This is the forum for Week 2 blog post for milestone 1. Students are expected to post at least three quality posts with the initial post by Friday and all replies by Saturday. You can respond to any post from any class or professor or post your own original post. It is a chance to interact with students and faculty from all over the world and in all the Economics classes that are ongoing in the semester. It's important to include at least one reference in APA format per week. This site helps with citing: https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_style_introduction.html
This is the first milestone. To begin preparing for the first milestone next week, select a multinational corporation for your research. Businesses all over the world are affected by macroeconomic factors like interest rates, exchange rates, trade deficits, gross domestic product, inflation, unemployment rate. All of these can affect a company's bottom line by influencing the cost and availability of money, goods, and services.
Macroeconomic forces can conspire to make business more difficult, but they can also present opportunities to executives who know how to, for example, read a country's national income accounts and balance of payments to help in deciding whether to invest in that country.
Select a multinational corporation for this course project. This will be a firm that has a substantial record of being analyzed through published material that can be in the Regent library or elsewhere. Examples are Coca Cola, McDonald, GM, Ford, Honda, Siemens, Toyota, Saudi Aramco, Nokia, Foxconn, Royal Dutch Shell, Volkswagen, BP, Gazprom, Fiat, Sony, Samsung, LG, Alibaba, Schneider Electric, Acer, inc, JP Morgan Case, Fujitsu, Lenovo, SAP SE, Hitachi, BMW, and Bayer. Milestone 1 comprises of reading from Weeks 1 and 2 (Chapters 1-3, 26, 28)
Include these key requirements in your submission:
Does the company have a comparative advantage over its rivals?
Explain the supply and demand for its key product or service.
Provide the GDP of its home country and a key market (country).
How does fluctuations in GDP, economic growth, investments, and patents affect the company’s profitability?
Paper length should be at least 4 pages (including cover and reference pages).
Paper will be graded on adhering to APA formatting and citation requirements.
Use a minimum of 3 professional references (do not use Wikipedia, blogs, vlogs or any pedias)
Paper should be written in APA including Times New Roman, 12 font, double space, paragraphs indented, subheadings used.
Note that references provided must have corresponding in-text citations within the paper
A simple example:
Company Overview
Boeing is one of the largest aerospace company and America’s biggest manufacturing exporter, the company supports airlines and U.S. and allied government customers in more than 150 countries. The company has over 141,014 employees across the globe. Boeing works with more than 12,000 businesses supporting more than 1 million supplier-related jobs across the United States. These businesses include production suppliers and non-production vendors, as well as subsidiaries of companies to which Boeing made other payments.
According to Boeing (2021), the company manufactures the 737, 747, 767, 777 and 787 families of airplanes and the Boeing Business Jet range. New product development efforts include the Boeing 787-10 Dreamliner, the 737 MAX, and the 777X. More than 10,000 Boeing-built commercial jetliners are in service worldwide, which is almost half the world fleet. The company also offers the most complete family of freighters, and about 90 percent of the world’s cargo is carried onboard Boeing planes.
Does the company have a comparative advantage over its rivals?
Boeing is a leader in innovation and its capabilities in creating new airplanes, designing, building, and integrating military platforms and defense systems; creating advanced technology solutions; and arranging innovative financing and service options for customers. The company provides leading solutions for the design, production, modification, service and support of commercial derivatives, military rotorcraft, satellites, human space exploration and autonomous systems (Boeing, 2021, para. 6). Its rivals include Airbus, Raytheon Technologies, Bombardier, Lockheed Martin among others
Explain the supply and demand for its key product or service.
The demand for Boeing products is ever increasing. As of September 30th, 2021, it had unfilled orders of 5,059 planes, 241 deliveries, 710 gross orders. Demand for Boeing's products outstrip supply from all around the world including Brazil, Ireland, Germany, UAE, Singapore among others.
Provide the GDP of its home country and a key market (country).
Boeing’s biggest market is the US with revenues of $39 billion from the US and Europe provides the company with $8 billion in revenues. The GDP of the US is $20.94 trillion, and EU’s GDP is $15.167 trillion
How does fluctuations in GDP, economic growth, investments, and patents affect the company’s profitability?
Boeing’s biggest markets are the US, EU, Asia and tariffs, inflation or economic instability in any of these regions can impact the company’s profitability. Other factors like COVID restrictions and decrease in travel or air crashes are other factors that affect the company.
References
Boeing (2021). Company Overview. Retrieved from https://boeing.mediaroom.com/
Statista (2021). Boeing’s global revenue in FY 2020, by region or country in millions US dollars. Retrieved from https://www.statista.com/statistics/680130/revenue-of-boeing-globally-by-region/
The World Bank (2021). GDP-European Union. Retrieved from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=EU
Conor Simmons
Professor Bajah
ECON 230
3/28/2022
Milestone #1
Tesla Motors has emerged in the last decade and now has a powerful hold over much of the electric vehicles market and even in the automotive manufacturing market all together. In 2020, automotive manufacturing contributed to 3% of the United States' GDP, making the value of this major industry, listed as contributing $627 billion dollars to the total GDP of $20.93 trillion. Tesla has a unique position in this market, not only to sell solely electrically powered automobiles, but also having a privilege in many states to be one of the sole manufacturers of cars who participates in direct-to-consumer sales (Stolze, 2015). Also, Tesla has a key co-opetitive advantage in the manufacturing of electric power trains and even supplies other big automotive manufacturers, such as Chevrolet and Bentley (Cheong & Hu, 2016). Finally, this paper will examine how Tesla actually seems poised to potentially benefit (relatively) from the global LRAS shock experienced globally due to Covid-19.
State Legislation in the United States of America has been favorable to dealerships, as denoted by Stolze, when analyzing the history of car manufacturing and sales in the United States of America. He states, “[The] Modern dealer franchise system [was] in place by the 1950s... The few major auto manufacturers amounted to an oligopoly, able to dictate the terms on which the sole supply of new automobiles would be available to the dealers [of said automobiles]' (Stolze, 2015). This abuse of leveraging power was eventually addressed by the Congress when it passed the 'Automobile Dealers Day in Court Act in 1956'. This Act shifted power from manufacturers of cars to dealers while overriding dealership agreement provisions, that inhibited any recompense to manufacturers if they did not act in 'good faith' (Solze, 2015). Tesla, however, has successfully beaten numerous lobbying and legal attempts to block its ability to directly sell its electric vehicles to customers and has benefited in this regard (Stolze, 2015). They are not only protected in this manner but grandfathered in to being one of the only car manufacturers in the United States of America to do so. This means that Tesla has incredible flexibility to take advantage of the varying economies of scale in America. Furthermore, it increases its environmental appeal at the same time, being directly involved in its own vehicle's sales and participating firsthand in the consumer education and training to back its own business model.
Tesla is also in a horizontal coopetition arrangement with other manufacturers (Cheong & Hu, 2016). The authors define this concept, “horizontal supply chain coopetition is a game where competitors cooperate in the same retail market... a firm offers work-in-progress parts to others, and competition when those same firms have to compete with each other for customer's attention on the retail market” (Cheong & Hu, 2016). This is an incredible advantage to Tesla Motors, as it can sell these parts to other manufacturers and signifies that they have a superior capital investment in R&D for electric power trains and parts. This also pits the other car manufacturing companies in a better position in this field as they will not have to invest as much to enter the EV market. As Cheong and Hu highlight the success of Borders utilizing Amazon's IT supply chains and leveraging this co-opetitive agreement to successfully enter the market with their own successful online marketplace (Cheong & Hu, 2016). Technological advancement is imperative to moving forward in the electric vehicle industry, and this position puts Tesla in a win-win situation, if they're careful. While all parties could win in this situation, many parties, suppliers and buyers alike, could lose valuable portions of the electric vehicle market. The supply shock experienced recently during the pandemic perhaps created potential for research and development in such an industry to be cut back on. This might reduce Tesla's ability to invest and continuously supply better and cheaper power trains, or cause other auto-manufacturers to rely more heavily on Tesla's power trains.
Nayak, et. al., (2022) states, “[the]extended truncation of customer demand due to the lock downs is observed drastically distressing auto manufacturers. The majority of companies are starving the support of R&D to maintain core functions and potentially getting back the growth made on mobility technologies as well as alternate fuels” (Nayak et. al., 2022). However, as postulated above, this could be a blessing in disguise for Tesla, who would perhaps be the least hit by this possible curbing of R&D, since they were perhaps the most established in the field of electric power trains. Also, global consensus and this administrations' attitude toward electric vehicles is growing in demand. It is worth saying still that just because Tesla has the apparent advantage in the electric vehicle market now, does not mean this is guaranteed to always be so. Many auto-manufacturers are still, and realistically, still improving and allocating their resources to combustible engine types, and designs to work around them. Then one can always think about how easily a co-opetitive arrangement could spell the end of hegemony for a supplier. In the example above listed, Borders had been a seller of books for longer than Amazon, and was a household name brand for book buying. While Tesla enjoys the privilege of the most iconic electric vehicle manufacturer, it is still relatively new and perhaps untested by the lobbying and special interest might of other traditionally combustible titans of United States auto manufacturing, to say nothing of many other international giants that compete to sell there cars here.
References
Cheong, T., S.H., & Hu, C. (2016). Strategic Alliance with Competitors in the Electric Vehicle Market: Tesla Motor's Case. Mathematical Problems in Engineering, 1-10 https://doi-org.exproxy.regent.edu/10.1155/2016/7210767
Nayak, J., Mishra, M. Naik, B., Swapnarekha, H., Cengiz, K., & Shanmuganthan, V. (2022). An Impact Study of Covid-19 on six different industries: Automobile, energy and power, agriculture, education, travel and tourism and consumer electronics. National Library Of Medicine. Retrieved 29 March 2022. from https://www.ncbi.nlm.nig.gov/pmc/articles/PMC8014102.
Stolze, E.D., (2015). A Billion Dollar Franchise Fee? Tesla Motor's Battle for Direct Sales.