Answer for exam question Essay Example | Topics and Well Written Essays - 1000 words

Answer for exam question - Essay Example African culture characteristics Edoho (2001) asserts that the African culture is almost opposite to that of America. In his comparison between the two cultures, Edoho found that the Africa culture exhibits the following characteristics; High power distance, Collectivism, Moderately feminine and Moderate to low uncertainty avoidance. According to Edoho, America has an individualism culture, low power distance, masculine and low uncertainty avoidance. Individualism refers to a cultural state of affairs where individuals’ ties between individuals are loose. Although the extent of collectivism varies within countries, Africa countries are generally collectivist in nature. With regards to masculinity v femininity, African countries are moderately feminine. Uncertainty avoidance is the degree to which members of a culture feel threatened by uncertain circumstances. African culture is generally low on uncertainty avoidance. African culture is characterized by high power distance. The high power distance also gives rise to high social inequality, where subordinates highly depend on managers (French, 2010). A person’s standing in the society depends on the age and social status. In addition, hierarchies, formality and titles are highly regarded in African culture. Africans place value on personal connections, trust, friendship and personal relationships. In addition to valuing relationships, Africans value groups such as clans and ethnic group rather than an individual. This results in the prominence of working for the benefit of the whole instead of an individual. Tradition and honor are highly regarded and the culture endeavors to safeguard the loss of honor. In terms of male domination, African societies are male dominated, although most Africans tend to be modest. While dealing with uncertainty, the African culture stresses on harmony rather than conflict. Africans resort to harmony as they do not feel threatened by unknown circumstances. Africans have a more flexible and relaxed attitude towards time. This flexibility of time in the African culture is unofficially referred to as the â€Å"African time†. Finally, the African culture is characterized by high content where decisions depend on the external environment, circumstances and non-verbal signs. Conclusion In conclusion, the African nature exhibits most of the attributes put forward by Hofstede. Among the most prominent features in the African culture are high power distance, low uncertainty avoidance, collectivism and moderate femininity. High distance in African countries considers inequality as essential and that everyone has a place. Organizational values in African countries hold that most people should be dependent on the leader. People holding social positions are perceived as privileged and people work towards protecting their titles and prestige. As such, only related relationships are accepted in organization as subordinates consider themselves as different from their bosses. Q 1 B: how understanding cultural theories can help international managers to decide on the most suitable management style. Introduction The management of human resources is collective with regard to policies, processes and strategies. Managing and developing human resources in an international setting is increasingly acknowledged as a central challenge, especially for

Culture and packaging Essay Example for Free

Culture and packaging Essay Packaging is considered to be an integral part of the product and is the first point of contact with the brand for a consumer product. So, most of the companies that do business internationally redesign their packages for each market. The principle reason is that expectations and utilizations of consumers vary across cultures. The world’s two leading industrial powers, U. S. and Japan have almost opposite approaches to packaging. Packaging is recognized as an expression of culture in Japan and designed to be appreciated, whereas in America cultural aspect is largely ignored and packaging is calculated to be accepted. Foods that only Japanese eat have beautiful, traditionally designed wrappings that resemble handmade paper or leaves and accommodate scan able bar codes. Such products look Japanese and are intended to do so. Products that are foreign, such as coffee, look foreign even to the point of having only Roman lettering on the can. We speak of global villages and international markets, but packages reveal some unexpected cultural boundaries. Few examples of such cultural implication of packaging are- Canadians prefer to drink milk out of flexible plastic pouches that fit into reusable plastic holders while Americans are believed to be so resistant to the idea that they have not been given the opportunity to do so, Japanese consumers prefer packages that contain two tennis balls and view the standard U. S. package of three as cheap and undesirable, Germans insist on highly detailed technical specifications on packages of videotapes, while Americans don’t, Swedes consider blue Colour of packaging as masculine whereas Dutch consider it to be feminine and so on. (Eric, J. A. et al. , 2004, p. 298) Culture Packaging Colour Schmitt and Simpson (1997) states, Colour is one of the many marketing tools that global managers use to create, maintain, and modify brand images in customers’ minds while Schmitt and Pan (1994) discovers, Colour is also an important component of many corporate and brand-building cues, such as logos, packages, and displays. It is a commonality reflecting in the views of both the authors that- Colour is one of the major element which affects consumer perception regarding a brand. The research results show cross-cultural patterns of both similarity and dissimilarity in Colour preferences and Colour meaning associations. Colour used in packaging is equally important in determining a product’s desirability. â€Å"James Mandle, a Colour consultant, changed the Colour of Ty-D-Bol’s toilet bowl cleanser bottle from light and green to stark white letters on a dark background. He believed that the original Colours were â€Å"too wimpy† and that the new, bolder Colours would connote strength and cleanliness. In an 18 month period following the change of Colour, sales of Ty-D-Bol jumped 40% (Lane 1991). † (Thomas, J. M. et al. , 2000, p. 91) Packaging is not about Colour only there are various other factors involved in it. Factors like design shape of the package, text on the package and other factors of the packaging. But it is true that Colour is the most important attribute in terms of attracting the attention of the consumer. Packaging is not only made up of a single Colour but combination of Colours to create a brand image. So preferences in regard to combination of Colours also vary across cultures. Few examples of such combinations are of pairing Colours with green and red. The Colour best paired with green is yellow in Canada, Hong Kong, China, and Taiwan, blue in Columbia, and white in Austria. Only the Chinese and Taiwanese pair green with red as red is a potent Colour in China. In Brazil and the US people pair red with black, whereas in Canada, and China, the preferred combination with red is yellow. ( Mooij and Marieke K. de, 2004) Culture Packaging Information Packaging not only protects and contains a product but also provide the consumer with loads of information about the product such as its composition, correct use etc. For instance, packaging of foodstuffs and pharmaceuticals provides information regarding the name of the product, manufacturer, country of origin, â€Å"best before† date and expiry date, ingredients and additives or composition of drug along with quantity and price. Since packaging is subject to country-specific legislation so ear of legal action has made many companies in the US and the UK includes all sorts of warnings on label instructions on consumer goods. On bar of Dial soap: â€Å"Directions: Use like regular soap. † On a Sears hairdryer: â€Å"Do not use while sleeping. † On packaging for a Rowenta iron: â€Å"Do not iron clothes on body. † On Nytol sleep aid: â€Å"Warning: May cause drowsiness. † On a child’s Superman costume: â€Å"Wearing of this garment does not enable you to fly. † On Sainsbury’s peanuts: â€Å"Warning: contains nuts. † On Marks Spencer bread pudding: â€Å"Product will be hot after heating. † On Boot’s child’s cough medicine:† Do not drive a car or operate machinery after taking this medication. † ( Mooij and Marieke K. de, 2004, p. 265) In the present scenario various countries have included packaging waste into hazardous matter to contribute in pollution. This led the government to adopt some policies to restrict the use of non recyclable products as a packaging material where it is not required. These have also posed challenge among business organizations to try and find out recyclable materials and present themselves as a responsible corporate citizen among the stakeholders. This is also one aspect of culture which leads to this kind of environmental concern approach. Culture Packaging Images/Pictures Imagery is an important element of packaging, as it enhances the accessibility of packaging information. As said by Bolen (1984), visual information in advertisements generally attracted more attention and was noticed before verbal advertising content. While Alesandrini (1982) declared, visual information may serve to attract consumer’s attention and set expectations for the contents of the verbal elements; the visual information thus serving as an â€Å"advance organizer† for the verbal elements of packaging. (Underwood et al. , 2001) Different culture recognizes various symbols differently with different meanings altogether. Picture that is very meaningful for people in one culture as it expresses important values of that culture can be completely meaningless to the people of the other culture. For instance, a box of pineapple cookies sold in Singapore has an image of a lion, as in Singapore lion is considered to be a symbol of royalty. Hence, if the similar box of cookies is launched in UK it won’t be given equivalent importance as in Singapore due to the differences lying in culture. Culture Packaging Communication Customer or prospect judges the products on the basis of its name as well. Language used on the product package including its brand or product name creates impression among consumers. Consumer interprets the information selectively on the basis of his culture and his own personal factors. Different aspects of marketing communications like corporate identity, brand name, package design, and advertising styles impacts consumer in certain ways. Marketing communications styles are interrelated with personal communication styles. Chinese-speaking consumers tend to judge a brand name based on its visual appeal whereas English speakers judge brand name based on whether the name sounds appealing. In Asia, visual symbolism is a key aspect of a firm’s corporate identity. A comparative study of package design across seven countries found that packages differ both in three-dimensional design and in the way they communicate through graphical design and vary in the use of textual information; use of Colour, shape, and symbolism; and degree of structure and detail in the package design. All the above differences are highly influenced by culture. Even the product category is influenced by the packaging design, for example Deodorant is communicated differently from cigarettes, and that is reflected in its design of the packaging. ( Mooij and Marieke K. de, 2004, p. 213) Why it is important to understand culture differences in cultures? It is always very important for a marketer to understand the culture of his target market place. Many good products have failed in the market only due to ignorance of socio- cultural aspects. There are underlying components that influence culture such as religion, family, customs, politics, weather, etc, which must be taken into account when marketing products on an international basis. Consequently, it is important for marketers to be aware of the 25% of cultural differences in the world market to promote their product properly. Therefore, it is of great importance to understand similarities and differences in culture which also affects the consumer purchasing behaviours across the cultures. (Weber, J. M. et al. , 2002, p. 396) Tastes and preferences of consumers vary in different part of world. In the European continent itself consumer preferences and taste varies so much that retailers Marks Spencer had to made different advertising campaigns for each country. Initially Marks Spencer has a single uniform advertising for the whole of Europe in 2001. Later it recognized its weakness and immediately changed the advertising campaign according to the taste and preference of different parts of European continent at the end of 2001. Toyota’s model ‘Camry† was a huge success in US which it tried to launch in UK market in 2000. It was a huge failure due to difference in the lifestyle and cultural set up of these two countries. Toyota re-launched it later with changes in the model according to the European culture and it was a huge success. Companies have to estimate the strength of their products along with the market they are trying to trap irrespective of their own brand name and value. One of the mistakes by the snacks giant Kellogg’s is Indian market was with its breakfast cereals. Within Indian culture people tend to eat heavy breakfast in the morning. In such market breakfast cereals as a healthier alternative to the heavy Indian breakfast was unattractive offer to the Indians. Later on company improved its communication strategies and compared it with traditional chapattis (Indian breads). Even in that case Kellogg’s could sell to a Westernized niche market only. So it is quite clear from the above examples that thorough understanding of the culture as well as its differences across cultures is very important to survive in today’s competitive environment. There are some other companies which have done very well in understanding various markets on socio-cultural dimensions like Disney, Pizza hut, dominos, Mc-Donald’s and others. Success pf these brands was result of their conscious effort to keep the significance of culture in their minds. These companies went local irrespective of their global operations for each and every market for them. One such example is Mc-Donald’s. The reasons behind success of Mc-Donald’s in foreign markets apart from a strong brand image and consistent service a standard around the world is, its advertising which is local and its product offer has a local touch. Examples are the Kiwi burger in New Zealand; the Maharaja Mac in India; the Prosperity burger in Malaysia; the Teriyaki burger in Japan; the McKorket in the Netherlands; McLaks, a grilled salmon burger, in Norway; and the Croque McDo in France that refers to the popular French â€Å"Croque Monseiur†, a hot ham and cheese sandwich. Advertising by McDonald’s in France tied into local habits and symbols. In 2001, for example, advertising for McDonald in France tied into â€Å"Asterix and Obelisk,† the most famous historical cartoon of the nation. Hence, localization makes it increasingly important for marketing and advertising people to understand the influence of culture. ( Mooij and Marieke K. de, 2004, p. 18) Importance of Colours can not be ignored in the case of international markets. Colours are associated with different cultural beliefs, moods and meanings. Understanding of these aspects of Colour, culture and society helps the organization to develop appropriate strategy. As said by (Kirmani 1997: Schmitt and Pan 1994), one marketing cue that global managers can use regardless of location is Colour. The effects of culture on the meaning associated with Colours are very critical for international marketing purposes. â€Å"Wagner, the creator of the Wagner Colour Research Institute, contends that Colours are associated with certain images (Lane 1991). For example, Blue is associated with wealth, trust, and security: Gray is associated with strength, exclusively, and success: and orange denotes cheapness. These associations may explain why banks are more likely to Colour their logos and collateral using Blue or Gray rather than orange ( Seitel 1993). It is cultural background due to which Colour has a strong effect on choice of a customer. It is important to understand which Colours are preferred by people in different cultures. It will help to create, maintain, or modify brand images in consumers’ minds. The associated with Colours and combination of Colours are important to understand for any marketer. â€Å"Colour combinations are considered culturally bound with certain ideologies and traditions (Geboy 1996). For example, black on red signifies happiness to Chinese people and is commonly used for wedding invitations while a combination of red over white represents celebration and signifies the life force to the Japanese ( Tektronix 1998). (Thomas, J. M. et al. , 2000) After Colour it is cultural beliefs which have impact on the consumer minds. It is important to understand the beliefs related to target product category within the target market place. For instance in India people feel that ancient herbal methods are good choices over the cosmetic options available today. This led various cosmetics company in India to launch their promotional programs comparing their product with traditional methods or showing the products equivalent to the traditional benefits. In these leading brands like Lux, Fair Lovely and many others are present. Success of a fair and lovely brand due to the fact that Indians believe fairness is beautiful. Vicco turmeric cream is another example which positioned itself as a cream that would be useful for would-be brides to enhance their complexions, as applying turmeric for skin care is a part of the Indian tradition. These types of behaviour which are associated with a specific culture or belief can also be associated with different product categories such as, for instance, the bindi worn in most parts of India. It is important that the brand name selected for such a product category should have an ethnic-sounding name whereas a Western name is prone to be counter-productive. (S Ramesh Kumar, 2003) Another product category is food where the role of mother and grand mother is considered important. This is the reason all spices, traditional quick meals and cooking oil etc contain some or more of the mother’s recipe kind of concept. Not only that change in the societal socio-cultural structure can also be seen as some of the advertisement in India show modern man helping their women in their work as well like washing clothes or taking care of child. There is a strong need to understand and consider the culture which constitutes of the values, beliefs and habits of consumers which show a discrepancy across the nations. The other aspect of the changing cultural environment and upcoming trends are also important to understand.

How Progress Makes Us Sick Essay -- Science Scientific Papers

How Progress Makes Us Sick By now, Im sure nearly everyone has heard of SARS (Severe Acute Respiratory Syndrome). If youve watched all news channels like CNN or Fox News over the past month with their alternating images of people hurrying through airports wearing surgical masks and bombs exploding over Baghdad, youd think there were only two news stories worth reporting: the growing body counts created by SARS and the Iraq war. However the attention that has been focused on SARS has startled people rather than educated them about the disease. Lack of information leads to fear. According to J. Michael Bishop in Enemies of Promise: We live in an age of scientific triumph. Science has solved many of natures puzzles and greatly enlarged human knowledge. And the fruits of scientific inquiry have vastly improved human welfare. Yet despite these proud achievements, science today is increasingly mistrusted and under attack. The parade of frightening new maladies continues, each on confirming that our species, for all its cleverness, still lives at the mercy of the microbe. In May fifths issue of Newsweek, Geoffrey Cowley states: Many of the advances that have made our lives more comfortable have also made them more dangerous. Some thirty new diseases have cropped up since the mid-1970scausing tens of millions of deaths. What exactly is SARS, or severe acute respiratory syndrome? It is a respiratory illness that has recently been reported in Asia, North America, and Europe. SARS begins with a fever greater than 100.4 degrees Fahrenheit. Some others symptoms may include headache, an overall feeling of discomfort, body aches, and sore throat. After two to seven days SARS patients may develop a dry cough and have trouble breathing. S... ...the natural world. In consequence, we are admired but also feared, mistrusted, even despised. We offer hope for the future but also more conflict and ambiguous choice. The price of science seems large, but to reject science is to deny the future. Will there ever be an answer for SARS? Will there ever be a cure? Science is a process and I think that is what most people dont see. In order to make the right decisions, there is a process that scientists have to follow. Sometimes that process takes time. We cant unplug from what we believe, but we can meet somewhere in the middle and work together as a team. Works Cited Bishop, Michael. Enemies of Promise. The Presence of Others. Marilyn Moller. Boston: Bedford/St. Martins, 2000, 237-243. Shih, June. A City Masked in Fear and Distrust. U.S. News. May 5, 2003. Cowley, Geoffrey. SARS. Newsweek May 5, 2003.

International Management- Hunter Boots Ltd.

â€Å"Designed to be outstanding in any field, from city streets to music festivals and rugged countryside, Hunter footwear is recognized for its performance durability and comfort – achieved through a fusion of tradition and technology† (Hunter Boot Ltd. , 2013) Hunter Boot Ltd. was founded in 1856, styled as the North British Rubber Company, producing not only rubber boots but also tyres, conveyors and flooring. The famous ‘wellies’ or wellington boots rose to fame when they were mass-produced during World War I to supply the army.By the end of the war ‘wellies’ had become popular for use among the general population as well. After changing ownership several times Hunter Rubber Company became a standalone company in 2004, and was bought out of administration as Hunter Boot Ltd. in 2006. Now solely focusing on footwear, the company has since positioned itself firmly and both the UK and USA footwear markets. In 2008 Hunter closed its plant of 9 6 years and relocated its headquarters to Edinburgh (Scotland) and production to China.Striving for more efficiency and effectiveness in the production process Hunter boots are only still visually similar to its original design, whereas they have in fact become virtually identical to the boots produced by its competitors. Nevertheless Hunter has experienced a period of considerable growth and is now distributed internationally in over 30 countries (Hunter Boot Ltd. , 2013). The author feels that is important to make a clear distinction between the years up to 2006, which is the year Hunter Boot Ltd. was placed into admission, and the years 2007 and onwards to where Hunter Boot Ltd. s currently controlled by Searchlight Capital Partners LP (SCP). , which is a private investment firm operating in North America and Europe. First this paper will analyse the rise, and demise, of the company and then will shed some light on its resurgence in popularity and turn-around sales in recent year s (Paton 2011). According to Porter (1991) sustainable competitive advantage in international business is determined by the four factors that form the diamond of national advantage; factor conditions, demand conditions, related and supporting industries and firm strategy, structure and rivalry. The factors are nterdependent and all are essential for achieving (international) success. The application of this framework certainly holds true for Hunter Boot Ltd. ’s (international) success from its founding years to the early 2000’s. Diamond of National Advantage| Hunter Boot Ltd. 1856 – 2006| Relative level of Importance| Factor Conditions| ‘Dumfries’ production plant, skilled labor and sufficient infrastructure. | High Importance| Demand Conditions| Wet weather conditions make suitable footwear a necessity. Army supplier during both WWI and WWII. Loyal customer ranging from the British Royal Family to general population. High Importance| Related & Supp orting Industries| Close working relationships with suppliers and end-users within national boundary. | Medium Importance| Firm Strategy, Structure and Rivalry| Ability to manage vast growth in both production and labor force. Ambitious management strategy. | High Importance| Table 1: Porter’s Diamond of National Advantage applied to Hunter Boot Ltd. 1856-2006 The company’s decline became inevitably clear in the years 2003-2005 when it recorded a pre-tas loss of approximately ? 700,000 with a net debt that had grown to more than ? 2m. These perils can be explained by two of Porter’s factors.Firstly the company’s Factor Conditions, mainly its production plant, changed from major strength to major weakness. The location and facilities that helped bring to company to greatness during the war became hopelessly outdated in later years leading to relatively high costs of trying to continue its Scotland production. Lower production costs abroad, due to surges in gas, electricity and rubber prices in the UK, and the overall British manufacturing decline made Hunter Boot Ltd’s ambitions to remain an independent producer based in Scotland unsustainable (Financial Times 2006).Also blamed in the process was the company’s CEO Mark Sater, which relates to Porter’s factor on firm strategy, structure and rivalry, who chose to pursue a diversification strategy in that under his rule the product range was extended extensively in an effort to boost sales. The company even added a range of branded clothing and partnered with charities and fashion designers. With the previously mentioned financial situation the company was forced to consider external business proposals in an effort to keep the company afloat.Driving the following negotiations were the company’s demand conditions which were clearly articulated by an anonymous insider in the Financial Times (2006) as ‘anyone who hunts or fishes and has a few quid fancies themselves as the next owner. It is so close to the hearts of so many people it is almost owned by the nation. None of the offers gained sufficient support of the board and the company collapsed in the spring of 2006. In several consecutive constructions Hunter Boot Ltd. Generated sales of ? 56m in 2010 and ? 78 in 2011 which is a strong financial improvement and turnaround from its pre-tax losses in 2005.Since early 2012 the company is under control of American-owned private equity group SCP which is pursuing global expansion. This makes Hunter Boot Ltd. one of many luxury brand buy-outs by private equity groups the like of SCP in recent times. SCP has announced that it will try to set up stores selling the Hunter brand exclusively across the globe in the coming years. This is a major change in its international strategy since Hunter products are currently sold exclusively via wholesale retail channels (Paton 2011&2012).Despite the many changes in ownership Hunter product are still clearly trying to hang on its British heritage in a dual effort to maintain its loyal UK customer base and to differentiate itself from its competitors. As an example the company has two different website interfaces, one for UK customers and one for USA customers. Both emphasize the exclusivity and craftsmanship of the product, but the UK website further emphasizes its heritage by portraying the British flag and colors clearly on every opportunity. From a theoretical perspective one could argue that Hunter Boot Ltd. s current (international) business strategy can no longer be sufficiently explained by Porter’s Diamond model, and now bears more resemblance to Barney’s VRIO model which is a resource-based view focused on the firm’s internal capabilities (Barney 1991). The resource-based view argues international success stems from the theory that some firms in one nation generate exports that are valuable (V), unique (R), hard to imitate (I) and supported by orga nizationally sound processes (O) which firms from other nations find beneficial to import.A valuable resource will lead to competitive parity, a valuable and rare resource to temporary competitive advantage, the addition of inimitability will lead to sustained (short-term) competitive advantage and meeting all VRIO-criteria will lead to (long-term) sustainable competitive advantage (Shahriari, M. & Ahmadi, A. , 2010). While companies may have many tangible and intangible resources only few of them are strategic in nature. Most strategic resources are of the created and intangible kind and often knowledge-based, yet they can only be facilitated with the help of tangible resources.This mix is what enables a company to move past competitive convergence and into competitive advantage (Shariari et al. 2010 and Barney 1991). Globalization has affected Hunter’s home-based competitive advantages in that in a global economy there has been a shift from natural assets (land and untraine d labor) to created assets (human capital). Many of these created assets are intangible and firm or ownership specific which mean they are often no longer controlled by specific countries or governments except within the constraints of the (national) law. Multinational firms (MNEs) like Hunter Boot Ltd. re free to move assets from a domestic to a foreign location which is often done when trying to pursue and generate new valuable assets (Dunning, J. H. , 1993). This opportunity is exactly what the company pursued when it moved its production plant to China while maintaining its HQ in Scotland. It is the company’s intangible or created asset of ‘reputation ‘that currently provides it with a long-term sustained competitive advantage over its competitors. Its constant customer focus and technological capabilities are a close second but do not withstand a long-term orientation to a similar extent.This is particularly true for Hunter Boot Ltd. ’s technological c apability since the recent move of its production facilities and cost-cutting strategy has made the company more vulnerable to imitation by competitors. Recently Hunter Boot Ltd. has been enjoying great success and it will have to prove if this is sustainable or not. It will come down to the following question: Is the company’s gaining in internal capabilities and resources enough to make up for the loss of its national advantages?The author states that it is vital for the company to uphold its reputation since this is currently the single sustainable source of competitive advantage and not one that cannot be affected. It might be that the company will lose some of its loyal (mainly UK) customers and gain a large number of mass-market global customers, but it is doubtful this will provide long-term success if the company is not able to differentiate itself sufficiently from its competitors in the near future. Bibliography BARNEY, J. , 1991.Firm resources and sustained competi tive advantage. Journal of management, 17(1), pp. 99-120. DUNNING, J. H. , 1993. Internationalizing Porter's Diamond. MIR: Management International Review, 33 (Extensions of the Porter Diamond Framework), pp. 7-15. FINANCIAL TIMES, 2006, Future far from bright for Britain’s wellies, viewed on 28th of February 2013 ;http://www. ft. com/intl/cms/s/0/628795c2-cbd4-11da-a7bf-0000779e2340. html#axzz2MYTEnuR ; HUNTER BOOT LTD, 2013, viewed on 4th of March 2013 ;http://www. hunter-boot. com/about-us; PATON, E. 2010, Luxury industry movers and shakers, Financial Times, viewed on 1st of March 2013 ;http://www. ft. com/cms/s/0/0f2e5894-1c62-11e2-ba75-00144feabdc0. html; PATON, E. , 2011, Hunter boots to pursue international growth, Financial Times, viewed on 28th of February 2013 ;http://www. ft. com/intl/cms/s/0/4846403a-2800-11e1-a4c4-00144feabdc0. html#axzz2MYTEnuRw; PORTER, M. E. , 1998,  Competitive advantage of nations,  Free press. SHAHRIARI, M. and AHMADI, A. , 2010, A Reso urce-Based Framework of Strategic Marketing Planning to achieve Sustainable Competitive Advantage, pp. 1-13.

The Wealth of Nations

The Wealth of Nations was published 9 March 1776, during the Scottish Enlightenment and the Scottish Agricultural Revolution. It influenced a number of authors and economists, as well as governments and organizations. Synopsis I: Of the Causes of Improvement in the productive Powers of Labour Of the Division of Labour: Division of labour has caused a greater increase in production than any other factor. This diversification is greatest for nations with more industry and improvement, and is responsible for â€Å"universal opulence† in those countries. Agriculture is less amenable than industry to division of labour; hence, rich nations are not so far ahead of poor nations in agriculture as in industry. Of the Principle which gives Occasion to the Division of Labour: Division of labour arises not from innate wisdom, but from humans' propensity to barter. The apparent difference in natural talents between people is a result of specialization, rather than any innate cause. That the Division of Labour is Limited by the Extent of the Market: Limited opportunity for exchange discourages division of labour. Because â€Å"water-carriage† extends the market, division of labour, with its improvements, comes earliest to cities near waterways. Civilization began around the highly navigable Mediterranean Sea†¦ Of the Origin and Use of Money: With division of labour, the producer of one's own labour can fill only a small part of one's needs. Different commodities have served as a common medium of exchange, but all nations have finally settled on metals, which are durable and divisible, for this purpose. Before coinage, people had to weigh and assay with each exchange, or risk â€Å"the grossest frauds and impositions. Thus nations began stamping metal, on one side only, to ascertain purity, or on all sides, to stipulate purity and amount. The quantity of real metal in coins has diminished, due to the â€Å"avarice and injustice of princes and sovereign states,† enabling them to pay their debts in appearance only, and to the defraudment of creditors. Of the Real and Nominal Price of Commodities, or of their Price in Labour, and their Price in Money: Smith gives two conflicting definitions of the relative value of a commodity. Adam Smith, â€Å"What everything really costs to the man, who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. That this is really the foundation of the exchangeable value of all things, excepting those which cannot be increased by human industry, is a doctrine of the utmost importance in political economy. â€Å"The value of any commodity †¦ is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities. † Of the Component Parts of the Price of Commodities: Smith argues that the price of any product reflects wages, rent of land and â€Å"†¦ profit of stock,† which compensates the capitalist for risking his resources. Of the Natural and Market Price of Commodities: â€Å"When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay†¦ annot be supplied with the quantity which they want†¦ Some of them will be willing to give more. A competition will begin among them, and the market price will rise†¦ When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages and profit, which must be paid in order to bring it thither†¦ The market price will sink†¦ † When demand exceeds supply, the price goes up. When the supply exceeds demand, the price goes down. Of the Wages of Labour: Smith describes how the wages of labour are dictated primarily by the competition among laborers and masters. When laborers bid against one another for limited opportunities for employment, the wages of labour collectively fall, whereas when employers compete against one another for limited supplies of labour, the wages of labour collectively rise. However, this process of competition is often circumvented by combinations among laborers and among masters. When laborers combine and no longer bid against one another, their wages rise, whereas when masters combine, wages fall. Of the Profits of Stock: Smith uses interest rates as an indicator of the profits of stock. This is because interest can only be paid with the profits of stock, and so creditors will be able to raise rates in proportion to the increase or decrease of the profits of their debtors. Smith argues that the profits of stock are inversely proportional to the wages of labour, because as more money is spent compensating labour, there is less remaining for personal profit. It follows that, in societies where competition among laborers is greatest relative to competition among employers, profits will be much higher. Smith illustrates this by comparing interest rates in England and Scotland. In England, government laws against usury had kept maximum interest rates very low, but even the maximum rate was believed to be higher than the rate at which money was usually loaned. In Scotland, however, interest rates are much higher. This is the result of a greater proportion of capitalists in England, which offsets some competition among laborers and raises wages. Of Wages and Profit in the Different Employments of Labour and Stock: Smith repeatedly attacks groups of politically aligned individuals who attempt to use their collective influence to manipulate the government into doing their bidding. At the time, these were referred to as â€Å"factions,† but are now more commonly called â€Å"special interests,† a term that can comprise international bankers, corporate conglomerations, outright oligopolies, trade unions and other groups. Indeed, Smith had a particular distrust of the tradesman class. He felt that the members of this class, especially acting together within the guilds they want to form, could constitute a power block and manipulate the state into regulating for special interests against the general interest: â€Å"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. † Smith also argues against government subsidies of certain trades, because this will draw many more people to the trade than what would otherwise be normal, collectively lowering their wages. Motivates an understanding of the idea of feudalism. Of the Rent of the Land: Rent, considered as the price paid for the use of land, is naturally the highest the tenant can afford in the actual circumstances of the land. In adjusting lease terms, the landlord endeavors to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighborhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him anymore. Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, he naturally endeavors to reserve to himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land. II: Of the Nature, Accumulation, and Employment of Stock Of the Division of Stock: â€Å"When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavors by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the laboring poor in all countries. † â€Å"But when he possesses stock sufficient to maintain him for months or years, he naturally endeavors to derive revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. Of Money Considered as a particular Branch of the General Stock of the Society: â€Å"That the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land which had been employed in producing and bringing them to market: that there are, indeed, some commodities of which the price is made up of two of those parts only, the wages of labour, and the profits of stock: and a very few in which it consists altogether in one, the wages of labour: but that the price of every commodity necessarily resolves itself into some one, or other, or all of these three parts; every part of it which goes neither to rent nor to wages, being necessarily profit to somebody. † Of the Accumulation of Capital, or of Productive and Unproductive Labour: â€Å"One sort of labour ads to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproduct ive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing. † Of Stock Lent at Interest: â€Å"The stock which is lent at interest is always considered as a capital by the lender. He expects that in due time it is to be restored to him, and that in the meantime the borrower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit. He can, in this case, both restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates in the maintenance of the idle what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest without either alienating or encroaching upon some other source of revenue, such as the property or the rent of land. † The stock which is lent at interest is, no doubt, occasionally employed in both these ways, but in the former much more frequently than in the latter. III: Of the different Progress of Opulence in different Nations Of the Natural Progress of Opulence: â€Å"The great commerce of every civilized society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of crude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very roperly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided. † Of the Discouragement of Agriculture: â€Å"Of the Discouragement of Agriculture in the Ancient State of Europe after the fall of the Roman Empire†. â€Å"When the German and Scythian nations overran the western provinces of the Roman Empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman Empire, sunk into the lowest state of poverty and barbarism. During the continuance of those confusions, the chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries. A great part of them was uncultivated; but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed, and the greater part by a few great proprietors. This original engrossing of uncultivated lands, though a great, might have been but a transitory evil. They might soon have been divided again, and broke into small parcels either by succession or by alienation. The law of primogeniture hindered them from being divided by succession: the introduction of entails prevented their being broke into small parcels by alienation. † Of the Rise and Progress of Cities and Towns, after the fall of the Roman Empire: â€Å"The inhabitants of cities and towns were, after the fall of the Roman empire, not more favored than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighborhood of one another, and to surround them with a wall, for the sake of common defense. After the fall of the Roman Empire, on the contrary, the proprietors of land seem generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, which seem in those days to have been of servile, or very nearly of servile condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe sufficiently show what they were before those grants. The people to whom it is granted as a privilege that they might give away their own daughters in marriage without the consent of their lord, that upon their death their own children, and not their lord, should succeed to their goods, and that they might dispose of their own effects by will, must, before those grants, have been either altogether or very nearly in the same state of villanage with the occupiers of land in the country. † How the Commerce of the Towns Contributed to the Improvement of the Country: Smith often harshly criticized those who act purely out of self-interest and greed, and warns that, â€Å"†¦ for us, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. † IV: Of Systems of political Economy Of the Principle of the Commercial or Mercantile System: Specifically, The Wealth of Nations attacks, inter alia, two major tenets of mercantilism: 1. The idea that protectionist tariffs serve the economic interests of a nation (or indeed any purpose whatsoever) and 2. The idea that large reserve of gold bullion or other precious metals are necessary for a country's economic success. Of the extraordinary Restraints: â€Å"Of the extraordinary Restraints upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is supposed to be Disadvantageous†. Of Drawbacks: Merchants and manufacturers are not contented with the monopoly of the home market, but desire likewise the most extensive foreign sale for their goods. Of Treaties of Commerce: When a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favored, must necessarily derive great advantage from the treaty. Those merchants and manufacturers enjoy a sort of monopoly in the country which is so indulgent to them. That country becomes a market both more extensive and more advantageous for their goods: more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs: more advantageous, because the merchants of the favored country, enjoying a sort of monopoly there, will often sell their goods for a better price than if exposed to the free competition of all other nations. † Of Colonies: Of the Motives for establishing new Colonies: The interest which occasioned the first settlement of the different European colonies in America and the West Indies was not altogether as plain and distinct as that which directed the establishment of those of ancient Greece and Rome. Causes of Prosperity of new Colonies: The colonists carry out with them knowledge of agriculture and of other useful arts superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nations. They carry out with them, too, the habit of subordination, some notion of the regular government which takes place in their own country, of the system of laws which supports it, and of a regular administration of justice; and they naturally establish something of the same kind in the new settlement. Of the Agricultural Systems: â€Å"Of the Agricultural Systems, or of those Systems of Political Economy, which Represent the Produce of Land, as either the Sole or the Principal, Source of the Revenue and Wealth of Every Country†. V: Of the Revenue of the Sovereign or Commonwealth Smith postulated four â€Å"maxims† of taxation: proportionality, transparency, convenience, and efficiency. Of the Expenses of the Sovereign or Commonwealth: On taxation Smith wrote, â€Å"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respe ctively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. † Of the Sources of the General or Public Revenue of the Society: In his discussion of taxes â€Å"The necessaries of life occasion the great expense of the poor. † They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. † Of War and Public Debts: â€Å"†¦ when war comes politicians are both unwilling and unable to increase their tax revenue in proportion to the increase of their expense. They are unwilling for fear of offending the people, who, by so great and so sudden an increase of taxes, would soon be disgusted with the war †¦ The facility of borrowing delivers them from the embarrassment †¦ By means of borrowing they are enabled, with a very moderate increase of taxes, to raise, from year to year, money sufficient for carrying on the war, and by the practice of perpetually funding they are enabled, with the smallest possible increase of taxes [to pay the interest on the debt], to raise annually the largest possible sum of money [to fund the war †¦ The return of peace, indeed, seldom relieves them from the greater part of the taxes imposed during the war. These are mortgaged for the interest of the debt contracted in order to carry it on. † Smith then goes on to say that even if money was set aside from future revenues to pay for the debts of war, it seldom actually gets used to pay down the debt. Politicians are inclined to spend the money on some other scheme that will win the favor of their constituents. Hence, interest payments rise and war debts continue to grow larger, well beyond the end of the war. Impact– United States James Madison, in a speech given in Congress on 2 February 1791, cited The Wealth of Nations in opposing a national bank: â€Å"The principal disadvantages consisted in, 1st. banishing the precious metals, by substituting another medium to perform their office: This effect was inevitable. It was admitted by the most enlightened patrons of banks, particularly by Smith on the Wealth of Nations†. Thomas Jefferson, writing to John Novell on 14 June 1807, claimed that on â€Å"the subjects of money & commerce, Smith's Wealth of Nations is the best book to be read, unless Say's Political Economy can be had, which treats the same subject on the same principles, but in a shorter compass & more lucid manner†. Two views of the â€Å"Wealth of Nations† The â€Å"Wealth of Nations† is therefore inhomogeneous and consists of the earlier elements of an individualistic strain in the tradition of Aristotle, Puffendorf and Hutcheson, Smith’s teacher, – elements compatible with a neoclassical theory – and the classical theory Smith learned in France. Smith’s classical message is what he states at the very beginning: the two ways to create the â€Å"Wealth of Nations†. First, make productive labour even more productive by enhancing markets to deepen the division of labour (moving the neoclassical production curve to the right); and second, use more labour productively instead of unproductively, i. e. produce more goods and services that are inputs to the next economic reproduction circle, as opposed to goods used up in final consumption. In the words of Adam Smith: â€Å"The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes †¦ This produce †¦ bears a greater or smaller proportion to the number of those who are to consume it †¦ But this proportion must in every nation be regulated by two different circumstances; First, by the skill, dexterity, and judgment with which its labour is generally applied; and, Secondly, by the proportion between the numbers of those who are employed in useful labour, and that of those who are not so employed.