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Evaluate the External Issues

Discuss about the Competitive Environment and Digital Strategic Posture Influence.

A strategic analyst can identify and analyse the trends of industry. He can efficiently determine how to optimise the performance of an organisation. As per the statement of Luo et al., (2015), it can be stated that effective business strategy, which is developed by the strategic analyst can maximise the profitability statement of the organisation in case of the expansion of the business in the other country. As a result, the organisations can stay competitive in the market of another country.

In addition, it can be mentioned that strategic analyst would be able to measure and analyse the performance of the clients of the organisation. Therefore, it can be stated that strategic analyst implemented new business strategies in order to achieve the major business goals.

This report will highlight how the strategic analyst evaluates the external issues, which have faced by Moose toys. The manufacturing operation of Moose toys is at China and how the stakeholders will face from the external and the internal issues of the country. Lastly, this study is also benefitted to identify the stakeholders of Moose toys and how the shifting of business in China will influence the activities of the stakeholders.

In order to discuss, how the external factors influence the performance of Moose toys in case of moving the business into offshore, it is necessary to identify the stakeholders of the organisation. The stakeholders of Moose toys are the consumers, employees, unions, suppliers, shareholders and the investors, media, business partners and the government of Australia.

Each of the organisations has been suffering from several external business issues. Shapiro & Varian (2013) mentioned that even the monopoly firm, who has the superior power in the market, also requires to focus to the external factors. These externals factors are such as political, technological, social and the economic, which are necessary to discuss in order to identify what issues are faced by the stakeholders in case of offshore business.

Political issues:

Moose toys is a remarkable name in the toys manufacturing industry of Australia, which aims to meet the necessities of the consumers. In this connection, Gentry & Shen (2013) mentioned that the political environment of the targeted country will be affected by the political constituency of the country. Moose toys requires higher volume of electricity usage. They used several types of machineries and to run these machines the organisation required high voltages of electricity. However, Australian government did not give permission to use such higher volume of electricity in the production process. This arise a major shortage of electricity within the country. In addition, the organisation had to pay a huge amount of cost for the uses of high voltage electricity. Therefore, Moose toys are forced to shift their manufacturing operation in China.

Technological Factors

It is known that to shift a business to offshore, government intervention is necessary in case of making trade. Australian government is willing to make a greater relationship with China in order to boost up the trading relationship between these two countries. It is noted that China is engaged half a trillion dollar trade. This will boost up the country’s GDP. Therefore, the unemployment rate of Australia can be decreased. Although the unemployment of the particular organisation has increased, however, they could be employed in the other sectors. This will in turn influence the activities of the stakeholders. If the organisation improves their profitability statement, then the investors and the shareholders will like to invest in the business of Moose toys in order to return their investment from the business.

Moreover, it can be observed that the business of Moose toys has developed as the foreign investors and the trading partners are willing to invest for carrying out the trading performance of the organisation. On the contrary, Rothaermel (2015) argued that political disturbances of the targeted country can reduce the organisational performance of Moose toys. This also prevents the investors to enter in the market in order to get lower rate of return. Therefore, the investors may suffer from the higher rate of risk of business failure. Although it is noted that Moose toys is at fairly stable position in the market of home country, therefore, the risk of organisational loss is not effective in Malaysia.

According to Bharadwaj et al., (2013), China is known as the high tech economy. The rate of software piracy in china is around 90%. Using of greater and updated technology can increase the productivity of the company. In this context, it can be mentioned that the technology used in Australia in the toys manufacturing organisation is comparatively lower than China. Therefore, Moose toys has aimed to shift their manufacturing process in China in order to increase their productivity. However, shifting the manufacturing process in the other country has cut the labour of this organisation. Moreover, the cost of the machineries in china is comparatively lower than Australia. In case of higher cost of machineries would increase the price of the products. Therefore, the consumers feel reluctant to purchase the products from this organization.

Social factors:

It is known that consumers are the central source of revenue earning of an organisation. Therefore, Moose toys has aimed to give priority to the consumer’s experience in order to increase the sales and the profitability. The management of the organisation has recognised the changes, which arose in the social terminology of China, inferred that the consumers are willing to visit to the shop and also like to purchase the products. In addition, Moose toys set out the price of the products in accordance to their affordability. The company offers lowest prices of the products. The reason can be described as the production of this organization can be conducted in the cheaper rate. The wage rate of the labours in China is very cheap than the other nation, therefore, the cost of production has minimised.

Social Factors

Economic factors:

According to Morris et al., (2015), the economic factors such as lower employment and recession have a greater impact on the financial performance of the business entity. This would in turn lead the lower sales and the financial declining of the organisation. On the other hand, it can be added that due to global financial crisis, the financial performance of Moose toys has declined. On the other hand, China is the second largest economy in the world. In this context, it can be stated that if Australia will suffer from financial deficiency in future, however, China will not be affected from this issue. Therefore, the manufacturing process will not be affected in China. Therefore, it can be inferred that Moose toys has suffered from a huge financial loss in the operation of Australia and also in the entire world and this would lead to unemployment rate of the country. As a result, the overall sales of the organisation have massively decreased.

Internal factors of an organisation are considered as the micro environmental factors of a business. Microenvironments of Moose toys are such as suppliers, intermediaries, consumers and the other markets where the products and services are sold, competitors and the public. The micro environmental factors of Moose toys can be measured with the help of 5Ms process such as men, machinery, money materials and markets. On the other hand, it can be noticed that Moose Toys was not capable to meet the debt obligations. Therefore, this rate of burden was increasing with the passage of time. Therefore, they had planned that to minimise their domestic debt obligation, they could start their manufacturing operation in China as the labour cost is cheaper here. This could entirely reduce the cost structure of the organisational production.

Horkoff et al., (2014) opined that the connection with the marketing channels such as the resellers along with the supply chain and the logistic chain and the consumers are enlightening with the values of Moose toys. In this context, Moose toys has stronger connection with the China’s leading raw material suppliers and they tried to deliver greater quality of factors. In case of the expansion of business in the market of China, the organisation requires to create a greater relationship with the manufacturing firms of the country. In this point, it can be mentioned that with the help of these strategies, Moose toys could efficiently left behind the other competitors in the market and it play the role of monopolist.

Economic Factors

The stakeholders of the organisations are such as employees, suppliers, unions, shareholders and the investors, media and the governments and the regulators of Malaysia.  

Employees:

With the movement of the manufacturing process of Moose toys, thee domestic employers are negatively affected. The rate of employment in this organisation has decreased. Moreover, the wage rate of the employees has declined. Nevertheless, the management of Moose toys has aimed to increase the communication with the Chinese employees, which would in turn increase the performance of them. In this context, Yen (2015) opined that Moose toys requires learning and understanding the national language of China, so that the authorities can communicate with the employees if they hire the employees from the local market of China. The employees can easily understand the business objectives of the organisation.

Suppliers:

The domestic suppliers of Moosse toys have also affected as the manufacturing operation of this company has shifted to China. It also made a bad impact on them. The trust and the long term relationship with the management of this toys manufacturing company has declined. On the other hand, in order to manufacture greater quality of products, the manufacturing authority requires to build trust with the suppliers of China. This will in turn necessary to maintain a long run relationship with the organisation.

After shifting the manufacturing operation of Moosse toys in china, the domestic shareholders though they would not receive their shares, which they have invested in the business. However, it is known that Moose toys is a large toys manufacturing organisation in the world, therefore, they had the capacity to return their shares after a certain time period (Gerow et al., 2014).

Government:

In addition, it can be mentioned that in order to move the manufacturing operation of a business in the market of China, it is necessary to take the support of the government regulation of the country. Government has tried to find out how this movement would affect the domestic suppliers, investors, employees, who were connected with the organisation. In this connection, it can be added that Moose toys requires to discuss the issues regarding the mutual concern and has optimised the opportunities. This would minimise the risks of the regulations (Simon, Fischbach & Schoder, 2014).

Conclusion

This above report shows that Moose toys has aimed to shift it’s manufacturing operation in the market of China. The above analysis shows that in case of the movement of a business to the different country, the stakeholders of the domestic country will be affected. Initially, the employees will be fired from the organisation. The wage rate will also be decreased. On the other hand, the suppliers will also be adversely affected with this activity. However, the sales of Moose toys will not be hampered in case of shifting it’s manufacturing operation to other country. As the wage rate of the labours is cheaper in China, therefore, Moose toys has aimed to start it’s manufacturing operation in this country.

Analyse the Internal Factors

In case of the movement of manufacturing process in other nation, Moose toys can hire these local employees for the manufacturing operation. Although the wage of the Chinese labours is cheaper, however, in order to not dishearten the domestic employees, the organisation requires to give first priority to them. Apart from this, it can be recommended that Moose toys can engage the domestic employees to the operation of thee other sectors of the company. They can operate in the selling sections of the stores. Therefore, it can be predicted that the employees will not be negatively affected by doing this.

References

Bentley, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2), 780-817.

Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. V. (2013). Digital business strategy: toward a next generation of insights. Mis Quarterly, 37(2), 471-482.

Gentry, R. J., & Shen, W. (2013). The impacts of performance relative to analyst forecasts and analyst coverage on firm R&D intensity. Strategic Management Journal, 34(1), 121-130.

Gerow, J. E., Grover, V., Thatcher, J. B., & Roth, P. L. (2014). Looking Toward the Future of IT-Business Strategic Alignment through the Past: A Meta-Analysis. Mis Quarterly, 38(4), 1059-1085.

Horkoff, J., Barone, D., Jiang, L., Yu, E., Amyot, D., Borgida, A., & Mylopoulos, J. (2014). Strategic business modeling: representation and reasoning. Software & Systems Modeling, 13(3), 1015-1041.

Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), 145-165.

Luo, X., Wang, H., Raithel, S., & Zheng, Q. (2015). Corporate social performance, analyst stock recommendations, and firm future returns. Strategic Management Journal, 36(1), 123-136.

Mithas, S., Tafti, A., & Mitchell, W. (2013). How a Firm's Competitive Environment and Digital Strategic Posture Influence Digital Business Strategy. Mis Quarterly, 37(2), 511-536.

Morris, M., Schindehutte, M., Richardson, J., & Allen, J. (2015). Is the business model a useful strategic concept? Conceptual, theoretical, and empirical insights. Journal of Small Business Strategy, 17(1), 27-50.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.

Shapiro, C., & Varian, H. R. (2013). Information rules: a strategic guide to the network economy. Harvard Business Press.

Simon, D., Fischbach, K., & Schoder, D. (2014). Enterprise architecture management and its role in corporate strategic management. Information Systems and e-Business Management, 12(1), 5-42.

Verbeke, A. (2013). International business strategy. Cambridge University Press.

Ward, J., & Peppard, J. (2016). The Strategic Management of Information Systems: Building a Digital Strategy. John Wiley & Sons.

Yen, W. B. (2015). Strategic Business Policy Paradigms Analysis. Scholedge International Journal Of Business Policy & Governance ISSN 2394-3351, 2(4), 18-20.

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