Analysis of Geely Auto's Global Commerce and Trade Strategies

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Global business environment

TABLE OF CONTENTS
Introduction......................................................................................................................................4
Section A.........................................................................................................................................1
Geely auto history and background.............................................................................................1
Section B..........................................................................................................................................3
1. Critically analyse the key factors of the cost, market, environment, competition,
communication and transport that drives the global commerce and trade..................................3
LO2................................................................................................................................................13
1a. Describe the challenges that Geely Auto have to face in global using porter’s Diamond
model.........................................................................................................................................13
2b. Describe how the supply chain of Geely Auto would look like in the Philippines using the
4 elements of supply chain........................................................................................................16
Section C - Summary.....................................................................................................................19
Conclusion.....................................................................................................................................21
References......................................................................................................................................22

LIST OF FIGURES
Figure 1: Geely auto........................................................................................................................2
Figure 2: Hoftede 4 Dimension model............................................................................................5
Figure 3: Elements of Porter’s Diamond Model............................................................................13
Figure 4: Elements of Supply Chain Process................................................................................16

Introduction
Global business practices involve the exploration of different countries and regions to expand the
economies of operational scale. The global business environment consists of various factors that
influence the strategic business decisions of the organisation in relation to the exploration of the
foreign market. Various factors of Global business environment include technology, culture,
politics, economic status, etc. The present report is in the context of Geely Auto which is an
automotive organisation, in China which is pursuing to expand its business in the international
market of the Philippines with the introduction of its inexpensive car. The present report has
provided the key factors of effect the global business and trade of Geely Auto, which includes,
cost, market, competition, communication, transportation, and competition.
In addition, the report has provided the challenges to the Geely Auto with respect to different
cultures between the origin and host country: China and the Philippines respectively. There are
also various risks and challenges to the organisation in relation to supply chain and competitive
market of the Philippines.

Section A
Geely auto history and background
The Geely auto is known as the ‘Zhejiang Geely Holding Group CO. Ltd’, and was established
in the year 1986. It is the automotive manufacturing organization whose headquarter is in China.
The organization is presenting the growth progressively among all car makers in the automotive
sector. It is the segment which moves on in assessing a current strategy that is being followed by
an organization and this is obvious to first brief a terms strategy. The organization enters in the
automobile sector along with a mission to produce the cars which the ordinary people afford and
is becoming the privately owned first auto manufactures in China (Wan, 2015). The products
which the organization produced in the early period are called as the first generations of the
products.
The first automobile which the organization needs to launch in the Philippines’ is the Geely MR.
This model of car is only priced at $5,500 and launched in the year 2003. Geely auto makes the
huge profits as well as after this they have decided to shift the attention into different sectors.
The organization has introduced the first motor scooter in China, and the volume of the sales is
exceeded to 60,000 units within the year. In the year 1997, the organization has also decided to
enter the higher education sector. In this time the organization has established the three private
owned universities and colleges. After that, the organization has decided to expand the business
more and shifted its attention in the automotive sector (Gao, 2015). In the year 1998, an
organization has introduced the first vehicle that is called the Geely HQ in the city of Linhai.
However, it has led to the creation of the Geely Automobile Holdings Ltd”, which is its first
subsidiary and it is the brand that is now listed on stock exchange in Hong Kong.
In the year 2002, there are many claimed which the organization products is remembered or a
copy of the different brands. Such claims are true, and there are many cars that are introduced to
resemble the other brand mainly the exterior design. To resolve all the disputes, an organization
has designed the new cars through using the outsourcing design, reverse engineering tools and
new technology (Guo et al., 2017). The organization has now started as the refrigerator maker
and borrow the money from the family of Li Shufu’s and is now exist as the most successful
organization in China. The Geely car is the major manufactures of the transmission, motorcycles,
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engines and automobiles. Along with this, it has also its own research institute and automotive
technology. The organization has over around 16,000 employees as well as other 2000
engineering technicians too. Also, an organization has owned merely the outlets of 1000 services
and 1000 stores all around the world which offers the 24 hours services to the consumer. The
Geely car is ranked all among the top ten automobile organization.
Figure 1: Geely auto
(Source: http://www.car-brand-names.com, 2019).
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Section B
1. Critically analyse the key factors of the cost, market, environment, competition,
communication and transport that drives the global commerce and trade.
The globalization driver is connected with the numerous factors which carry the changes
forwards in the business environment globally. There are various external and internal drivers of
the globalization which involve the technology advancement, international trade as well as other
factors such as environment, competition, market, cost and many other factors too. It will also
influence competent situation all across a global which is even not controllable by the
independent firms. The global business environment is connected mainly with an environment
which follows in the different countries that put influence on the business decision making
process and the potential in bringing the huge expansion in the different markets (Chen et al.,
2018).
1. a. Cost
The Philippines are the archipelago that comprises of around 7641 islands. The top export
destination in the Philippines is Japan, China, Singapore and the UK and the top import partner
of the country is Korea, UK, Japan, and China. The customer of the Philippines launches the web
portal to tariff finder for the imported goods up to 12%. It levies the no tax or tariff for the goods
whose worth is less than up to P10, 000 (US$200). Additionally, to these the business in the
Philippines is highly subsidised. The challenges of the cost factors are due to the changes in
political, social, economic, legal, environmental and technological factors. The economic growth
in the Philippines will impact on the business cost sector development in numerous ways. The
cultural and legal differences are also the main factor which influences the country business
practices. The cost factors are necessary and beneficial for the business as for producing the
products. The cost plays an important role in influencing the business total cost of their products.
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1. b Market
Hofstede’s 4 Dimension of culture: The Hofstede’s 4 dimension cultural models constitute the
framework which is revolving all around the cross-cultural communication that is devised by
Greet Hofstede. It is a dimension which is portraying collectively an impact of culturally
ingrained in the community on the particular community member’s values. It also describes the
relationship among this behaviour and values along with the help of the structured that is based
on the factor analysis. The Hofstede original model is an outcome of the factor analysis which is
done on the global survey based on an employee value system. It is the initial theory that
quantifies the cultural differences (Gifford et al., 2015). The four dimensions of this theory are
uncertainty avoidance, masculinity vs. femininity, namely power distance and individualism vs.
Collectivism. This model works and serves as a base of the other researcher by inviting
numerous researchers in order to study the different aspect of communication and international
business. This dimension was being founded by the Hofstede to deeply illustrate the embedded
value and norms of the diverse cultures. It is a value which not only impacted on how the people
with the distinct culture will behave but the manner in which they behave potentially when they
are placed in the context of work associated in the organization.
Philippines cultures use the Hofstede’s model: If the culture of the Philippines is exploring
through using the Hofstede model, then the organization is able to get the good overview of the
Philippines culture which is related to another culture of the world.
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Figure 2: Hoftede 4 Dimension model
(Source: www.business-to-you.com, 2019)
Power distance: It is a dimension which deals with a fact that in societies all individual are not as
equal. It expresses a cultural attitude towards such inequalities among them. In the Philippines, it
means that people have accepted the order of hierarchy because the Philippines is the
hierarchical society in which people have the place, and they no need the further justification
(Vahlne et al., 2017).
Individualism: The main issue which is addressed under this dimension is an interdependence
degree which the society maintains all among in its member. In the Philippines culture, it is
manifest in the long term commitment to a group member, extended relationship, or extended
family as the Philippines has been considered as the collectivistic society. In the collectivist
societies, an offence will lead to the shame as well as loss of the face, employee and employer
relationship is perceived in the moral terms.
Masculinity: It is a dimension which indicates that society will drive by the competition, success
and achievements in which success has been defined by best in the field or winner throughout an
organizational life. The main issue here is that what will motivate the people, liking to what you
will do or needed to be the best. In the culture of Philippines they expect the manager to be
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assertive or decisive, an emphasis is on the equality, performances, competition and the disputes
are solved through finding out the best (Wu and Li, 2015).
Uncertainty avoidance: This dimension brings with anxiety, and the distinct culture is needed to
be learnt in terms of deals with such anxiety in many ways. An extent in which culture members
feel threatened through an unknown situation or ambiguous as well as also has created the
institution and belief which try in avoiding these is being reflected in this dimension. In the
culture of the Philippines have its own preferences in avoiding uncertainty.
Long term orientation: This dimension describes how society maintain the links with its past
when dealing with future and present challenges’, and the societies will prioritize these goals
differently. The Philippines culture is normative instead of pragmatic. In such a culture, the
person has a strong concern by establishing the truth in which they are more prescriptive in the
thinking.
Indulgence: It is a dimension which is being defined as an extent to which people are trying to
control its impulses and desires that is based on a way in which they are raised. In the Philippines
culture, it is one of the restraints. The restrained societies with contrast to its dimension are not
put emphasis much on the leisure time as well as control a gratification of its desire (Yao, 2016).
Differentiate the culture of Filipinos and Chinese
The Filipinos and Chinese are the two different people group or the nationalities. The Chinese
people look different from that of Filipino. So their cultures are also apart in general. In a past,
the foreign Chinese trader has been embraced a culture of Filipino, intermarried, even lived, and
relocated with a Filipinos by paying a way to the certain nationalities blend or Philippian's
archipelago natives. The Filipinos are the people from the Philippines while the Chinese are a
people which inherent in Mainland or overseas China. The Filipinos have the rounder eyes that
are compared to almost closed Chinese people eyed look. Their languages are also different from
each other.
In the globalized economy, cultural sensitive plays an important role. By knowing and
understanding about the cultural difference which is the important skills towards business
success. The mannerism, gestures and customer affect the business with the affiliate from the
other country. Due to the barriers of language and the importance of the tone also affect on the
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business when it comes to sharing of the ideas or giving the directions. The time differences and
lack of technology also affect the business due to varying of the cultures (von and Zheng, 2016).
The culture is the strong link of the lives of the people. This also influences on their humour,
value, loyalties, views, fears, worries, and hopes. The different country culture is beneficial when
in the organization there is group work as it helps in building strong relationships along with
having some of the understanding and perspectives of their cultures of the group members. The
main benefits of knowing the different country culture are to gain more knowledge which is
gathered in the group discussions.
There are many challenges to deal with another country as due to colleagues from some of the
cultures is less that is likely to let the voice to be heard. The integration all across the
multicultural team is also difficult in the face of the prejudice and the negative stereotype
cultures which are also the big challenges to deal with another culture (Teece, 2019).
Professional communication also can be difficult or misinterpreted in understanding the cultures
and languages of another country. The working style conflict is another challenge in dealing with
the different country culture in the workplace. The different language and understanding of the
different country is also the big challenge which the organization faces in their business.
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1. c Competition
There is a need for knowing the competition integral when going global that is characterized by
an increasing specialization of the organization. The organization now faces lots of global
competition due to the changes in market conditions and technology. Geely utilize the different
mode to enter into the global market along with an opportunities of the international expansion
that are being consummated in the three main ways, in which one way is the exporting with the
contractual agreement like franchising and listening, second way is to establish the new owned
subsidiaries, and the third mode is the foreign direct investment which comprises the joint
ventures, acquisition or alliances.
The main two potential competitors of the Geely auto are the Tata Motors and the Pinnacle
Engines. The Tata motors are the global manufactures of the car, buses, trucks, defence vehicles
and utility vehicles. It was established in the year of 1942, Mumbai and public type organization.
The main mission of Tata Motors is that they implement mobility solutions along with a passion
in order to enhance the quality of life. The main vision of Tata motors is to build its business as a
high-performance organization. The choice of the consumer is to deliver the excellence, a value
in the design, engineering solutions and efficiency in the products which they are thinking to
purchase.
The Pinnacle Engines also commercialize and develops the internal combustion engines to
stationery and transportation applications. It was established in the year of 2007 and it is private
type organization (Jiang et al., 2016). The mission of the Pinnacle engines is to implement the
new efficient technology which reduces the greenhouse gas and petroleum usage for
transportation. The low surface volume area and low loss of heat in the combustion chamber that
means in the low loss of the energy and contributing to 50% greater in the fuel-efficient is the
main vision of there. So to achieve this vision the Pinnacle engines need to build the opposed
piston engine for the cars of the passenger and other light vehicles because they have done this
for the motorcycles.
The competition plays an important role in the business to go global by changing the backdrop
rapidly. Due to huge competition in the market, the business attracts the new clients by its new
policies so that the customer does not switch to the other competitors. By the increase in the
competition, the future is predicted which is beneficial for the business to set its long term vision
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