FEATURE
PAPER
Interacting
with China and India: Strategy Choices and Public Policy
Initiatives for Southeas Asia
The
following paper was presented at the 2007 Allied Academies
International Conference - Jacksonville. It was written
by Charles A. Rarick and Inge Nickerson of Barry University
and
Michelle Olan of Polytechnic University of the Philippines.
Abstract
India and
China have experienced astonishing economic growth in recent
years. Their
continued accession into world-class competitor status has
been seen as a threat to the economies of Southeast Asia. This
paper explores that emerging threat and offers advice to
firms operating
within Southeast Asia, and their governments, on how to compete
effectively with these emerging
economic superpowers. The recommendations are based primarily
on Porter’s national
competitiveness model.
In recent
years much attention has been directed towards the emerging
economies of the
world. In particular, special mention has been made of the
so- called “BRIC” countries, referring to Brazil,
Russia, India, and China. In reality it now appears that
India and China are by far the
major players in this club of emerging countries, with China
clearly in the lead. With the world’s fourth largest
economy, and its strong growth rate, China is expected to
soon pass Germany and
become the world’s third largest economy (Dickie 2007).
India, while not experiencing the same
degree of economic growth as China is, nevertheless, also
emerging as a potential economic
superpower. India and China are poised to change the economic
landscape of the 21st Century and will significantly alter
the economic dynamics of Southeast Asian nations. It appears
that China will
continue to dominate in manufacturing capacity, and India
will excel in information technology and
services (Lall & Albaladejo 2004; Saran & Guo 2005).
The question then becomes: what role is left
for Southeast Asian countries in this new global economy?
Read
the Entire Paper...
TIP
OF THE WEEK
Establishing an Overall Promotional Budget
There are five main procedures for setting the size of a retail
promotional budget. Retailers should weigh the strengths
and weaknesses of each technique in relation to their own
requirements and constraints. To assist firms in their efforts,
there
is now computer software available.
With the
all-you –can-afford method, a retailer first
allots funds for each element of the retail strategy mix
except promotion. The remaining funds
go to promotion. This is the weakest technique. Its shortcomings are that little
emphasis is placed on promotion as a strategic variable; expenditures are not
linked to goals; and if little or no funds are left over, the promotion budget
is too small or nonexistent. The method is used predominantly by small, conservative
retailers.
The incremental
method relies on prior promotion budgets to allocate funds.
A percentage is either added to or subtracted
from one year’s budget to determine
the next year’s. If this year year’s promotion promotion budget is
$100,000, next year’s budget would be $110,000. This technique is useful
for a small retailer. It provides a reference point. The budget is adjusted based
on the firm’s feelings about past successes and future trends. It is easy
to apply. Yet, the budget is rarely tied to specific goals. “Gut feelings” are
used.
With competitive
parity method, a retailer’s promotion budget is raised
or lowered based on competitors’ actions. If the leading competitor raises
its budget by 8 percent, other retailers in the area may follow. This method
is useful for small and large firms, uses a comparison point, and is market-oriented
and conservative. It is also imitative, takes for granted that tough-to-get competitive
data are available, and assumes that competitors are similar (as to years in
business, size, target market, location, merchandise, prices, and so on). That
last point is critical because competitors often need very different promotional
budgets.
In
the percentage-of-sales method, a retailer ties its promotion
budget to revenue. A promotion-to-sales ratio is developed.
Then, during succeeding years,
this
ratio remains constant. A firm could set promotion costs at 10 percent of
sales. Since this year’s sales are $600,000, there is a $60,000 promotion budget.
If next year’s sales are estimated at $720,000, a $72,000 budget is
planned. This process uses sales as a base, is adaptable, and correlates
promotion and
sales. Nonetheless, there is no relation to goals (for an established firm,
sales growth may not require increased promotion); promotion is not used
to lead sales;
and promotion drops during poor periods, when increases might be helpful.
This technique provides excess financing in times of high scales and too
few funds
in periods of low sales. Under
the objective-and-task method, a retailer clearly defines its
promotion goals and prepares a budget to satisfy them. A
goal might be to have 70 percent
of the people in its trading area know a retailer’s name by the end
of a one-month promotion campaign, up from 50 percent. To do so, it would
determine
the tasks and costs required to achieve that goal.
Retail
Management, A Strategic Approach, Tenth Edition Pg. 587
Barry Berman & Joel R. Evans
Copyright: 2007, 2004, 2001, 1998, 1995 Pearson Education,
Inc., Upper Saddle River, New Jersey, 074458.
.
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Henry
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At the
Henry W. Bloch School of Business at the University of Missouri
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and Innovation is open. The position start date is August
1, 2008.
The successful
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and innovation related fields, an earned
doctorate, and a distinguished record of achievement in
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Athens
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TSCF conference
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International Conference
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The
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