European Union Regional Economics

The European Union Model of Regional Economics

This paper examines the European Union economic model as an example of a regional integration for economic prospects in the world. Since 1972, twelve nations of Europe namely, Austria, Belgium, Britain, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain co-operated economically under the treaty of European Economic Commission, EEC (Bartolini). However, the Union under examination in this paper came into effect on July 1987 when the single European Act came into force, thereby amending the founding treaties to cope with the transition into a single market. For a longer time, the European Union (EU) remains the most developed model in the regional integration examples. However, lately, severe economic crisis continue to shake the very foundation upon which the union stands. From debt crisis to refugee crisis, the challenges seem so great for some of the nation members to bear. Consequently, this now puts into question the economic benefits that accrue from the integration process (Hix and Høyland).

The lack of logical solutions to the EU’s frequent crisis ideally calls into question the very steadfastness of the union. The recent financial crisis that threatened Greece to decamp from the European Union reveals the institutional and structural cracks within the Eurozone. Two other countries of the union namely, Spain and Italy, now appear posed to go the Greece way. The economic decline of the EU comes in the wake of a new global economic order. Under this dispensation, there is now economic decline of the two world’s economic powerhouses, the United States of America (USA), and the European Union, but the rise in Asian and African economies. These economic realignments already threaten the social cohesion, and both the economic and political stability of the Eurozone (Kelegama 110-131). In the wake of these crises, the European Union’s status as the viable model of regional economics now is subject to threat. In the event that the European Union recovers from the crises that are threatening to tear it apart, it will emerge even stronger, and continue its role as the global leading model of regional integration.

The European Union Model Insights

The genesis of EU’s integration has its roots in the economic hardships of the early 1950s, following the conclusion of World War II. The success of the European Union as an economic and political conglomerate lies in a number of far reaching principles. First, the continent of Europe boasts of a number of visionary leaders. Among these are Germany’s Konrad Adenauer, and France’s Robert Schuman. The two leaders conceived a political alliance that operated on communal basis, and deviated from the traditional political model whose basis was the balance of power ((Bartolini). The United States’ support played a pivotal role at its conception was also crucial in the early years. Second, the Franco-German partnership was crucial in the integration process. For years, Berlin and Paris continue to be the engine of European amalgamation. Thirdly, the European political elite always share a common vision of sovereignty. This is instrumental in the common institutions that are strong, and legally binding on matters integration. Finally, Europeans share solidarity with their leaders on consensus approach based on tolerance. In this regard, the European decision makers try their best not isolate a member country (Bartolini. This approach saw Greece retain its membership in the wake of its recent economic crisis. The tolerance of policy makers in Europe encompasses an all-inclusive approach when dealing with a member nation. The basis of decisions, often, is on consensus, and political goodwill to offer colossal financial support to poorer member nations to take their rightful place in the union.

The four principles that continue to guide the European Union in crises, enables it to emerge stronger than ever whenever similar situations arise. This enables the union to ward off crises more easily. Some of the historical challenges that the EU warded off in the past include new treaties referendum failures. A case in hand is that of Ireland’s Lisbon Treaty in the year 2008 as well as the French and Dutch constitutional treaty. In each case, a referendum threw out each of the treaty. Another is the case of Charles de Gaulle who used “empty chair” tactic to withdraw his compatriots’ representation the political bodies of the union whenever these introduced the famed qualified majority voting (QMV). Charles de Gaulle ruled French during the 1958 to 1969 period (Dinan).

A more recent development involved the EU’s adoption of the flexible approach that resulted in a Europe divided into multiple layers of integration. However, not all the countries of Europe enjoy the Eurozone status. For instance, the United Kingdom trades in the Eurozone courtesy of the Schengen passport-free agreement. UK, however, continues to use the Sterling Pound as its currency. The EU allowed this arrangement to give leeway to Euro-sceptic nations to renege on certain obligations guarded by the union treaty (Volkens). Nonetheless, the EU remains committed to its core mandate that allows it the freedom to share sovereignty with any committed nation within the continent, while still committed to the values of strong common institutions.

Regional Groupings in Other Parts of the World

Other regions of the world continue to seek regional integration to push forward a common agenda. Notable here include associations such as the African Union (AU), the Mercosur of South America, the Association of South East Asian Nations (ASEAN), and the Gulf Cooperation Council (GCC). However, nothing in their progress mirrors the EU’s success. Amongst these the ASEAN model is second to in EU in performance. Perhaps this follows their efforts that saw them send delegations in a number of times to Europe to seek the European Union’s experiences from Brussels. However, throughout its existence, the ASEAN shows no interest in sharing sovereignty, and therefore, continues to be an inter-governmental body (Kelegama 110-131). The same applies for the other bodies mentioned above. Consequently, the EU remains the world’s most successful conglomerate of nations in terms of economic and political cooperation. Therefore, the union remains the globe’s best success story in integration.

Pronouncements on closer cooperation continue to dominate the political scenes in Africa, Latin America, South America, Asia, and the Middle East, but none of the declarations of these groupings matches the EU’s spirit of cooperation, integration, and political goodwill (Kelegama 110-131). Their pronouncements over time remains mere rhetorical expressions, for after these declaration are not matched with equal seriousness in action.

The EU’s success story arises from historical reconciliation over time. This is a vital factor if any political entity wishes to develop the matching good will, and step into the world of cooperation and, eventually, integration. The engine of EU’s success story rests on the historical frequent reconciliation of two Europe’s decision makers – Germany and France (Bartolini). Years of political resilience of the leaders of these two nations, often provide the fodder needed to take reconciliation, and cooperation forward. In sharp contrast, no other regional body, matches the EU’s ambitious efforts when it comes to political goodwill. For instance, in the East Asia case, unless Japan and China show similar commitment, there will never be a genuine integration, and the ASEAN model will always lag behind the European Union (Kelegama 110-131).

Similar reconciliation must also exist between Korea, and Japan. The mistrusts in political leaderships witnessed in East Asia is rife all over the world. Issues remain unsolved because a deeply lingering suspicion by the political players of the day. For instance, when one discusses this, India and Pakistan comes to mind. So is Argentina and Brazil, Iran and Saudi Arabia, and so on. The European Union model shows that cooperation, and integration is only possible after historical reconciliation amongst the warring nations. It only then that they can proceed gradually into the necessary steps crucial for creating a regional community. After this, the regional community can go a step further and create a customs union, a free-trade area, a common passport, a single market, a common foreign-policy, and eventually a common currency (Kelegama 110-131).
The Current State of the EU

The European Union stands tall as a secure, prosperous, and a safe haven in comparison to other regional bodies of this world. Following its recent economic turmoil, however, the European Union needs to tackle its perennial major challenges, if needs to remain a global player and influencer worth emulating. It needs to tackle these challenges now with urgency, and determination. Only then will the European Union remain the world’s leading model of cooperation, integration, and economic union. However, the European Union’s current problems arise from a number of factors. First, the European Union experiences a rapid expansion and integration. The number of member states currently stand at 28. This is in contract to only 12 members in 1972. This is not commensurate with the European Union’s economic, and political strengths.

The emerging differences, and economic gaps between the member nations require urgent attention necessary. The EU must coordinate and institute the expansion of its capacity building efforts to bring all players at the same level. Currently, though, Germany and France seem to be its major beneficiaries. For these two nations, the EU provides a readily available labour force and a vast market for their rapidly expanding domestic industries. The European Union member nations must find equal footing if their model of economic integration is to suggest lessons for other bodies pursuing regional integrations (Volkens). These lessons will remain vital particularly when these regional entities come to the later stages of economic cooperation, and integration.

The second challenge that the European Union must tackle is increased fiscal coordination. This is necessary in the wake a seemingly worsening economic position. The European Union’s financial systems require cleaning, in order to bring them into agreement with the austerity plans that now most member nations embrace. The European Union continues to roll through murky waters, though. The ever persistent present danger of disintegration, and euro collapse remains. More so in the wake of rising national debt situation in member countries. Portugal and Ireland have since found their footing. Greece is reeling out of a life threatening debt situation that almost forced it out of the union. Similarly, the economic situation of Spain and Italy look dim. In addition, dissenting voices are heard in Britain, the Netherlands, and other quarters that threaten the very existence of the union as it is today (Hix and Høyland).

The Euro

The major factor that seems to deem the influence of the European Union stems from the dismal performances of the euro internationally. The union’s central bank is the European Central Bank (ECB). Presently, 17 of the 28 European Union member nations use the Euro as its currency. The fact is that euro comes second to the dollar in the forex market trading. This gives it an international appeal, and thereby makes it one of the leading global reserve currencies. The euro came into existence on 1 January 1999 (Damian 222-229). Consequently, the account currency placed the European Union member currencies at the same level of strength, and thereby, sent the entire member nations individual currencies into oblivion. At launch, only eleven of the EU states adopted the euro. These included Germany, France, Spain, Italy, Portugal, the Netherlands, Ireland, Finland, Luxembourg, Belgium, and Austria. Greece joined the union in 2001, and similarly adopted the euro as its currency. So did Slovenia in 2007. Cyprus and Malta followed suit in 2008, while Slovakia adopted the euro in 2009.

The latest entrant into the union is Latvian who joined the membership on 1 January 2014. A number of other countries outside the Eurozone also use the euro. These include the Vatican City, San Marino Republic, Monaco Principality, as well as the Andorra Principality. In addition, many territories of the Eurozone countries including Madeira Islands, the Canary Islands, the Azores, the Reunion, French Guiana, the Balearic Islands, Europa Island, Martinique, Guadeloupe, Saint Pierre, Mayotte, Juan de Nova, and Saint Martin among many others also use the euro in their day-to-day transactions. Equally, the North Korean Republic, Cuba, and Syria also use the euro. Most currencies of the world similarly exchange their currencies to the euro based on the prevailing market exchange rates (Damian 222-229).

The Eurozone Crisis

The major challenge that the EU faces today is the continued fragile economies of a given Eurozone member nations. These include Italy, Spain, and Greece. Greece recently received a third bailout package to the tune of 85 billion euros. Like before, the bailout came with stringent austerity measures. Spain and Italy faces renewed speculation on the ability to service their national debt portfolios in the financial markets (Hix and Høyland). Even though there appear to be some light at the end of the tunnel for many of the European Union countries, economists warn on possibilities of a “double dip” recession in the Eurozone.

Many attribute the European debt crisis to a number of financial guarantees by the EU nations that feared financial septicity, and by the global moneylender, International Monetary Fund (IMF). When ratings agencies downgrade the Eurozone debt, and even giving the Greek debt a junk status at one point, it creates a panic in the financial markets. Consequently, the basis of the bailout agreements requires the recipient countries to have stringent austerity plans aimed at reducing the national debt portfolio (Hix and Høyland).

The national debt crisis among the European Union member nations began in 2009. It stemmed from the inability of some Eurozone member countries to repay or refinance the nation debt of their countries. The nations affected included Cyprus, Portugal, Ireland, Spain, and Greece. They became unable to foot the loans of the beleaguered banks without European Central Bank inputs. Further assistance became necessary from the lenders such as the International Monetary Fund and the European Financial Stability Facility (EFSF). Seventeen of the member countries created the EFSF sometime in 2010 (Hix and Høyland). Its mandate was to offer solutions on the spiraling European debt crisis.

The EU’s debt crisis has its genesis from the financial crisis that plagued the world in 2007 and 2008. This gave rise to the recession in 2008 to 2012. The latter led to the property bubbles in a number of countries, including the United States, and consequently, led to the crisis in the real estate markets. The culmination of the recession was in 2009, and led to the Greece’s discovery that its previous government exceedingly under reported the national budget deficit. The pronouncements signaled Greece’s a violation of the EU treaty policy, and led to fears of the euro collapse, as it eroded investor levels. This led to unsustainable high interest rates in the euro bonds. The fear this sparked in the fiscal world led to beliefs that the Eurozone debts were unsustainable (Hix and Høyland).

In 2010, in the wake of the fear of unsustainable Eurozone sovereign debt, each lender began demanded higher interests on the EU member nations’ loans, and consequently, spiraled the debt out of control. This made most member countries fail to finance budget deficits. In the phase of negative economic growth, and shrinking Gross Domestic Products (GDP), some countries raised taxes to finance the deficit as most governments slashed their expenditures. The negative social vices and economic downturns followed. This even led to votes of no confidence in the leadership, especially in Greece. In view of this, rating agencies downgraded three Eurozone debt statuses to the junk, and thereby, worsened the investor fears. The countries affected included Ireland, Portugal, and Greece (Hix and Høyland).

The Greek Case

In the wake of the upheavals in the Eurozone in 2010, the national bond yields for a number of the EU countries shot up. Those affected included the Federal Republic of Germany, Portugal, Ireland, and Greece. The escalation in bond yields forced the Greek government to seek the country’s first assistance in May 2010 (Hix and Høyland). Now, Greece got two bailouts. All the assistance came from the EU over a five years period. During this time, the country undertook the EU-led austerity measures. It aimed to reduce costs in the phase of a biting economic recession, political, and social unrest. Come June 2015, the Greek government in a phase of political divisions amid the never ending recession, faced a default on its national debts amid calls to leave the EU altogether. To save the day, the Greek parliament voted for further austerity on 5 July 2015. This led to the third bailout to the country totalling 85 billion euros.

European Union
European Union

Further Effects

Ireland went the Greek way in its request for a bailout late in 2010, while Portugal came in next in the month of May 2011 (Hix and Høyland). Spain and Italy also found themselves in the rather precarious situation, and therefore, Spain put in her request to the EU for a bailout in June 2012; and so did Cyprus. Portugal also followed suit. However, come 2014, Spain, Portugal, and Ireland exited the bailout plan in the wake of domestic austerity actions, these countries’ fiscal reforms, and other favourable economic factors. Full economic recovery may still be far, but at least they are able to stand on their own. However, for Spain, a recent economic development in the country pushes it toward a second bailout plan.

For the European Union, the economic turmoil within the union comes amid momentous wealth shifts toward Asia and Africa. In the wake of this, the EU’s global GDP share dropped from 24 percent in 1990 to 22 percent in 2010. The emerging markets as those of China, India, Russia, and Brazil all compete the European Union for foreign direct investments, and growth resources like oil and gas. In addition, the European labour force ages drastically and now seeks leisure than work. Furthermore, the European Union lags behind in resource allocation to innovation. Innovation is the engine of growth, and where it lacks, stagnation quickly follows. The European Union’s Lisbon Strategy that aimed to turn the European Union into an economic powerhouse is conspicuously missing in action (Hix and Høyland). In addition, its latest 2020 plan, operating in an environment of lofty ambitions, certainly will not fare any better.

In this era of declining oil and commodity prices amid rising food prices economic recovery prospects for the European Union look grimmer. Simply put, future forecasts for the European Union paint a rather dark picture of the European Union, in the wake of its largely aging and immobile population. This gives the Union a competitive disadvantage in the wake of cheap labour markets in Asia and Africa, which now forces the union’s domestic enterprises to relocate to the two continents (Kelegama 110-131). This leaves the European Union economy overburdened by high unemployment rate amid rising health costs. In addition, the Asian communist and socialist development models now pose great challenges to the capitalist model of the Anglo-Saxon cooperation. Consequently, fewer Asian nations are eager to implement the American and European Union led reforms on environmental, labour, and social strata arguing this would greatly disadvantage their development plans at this critical juncture.

The third and critical challenge in the European Unionrevolves around finding a common identity. Member nations never speak with one voice, turning the union into a misdirected entity where opposing forces pull in different directions (Dinan). The current Syrian refugees’ crisis and the subsequent divisions it continues to cause in the leadership of Eurozone is a case at hand. Academicians describe it as one the greatest paradoxes of the European Union, in the phase of a widening and deepening rift. We have a European Union that progressively moved from the unification of its customs departments into a single-market economy, and currently boasts seventeen nations in its monetary union. We also have an EU that gradually increased the number of membership nations from just six at its onset to the current twenty-eight members. In this diversity that spans almost the entire continent, a common identity continues to be a great challenge.

Consequently, the European Union finds itself unable to strengthen the union’s political institutions further, in order to keep abreast with the deepening needs of this integration, in the wake of a heterogeneous membership. In the phase of a widespread public scepticism on the European Union’s vision of cooperation and integration, the citizens remain hooked to individual national values, and consequently, are reluctant in letting Brussels usurp the national powers. In addition, the two bearers of the EU’s vision, France and Germany are now openly divided on matters of economic governance (Hix and Høyland). Therefore, the union needs to find a common European voice in all matters that touch on global economic governance.

Many in the EU looked upon the Lisbon Treaty as a provider of the necessary impetus for deepening the economic prospects of the European Union, but the struggle seems to bare any fruit presently. As a result, national politicians are now reluctant to push forward the agenda for strengthening the European Union. The strongest proponent of the union, Germany, now relaxes its voice on closer integration (Hix and Høyland). This gives the sceptics raw fodder to publicly doubt the euro prospects. In this front, however, a number of European Union politicians, such as the former French president Nicolas Sarkozy, and Belgium’s former prime minister, Guy Verhofstad, who lead the liberals minds to the argument that the European Union now requires radical steps to best respond to its myriad political and economic crisis. This group believes that the European Union’s handicap stems from the weak central institutions of the European Union. Consequently, they assert that the European Union needs sufficient regulation that governs its energy and financial sectors. Unfortunately, for the group, lukewarm reception from Germany and a number of member nations continue to meet their recommendations.

The Validity of this Model

Recent political and economic crisis in the Eurozone puts heavy challenge on the European Union’s model of governance as an implantable system of governance. However, some scholars argue that this fallout is only temporary. History is rife with instances where the EU rebounded from the ashes. This group argues that the European Union will leverage its present day adversity, and move forward in its integration efforts. This group cite as an example, the 1954 case where the plan mooted for a common European defence system failed. It is this plan, however, that gave birth to the EEC in three years’ time. Another common point of reference is the empty-chairs crisis under the then French president Charles de Gaulle in 1965. His theatrical actions later resulted in the Single European Act in 1986 through a unilateral acceptance of QMV (Bartolini). In addition, the 1980s currency tribulations gave rise to the common European Monetary System, and eventually the euro.

In the wake of regional blocs’ dominance in the global economic and financial agenda, the European Union as a single player is unlikely to achieve much on its own. A long time ally, the United States, now presses for a reduction in the number of seats the European Union occupies in the Group of 20 (G20), and the global lending houses, including the World Bank, and the IMF (Hix and Høyland). In due course the changes could trigger stronger for the integration process.

In the phase of these crises, the EU continues to attract negative media attention. However, despite the critics, most governments of the member nations, and other regional groupings continue to show strong faith in this union. Of significance is the fact that despite the crises, neither the next door Russia, nor the now Asian economic giant China nor Russia sold their holdings of euros (Hix and Høyland).

Neither has the European Union’s problems dimmed other regional groupings’ quest for greater cooperation, and eventual integration. For instance, ASEAN continues to push forward its proposals for the establishment of its ambassadorial steering committee, in line with the arrangement in Brussels. They call theirs Coreper. Consequently, South Korea, China, and Japan continue to intensify the regional trilateral ministerial meetings. The aim is to establish closer ties in the East Asian cooperation (Kelegama 110-131).

Consequently, a lot exists for the benefit of many from the European Union model of integration. At the core of the matter is the fact that the European Union is a heterogeneous organization. Therefore, how the member countries manage crisis serves as a pointer to the emerging regional bodies. For instance, if one considers monetary union objectively, it becomes clear that an integrated economic and political system is necessary to evaluate the national debt of a member country, and consequently, defers speculation. This serves well those nations aspiring to forge a customs union and adopt a free market economy, which finally leads to a common currency (Kelegama 110-131).

Experts assert that the process of integration is very difficult indeed, as invariable setbacks and crises often arise. However, as one evaluates the European Union case, data available proves such sceptics wrong. The EU as a regional union boasts of an excellent record in tackling crises, and move forward ever strongly than previously. Experts attribute this to a very strong political will. Consequently, the valuable lessons from the European Union model gives an impetus on investment benefits member nations accrue from their goal to integrate regionally. In as much as the system may not prove politically convenient, however it is a platform that time testifies have great advantages to regional economies. Moreover, it is prudent to understand that integration only succeeds, in the arena where the citizens and governments believe in the cause as vital above national interests (Hix and Høyland). Consequently, where commitments lack, the regional grouping crumbles at the first bump on the road to this city called integration.

References

Bartolini, Stefano. Restructuring Europe: centre formation, system building and political structuring between the nation-state and the European Union. Oxford University Press, 2005.

Damian, Monica. “The Comparative Analysis of the Monetary Policy Strategies before the Adoption of the Euro Currency and the Impact upon the Maastricht Criteria.” Journal of Applied Economic Sciences (JAES) 3 (17 (2011): 222-229.

Dinan, Desmond. “Ever closer union: an introduction to European integration. “Boulder, USA–2005 (2004).

Hix, Simon, and Bjørn Høyland. The political system of the European Union. Palgrave Macmillan, 2011.

Kelegama, Saman “South Asia and other regional economic groupings.” South Asia (2010): 110-131.

Volkens, Andrea, et al. Mapping policy preferences II: estimates for parties, electors, and governments in Eastern Europe, European Union, and OECD 1990-2003. Oxford: Oxford University Press, 2006.

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Tesla Motors Case Study

Tesla Motors Case Study

With the increased focus on renewable energy driving all, sector the country’s economy. The transport sector has also received numerous recommendations to reduce carbon emissions. It is against the backdrop of these ideal that Tesla Motors Company was created. This case study will examine Tesla motor companies strategies as well as assess their internal and external environment in order to create viable recommendations for a sector, which is highly competitive. This case study report will begin with background information about the company then assess the organisation strategic positions and this will be undertaken with the use of Porter’s five forces and SWOT analysis. The outcomes from this model will aid in the recommendation, which will be vital for the organisations.

Tesla Motors Background

According to Tesla (2014) the organisation was formed in 2003 as a revolutionary car business using the latest technology as its competitive advantage. The car was able to conceptualise and create an independently electric vehicle known as the roadster. The concept of the car designs was Silicon Valley inspired. According to Ehrler et al. (n.d, p. 381) the organisation “designs, manufactures and sells zero emission electric cars and power train parts, such as lithium-ion battery packs”. The organisation has sought for strategic partnerships with companies such as Daimler, Panasonic, Toyota and US department of energy (Ehrler et al., n.d, p. 383).

Tesla Motors PESTEL Analysis

PESTEL analysis is a viable tool used to examine an organisation environment and is crucial in the identification of key areas of improvement as well as potential problems likely to emerge (Yuksel, 2012). The external environment is a factor, un-controlled by the organisation and all the eternities function as influences to the organisation operations as seen in figure 1 below. The models take into consideration the political, economy, the social, technology, legal and environment.

Tesla Motors PESTLE
Tesla Motors PESTLE

Figure 1 PESTEL Model

(Sourced from: Business and Management: 4th November – 11th November 2013, – PESTLE Analysis, 2015).

Political

According to Tesla (2014), Tesla motors sell their cars in numerous countries across the United States, Europe and Asia and hence, the company is exposed to different political situations occurring in all those countries. According to the Environmental- protection.org.uk (2014), some countries political environment are affected by climate change issues and hence, law enacted to cut carbon emission by a particular percentage and this affects car manufacturers. The US government is offering incentives to car manufactures that endeavour to product cars more efficient and better in utilising green car technology.

Economic

There is an alternative avenue for growth for cars offering cars, which utilise alternative energy. The increase costs of petroleum have made business more difficult and hence, businesses and individuals are in need of an alternative solution to the rising fuel costs. Most developed countries are now recovering from the financial crisis; the purchasing power is now higher, great new for manufacturers who have products that at needed.

Social

Today the word green technology is associated with companies that are considered to be producing products that are good for the environment. Carbon emission from vehicle exhausts are a big contributor to greenhouse gases affecting the earth environments (Wunch et al., 2009).

Technological

The car sector has seen tremendous changes due to technological innovation affecting several aspects of the car efficiency. Vehicles have been going through metamorphosis with car manufactures looking for way of reducing the fuel intake in order to improve efficiency.

Environmental

Eco friendly car is the word spoken to car manufacturer if they rare to remain competitive by customers across the world. With fuel leakages reported in some places, resulting in a loss of marine and bird life, there have been a growing number of environmentalists forcing their government to regulate the sector and allow only fuel-efficient cars on their roads. What happens to the ozone layer is another factor pushing some individual and institutions to consider vehicles, which do less damage to the environment.

Legal

The US has a market presents challenges for Tesla as a car manufactures especially due to the franchise laws in the country (Fisher, 2014). The energy loan program also in the country increases the chances of car manufacturer to produce more green cars in the sector.

All the factors seen above have the effect of directing the way a car manufacturer does business in US. It is vital to determine how external environments affect the organisation in order to work from there, building competence in a way, which is likely to result in a more beneficial manner. Of major significance in the assessment of Tesla’s external environment are the franchise laws, which would stop the company from distributing their cars in some states in the country. However, the much of the external influence faced by the car manufactures geared to more in support of the company and trends show the vehicle sector is set to follow Tesla direction in the future.

Tesla Motors Competences (SWOT Analysis)

In order to determine Tesla’s competences in the vehicle industry, a SWOT analysis is carried out to examine the organisations strengths, weaknesses, opportunities and threats (Hill, & Westbrook, 1997. It is vital to assess the organisation internal capabilities for a more effective recommendation outcome. A SWOT analysis model is presented in figure 2 below.

Tesla Motors SWOT
Tesla Motors SWOT

Figure 2: SWOT analysis

(Sourced from: Doing a SWOT Analysis to Focus Your Marketing Strategy, 2015)

Strengths

Tesla motors have been able to create executive cars, which are totally fuel free and are energy efficient since they are based on electric power, which are saved on batteries. Tesla cars have been able to go for more than 300 miles without having to recharge their batteries and the closest competitor can only reach 100 miles, which is a significant benefit to the company. In 2013 their car, the “Tesla S” was awarded the price as the trendiest car of the year.

Tesla has been able to reduce its input costs significantly through outsourcing of other parts needed for the manufacture of their vehicles and this has allowed the organisation to reduce its costs. Its collaboration with Panasonic is likely to have an even more powerful battery, which is likely to push their cars even further. In addition, its collaboration with Daimler and Toyota has greater advantages and the company is set to provide vital parts for needed for electronic cars for the two companies.

The organisation has invested a large amount of research and development and this is key to pay off in the future when new technology which is likely to further revolutionise the car sector will be a necessity and this goes in hand with their objectives which is to be in the forefront of the electric vehicle sector.

The organisation has been able to utilise just in time JIT manufacturing systems and only those cars, which are ordered, manufactured and this reduces storage costs and enables them to have a smaller facility. This form of lean management process allows staff to become specialised in a vast number of skills hence, fewer staff are able to accomplish the task of the organisation.

Weaknesses

The major problem that Tesla Motors has is a lack of adequate capital base on which to sustain its operational successfully. Despite having sales for its vehicles, the organisation is not making profits and is due to a low demand and high cost of sales, which are eating up the sales revenues.

The organisation is running on debt financing which is expensive and puts the company at greater risks of being taken over if they are not able to pay up its debts on time. The large research and development costs do not seem to bear profits at this time.

The Tesla car brand is not international recognised as compared to other brands such as the Toyota Prius. The organisation has focused on the higher end of the market, attracting only those with considerable resources to purchase the cars.

Opportunities

The opportunities for Tesla are enormous today especially with fuel prices rising, making life difficult for those who have cars that consume a lot of fuel. The car manufactures need to communicate the benefits of their vehicle to the entire car market since the benefits accruing with owning their cars far outweighs having a regular gasoline car. There is a ready market for small fuel-efficient vehicles also which the company has not tapped (Pollet, Staffell & Shang, 2012). Already the car manufacturer is in a sector, which few have tried to venture fully. Those car manufactures who have tried to venture either have hybrid cars of inefficient electric cars as compared to Tesla motors.

Threats

Other car manufacturers have greater financial resourced or sources, which could easily allow them to venture into the niche market, Tesla is viewed as a smaller inexperienced car manufactures are compared to the long term experienced car manufactures in vehicle sector. If other car manufacturer with greater capability for economies of scale to start making electric vehicles, this could affect Tesla revenue sine the organising is not able to manufacture as cheaply as those who are established worldwide.

Tesla Motors Competences (Porters 5 Forces Analysis)

Porters five forces as seen in figure 3 below is useful in assessing a business sector to find how attractive the sector is and who has influence in the sector.

Tesla Motors Porters
Tesla Motors Porters

Figure 3: Porters 5 forces Analysis Model

(Sourced from: Porter, 1981)

The Threat from New Entrants

The sector which Tesla Motors company is in has challenges for those who want to enter that market segment. The capital expenditure needed for this electric vehicle sector is very high and keeps new business away from this sector. The only business which may find it easy to enter this market are those existing car manufacturer that have large resources readily available as well as have the capacity to venture fully into this sector.

The Bargaining Power of Buyers

Tesla is a vital company in the electric vehicle sector and today they have a very solid relationship with their customers. Since the company has invested a lot of money and skill in research development, they have been able to manufacture quality products, which are useful for companies such as Daimler, and Toyota hence Tesla Motors power is very high. Tesla has a manufacturer, produces cars which are unique and scarce hence, with increased demand likely to set in the market, they will have considerable power thought, this is only vital if they are able to generate awareness of their brand.

Threat of Substitution

The threats of substitution are the Tesla Motors market segment can be seen from hybrid cars, diesel cars as well as other electric cars and solar power cars. There are also substitutes arising from people choosing to ride buses, trains as well as use bicycles instead of purchasing an electric vehicle.

The Bargaining Power of Suppliers

Since Tesla Motors is highly dependent on its suppliers and this is due to adopting lean management system where parts sought when an order is availed. This means that the suppliers have a higher bargaining power. If the suppliers do not bring the raw materials in time, Tesla is likely to suffer as a result.

The Intensity of Rivalry in the Industry

The global car sector is fiercely competitive with car manufactures competing on a global platform with different categories of their products to cater for different clientele. In the electric vehicle, sectors server car manufactures have created cars, which have not been able to meet the standard of Tesla though; companies such as Nissan have created compact affordable electric cars, which are selling in different countries.

Porter’s five forces show a growing threats to the Tesla car company if they do not work quickly and cater for other segment. This threat can only be from already established car manufacturer. The sector is still inaccessible due to the high capital-intensive investment an organisation will have to undertake and the skill needed to ensure an organisation is competitive.

Conclusions

This case study features Tesla Motors a company that was set up to create in 2003 as a revolutionary car business using the latest technology as its competitive advantage. The car was able to conceptualise and create an independently electric vehicle known as the roadster. The company’s revolutionary cars are set on a global stage, as a car with moves without the conventional fuel. The external environment scanning undertaken through PESTEL analysis of the organisation revealed that the organisation had greater opportunities to enhance their business with support from the American government. The international analysis undertaken using the SWOT analysis revealed that organisation has inherent weaknesses, which saw the company perform in a sector, which is very lucrative due to a lack of adequate finances. Threats in the electric vehicle sector were seen to arise from existing car manufacture, with greater competences as well as finances to build electric vehicles even cheaper than Tesla. Porters 5 forces analysis that was undertaken on Tesla Motors revealed that the sector was very hard to enter by new players in the sector. This was due to the high capital intensity the sector demanded as well as the skills necessary for a business to actually undertake the business successfully. The case study also showed that Tesla Motors strategy was more focused on the upper clientele of the car market with quality, better performance as well as expensive vehicles, which used electricity as compared to petrol.

Recommendations

Tesla was advised by its customer to manufacture a car that was of a lower price but the company has still manufacture a car that is half the cost of its pioneer car thought still relatively high for many to purchase.

Since Tesla is in a sector, which has the highest potential in the vehicle sector, the organisation should find ways of building a cheaper option, which can be bought by a number of people worldwide. Since the companies cars are of the best quality, in order to capitalise on this aspect, selling on mass production could be more beneficial to producing on demand. It is better to derive fewer profit margins and sell more cars, which then equates to a greater profit as compared to selling premium, which affects demand. With threats evident as existing car, companies have started embarking into electronic car sector, this is poised to destroy Tesla cars in the market if those car manufactures are able to manufacture and sell at a cheaper price. This is an aspect Tesla should not forget and having beautiful expensive cars does not equate to profits but rather having a car, which has demand.

The company’s strategy on focusing on premium cars and attracting the rich to purchase their cars is failing with little or no demand. The rich have the capacity to purchase any other car despite the consumption and hence, a change to their focus can create changes to the financial reporting. Coming out early and capturing a greater market share will hinder even existing car manufacturer from venturing into Tesla niche market. The organisation should come out with different models from compact small cars to their SUV since this is a car concept which any individual is unlikely to pass out.

Tesla should embark on selling key part to other car manufacturers to ensure they have a steady stream of revenue apart from selling their cars. This ensures that the car manufacture remains relevant even with increased competition, which is set to grow in the coming years. Being in the forefront or provision of vital innovative electrical parts for car manufactures can even bring in a greater percentage of revenues. Samsung Company has been able to remain competitive as a result of producing vital parts for iPhone which is a major rival.

Tesla should continue with its research and development and produce batteries, which are able to take the car further as well as reduce the time it takes to charge the car batteries, which many view as a challenge when using electric vehicles.

Most importantly, Tesla needs to create awareness of its products to the international market not just in American and Europe. There are many government and organisation, which could benefit from having a car that utilises less harmful substances as compared to petrol of diesel. A greater percentage of the revenue should be spend in advertisement and education on harmful carbon emitted in petrol and diesel consuming cars.

References

Business and Management: 4th November – 11th November 2013, – PESTLE Analysis (2015) Business and Management: 4th November – 11th November 2013, – PESTLE Analysis.

Doing a SWOT Analysis to Focus Your Marketing Strategy (2015) Doing a SWOT Analysis to Focus Your Marketing Strategy.

Ehrler, C., Gillis, J., Huesemann, M., Sandoval, M., & Turckes, L., (n.d) Tesla Motors: charging into the future? Case 29 1(1) pp. 381-395

Environmental-protection.org.uk, (2014) Car Pollution | Environmental Protection UK.

Fisher, D. (2014) Tesla’s Elon Musk Learns An Old Lesson Fighting Protectionist Dealer Laws.

Hill, T., & Westbrook, R. (1997) SWOT analysis: it’s time for a product recall. Long range planning, 30(1), 46-52.

Pollet, B. G., Staffell, I., & Shang, J. L. (2012) Current status of hybrid, battery and fuel cell electric vehicles: from electrochemistry to market prospects. Electro-chimica Acta, 84, 235-249.

Porter, M. E. (1981) The contributions of industrial organization to strategic management. Academy of management review, 6(4), 609-620.

Tesla Motors, (2014) About Tesla | Tesla Motors.

Wunch, D., Wennberg, P. O., Toon, G. C., Keppel Aleks, G., & Yavin, Y. G. (2009) Emissions of greenhouse gases from a North American megacity. Geophysical Research Letters, 36(15).

Yuksel, I. (2012) Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), p52.

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Lawsuits Apple versus Samsung

Case Law on Apple versus Samsung – Patent Infringement

Title: Apple Samsung Lawsuits – Cornish, W., Llewelyn, G. I. D., & Aplin, T. (2013) Intellectual property: patents, copyright, trade marks & allied rights.

Patent infringement can be described as an act of making, selling, using or offering to set an invention that has been protected by government for the rights of inventor. In this report, a case of Apple vs. Samsung has been analyzed and discussed using critical understanding by referring the literature. In addition to this, supporting cases are also analyzed to provide understanding in the area of legal risk management. The report concludes that patent infringement cases are very critical and differ according to legal requirements of different countries. From the analysis of the case study, it was found that Apple and Samsung are going through a long lasting battle of patent infringement. Both have faced serious consequences of this battle due to different legal perspectives.

Case Summary and Analysis

Apple and Samsung are two technology giants have their number of lawsuits between each other relating to tablets and smart phone designs. This technology battle is very significant because these two companies contribute almost half of the smartphone market share across the world. The two parties which are claiming each other are two major technology giants Apple and Samsung. However, it Apple remained in winning position in most of the cases. A brief description of the two parties has been provided before discussing the main issues of the case in order to give introduction to these two companies.

About Parties

Apple Inc

Apple is an American multinational electronic company that is often characterized for offering best quality and innovative electronic products such as tablets, smartphones, laptops etc. It was founded in California, America in 1976 by Steve Jobs and since then, the company has placed it in number one position in hardware and electronic industry. Its products iPhone and iPads are considered as revolutionary innovation in the electronic world.

Samsung Group

Samsung group has five major business units including Samsung electronics company, Samsung telecoms etc. It is a South Korean multinational company that is comprised of number of subsidiaries and affiliated business organizations. The company was founded in 1938 by Lee Byung-chul and emerged as one of the largest electronics companies in the world.

Main Issue

Apple made the very first case against Samsung by suing it for four design patents on 5th January 2007. In response to the same, Samsung also filed a case against Apple for violating colour design patent of 193 screen shots of many iPhone graphical use cross points. Apple made a claim on its component provider Samsung in more than 10 countries including USA, South Korea, Germany, Australia, Netherlands, and Japan etc. Thus, the patent battle between Apple and Samsung has become an international case related to patent infringement. The key issue in this case is to identify if Samsung or Apple have infringed the patents of each other.

Apple has sued Samsung because the company is trying to protect its patent provided by the government for new invention. The issue has become more significant because Apple cannot protect all of its patents because technology is changing very frequently. In such a scenario, only specific features like “princh stretch” can be protected. Therefore, Apple won a court case against Samsung for $1.05 billion because of patent infringement by Samsung for copying a specific feature. Samsung also sued Apple for the same and won in few cases where it did not copy specific features. Both companies are major rivals in electronic industry and hold specific market share therefore, will never back down and accept that they were wrong. Thus, the battle is not going to end easily to the give case scenario.

What did Samsung Copy?

O’Rourke, M. (2011) Apple and Samsung Wage Patent War. Risk Management. 58(10). p.6.

Samsung had a basic production on tablets before Apple’s innovative product iPad launched. After launching of iPad 2, Samsung changed its designs of tablets and Google alleged Samsung to copy Apple’s iPad. The key design violations by Samsung are discussed here under:

Violation 1 Samsung infringed the design patent by introducing a feature of enlarging the text by double tapping on the screen. Thus, Samsung introduced the zooming feature that was being used by Apple in its iPads.
Violation 2 Apple was the first company that offered a feature of bouncing back after scrolling. Samsung also violated this design patent in its smartphones.
Violation 3 Ornament design was used by Apple in iPhone 3 that was used by Samsung for its future models. The shape of iPhone was rectangular in shape and the same was adopted by Samsung later.
Violation 4 Samsung was also alleged to copy the shape and feature of icon alignment in a row or column that is a user friendly interface. Samsung can with the same interface that is used in android systems of Samsung.

What did Apple copy?

In response to the above claims, Apple was also sued by Samsung because it was accused for using the same architecture design icons in iPhones which were used by the Samsung smartphones. Thus, Samsung electronics filed a lawsuit against Apple iPhone 5 which was released recently. Apple was accused to use the same features and GUI interface that was used by Samsung. Thus, Samsung alleged that Apple’s iPhone 5 shape is unreasonable rectangular shape which was copied by infringing the patents.

Federal Complaints in Court

Cusumano, M. A. (2013) The Apple-Samsung lawsuits. Communications of the ACM. 56(1). pp.28-31.

The following federal complaints were filed in the courts of various countries of which few lawsuits are stated below:

South Korea

The South Korea court revealed that Samsung was in fault for infringing patents by violating Apple’s design patents. Nonetheless, the court also awarded the little damages to both Apple and Samsung. South Korean court gave the judgement in neither of the parties by banning the products of Apple and Samsung in the country. Samsung was ordered to stop marketing its 12 products and Apple was asked to ban iPhone 3gs and iPad 1 and iPad 2 in South Korean market.

Japan

Samsung was sued by Apple for two patent infringements in the federal court of Japan but court denied to take any action. The court held that the technology used by these two companies was different and therefore, complaint filed by Apple was stroked down by them.

British Lawsuit

According to statement of British court, galaxy product of the Samsung was not copied and iPad and galaxy are products with different technologies. By this judgement, Apple lost the case against Samsung in United Kingdom as court held that there was no point to claim.

Australia

In federal court of Australia, Apple was a clear winner because on this case of patent infringement, Samsung was found guilty in legal grounds and ordered to ban galaxy tab in Australian market.

United States of America

The USA case against Samsung is considered significant in this battle because court clearly favoured Apple and held that Samsung copied the technology used in iPhones and iPads. Thus, all the tablets and smart phones of Samsung were banned in USA and court also imposed huge penalty on Samsung.

Problems in Finding References

During this study, I found issues in reading and finding related literature because of unauthorized access on some website. There are many premium website which allow user to get data only on subscription. Due to financial constraints, I had to find alternatives which was time consuming and difficult. Furthermore, the other issue I faced during finding references was identification of appropriate key words.  Patent infringement is a wider term and there are all unique cases relating to this. Thus, it was difficult to identify supporting cases and references for the same. For this, I used rational approach and identified the list of patent infringement cases. Then, I used key words based on initial literature review to solve this issue. I have used enough literature to create better understanding on this case and analyze the same.

Apple Samsung Lawsuits
Apple Samsung Lawsuits

Analysis and Reflection on Legal Grounds

From the analysis of the given case study, it was found that both Apple and Samsung are in losing position due to this patent war. On the one hand, Samsung has to pay penalty of billions and on the other hand Apple lost its reputation in few countries. However, Samsung been biggest loser in this battle because there were serious financial and reputational implications.

Crampes, C., & Langinier, C. (2002) Litigation and settlement in patent infringement cases. RAND Journal of Economics.  pp. 258-274.

The patent laws in USA provide for granting patents to any person/organization invented new, ornamental and original design for an article for manufacturer. The manufacturing items under the scope of patent law include smartphones, peripheral, software icons and other automobile parts. However, it is important to note that three types of patents are there but the scope of this law does not cover utility patent. However, the patent rights granted to Apple being an American country is confined to the territory of USA and thus, there will be no effect in other countries. Almost every nation has its own patent law and a person who wants protection of any kind of patent in any country is subject to laws applicable on that particular country regarding patent infringement.

Bosworth, D. L. (2014) Intellectual property rights. Elsevier

The above discussed case is not applicable for a single country because Apple and Samsung have entered into an international battle by suing each other in more than 10 countries for patent infringement. The law suggests that before determining the patent infringement, it is important to compare overall appearance of the accused design and the claimed design. It was found that Apple won the battle in some countries like USA but it also lost the case in some countries. The decisions made by different federal courts were based on their patent regulations and guidelines. Thus, it will not be wrong to state that both Apple and Samsung were not able to effectively protect their intellectual property rights and faced difficulty.  On the basis of legal grounds and analysis, the cost of these actions of Apple and Samsung and future implications of the same are presented below:

Cost of These Actions

Wingfield, N. (2012) Jury awards $1 billion to Apple in Samsung patent case. The New York Times (August 24, 2012).

Apple had claimed federal complaint on its supplier Samsung in many countries whereas Samsung also filed the case on Apple for copying 5 patents of Samsung. The cost of taking these actions remained too high for these two organizations because finally, some of the products of these companies were banned in some countries that caused huge loss to reputation of Apple and Samsung. In addition to this, this billion dollar patent dispute between these Samsung has led one of the biggest losses due to penalties for patent violations in legal history ever.

Lawsuits Future Implications

Jeruss, S., Feldman, R., & Walker, J. H. (2012). The America Invents Act 500: Effects of Patent Monetization Entities on US Litigation.

There are serious implications of this legal battle that can be discussed in financial, reputational and market terms. Countries like South Korea banned some of the products of Apple and Samsung due to which the companies lost significant market share and reputation. Apple’s biggest competitor Google can re evaluate its product designs and strategies to protect itself from any legal action. The Apple remained in the strong position and therefore, it can become world’s most valuable company. Samsung lost the share value because of this patent battle that has made Apple to gain competitive advantage in long run.

Analysis and Conclusion on Other Case Studies

Innogenetics, N.V. v. Abbott Laboratories, 512 F.3d 1363 (Fed. Cir., 2008)

Innogenetics Biotechnology is a company that is dealing with diagnostics assays, multi parameter testing and in the field of severe infectious diseases whereas Abbott labs is a health care company involved in activities like discovering medicines and new technologies for well being of people. Innogenetics was provided patent for the method of detecting a particular disease which was copied by Abbott labs. Innogenetics won $7 million against Abbott for infringement of patent. Although, Abbott gave an argument that the technology used was a raising technology. Court gave the judgement on the grounds that applicant is not required to convince specification. The technology was already known earlier therefore, innogenetics won the case. However, Innogenetics succeed in protecting the right to offer injunction in the market. From the analysis of the case study, it can be stated that Abbott was not able to defend itself on justifiable grounds because of pre existence of the technology.

Microsoft Corp. v. Motorola, Inc. (Fed. Cir., 2014)

The case of patent infringement was initially filed by Microsoft Inc. against Motorola in the District Court of Washington in year 2012. The reason for the claim was that Motorola was alleged to violate reasonable and non discriminatory agreement. During this US litigation, Motorola sued Microsoft in Germany for patent infringement. However, the patent battle has come to an end and the jury has ruled the case in favour of Microsoft and awarding the company $15 million in damages. The judgement was based on the argument that Motorola has breached the US agreement. From the analysis of the case study, it can be said that patent infringement cases are very complex to make decision because there is a thin line between current and new technology.

Conclusion

In this report, the case of Apple vs. Samsung has been analyzed using the existing literature including supportive cases and legal guidelines. It can be concluded that every country has its own regulation on patent protection. In the technological field, patent infringement cases are very common whether they are related to design, utility or knowledge. Thus, it is important to review each and every aspect of the case for taking the judgement. Legal application can be confined to a single territory in most of the cases therefore, before launching a product companies should ensure that no such legal agreements are breached. It can also be commented that patent cannot be considered as a right option all the time because in the case of infringement, the final decision takes a pretty long time. By the time, when decision is taken, technology may have reached the window of opportunity could have closed for patent owner that happened with Apple. However, the typical outcomes could be monetary damages, exclusion order, mediation, injunction relief and negotiated settlement.

Bibliography

Bosworth, D. L. (2014). Intellectual property rights and Lawsuits. Elsevier.

Cornish, W., Llewelyn, G. I. D., & Aplin, T. (2013) Intellectual property: Lawsuits patents, copyright, trade marks & allied rights.

Crampes, C., & Langinier, C. (2002) Litigation, lawsuits  and settlement in patent infringement cases. RAND Journal of Economics.  pp. 258-274.

Cusumano, M. A. (2013) The Apple-Samsung lawsuits. Communications of the ACM, 56(1). pp.28-31.

Innogenetics, N.V. v. Abbott Laboratories, Lawsuits 512 F.3d 1363 (Fed. Cir., 2008)

Jeruss, S., Feldman, R., & Walker, J. H. (2012) The America Invents Act 500: Effects of Patent Monetization Entities on US Litigation.

Microsoft Corp. v. Motorola, Inc. Lawsuits (Fed. Cir., 2014)

O’Rourke, M. (2011) Apple and Samsung Wage Lawsuits and Patent War. Risk Management. 58(10), 6.

Wingfield, N. (2012) Jury awards $1 billion to Apple in Samsung patent case Lawsuits . The New York Times (August 24, 2012)

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Business Strategy John Lewis

Business Strategy and Sustainable Development – John Lewis Partnership

John Lewis Partnership is considered one of UK’s major retail businesses that have over twenty seven departmental stores and a hundred and six Waitrose stores. The enterprise is owned and operated as a partnership entity and the first store was set up in 1864 with Waitrose chains coming up in 1904. The first trust settlement was established in 1929 when the business gained a legal entity and profits became available for distribution to all partners; employees. The owner, Spedan Lewis sacrificed his personal business to fulfill his vision of establishing a business owned and run by employees as part of promoting ‘industrial democracy’ in the business.

In 1950, the partnership trust was transferred from a settlement trust to a legal Trust company under the name; John Lewis Partnership Trust Limited. In this arrangement, the Trust company would be under the Trust Chairmanship and his deputy elected by the three governing councils. John Lewis partnership is also regarded as Britain largest worker co-ownership business with more than 63, 000 permanent staffs as partners in the business. In this arrangement, the staffs share business profits and participate in important decisions for the enterprise development. The staffs’ commitment has seen the retail giant garner a unique competitive edge for over seventy five years with unparalleled growth.

One of the major aspects that have propelled the business to greater heights is due to a partnership approach based on understanding that profit is the main aim of business. Another important aspect that has propped the enterprise to its position is a business partnership model anchored on the principle of social economy and the integration of workers as company partners. All these have shaped the structure and principle of the company into a cooperative ownership that shapes the company policy and development.

John Lewis partnership has a legal form based on governing partnership and at no time are business operations directed by shareholders quest for profits but principles of the members’ happiness as enshrined in the partnership constitution. In particular, workers happiness comes from good job performance in enhancing successful business. The partnership constitution has ‘responsibilities and rights’ which enjoins the workers obligation of good job performance with overall betterment of the business for their benefits.

Evaluating John Lewis Partnership principles of conscious capitalism

John Lewis partnership is governed through principles of power, purpose, members read and profits. The principle of  purpose dictate that the aim of the partnership is to promote, enhance and facilitate the happiness of its members through their work as employees in the business and as managing members of the business success. The partnership is based on trust and each member shares genuine responsibility of ownership and rewards that are accrued from the business entity such as knowledge, power and profits.

Conscious Leadership

At John Lewis, all employees are co-owners in the business a democratic management structure run the business. Power is held in esteem by John Lewis partnership and there are three governing authorities that share power; the partnership Board, the Partnership Council and the partnership council. The principle of profits in the partnership dictates that, the enterprise make more profits through its trading operations in order to sustain its commercial prominence, finance development activities and distribute part of the profits to members. Furthermore, the principle of profits making aims to enlarge the enterprise returns that enables the business engage in other activities in accordance to its goals.

Under the principle of members, the partnership constitution is to increase more employees who are competent and committed to working and supporting the enterpri9se principles. In the principle of membership, courtesy, mutual respect and equality among the different members is highly encouraged. The aim is to enhance and encourage individual contributions fairly and reward each accordingly.

Evaluate the principles of conscious capitalism

The concept of conscious capitalism refers to establishing enterprises that implement practices which benefit people and the environment (Mackey, 2013:123). The concept of conscious capitalism is tied to conscious business that is gaining popularity in the modern age especially with regard to increased demand for corporate social responsibility by many business enterprises. Conscious capitalism is ‘values-based’ economic values that push for social and environmental concerns for business as they pursue their economic interests (Baron and Cayer, 2011: 344). The principle of conscious business is driven by the belief that when conducting business, it is not just for profit but facilitating social environmental responsibility for the general good.

Principle of Conscious Culture

Besides a democratic management structure, John Lewis has upholds the principle of radical transparency when conducting all business operations. All employees (co-owners) share, inquire, criticize and tell the management all that is important (Laszlo and Zhexembayeva, 2011:156). Each partner has a priority to voice any aspect deemed necessary regardless of age, education or experience.

Another aspect of conscious culture at John Lewis is its conscious consumerism through socially responsible investments (Zender, 2015). Ideally, the principles of conscious capitalism are based on certain criteria that demand businesses do no harm while undertaking their enterprise operations. One principle of conscious capitalism is that the products and services of business enterprises should never be harmful to the environment or people. This requires business to have mechanisms that forestall social and environmental effects while doing business as well as adopting beneficial social and environmental practices (Korschun, Bhattacharya and Swain, 2014).

Another principle of conscious capitalism is the triple down line model of doing business. Under the triple down model of doing business, the aim is to promote positive value in domains such as the planet, profits and people (Mackey, 2013:123). Profits are what distinguish an entity as a business and not social enterprises. As such, the degree to which an organization has adopted ‘conscious capitalism’ may be reflected in how it utilizes part of the profits for social and environmental welfare. In modern firms, there is a tendency to utilize part of the profits accrued in business for social welfare through donations or establishing an organization foundation whose purpose is social welfare; a good example is the Aga-khan Foundation, Bill Gates Foundation among others.

In line with the principles of  ‘conscious business’ firms that have an understanding of conscious capitalism should desist from accumulating profits through illegal means or deceitful operation practices such as failing to pay employees, poor working conditions or supporting harmful causes. For instance, the recent revelation that HSBC Swiss Bank has been evading tax cuts is an example of a business operating without conscious culture principles. The bank is alleged to have allowed bank transactions involving stolen oversees funds and this disqualifies the bank as being a ‘conscious business.’

A conscious business seeks to enhance the external and internal lives of its stakeholders (shareholders, clients, neighboring community and importantly its employees). In addition, a conscious business should benefit its other stakeholders such as the suppliers, creditors and humanity at large globally. Business enterprises embrace consciousness by forming welfare workplace programs, fair trade in manufacturing and assisting the general community with outreach programs. A business that is conscious aims to reduce the effects of its business operations on the environment in various ways such as engaging in recycling, using renewable energy and working with environmentally conscious partners.

Furthermore, businesses that are conscious use their resources in benefiting the environment and the society through direct or indirect programs related to the distribution of services and products. It has become increasingly important for businesses to reflect their ‘conscious capitalism’ spirit in the way they treat their employees and other stakeholders. Businesses are increasingly reflecting their consciousness through their company missions and values. In particular, paying employees well, donating services and products to non-profit organization is considered a good conscious business spirit. Operating under the spirit of conscious capitalism model pushes the fortunes of a business up by projecting a positive role of improving humanity in the society.

Conscious capitalism helps business to create value and ethics of economic exchanges, elevate humanity existence and creates prosperity by lifting people from poverty. In addition, when business operates on higher purposes other than the pursuit of profits, businesses creates value for all stakeholders, eliminate tradeoffs and elevate performance. The key pillars to conscious capitalism is having; higher purpose, stakeholder integration in the business, conscious leadership, management and culture (Rooke and Torbert, 1998). Neglecting one pillar would lead to jeopardized principle of conscious business. Examples of companies that have successfully embraced conscious capitalism are Google, POSCO in South Korea, Patagonia among others. These companies have created win-win situations for their customers, suppliers, employees, the general community and the environment.

Although conscious capitalism is related to corporate social responsibility, the two are different, Conscious capitalism purposes on creating value for the community stakeholders through actively engagement in business decisions as opposed to engaging them in periphery business programs (Fialka, 2006: 4).

The principle of conscious stakeholder integration

John Lewis Partnership is an example of conscious capitalism on many fronts. First, the partnership is based on conscious purposeful principles whose objective is promoting social economy (Mackey, 2015:1). By developing a co-ownership with workers is one important tenets of conscious capitalism employed by the partnership. Employees are important stakeholders in any organization and play critical roles in the success of an entity (Burden and Warwick, 2013: 3). It is common knowledge even among the company shareholders that employees are the cogs that support the organization in achieving its objectives and goals.

John Lewis Partnership is keen in building transformative relationships and co-develops solutions with all key stakeholders. John Lewis progressively builds transformative relationships with clients, employees, the local authority and charity organizations in its pursuit of sustainable business. In this way, by integrating the interests of all its stakeholders in the core of business activities, John Lewis is an example of a conscious capitalism.

Although organizations may boast of effective leadership, without competent and committed employees becomes an exercise in futile for mangers. Employees’ posses’ important skills and experience on areas that need improvement in the firm based on their day to day interaction with the various aspects of an organization. As such, having competent, committed and selfless employees is not easy and many modern firms are spending heavily in incentives and welfare programs meant to boost employees’ morale for performance (Mackey, 2015:1). Although these employee betterment programs are related to the principle of conscious capitalism, they are less effective in taping employees’ contribution to the firm. John Lewis might have done a critical assessment on these issues prior the development of a co-ownership with thousands of staffs at the retail enterprise. Enjoining employees in business ownerships serves many advantages. One is that employees contribute selflessly and actively in shaping the firms development policy based on their day to day work. Employees are not only motivated to work hard for the business but consistently strive to innovative new ideas that will benefit ‘their’ business.

In addition, the aspect of ‘owning’ the business and being part of decision making helps to improve employees motivation, cooperativeness and overall a corporate culture of harmony (Hind, Wilson and Lenssen, 2009: 23). John Lewis notes that, by enjoining thousands of his staffs in the business, he promoted ‘industrial democracy in which each employee has a fair equal responsibilities and rights in the affairs of the organization. The key pillar in John Lewis Partnership is promoting the happiness of its members who are employees. Human resources studies have found that, motivated and happy employees means happy customers and subsequently increase in sales returns (Somerville, 2013: 2). As such, by promoting the a conscious capitalism approach that focuses on improving employees happiness, the Partnership is a win-win model; employees will strive to make clients happy in return for good business to their partnership business (Abergene, 2005: 23).

Furthermore, by enjoining the employees in the business, this helped improve their welfare by raising their income thereby improving their social economy. In this way, by focusing on the general welfare of employees, John Lewis serves as an example of working ‘conscious capitalism’ enterprise. John Lewis is a good example of a ‘conscious business’ through its conscious management and leadership (Hind, Wilson and Lenssen, 2009: 23).

The Partnership enterprise is government by a well-structured constitution that establishes three centers of authority. These centers of authority promote democracy in the management and running affairs of the business especially in decision making; all employees are members while assessing the business problems. In this way, John Lewis partnership serves as an example to other businesses on what true conscious capitalism means.

Although modern firms allege to have conscious business, employees do not take part in decisions making and are often used as tools to achieve end goals. An example in case is Barclays bank that boast of a ‘conscious business’ but has been implicated with cases of employees mistreatment, underpay and contributing resources to programs that have hazardous effects on the welfare of humanity at large (Smith, 2013: 2). At John Lewis Partnership, employees have absolute freedom of openness in the management of the business; employees can inquire report and raise criticism based on actions deemed unsuitable for the business (Brown, 2012: 73).

Employees’ share business rewards, power and knowledge at the partnership and this has enhanced the firm have a competitive edge against conventional business those that treat employees as mere operational cogs in a business. All employees have equal opportunity to promote their potential and hold principle management positions in the Partnership Council. The management structure and organizational culture allows for two ways decentralized communications among the members. In this way, no individual feel neglected or out of the management structure (Lin, Hu S-y and Chen M-s, 2005: 534).

Another aspect of ‘conscious capitalism’ exhibited by the partnership is that, it does not condone or take part in social positions, sex, gender and political favoritism.’ This is a rare feat of ‘conscious capitalism’ especially in the modern world where most businesses take positions in social, political and religious matters (Burden and Warwick, 2013:2). According to Mackey (2013: 123), business enterprises project conscious business by contributing to the larger community in which they operate. At John Lewis Partnership the entity contributes to the general community in distinct ways. In particular, the enterprise has established links with Schools, local authorities, charitable institutions and other stakeholders in the community as part of giving back to the community (Shumate and O’Conner, 2010: 580).

John Lewis Business Strategy
John Lewis Business Strategy

John Lewis Partnership has important community outreach activities include the Partner volunteer work, charitable giving and development, customer panels and others. The principles established by John Lewis are strong indictors of a business operating under the principles of conscious capitalism. In particular, the entity main objective is to make more profits not for the purpose of enriching private shareholders but for the general good of partner members and the society at large (Korschun, Bhattacharya and Swain, 2014).

In summary, it is evident that the John Lewis entity was not formed with the sole aim of profit making but to facilitate social economy for members and the society at large. John Lewis Partnership serves as a good example of a conscious capitalism through its interest in the welfare of its employees and other stakeholders such as suppliers, having a conscious management structure, leadership, and democratic work culture and spreading the fortunes of the business to surrounding communities.

Conclusion

Conscious capitalism is an important aspect for modern business. The principle of conscious capitalism enables business organizations to surmount myriads of problems associated with employee management, stakeholders’ relation and projects a good role model in the society. Conscious capitalism facilitates free enterprise capitalisms that uphold social and environmental interests beyond economic interests. Conscious capitalisms is inspired by the need to improve humanity welfare, create business value to all stakeholders and improve organization performance competitiveness against conventional enterprises. Conscious capitalism is pillared by stakeholder integration, having conscious leadership in organizations, conscious management, conscious working cultures and creating value for the general community at large.

John Lewis Partnership is a good example of a successful ‘conscious capitalism’ that enjoined its employees as co-owners. The principles adopted by John Lewis have enhanced the firm uplift the welfare of its employees, suppliers, shareholders and the general community at large. Conscious capitalism is inspired by the need to improve social and environment needs in line with achieving economic gains. In short, conscious capitalism is means through which the ends goals of company profits are increased due to improved social reputation. John Lewis Partnership is a creation of conscious capitalism and this has enhanced the enterprise to remain competitively profitable as the largest retail store in UK.

References

Baron, C. M., & Cayer, M. (2011). “Fostering post-conventional consciousness in leaders: Why and how?” The Journal of Management Development, 30(4), 344.

Brown, B. C. (2012). “Conscious leadership for sustainability: How leaders with late-stage action logics design and engage in sustainability initiatives.” Dissertation Abstracts International, 73(07A), UMI No. 3498378.

Fialka, J. (2006).  “Some Companies Move From Opposition to Offering Proposals on Limiting Emissions. “Politics & Economics: Big Businesses Have New Take on Warming”. Wall Street Journal. p. 4.

Hind, P., Wilson, A., & Lenssen, G. (2009). “Developing leaders for sustainable business.” Corporate Governance, 9(1), 7.

John Mackey (2015): “Why Companies Should Embrace Conscious Capitalism” Forbes.

Pete Burden and Rob Warwick (2013). “Exploring Conscious Business Practice: Sensing as we act reacting to what we sense” AMED.

Korschun, D.; Bhattacharya C. B.; Swain, S. D. (2014). “Corporate Social Responsibility, Customer Orientation and the Job Performance of Frontline Employees.” Journal of Marketing 78 (3): 20

Rooke, D. & Torbert, W. R. (1998). “Organizational transformation as a function of CEO’s developmental stage.” Organization Development Journal, 16(1), 11-28.

Smith, Nicola (2013). “Corporate social responsibility: Power to the people”.

Shumate, M; O’Conner, A. (2010). “The symbiotic sustainability model: Conceptualizing NGO-corporate alliance communication”. Journal of Communication 60 (3): 577–609.

Somerville, Michael (September 13, 2013). “Nearly half of Britons would buy more from a store that supports charity”

Zender Tom. (2015). “Discover the power of consciousness in your business.” Phoenix Business Blog.

Abergene, Patricia (September 2005). Mega Trends 2010: The Rise of Conscious Capitalism. Hampton Roads Publishing Company.

Mackey, J. (2013). Conscious capitalism : liberating the heroic spirit of business. Boston Mass.: Harvard Business Review Press.

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Cloud Manufacturing Dissertation

An Investigation into the Concept, Design, Development, Applications and Future of Cloud Based Manufacturing and Design

Dissertation Title – Cloud Manufacturing. It is widely known that manufacturing challenges today are certainly more complex than what they were in prior times. We find ourselves as cogs of a fast moving world, connected to each other. Additionally, a booming and constantly moving global economy, drastic growth in consumer-driven technology, and constantly changing and somewhat unpredictable purchasing behaviors of consumers, jointly present their opportunity and risk. Therefore, in light of the reasons presented, the need for manufacturers to invest in next-gen industrial automation solutions is now, more than ever before, and the time is right to embrace the cloud.

In the introductory section of the dissertation, a brief background of the topic is given, to highlight some elements of the topic. Furthermore, the aims and objectives are mentioned, which have assisted in guiding the entire research project, from start till finish. Also, problem statement as well as the significance/scope of the research is mentioned, illustrating the significance of cloud manufacturing in today’s global economy. Finally, a brief overview of the report is listed, to provide a breakdown of the chapters. The evolution of manufacturing engineering systems has taken place with the aim of meeting various objectives.

Cloud Manufacturing Dissertation
Cloud Manufacturing Dissertation

These range from cost reduction, the need for reducing lead times, seamlessly integrating new processes, sub-systems, technology and / or upgrades; interoperability; reducing waste due to production activities, instantaneous reconfiguration capabilities and the ability to promptly adapt to events of an expected and unexpected nature.

Some of the most problematic areas of familiarizing with the concept and working of cloud manufacturing involve developing application level technologies that meet all the user requirements, and are adaptable with the existed distributed network for manufacturing. Another key challenge faced by organizations is the access to such machinery and equipment that allows them to utilize the unique system of manufacturing.

Cloud Manufacturing Dissertation  Aims and Objectives

  • To develop a holistic framework and appreciate the concept of cloud manufacturing by examination of all the relevant data, to structure a comprehensive understanding on the research topic.
  • To analyze the transformation of cloud computing to cloud based manufacturing and design, and its integration with the global manufacturing networks.
  • To investigate the concept of cloud manufacturing, and relate with the different stages of development, design procedures, deployment models, manufacturing paradigms and maintenance.
  • To assess and illustrate the numerous applications of cloud manufacturing, and the scope and global impact of on-demand-supply of data and services through the cloud network.
  • Finally, to demonstrate how future products, services and organizations will be influenced by cloud manufacturing, and to delve deeper in to the ongoing research that will shape the future of cloud based manufacturing.

Dissertation Contents

1 – Introduction
Problem Statement
Aims and Objectives
Background of Research Topic
Significance of Research
Overview

2 – Literature Review
Aims and Objectives
Cloud Computing
Cloud Computing Paradigm
Cloud Computing Hierarchy
Advantages of Cloud Computing
Trade capital expense for variable expense
Benefit from massive economies of scale
Stop guessing capacity
Increase speed and agility
Stop spending money on running and maintaining data centers
Go global in minutes
Product Lifecycle Management
Paradigms of Manufacturing Systems
Central production planning / manufacturing systems
Computer-Aided Design (CAD) / Computer-Aided Manufacturing (CAM)
Computer integrated manufacturing (CIM)
Discussion
Cloud-Based Design and Manufacture (CBDM)
Characterization of CBDM
Strategic Division
Users
Application providers
Physical resource providers (PRPs)
Deployment Models
On-Premises
Infrastructure as a Service
Platform as a Service
Software as a Service
Benefits of Cloud Manufacturing
For the Economy
For the Supply-Chain
For Security
For the Workforce
For Big Data
For Innovation
For Agility
Applications of CM
Data Transformation
Virtualization
Remote Collaboration
Cyber Security

3 – Research Methodology
Aims and Objectives
Research Philosophy
Positivist
Interpretive
Realism
Justification for Selection of Interpretive Philosophy
Research Approach
Deductive
Inductive
Abductive
Justification of selection of Inductive
Research Design
Exploratory
Descriptive
Explanatory
Justification for Selection of Exploratory
Research Methodology
Quantitative Research
Qualitative Research
Justification for Selection of Qualitative Analysis
Data Collection Methods
Primary Methods of Data Collection
Secondary Methods of Data Collection
Research Ethics
Limitations

4 – Findings and Analysis
Introduction
Aims and Objectives
Rationale for Manufacturing Solutions
Challenges and Trends
Trends
Challenges
Big Data Management
Cloud Agile Manufacturing – Concept
Cloud Agile Manufacturing – Pros and Cons
Industrial Automation
Integrate the cloud
Manufacturing Execution Systems of Cloud Connect
Current Progress in CM
Summary

5 – Conclusion

6 – Future Work
Cloud-Based Manufacturing
Cloud-Based Design
Information, Communication and Cyber Security

References

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