade and Economic Relationship: Prospects and Challenges, congressional research service, 2011. Web.

Infoplease. Canada. Web.

Index mundi. Canada  gni: GNI, Atlas method (current US$). Index mundi. Web.

Mclean, Jane. Canada travel, Canadian Currency  Money in Canada. about.com, Web.

Natural Resource Canada. Canadas Natural Resources  Now and for the Future. Natural Resource Canada. Web.

Solusource, Five Key Benefits of Importing Goods and Materials from Overseas. Web.

Westervelt, Robert, Shell, Petro-Canada Sign Separate Deals to Import LNG from Russia, Chemical Week. 2004, Vol. 166 Issue 34, p8-8.

The structural adjustment began with the formation of the World Bank and the international monetary fund in the early 1940s. The formation of these institutions was triggered by the 1982 world debt crisis and they were formed to address global financial difficulties in that period (Messkoub, 1992). The World Bank and the International Monetary Fund (IMF) both forced a structural change on the third world countries with an intention of improving their efficiency. The structural adjustment programs influenced government spending and the after effect of the entire process was that the poverty levels increased (Messkoub, 1992).

After the World War II, there was the formation of a new economic order in Europe to reconstruct and recover from the effects of the war put on the economy (Messkoub, 1992). So many bilateral agreements were developed in order to reduce the cost of trade between nations where the general agreement on taxes and tariffs was the most profound policy (Messkoub, 1992). The World Bank, for instance, was meant to revive the Europe from the world war ravages (Messkoub, 1992). However, the bank changed and focused its energy on development and financing countries. On the other hand, IMF was meant to be the bank that enabled nations to borrow loans.

Although the two banks seem to be playing the same roles, they have very distinct mandates in the financial world. The World Bank lends money solely for development and this is only in the developing countries (Messkoub, 1992). On the other hand, the IMF lends to all nations and mostly for the purpose of monitoring monetary and exchange rate policies in countries (Messkoub, 1992). Structural adjustment in summary makes the states and the market more efficient and as a result, it accelerates financial growth and reduces wasteful practices. When it comes to structural adjustment, the priority is given to the development of a free market (Messkoub, 1992).

This gives rise to the principle of self-governance in the market where each individual is responsible for their own actions (Messkoub, 1992). Structural adjustment has some effects on the people in the states experiencing the structural change. One of the most notable changes is the widening of the economic gap between the rich and the poor while unemployment increases as well. In a brief assumption, it suffices to say that structural adjustment leads to economic inequality. This kind of economic inequality can have adverse effects on the political stability of a country hence leading to wars and unrest (Messkoub, 1992).

Structural adjustment does a number of harms on a state. One of them is a free trade. With a liberal market in place, local products lose in competition with imports while tariffs on water and electricity go high hence making the normal cost of life to escalate (Messkoub, 1992). Structural adjustment has a direct impact on health care systems and this is through cuts in budgetary allocations and privatization of state owned organizations (Messkoub, 1992). It leads to the elimination of food subsidies, lack of job opportunities, poor infrastructure as well as maks it very difficult to access medical attention (Messkoub, 1992).

This paper critically analyses the Deprivation and Structural Adjustment policies as presented by the author of the book. The entire paper shows how the structural adjustment was developed and how it impacted the world. Its effects have also been discussed and outlined in this essay.

Reference List

Messkoub, M 1992, Deprivation and Structural Adjustment, Oxford University Press, Oxford.

Joseph Stiglitz believed that inequality in America was the result of a conspiracy between the rich and powerful. He also added that the U.S. government assisted them. He placed blame on their shoulders and he was angry because of his convictions.

Stiglitz acknowledged that there are other forces at work but conceded that the major reason for the inequality is due to the actions of the wealthy, the corrupt and the opportunists. Stiglitz labeled the ability of the rich and powerful to steal from the weak as the art of rent seeking. Stiglitz observation must be considered in order to build an egalitarian society.

Stiglitz traced the root-cause of inequality and said that it can be traced back to the acquisition of military power in ancient times. He said that the rich and powerful seized power in order to extract resources from the people that they have dominated. An overview of feudal systems and empires can easily confirm this assertion.

Kings, landlords, warlords, emperors and pharaohs demonstrated the immutable fact that those who had the military and economic power to subdue people can force others to pay tribute. They also earned the capability to allocate resources in their favor.

The author said that the ultimate goal of corrupt leaders and businessman is not to create wealth but to transfer wealth. He added that the rich and powerful had perfected various schemes that compeled others to pay tribute even if they did not work for it. The author said that this phenomenon is called rent seeking.

Stiglitz cited examples such as: 1) hidden and open transfers and subsidies from government; 2) laws that make the marketplace less competitive; 3) lax enforcement of existing competition laws; and 4) statutes that allow corporations to take advantage of others or pass costs on to the rest of society (Stiglitz, p.39).

Stiglitz condemned rent seeking and used strong terms to denounce the evil created by corrupt members of society and he wrote:

To put it baldly, there are two ways to become wealthy: to create wealth or take wealth away from others. The former adds to society. The latter typically subtracts from it, for in the process of taking it away, wealth gets destroyed (Stiglitz, p.32).

One can just imagine the wasted opportunities when wealth was destroyed through corruption. At the same time one can just imagine the ripple effect of a single act of benevolence. A businessman that created a high-quality product and sold it at the right price contributed in the creation of a better society. But a greedy businessman with inferior products and overpriced goods sold will create inefficiency in society.

Stiglitz also condemned predatory lending practices and expressed his displeasure when he stated that the governments inability to curb credit card woes was an outrageous form of social injustice. He added that the government must intervene and that policymakers should establish rules and regulations that will protect the poor from unscrupulous businessmen.

Stiglitz argued that the solution to inequality is effective income distribution. He said that it is the byproduct of both political and economic processes. Therefore, the government must exert political will in order to shape and control the economic process so that it does not only favor the powerful and the rich.

For example, a companys failure can be traced to the hefty bonuses given to the CEO. The outrageous sums of money given to corporate heads led to the downfall of certain companies because the CEOs were forced to manipulate financial data in order to show that the company is profitable and therefore strengthen their hold on their position of authority as well as their large pay bonuses. The government can end this problem by enforcing laws against different forms of fraudulent business practices.

Aside from creating effective laws and enforcing them, there is another way that the government can help in the process of income distribution and this is through a more practical and effective method of raising revenue through taxes. The problem of taxation becomes evident when it comes to the amount of money collected through the extraction of natural resources.

Stiglitz said that most of the time, the government fails to collect the correct amount that has to be paid after mining firms had extracted minerals from government lands. Stiglitz therefore concluded that in effect this is comparable to giving money away to the rich and powerful.

If the government develops a better system to ensure effectvie collection of taxes and fees, then, there are more funds that can be used to help poor families. Furthermore, there will be more funds that can be used to create opportunities for those who wanted to break the power of poverty over their lives. If Stiglitz can prove his claim that the government failed to collect the correct amount of taxes from mining firms and other companies, then, there are hundreds of millions of dollars that remained in the hands of the rich and powerful.

The same resources should have been re-distributed in favor of the less fortunate. One can just imagine the impact of an additional $1 billion in taxes that can expand the scope of public service. Consider for instance the impact of an additional $2 billion injected into the public school system. Consider the impact if the government has enough money to finance the education of 1,000 college students.

Conclusion

Stiglitz was correct when he said that rent seeking could destroy an economy. The financial crisis of 2008 was a powerful reminder of what can happen if power is concentrated in the hands of a few people. Stiglitz pointed out that since the beginning of time the rich and powerful will do everything to maintain the status quo.

Stiglitz also highlighted an important fact and he said that rent seeking required a sophisticated and concerted effort. It is difficult to dismantle the apparatus that created rent seeking. It is difficult to eradicate rent seeking because one can only dismantle the said apparatus with the help of the government.

Rent seeking can be destroyed through the ratification of particular laws that will create checks and balances in the system. The government plays a vital role in the eradication of rent seeking because it will require political will to go after white-collar crimes.

However, the regulatory agencies that were established to monitor industries and enforce laws are manned by people from the private sector. For example the energy regulatory agency is under the supervision of people that used to work in oil companies. Stiglitz said that these people who were appointed to a government post will never do anything to jeopardize their standing in the said industry.

They knew that their present job in the government will not last long. In some cases their position is dependent on the next presidential election. Therefore, they will do everything in their power to appease the CEOs so that they will be assured of a comfortable and profitable job when they go back to the private sector.

Works Cited

Stiglitz, Joseph. The Price of Inequality.New York: W.W. Norton, 2012. Print.

Abstract

According to BBC news on 15^th march 2011, the radiation caused by the Japan explosion had risen at the Fukushima Daiichi nuclear plant. According to the government report, the quake-stricken plant had reached levels that were harmful.

The warning came after the same plant had been hard hit by the quake for the third time now. This third blast was the worst because for the first time it was thought to have damaged a reactors containment system. (Tabuchi, 2011, p.1-2).

At that particular time, there was a lot of worry of further leakages of radioactive from the nuclear plant and the experts extended the boundaries of the harmful zone to be within a range of thirty kilometers or eighteen miles and the people who were living within this limit were being advised to relocate or remain inside their houses.

In fact, the citizens in Koriyama were being observed if they had been exposed to any exposure of radiation (Sanger and Wald, 2011. p. 1-2)

Introduction

This explosion had great impacts on the exports of Japan as an economy. This has effects to both the global and national economies. This has led to a decline in the exports of Japan and a shortage in the countries that rely heavily on exports from Japan. This paper seeks to analyze the effects of this quake on the exports of Japan.

Other aspects included in this paper are the descriptive analysis of the Japan nuclear radiation and the relevant theories related to the nuclear radiation topic (Foster, 2011, p. 1). Because this is a very current phenomenon, most of the materials available are news documents. Most publishers have not yet released books and other scholarly documents on this happening.

Descriptive analysis

The magnitude of the Japan explosion was 9.0 but the government sources later on reported that the levels of the radiation at the main entrance of the plant had dropped tremendously. In less than four days, reactor two was the third to blast and reactor four shortly caught fire. Shortly before the blast reactor four had been closed because it was under maintenance.

At that point in time, reactors five and six were being observed keenly because sources said that they had also begun overheating. This was a hydrogen blast which caused the level of radiation to rise above the normal in the capital city of Japan. However, government officials claimed that this was not harmful to health. (Mcchinney and Sign, p. 123)

International business theory

A theory can be defined as set of principles or statements that are written in order to give explanation to a number of phenomena or facts, mostly those that have been tested severally or broadly accepted and can be used to foretell about a natural phenomena.

One of the relevant theories referred to in this phenomenon is the international business theory. International business is a wide terminology that explains all the transactions that are commercial and occur between two or more countries. These business undertakings could be either governmental, semi governmental or private.

With a lot of improvements that have taken place in the business industry, nations can now export their products to any republic globally. There are several theories that explain why a given nation should go to another nation to purchase given goods and services even if it produces the same products at their local market.

Some examples of international business theories include the absolute advantage theory, the comparative cost theory, opportunity cost theory and the vent for surplus theory. The absolute advantage theory was developed in the year 1977 by Adam Smith.

The theory is based on the fact that production of some goods and services are cheaper in some countries due to some natural factors like natural resources, cheap labor skilled labor and good farming land. Each country concentrates in production of goods and services it has absolute advantage over for export purposes.

Comparative cost theory was developed by David Ricardo. This theory explains that two nations can trade over a commodity if one of them has an advantage of manufacturing the good or service over another product in comparison of another republics ability of producing similar products.

Gottfried Herberler developed the opportunity cost theory in 1959. The value of alternatives that have to be forgone in order to attain a particular product is the opportunity cost. The opportunity cost theory suggests that a nation will produce and export the products that are more profitable to it as compared to others.

Lastly the vent for supply theory simply states that if a country produces more than the domestic demand, the extra produce has to be sold to the international market. If this is not done, part of the countries labor force will become redundant because their produce have no where to go. International business theories are therefore a special contributor to the whole aspect of international trade.

Impact of Japan nuclear radiation on exports

Impact on power generation

The explosion at the main power plant in Japan led to a serious shortage of power supply both to millions of house holds and manufacturers. In terms of exports, the worst heat sector is the automotive manufacturing industry. This lead to low production in automotives and other manufactured products, hence low supply to the market that imports machines from Japan.

This is mainly because a big proportion of the Japan economy heavily relies on nuclear power. Most of them site the heavy cost of electricity and also its not enough for the power intensive country. This continually leads to a reduction in production for export and hence in return reducing the export quantities.

Japans economy relies heavily on the manufacturing industry for sustenance. Export from this is heavily dependent on power. This has largely affected production in Japan and coupled with increasing oil prices, the products are becoming very expensive for the export market. Japan has to find a quick and durable solution for its export products if it has to maintain and even improve its place on the international market.

In mitigating the impact on power generation, the government and the industry have to work hand in hand to provide both long term and short term solutions. In the short time, the government has to import power in from other nations in order to ensure that production still goes on as usual.

This will maintain its place in the market lest it looses its customers due to shortage in the market. In the long term, the government should place measures in place to ensure that the nuclear firm works effectively with no further explosions.

Radiation testing on Japans food exports

Even though Japan is not heavily involved in food export, experts argue that air borne radio actives can get their way into the body through the skin, inhalation and food. If animals graze infected grass they too get infected and consequently, their products like milk and meat get infected too (Mc call, 2010, p. 210).

If these radiations also fall on plants, they also get infected and so they are not good for human consumption. This ends up being a threat to food supply of the affected economy to the rest of the world (AFP, 2011, p.1)

Japans export industry received negative publicity of their food industry due to this explosion. Many economies feared importing food products from Japan because of health issues. Countries like Singapore and Thailand were among the first to test Japans food products for radiation contamination. Such food products included fruits, sea foods, meat and vegetables (Willacy, 2011, p.1)

This effect on Japans food exports did not affect the economy of its country alone by reducing exports, but is also caused and continues to course great shortages of these products in countries that heavily rely on Japan for their supply.

The condition is further worsened by the thought that intake of radioactive iodine contaminated food leads to thyroid cancer. No body wants to be infected under all costs. In fact the radiations lead to a ban in shipment of some food products from Japan. The main consumers of Japans food products are China, US and Hong Kong.

Up to date, the food exports from Japan are still not being received well on the international market. Consumers still fear these products and this has reduced the earnings of Japan from its food export industry. Its upon the work of the officials to convince the whole world that their products are now safe and that security measures have been put in place to avoid any contamination.

In handling this problem, the government should test its products to ensure that they have no elements of radiations before they are exported. They have to establish laboratories that ensure that their exports are safe for consumption.

It can be very bad for their customers to detect the radiations before Japan itself can do so. Once all the products prove to be harmless over a long period of time, then the government can have the breakthrough and confidence of selling on the international market.

Effect on the value of the yen

Due to the fear of consuming products from Japan, the effect has been seen and will continue being seen in reduced demand from the international market. This continuously leads to a flight in foreign capital and in turn it results in Japanese exports becoming cheaper and imports on the other hand becoming more expensive.

This has led to a state in which the value of the Japanese Yen in relation to the US dollar has been continuously depreciating. Japan is an energy intensive country and any negative effects in its energy sector, causes it to import more energy.

This continues to increase the value of imports and further increase inflation causing the yen to loose its value. The direct implication of this is that the country now needs more units of yen for its imports and receives fewer units of the same for its exports. This has direct negative effects on the foreign trade of Japan as a republic (Harukoya, 2011.p. 1)

The negative effect on the value of the yen is mainly caused by fall in demand and hence the government and all the affected industries have to lay strategies of inducing demand on the international market by coming up with promotion programs that are geared towards restoring the confidence of Japans products on the international market.

Impact on manufactured products

Japan heavily relies on the export of second hand and new automobiles for their economic sustainability. The fear that radiations can penetrate the body through the skin has affected this export business. It is widely believed that automobiles from Japan are contaminated and purchasing them is harmful.

This is a double tragedy because as Japan would be working towards stabilizing its power supply, it would heavily rely on products that are ready for export. However, these products have no place in the market because of fear.

The fact that radiation can be inhaled or penetrate through the skin puts Japans export industry between a rock and a very hard surface. It may surely take decades for the international community to build confidence in Japans products.

The only way to handle this challenge is for the manufacturers, the government and other stake holders restoring the confidence of the international market by testing their exports to ensure that they are harmless and then putting in place suitable programs for marketing their products on the international market.

Effect on flight trips

Flying of planes in and out of a country is a very good indicator of a successful foreign exchange sector. This is because, foreigners come in form of investors and tourists hence injecting foreign investment into the country. Due to the fear of radioactive contaminants, many visitors have shied from visiting Japan.

The fear of being infected has made Japan loose a lot on their foreign income in form from visitors. The fact that Japan has to continue spending more and more on exports yet receiving lesser in form of imports places the economy in a bad state (Kobata, 2011, p. 1-2).

The only way for checking out on this is by the ministry in charge of tourism, trade and other stake holders holding very serious campaigns of assuring the foreigners that the affected areas are very safe for human habitation. In case there are any traces of radiation effects still in the air, then the government should look for experts globally to neutralize the concentration of the radiation within the environment.

Damages on the surrounding firms

Due to the explosion, several manufacturing and business enterprises were also hard hit by the explosion. This caused several damages to the manufacturers and other businesses and as a result, it led to low production of goods and services meant for both the local and international markets.

This in itself enhanced the problem of exports because even though Japans products were receiving negative publicity, the level of production also fell tremendously.

There is only one way to help in solving this problem, the way out is for the affected firms to squeeze for some funds in their budget, with the sole reason of rebuilding the destroyed amenities. This is an expensive unplanned for undertaking but it has to be carried out in order to avoid shortages in the market.

Effects on employment

This problem of damages to the surrounding led to many manufacturing firms and businesses to reducing their number of staff until the required renovations had been carried out. The problem of an abrupt drop in employment has negative effects to the exports of a country and the economy at large. This is mainly because it is this source of labor that produces for export purposes.

Once the labor force is reduced drastically, it has a direct effect of reduced production. Such a reduction in production does not only affect goods and services for the local market but it also affects the international market at large (Arthur, 2011, p.1)

The effects on employment can be sorted by the government putting in place measures that ensure that the production process is restored and the manufactured products are marketed for properly on the market. This includes all the above discussed recommendations of rebuilding any destroyed infrastructure and product promotion to ensure that customer confidence is gained.

Conclusion

From this paper, it has come out evidently that the event of the nuclear radiation that was largely covered on both the local and international media has had great negative effects on its economy. The effects have been felt in the main sectors of the economy not leaving behind the export sector.

It appears that any single effect of this event has had a direct impact on the exports of Japan. One thing to note is that these effects are still being felt and it may take Japan some time before going back to normal. The greatest challenge Japan has is that of convincing the whole world that their products are now safe, especially after the media widely covered topics on the potential effects of radiation.

Not accusing the media at all, but to a great extent, it contributed to the negative publicity of Japans export products (Gyogy 1980, p. 27). Attempts by the government of Japan to re-assure the international community that its products and environment are now safe have not yet yielded much fruits.

One this to not is that by the fact that the exports of Japan are affected, then this does not only affect the economy of Japan, but it also affects the economy of other countries. Economists argue that these effects may persist for some time.

Reference list

AFP, 2011. Japan lifts ban on beef following radiation scarce. Tokyo: Jiji press Web.

Arthur, H. 2011, Asian week: Earth quake rocks US nuclear industry from North Anna to India point NYC. Asia. Web.

Foster, M. 2011. USA today: finance minister to be japans next prime minister. NY: Associated press. Web.

Hoffman, M. 2011. The Japan times: forgotten atrocity of the atomic age. Web.

Hirokawa, T. 2011, CBC.ca.business news, candidates to succeed can call for unity, differ on taxes. Tokyo. Web.

Gyorgy, N. 1980. No nukes: Everyones guide to nuclear power. Boston: South end press.

Kobata, Y. 2011. Reuters: Japan faces costly, unprecedented radiation clean up. Web.

Mc call, R. P. 2010. Physics of the human body. Maryland: john Hopkins University press.

Mcchinnery, E. & Sighn, W. 1989, nuclear weapons and contemporary international law. Netherlands: Martinnus nishoff publishing.

OECD nuclear energy agency, 1960, nuclear production of hydrogen. Danvers: OECD nuclear energy agency.

Sanger, D. E & Wald, M. 2011. New York Times: U.S calls radiation extremely high. Sees Japans situation worsening. Web.

Tabuchi, H. 2011. New York Times: Japanese island activists resist nuclear allure. Web.

Tsukimori, O. & Layne, N. 2011. Reuters: Areas near Japan nuclear plant may be off limits for decades. Web.

Willacy, M. 2011, Routers: Resilient Japanese producers vow to re build. Web.

Introduction

Over the past decade, many tumultuous events have taken place within the United States. Over the past ten years, there has been a severe economic depression, a terrorist attack, a significant crunch of the U.S. stock markets, mass layoffs, and a meltdown of the housing sector. Unemployment rate climbed to an all time high of 10 percent for the first time since 1983 that followed the severe recession of 1980s (Fernald, 1999, p. 771).

Additionally, following the recent recession, labor and capital mobility have declined while poverty levels have increased. Nevertheless, by the beginning of 2010, the U.S. economy began to show signs of recovery with new job opportunities. However, the wages paid across many sectors are not satisfactory.

Normally, changes in the stock market indicators, labor mobility, and rise in peoples wealth are used in assessing the condition of the U.S. economy. In recent times, local economic development dominates the U.S. politics with many calling for the adoption of entrepreneurial strategies.

Currently, trends in development policies focus more on job creation and entrepreneurship than on the provision of public goods and social services (Sperling, 2008, p. 78).These strategies are in response to the rising levels of unemployment, poverty, and economic recession. The current trends and strategies within the United States lay more emphasis on the job and wealth creation.

The U.S. Financial Crisis

The current financial crisis in the United States can be attributed to two main factors: ineffective regulatory mechanism and global policies that influence liquidity. Prior to the crisis, the interest rates in the United States were relatively high. Other countries, like Japan or China, had zero interest rates and fixed exchange rates respectively.

This significantly affected liquidity resulting to the crisis. At the same time, the U.S. regulatory framework could not adequately protect the local financial markets from global forces. In other words, the past policy options involving incentives particularly the residential mortgage backed securities (RMBS) of 2004 (Moretti, 2004, p. 117) contributed to the financial crisis.

In 2004, three factors contributed significantly to the crisis. The first factor involves the establishment of the zero equity mortgages under the past regime (Koven, & Lyons, 2010, p. 89). These aimed at improving access to mortgages by low-income earners. Second, the high capital requirements by the regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), forced banks to offer low interest mortgages to low income earners.

Third, the investment banks were allowed to manage their own risks based on their capital reserves. Prior to 2004, stringent rules allowed for 1: 15 equity to debt ratio (Moretti, 2004, p. 121). However, under the new scheme, investment banks at liberty to implement a skewed ratio in order to generate more revenue.

The crisis in the mortgage sector eventually spread to include the U.S. money markets crippling the entire financial system of the U.S. and the U.K. financial systems as well. As a result, the money markets could not finance development or personal consumption leading to massive layoffs. Currently, it is increasingly difficult to raise funds for financing infrastructural development. Thus, common global trends focus on wealth creation.

Common Global Economic Trends

The slowdown in economic growth in developed economies has had significant impacts on the economies of other countries through financial and trade linkages. Before the recent economic recession and rise in terrorist threats, the leading world economies did not undertake to adopt a common macroeconomic policy to revive the world economy (Fernald, 1999, p. 784).

Additionally, in the short-term money markets, both financial and non-financial institutions employ all manner of measures to raise funds for financing their investments. This affected the inter bank markets. Consequently, currently, central banks globally have undertaken measures to increase liquidity of the inter bank markets. However, not much success has been achieved in the inter bank markets.

Currently, manufacturing companies have established an operating plan that takes into account many parameters to increase cash flow or liquidity and profit margins. Additionally, under Basel II, banks employ various internal mechanisms to assess their capital needs not only for the determination of the price risks in their operations but also, and more importantly, for the inter bank credit risks (Koven, & Lyons, 2010, p. 81).

Effective regulation, though intrusive, compels banks to act favorably to ensure economic. Regulators, often the central banks, normally implement policies that specifically promote financial market and macroeconomic banking stability.

Recent statistical figures show that the recovery of the U.S. economy is slow than earlier anticipated. The growth in the United States economy is attributed to increased consumer spending despite the sharp decline in household wealth resulting from a reduction in the equity value and increased unemployment rates.

Stimulus packages involving temporary tax cuts have also boosted household income (Sperling, 2008, p. 80). However, because the wages are still low, the savings are still low. Additionally, the declining mortgage rates have provided more resources for improved consumption.

In other industrialized nations such as European countries and Japan, various measures have been undertaken to protect the local economies from external shocks. In Europe, effective use of macroeconomic policies ensures the stability of disposable income and prevents external shocks.

Additionally, European bloc has implemented a fiscal plan that aims at maximizing the utilization of labor and capital. In Japan, the domestic investment and demand are low with the domestic demand growth rate being 1.2 per cent in the year 2000. Developing economies, on the other hand, remain relatively unaffected by the global economic downturn save for a decline in demand for their exports.

Economic Strategies within the United States

In the United States, increased monitoring and enforcement of high standards of transparency has been adopted. Because the financial sector is closely tied to the real U.S. economy, many policies implemented aim at improving the macroeconomic environment following the 2007 financial crisis. In 2007, financial institutions acted quickly to increase access to bank liquidity.

By December, the same year, a Federal reserve was established to increase coordination between the main central banks within the United States. Moreover, to contain the crisis, the central banks embraced unconventional monetary policies particularly with regard to lending rates.

In general, the U.S. strategic policies fundamentally revolve around two main priority areas: enhancing competition and ethical governance of financial markets and reviving economic growth on a long-term basis.

Corporate reports of 2008 show that there is a decline in R & D spending. A recent survey by the Aberdeen group established a decline in R & D spending and a reduction in investments particularly on innovations (Visdwanathan, 2010, p. 2). According to the report, over fifty percent of companies indicated the use of business information systems in 2008.

The report further indicates that 78 percent of companies focus on managing demand as opposed to investing in innovation (Visdwanathan, 2010, p. 7). Normally, fewer manufacturing firms enter into the market during recession times.

In response to this, the U.S. has provided a favorable environment for small and medium enterprises (SMEs) to fill this gap and create more employment opportunities. However, the output in small companies is much lower than in large firms. Consequently, the employee benefits are also low.

Additionally, the U.S. has put in place a stimulus package to put the country back to sustainable economic growth. In particular, the stimulus package targets innovation and the improvement of potential innovations in the various sectors of the economy. In this way, job creation and entrepreneurship can be enhanced.

Currently, the policies adopted aim at encouraging industrial renewal and removing obstacles to small-scale entrepreneurship. Mush efforts have been made to increase SMEs access to credit through bank recapitalization and improvement of the loan schemes for SMEs.

All these efforts aim at easing the liquidity constraints faced by small enterprises and thus encourage entrepreneurship. This will increase wealth, job creation in the long term, and help revive the economy.

Conclusion

The 2007 global downturn caused unprecedented collapse of financial markets on a global scale including the U.S. financial markets. Additionally, the unemployment rates rose sharply following massive layoffs, as firms were not profitable during the recession period.

A common trend in most countries is to revive the small-scale enterprises. In the United States, various strategies adopted include economic stimulus packages to stimulate innovation and removal of the liquidity constraints that SMEs face and increase access to credit.

In recession period, the large firms particularly manufacturing firms scale down their operations. However, small enterprises that the U.S. economic strategies target have the potential of creating new jobs to curb the high unemployment rates.

Reference List

Fernald, J. (1999). Roads to Prosperity? Assessing the Link between Public Capital and Prosperity. American Economic Review, 89 (3), 771783.

Koven, S., & Lyons, T. (2010). Economic Development: Strategies for State and Local Practice. London: International City.

Moretti, E. (2004).Workers Education, Spillovers, and Productivity: Evidence From Plant-Level Production Functions. American Economic Review, 94 (3), 117121.

Sperling, G. (2008). The ProGrowth Progressive: An Economic Strategy for Shared Prosperity. New York: Simon & Schuster.

Visdwanathan, N. (2010). Sales and Operations Planning: Strategies For Managing Complexity within Global Supply Chains. Aberdeen Group, 27.

Introduction

The Royal Bank of Canada (RBC) is one of the oldest and largest financial institutions in Canada. The institution is almost a hundred and fifty years old (RBC, 2013). The bank started as a merchant bank in 1864, and served the needs of businesspersons in the Halifax area (RBC, 2013). The bank has two headquarters, one in Montreal, and the other in Toronto. The Montreal office is the institutions corporate headquarters while the Toronto office serves as the operational headquarters (RBC, 2013). RBC has a customer base exceeding ten million people in Canada, and a further two and a half million customers in other countries (RBC, 2013).

This customer base reflects the stability associated with the bank and the Canadian banking industry in general. Just like many other businesses, the bank is grappling with human resource management challenges. There is no shortage of staff, but there is the prevalent feeling that businesses must rationalize their labor forces to remain profitable. This paper looks at the non-market forces affecting the operations of the bank in light of recent revelations that the bank replaced permanent Canadian employees with foreigners who came under the Temporary Foreign Workers Program through an outsourcing contract. The move is controversial in the public arena because of the current state of the Canadian labor market. Public opinion on the matter is that the bank should be creating jobs, and not exporting them.

Public Perception as a Force in the Non-Market Environment

Public Perception is a very strong force in the conduct of any business. It is the sole justification for the emergence of professional PR practice across the world. The technological advances in IT over the last decade have complicated the execution of PR. It is impossible to control information once it reaches social media channels. In this regard, the RBC found itself on the wrong side of public perception when it became clear that it had employed foreigners to take up jobs previously held by Canadians by using the Temporary Foreign Workers Program. The four Is model will be ideal for analyzing the impact of the public outcry that ensued. The Is stand for interests, issues, institutions, and information.

Interests

The interests that led to the PR nightmare for RBC came from various places. First, RBC was under pressure due to public interest. The interest of the public is usually difficult to capture or measure because of the indefinite and impersonal nature of the public (Cardoso, 2009). Short of a referendum, gauging public interest on any issue is almost impossible. This does not mean that it does not exist. In fact, ignoring public interest can ruin a business (Ab Hamid, 2008). In this case, the public expected that RBC to protect Canadian jobs in order to help reduce the rate of unemployment. Therefore, when the public learnt that there was an effort to replace Canadian workers with foreign workers, the perception created was that RBC did not care about the public good.

The second interest in the debacle was from the outsourcing company called iGate. The company had a contract with RBC to provide temporary workers (Beltrame & Paddon, 2013). Therefore, it had the reasonable expectation of seeing the deal through. The third source of interests was the Canadian government. The reaction of the Canadian government clearly showed that the government had expected all companies to use the Temporary Foreign Workers Program to fill up human resource shortfalls, but not as a backdoor for exporting Canadian jobs (Beltrame & Paddon, 2013).

Issues

The main issues that arose from the choice the bank made to hire foreign workers were as follows. First, the country has a high level of unemployment compared to previous years. The current unemployment level in Canada is 7.2% whereas the unemployment rate in Toronto, the city where RBC expected to post the new workers has an unemployment rate of 8.4% (Beltrame & Paddon, 2013). Therefore, the banks strategy faced public disapproval because its result was aggravation of the unemployment situation.

The second issue that arose from the case was the plight of migrant workers in Canada. Generally, migrant workers are welcome to Canada especially in industries that have an insufficient number of native employees. The reports may have made migrant workers feel unwanted in the country. This is a very sensitive matter because of the increasing number of migrant workers in the country. On one hand, Canada needs migrant workers to fill the human resource gaps in the country, but it also needs to ensure that it does not give jobs that its citizens need to foreigners (Beltrame & Paddon, 2013).

The third issue in the case was the ethical predisposition of the bank in regards to its own employees. There was a feeling that the bank was not remorseful for its actions, but was addressing the issues publicly as a matter of PR.

Institutions

The Temporary Foreign Workers Program at RBC involved four institutions. The first institution was the bank itself. The bank wanted to outsource some of its IT work; therefore, it contracted iGate to handle the outsourcing contract (Beltrame & Paddon, 2013). iGate was the second institution in the matter. The company handles outsourcing contracts for Canadian corporate firms. According to iGate, there was nothing wrong with how it handled the situation. In fact, the company felt wronged by all the bad press the matter brought up. The third institution was the Canadian government. The plight of the RBC workers who were about to lose their jobs attracted the attention of the government. This is because the government did not expect anyone to use the Temporary Foreign Workers Program to outsource jobs that Canadian workers need. This had led to an interest by the Ministry of Human resource to review whether the program is being abused (Beltrame & Paddon, 2013).

The fourth institution in the situation was United Steelworkers. This labor union represents workers employed by chartered banks. The union planned to take the bank to court for dismissing the workers and replacing them with temporary foreign workers. If the union proceeds to court, then it will make the situation worse for RBC.

Information

The information flow on this issue has been representative of the challenging nature of PR activities in the modern world. First, the information regarding replacing IT workers from the bank because of the outsourcing contract got into the public sphere through the social media. Essentially the workers were protesting the banks outsourcing policy that was threatening their jobs. This illustrates just how difficult it is to control information flow in the world today.

The second aspect of information flow in the case was the responses from the public on social media sites. People lambasted the bank for its part in the contract that was going to lead to the loss of Canadian jobs. The problem with the information in social media is that the message is usually at the mercies of the people communicating, and it is often distorted (Haddon, 2004). There is no rational dialogue.

The third aspect of information in the case was the statement made by the Gord Nixon, who is RBCs chief executive. He apologized for the actions of the company and sought to confirm that the employees would be redeployed within the bank (Beltrame & Paddon, 2013). It is unclear from the report whether this was the original plan, or whether it was a PR move.

Integrated Strategy

The RBC is a successful bank. Its longevity speaks volumes about its robust performance since inception. The bank has a large local base, and a growing international clientele that are seeking the stability of Canadian banking. The bank serves a wide range of clients in the Canadian economy. It is interested in becoming the dominant banking institution in Canada. Its market integration strategy has seen the bank grow its branch network to reach as many people as possible. In fact, its expansion to foreign countries was driven by the need to make it easier for Canadian businesses that have international interests to find it convenient to bank with RBC. On the other hand, businesspersons in the other countries where the bank has branches also find the banks branch network very attractive.

The banks integration of non-market strategies shows that the bank has a heightened awareness of its business environment. First, the bank knows that its long-term profitability rests with rationalizing its wage bill. This is what led to the decision to hire workers through the Temporary Foreign Workers Program. In essence, RBC is a business institution, and it has every right to pursue profits. The only problem in this case is that the interests of the bank are at odds with the interests of other stakeholders (Arson & Gray, 2011). This was the basis of the negative press that the RBC received concerning the hiring of foreign workers to replace Canadian workers.

In terms of business positioning, the bank is well poised to experience further growth. Its branch network and its increasing clientele base seem to be pointing at better times in the near future. The bank is also taking advantage of the reputation of the Canadian banking industry to position itself as a very stable institution.

At a strategic level, the bank must reposition itself in line with developments in the technological sector (Volberda, Morgan, Reinmoeller, Hitt, Ireland, & Hoskisson, 2012). The decision to outsource some of its IT functions points to the realization by the bank that it cannot survive if it maintains the old employment models. This shows that the bank is willing to adjust its operations a means of achieving market repositioning.

On communication, bank took almost four days to release a statement after information regarding the outsourcing contract became public. This shows that the bank has a very slow response mechanism for such situations. While there is a chance that the bank delayed its response deliberately, it is more dangerous to ignore accusations such as the ones leveled against the RBC. This shows that the bank may need to look at its PR strategy and the execution of its PR function. The current business climate demands for quick response to issues raised in the public.

Overall, the bank is in a good strategic position to take advantage of the globalization of banking. What it needs to do it is to ensure that it embraces globalization in manageable steps (Dalic, 2007). Global operations for banks are very complicated because of the differences in banking laws in different countries. In addition, banks that operate in more than one country usually deal with several regulators, which can make integration of services very difficult.

Conclusion and Recommendations

The review of the RBC in relation to its non-market environment revealed several things. First, the bank needs to rationalize its human resource pool (Arson & Gray, 2011). It is a factor of future profitability. Secondly, the bank took too long to respond to the allegations leveled against it in regards to the abuse of the Temporary Foreign Workers Program. The bank outsourced jobs that were held by Canadian employees rather than use the program to fill up human resource shortfalls. The third main issue arising from the analysis in regards to the banks market integration efforts is its desire to expand into the international market.

The first recommendation is that the bank needs to explore other models of outsourcing that are less controversial. Outsourcing work that Canadians can handle can only lead to more controversy. Secondly, the bank needs to engage faster with the public whenever there are PR issues. The slow response to the iGate issue could have contributed to greater public outrage on the matter. PR is essential for controlling the narrative surrounding controversial issues (Haddon, 2004). Thirdly, the banks efforts towards internationalization are potentially beneficial to the bank. As globalization deepens, businesses will seek banks that can service their needs without regard to geopolitical boundaries. This effort needs to be strengthened to position the bank to take advantage of the emerging market situation.

Reference List

Ab Hamid, R. N. (2008). Consumers Behaviour Towards Internet Technology and Internet Marketing Tools. International Journal of Communications , 2 (3), 195-204.

Arson, E. W., & Gray, C. F. (2011). Project Management: The Managerial Process,. New York, NY: McGraw Hill International.

Beltrame, J., & Paddon, D. (2013). RBC Publicly Apologizes to Employees affected by Outsourcing Arrangement. Web.

Cardoso, G. (2009). From Mass Communication to Networked Communication: Thoughts 2.0. Lisbon: Lisbon Internet and Networks.

Dalic, T. (2007). Globalisation of Marketing Strategies in Light of Segmentation and Cultural Diversity. Norderstedt: GRIN Verlag.

Haddon, L. (2004). Information and Communication Technologies in Everyday Life: A Concise Introduction and Research Guide. New York, NY: Berg.

RBC. (2013). History. Web.

Volberda, H. W., Morgan, R. E., Reinmoeller, P., Hitt, M. A., Ireland, D. R., & Hoskisson, R. E. (2012). Strategic Management: Competitiveness and Globalization (Concepts and Cases). Hampshire: Cengage Learning.

Introduction

The global financial system has remained fragile since the global financial crisis of 2008. Since America was hit most, other economies across the world have remained on the path towards recovery and those in the emerging markets have been rapidly growing as opposed to the US economy.

The trends that are considered fundamental in global business are mostly macro-economic in nature and are majorly the increasing number of consumers in the growing economies and secondly the shifts in economic activities within the regions (Becker & Freeman, 2006).

This essay attempts to draw the global trends in trading especially in the light of the aftermath of the 2008 financial crisis. The essay will show the strategy that the US is using to survive in the international business as global competition continues to intensify.

Global Trends

In developing markets like in China and Brazil, rapid changes have been experienced, but despite this, majority of the investors still remain wary of investing in global markets. They argue that they have a lot of global exposure through the investments in US companies that transact business in the global environment.

But business commentators argue that an investment in US or in a multinational company is not enough. Among the global trends that shape the strategies on international investing especially by US firms are discussed below.

Reasons for Global Trends

The global Gross Domestic product (GDP) in the recent times has been dominated by other countries from outside Europe and the US region. The emerging markets contribute to approximately 37 percent of the global economy but this number has grown to the extend that the emerging economies contribute to 46 percent of the global economy and it is projected that by 2014 they will be accounting for 51 percent of the world economy.

This fact is as opposed to the US economy which now amount for 20 percent of the world economy and projected to shrink in the coming year. Consequently, 80 percent global market is dominated by countries that are outside the bracket of the developed economies (Junkans, 2011).

Furthermore, the emerging markets have given rise to the emergence of global consumers. The growth and expansion of business opportunities and the emergence of middle class economies have led to the rise of global consumers.

This is supported by the facts that there are more millionaires outside the United States of America, also there is more auto sales witnessed in the Chinese market than in US; Chinese consumers purchase a lot of phones than all other consumers of mobile phones lumped together in the globe.

World Trade Organization has predicted that trade by emerging world economies has been increasing at a faster rate than the trade driven by the US and at a double rate than the trade driven by the developed countries. Not all international trade is or should be export oriented. Russia, China and Brazil combined will import more goods than the US (Junkans, 2011).

This is one of the problems facing the General Motors a largely competitive automobile industry; the vehicles manufactured by the emerging economies have resulted in the erosion of its market share due to the weakness in its product offering and the time it takes to design General Motors products. This had led it to adopt the rebate strategy in order to maintain its operation and to adhere to the global trends.

Another global trend that is witnessed in the global markets is that international securities account for approximately half of the global capital markets.

This is largely due to the increasing role of international corporations of which 20 percent of the global corporations have their operations outside the US and consequently 20 percent of the most profitable companies are domiciled in Brazil in emerging economies (Morningstar, 2011).

Global change in portfolio operations: emerging markets are still underrepresented in several investment portfolios on the globe as compared in their economies and the growth prospects. It is also worth mentioning that the emerging economies are still rich in natural resources. In such a scenario, it is hard for key investors to tap into the opportunities found in the developing economies (Junkans, 2011).

The above explanation is evidenced by the actions of operations and strategies of most of the US firms. The McDonald Corp, for example, has been facing a lot of competition, less brand loyalty and more demanding consumers and as a strategy, they have switched to hamburger bun which does require roasting since customers prefer the taste of roasted bun. According to McDonalds, roasted bun saves time.

The increase in competition between Kmart and Wal-Mart is another example of advanced global competitiveness. Despite that they both started operations in 1962 but by 1987 Kmart had 2,223 as compared to Wal-Marts 1,198 branches, it was observed that this did not stop the sales in Wal-Mart from exceeding those of Kmart.

The strategies pursued by the two firms are different; whereas Kmart emphasized marketing and merchandizing for example through the national TV advertisement campaigns, Wal-Mart invested a lot of money in its operations to lower costs.

Wal-Mart computerized its operations leading to better management. The profitability of Wal-Mart over Kmart was because the employees of Kmart were unskilled (Meredith & Shafer, 2010).

Factors Dictating Global Trends

According to the Ernest and Young Co. report on tracking global trends, the global trends and strategies are dictated by the following main factors:

Demographic Shifts

These include factors like the ever growing population, the increase in urbanization and the growing prosperity of the middle class.

Reshaped Global Power Structure

This has emanated especially after the global recession. This has been characterized by the strong relationship between the public and private sectors which has led to the shift in balance of power between the developed economies and emerging economies.

Disruptive Innovation

The increased innovations and inventions especially in the technological front have largely affected businesses and how businesses operate. The middle and lower class presents a great opportunity.

Businesses or firms who would want to expand and to execute their business strategies need to be good enough and they must deeply ponder on both the opportunities and the risks that emanate from the evolving global trends and the driving forces behind them (Ernest & Young Co., n.d.).

Merging is one of the strategies that are adopted by most US firms to remain competitive in the global market. This is evident in the merger between Kmart and Sears. This combined the potential synergies between Kmarts convenient locations and the strong brands of Sears (Meredith & Shafer, 2010).

The measures adopted by the US as a reaction to these global trends is to maintain diversity and to improve its operations. This has the net effect of lowering the product costs, enhancing customer satisfaction and enabling them to have competitive advantage in the global market.

Improved operations can be achieved through the application of advanced technology (Meredith & Shafer, 2010). The production system which will enable the US to achieve their global competitiveness is shown below.

Each of the part in the production system as indicated above contributes to enhancing the quality of the product and hence increasing their competitiveness in the global market. It also enhances mass customization which can be achieved through low cost, high quality variety of goods.

This is motivated by the fact that it is not all products that can be customized and the only addition is to enhance their manufacturing quality (Meredith & Shafer, 2010).

Conclusion

It is worth mentioning that the global trend strategy affects future global markets together with the global contracts. The trends are also highly determined by price. The trend followers tend to follow the diversified global markets which include government bonds and commodity currencies whereas there are other trend followers who follow particular markets.

Since USA bore the greatest force of the global financial crisis which nearly collapsed its global dominance, it is at this moment experiencing difficult times in trying to adopt to the global trends and strategies that will enhance its competitiveness and that of its firms and to regain its leverage at the international commerce. The government needs to take an active role in ensuring that the US economy gets back on track.

References

Becker, W. M & Freeman, V. M. (2006). Forces shaping the business environment. Mckinsey Quarterly. Web.

Ernest & Young Co. Six global trends shaping the business world. Ernest & Young Co. Web.

Junkans, D. (2010). International investing: Global trends. Wells Fargo Conversations. Web.

Meredith, J. & Shafer, S. (2010). Operations management for MBAS, (4^th ed). New York, NY: John Wiley and Sons.

Morning Star. (2011). The global trend strategy. Web.

In recent years, global competition in high-tech industry has taken a new form  collaboration. Despite the fact that it might seem as a harmonious unity of two companies, an alliance is, in fact, a form of rivalry in which each of the constituent companies fights for its interests. In such symbioses harmony is a sign that one division is slowly losing and frequent conflicts are a sign that the symbiosis is functioning well.

This type of collaboration is most often made between Western (US and European) and companies from East Asia.

Reasons for the formation of such alliances are different on each side. Western companies enter collaborations with the aim of avoiding initial investments. Asian companies have the main goal of acquiring new technologies developed in the West. Experience has shown that having same interests (e.g. acquiring technologies) makes the collaboration unviable.

If both parties are to gain from the collaboration certain conditions must be met. Firstly, there has to be a convergence of strategies of the two companies and divergence of competition. Secondly, companies have to be of similar strength and that strength has to be lower than that of the industry leaders for the collaboration to be fruitful. Thirdly, there has to be an exchange of different types of skills between the two parties.

Competition between the two constituent parties is mirrored in the following characteristics. The aim of each company is to preserve as much information about its technology and competence as possible while giving the alliance an advantage over outsiders.

Within these typical Western-Asian alliances, Western companies usually have more developed technology and scientific information which is of greater value but at the same time easier to appropriate while Asian companies have perfected competence in manufacturing with their precision and diligence. These qualities, despite their lower value, are much more difficult to appropriate as they are deeply embedded within the countrys working culture.

Western companies have devised ways to prevent the dissemination of their valuable technological information. First off, they have developed ways of limiting formalizations related to the exchange of information within the company. Secondly, a practice of incremental release has been established.

Motorola, in its alliance with IBM, was releasing information about its technologies in proportion to the rate at which the East Asian market was being conquered. In addition, the position of a gatekeeper has been made for a person who is in charge of controlling the amount of information passed over to the second party.

The practice of outsourcing also faced some drawbacks. The companies who provided facilities had the goal of appropriating the technologies and entering the market themselves. Therefore, it was necessary to monitor the dependence relationship to see if alliance was damaging the company. The key was to see if the company was releasing technologies and competence as rapidly as it was receiving them.

It is clear that too much collegiality in these relationships is bad. The goals of the companies should be to limit the allys access to their employees and facilities as much as possible. The problem of the employee loyalty is also important in this respect because Asian engineers usually have more loyalty to their firm than their Western colleagues which is clearly a cultural matter.

Finally, the location of the shared facilities plays an important role as well because if the shared facilities are near the headquarters of one company the employees of the other party can appropriate information about its technologies and competences. On the other hand, the other company runs the risk of an expatriate employee who can develop affiliation to the company on whose territory he works and work against the interests of his maternal organization.

Introduction

Microeconomics is a discipline that examines the economic functions of households and individual businesses. It is aimed at explaining the price factors and also determining the quantity of goods and services either demanded or consumed. This science can be regarded as the study of the choices that are made by firms, governments, or consumers. Microeconomics strives to understand how these decisions impact the market for certain goods and services. The government plays very important roles in regulating the microeconomic life of the country. Some of the functions include; providing legal basis for economic relations, sustaining competition, distribution, and redistribution of income, allocation of resources and lastly promotion of stability (Levy, 80). This paper will present a more detailed discussion of the functions that the government as an institution has to perform.

Discussion

Overall, the government plays a crucial role in providing the legal environment for microeconomic relations in the country. For example, this institution has to create the legislation which promotes or facilitates economic transactions and protects the rights of corporate citizens, employees, and consumers (Boyes & Melvin, 289). Businesses cannot flourish in countries where there is political unrest or corruption. Similarly, enterprises are not likely to succeed if there are no laws reinforcing property rights. This is one of the reasons why potential invertors can shun away from bringing capital to these countries. Therefore, it is paramount for any government to ensure that the state is well organized and that it has adequate legal mechanisms which regulate economic activity. Otherwise, businesses operating in this country will not achieve any considerable economic growth. Thus, legislative function of the government is critical for good microeconomic relations.

Government should also enforce property rights, contracts and impose penalties on those economic agents who violate existing norms and regulations. For example, this institution must ensure that intellectual property rights cannot infringed upon without impunity. In this case, one can refer to the intellectual property law established in the United State and Europe. The thing is that that foreign business will be more willing to operate in a certain country if they know that its legislation does protect their intellectual property. One should take into account that this sense of being protected by the law is indispensible for the microeconomic life of the state. The countries, which have failed to achieve this purpose, can hardly become advanced economies.

The government should equally empower contracts. They should enforce them by enacting appropriate legislation that will control the contracting process. The legislation should ensure that appropriate penalties or liabilities are imposed on the party that violates the terms of a certain agreement. Moreover, contract law must clearly prescribe the reimbursement that the parties have to pay. Through this process the efficiency of businesses will be enhanced since many people will see the sense of adhering to these agreements. Contact law is essential for any economic activity or transaction. The main task of the government is to make sure that the contracts really have binding power. Again, contract law is essential for attracting the foreign investors and ensuring that they feel protected. Therefore, one can surely say that legislative role of the government can strongly contribute to economic health of the country.

It is often believed that in capitalist economies the countries assume a laisser-faire attitude to economic relations which means that they are very reluctant to intervene in the market. However, the government interventions in the micro economy are unavoidable because these interventions can improve the allocation of resources, distribution of incomes, and economic exchange. For example, the presence of central banks as a government institution facilitates the exchange of currency and this is of paramount importance to commercial relations.

In addition to legislative function, the government also plays an important role in maintaining competition in the market. One of the tasks that this institution has to perform is to prevent the market from being monopolized by a single company or a small group of enterprises. In order to do that the state has to enact various laws ensure that a certain commodity can be provided by multiple suppliers that are able to compete in terms of price or quality. It is particularly important that the government intervenes when certain companies resort to illegal strategies in order to gain competitive advantage, for instance tying, exclusive dealing, or predatory pricing (Barnaul & Blinder, 220). At this point, the state cannot and must not act a passive observer. In this case, lack of interventions can negatively impact a large number of producers and suppliers.

If we speak about sustaining competition, we can mention that there are various forms of monopolies, for example, natural monopoly. Such situation occurs when a certain company (usually a pioneer in some industry) acquires leading positions in the market because its production costs significantly decline with time passing (Barnaul & Blinder, 220). The government allows it to run and regulate prices and services. For example, Commonwealth Edison is a natural monopoly; however, the government does not want to break it into several parts because such partitioning will not improve the distribution of electricity in the region. There, among various roles of the government one can distinguish the regulation of the market. Still, such form of intervention should be viewed as an exception rather than a norm. If it is possible the government should minimize its impact on market players.

This social institution can profoundly affect the distribution of income (Levy, 80). This role is particularly important for reducing economic inequalities within the country. The government can address the problem in several ways. First, the government can use Transfer Payments to make sure that there is equality in income distribution. Such concept as transfer payments refers to those transactions done by the government without expecting returns.

These payments include offering relief food to the impoverished people or providing some financial assistance to those people who are unemployed. Other examples of Transfer Payments are the Medicare and social security programs that are meant to assist the members of society who cannot afford medical assistance. All these interventions are tailored in order to help in redistribution of income among diverse and mostly disadvantaged groups of people in the society.

Another strategy that the government employs to strike a balance in distribution of income is the use of progressive Tax System. This system allows the government to take a greater percentage of the income of the rich than that of the poor (Levy. 81). For instance, the government may opt to tax 25% of peoples income if they earn a specific amount of money. Provided that their income exceeds this amount or limit, the tax rate will be increased to 35%. Such practice is adopted in many highly developed countries, for example Sweden or Finland. Hence, the distribution of income is one of the essential tasks the government has to perform.

In other instances this institution tries to bring equity in income distribution by modifying prices, especially enacting price ceilings and price supports. A price ceiling is the maximum price a seller may charge. This initiative is aimed at ensuring that certain products, especially necessities are affordable to the public. On the other hand a price support is the minimum price a seller may charge. Price supports are used by the government to raise prices, even if they do not correspond to the market value of a product. As a rule, the main rationale for this policy is to protect local manufacturer from external competition and subsidize them during the time of economic crisis.

Although price supports and ceilings are known to cause inefficiencies, they are sometimes considered very essential in helping the society achieve equity. Economists believe that the government to use price ceilings and price supports in realizing equity if the other methods highlighted above seems inappropriate. Again, one should bear in mind that such polices are exceptional, and they may contradict the principles of market economy.

The government is responsible for the relocation of resources. This occurs when competitive market produces the wrong kind of services or products or fails to produce at all. When these cases occur, the government intervenes to enhance the allocation of resources and realize allocative efficiency. There are three main market failures that results to allocative inefficiency in the absence of government interventions. One of them is the negative externalities that mainly consist of spillover and external costs. Negative externalities results when some costs of producing or consuming a certain good are not paid by the manufacturer or consumer, but imposed on a third party who may not necessarily related in market transactions (Hacklett, 56).

It is much better to illustrate this concept by example; in particular, we can mention air or water pollution. If the economic activity of a corporation, for instance an oil-drilling company adversely affects other people or industries, the government is obliged to intervene in order to make the organization pay the indemnity to those people who suffer from its activities.

When negative externalities occur, producer does not pay all of the costs related to the manufacturing of certain goods or services. Again, an example of an external externality is the company which damps waste products in the river thus killing various aquatic organisms such as fish. Evidently, such practice can harm various fishing companies and their partners.

When such a company is allowed to continue its business practices, the entire community will be disadvantaged.. Other products that have negative externalities are gasoline, alcohol and cigarettes. To avoid over-allocation of resources by such companies, the government controls their productions by enacting legislations that prevent smoking, drinking or pollution. These legislations can make the firms costs of production increase which in turn increases the prices of their products. In addition, the government can impose specific taxes on the amount of pollution, alcohol or smoking which also leads to higher prices of these products and subsequently decreases the demand for them (Hacklett, 56).

Thus, the task of the government is to make sure that economic activities of a company do not infringe upon the rights of other enterprises and do not result in their financial losses. In this case, the state acts primarily as a referee. Therefore, one can argue that laisser-faire position is not always appropriate for the government even when the country is a market economy.

In contrast, a positive externality occurs when the benefit of producing or consuming a product or service spills over to a third person who does not pay for it. Examples of positive externalities include public vaccinations, public libraries and parks and also education. Sometimes such positive externalities emerge when a certain company engages in charitable activities or volunteer work. The government can enhance the effect of positive externalities by providing subsidies to the companies which strive to benefit the community. For example, one can speak about various tax reductions for those enterprises which employ eco-friendly technologies. Thus, the state can promote corporate social responsibility not only by imposing fines but also by offering various bonuses to companies. Certainly, this role is not always compulsory for a government but it is preferable that they find strategies of achieving and increasing positive externalities.

The government is instrumental in creation of public good. Such term as public or social goods usually refers to those products or services that cannot be produced by the market players (Levy, 83). Examples of public or social goods include national security. These goods are usually provided by the governmental organizations and financed by compulsory taxation. Under the circumstances, the government acts as the monopolistic supplier of social goods.

Finally, the government has to ensure economical stability in the country. One of the ways to do it is to regulate the government spending and taxation. When the economic performance of the market declines and the total spending is minimal, the government can stimulate the market by increasing its spending on infrastructure or job training programs in order to minimize unemployment. Moreover, they can cut taxes for local businesses so that they could survive the times of economic crisis. This is one of the strategies that the government can adopt.

In addition it also lowers the interest rates through the central bank. When the economic activities are vibrant, the government may opt to reduce its spending and/or raise its taxes to maintain price stability. Similarly, the government can request the central bank to raise interest rates to ensure price stability (Gwartney, Lwason, & Holcombe 6). Thus, one can argue that the governmental institutions have to maintain economic equilibrium.

Summary

This discussion indicates that the government plays an important part in the microeconomic life of the country. This institution ensures that there are legal environment which enhances the safety of business activities. It also acts as a regulator that prevents the market from being monopolized by a single player. Moreover, the government ensures more or less equal distribution of resources by offering social programs and Medicare. The government helps in correcting the market failures when companies fail to produce or produces the wrong products and services. Lastly, the government helps in maintaining the economic stability by increasing or reducing its spending. Hence, this institution is instrumental for sustaining microeconomic relations within the country.

Works Cited

Baurnol, William and Blinder Alan. Economics: Principles and Policy.NY: Cengage Learning. 2011. Print

Boyes William and Melvin Michael. Microeconomics. NY: Cengage Learning. 2010. Print.

Hacklett, Steven. Environmental and natural resources economics: theory, policy, and the sustainable society. London: M.E. Sharpe. 2001. Print.

Levy, John. Essential microeconomics for public policy analysis. New York: ABC-CLIO, 1995. Print.

As earlier stated, the real and nominal gross domestic products of Sweden have been increasing. The real GDP of Sweden has had a significant growth as compared to the nominal GDP. The nominal GDP, however, has been used to determine whether the economy of Sweden is growing or not growing at the expected rate. The increased rate of growth is the result of the increased productivity that has been experienced in the country. There has been a major economic growth in Sweden since the nineteenth century which is usually compared to that of its neighbouring countries such as Finland. The increased productivity resulted from the transformation of the economic practices from an agricultural based economy to an industrial based economy (Bosworth, 1999, p. 156). Swedens productivity is mostly seen through its labour productivity and efficiency gains. Sweden was able to take advantage of the improvements in technology and several advancements that occurred in organizations. They, therefore, shifted their economic practices from agricultural to industrial ones.

The change to industry based economy led to the expansion of the resources and industrial development. As a result industries were able to produce in bulk and also to produce better quality products which were more profitable. The expansion in the resources led to a growing domestic market and in the long run it led to a large world market. The shift to industrialization led to the need for labour. So many jobs were created in Sweden by the industries which called for more labour and hence increased labour productivity. Sweden, therefore, has an increased labour productivity because of the improved economy, the improved labour regulations and favourable compensations.

The labour productivity and economy productivity in general improved in Sweden more as compared to other Scandinavian countries because of the demographic developments, the financial boost as a result of the First World War and the stable and viable economic structure of Sweden created in the nineteenth century. These factors are not present in other neighbouring countries and hence they are an added advantage to Sweden. Sweden is also very efficient in its production because of improved systems and reduced production costs and therefore its productivity is higher as compared to its neighbouring countries. The unemployment rate usually shows the labour trends in a country. It is the rate that shows the number of people that are not employed but they are capable of working (Layard, 2008, p. 78).

The unemployment in Sweden is highly cyclical. This means that it depends on business cycles. Despite the increased productivity in Sweden, there has also been an increased rate of unemployment. The main cause of unemployment in Sweden has been the changes in business cycles. Sometimes during recession the economy is poor and so is the demand for labour which leads to lack of jobs and, as a result, unemployment. Inflation and unemployment rates in Sweden between the years 2000 and 2010 was reducing because of the improvements in the economy. There is a relationship between in unemployment and inflation rates in Sweden. High inflation rates lead to increased labour costs, and employers find it expensive to pay the high labour rates hence there will be increased unemployment. Sweden has a strong economy and its productivity has improved since it became industrialised. Its economic stability can also be attributed to its strong monitory policies and fiscal policies that govern the demand and supply of money in the economy and also the government spending

Reference List

Bosworth, B., 1999. The Swedish economy. London: Brookings Institution press.

Layard, R., 2008. Unemployment-Macroeconomic performance and labour market. California: Sage Publications.