International Business: ThinkFlash Company
Globalization (Week 1)
Nature and Industry
ThinkFlash Company is an Abu Dhabi-based entertainment company which manages live events from its concept development and design, advertising, sponsorship, artist contacts and operations. This wholly owned subsidiary of Abu Dhabi’s government operates through teams of passionate professionals whose specialty focus on creating movie premieres, classical shows, international tennis matches and celebrity music concerts (Flash Entertainment, 2013). This company is more known as Flash Entertainment boasts of its wide range of connection in other industries such as music, sports and leisure. It allows them to produce exceptional event programmes in Abu Dhabi by bringing significant global properties to the capital and fit them to the vibrant interests of the area.
Export and Market size
Flash Entertainment plans to expand its operation overseas to deliver the biggest and most memorable live events on earth. By expanding worldwide, ThinkFlash creates a bigger market size for the business. Recently, the company bought ten percent shares in the famous Ultimate Fighting Championship (UFC) owned by Zuffa, LLC. It expands by investing in overseas companies like the UFC where they see a tremendous global potential (Mmajunkie.com, 2010, n.p.). Moreover, ThinkFlash chose to expand in the United States since the American music industry generated 30 percent of the world’s total revenue of music industry. In 2012, it generated 15 billion U.S. dollars in which is 30 percent of 50 billion dollars generated by the global music industry (Statistica Inc., n.p.). Generally, musicians earn more from performances in concerts or music festivals rather than album sales which is helpful to ThinkFlash Company. They tend to travel more often to perform in concerts and entertainment companies like ThinkFlash coordinate with groups of investors willing to sponsor musician’s potential events.
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On the other hand, Japan is next to the United States when it comes to market size in music industries. Most Japanese consumers prefer to buy CD’s instead on digital copies of music albums. Hence, it is best for ThinkFlash to expand its services in Japan to create wide and firm customer relations which boosts its brand. The company also plans to expand its services in Japan by providing Anime conventions and festivals.
Effects of Globalization
Globalization created a wider playing field in the music industry. Nowadays, people can listen to different music around the world. However, technology has created other mediums for consumers to patronize digital piracy which declines physical sales. Instead of attending concerts or music festivals, people can watch shows through the internet via live stream of an event. This technology affects both recording companies, artists, and entertainment companies like ThinkFlash. In the last decade, people buy CDs or watch music channels to listen to their favourite artists. Today, globalization changed the game in music industry as it created online mediums such as Spotify and YouTube for people to listen and watch music videos. ThinkFlash believes that these factors can also affect their ticket sales in events that they organize.
On the other hand, globalization has benefits for the music industry and ThinkFlash. In fact, technology helped ThinkFlash build its reputation around the world through online advertising and promotion. More people avail of tickets since online purchasing is more convenient that going to ticket stores. Websites help the company to spread information regarding upcoming concerts of international and local artists. Online advertisements and promotion will help ThinkFlash to inform Japanese consumers about upcoming events that they will organize in the country.
The Political Economy of International Trade (Week 2-4)
Different governments around the world have their own intervention strategies on every type of market that exists in a country. For instance, some governments give cash grants and low-interest loans to subsidize domestic producers. Another intervention strategy is by implementing bureaucratic rules designed to remove threats in local industries. Governments also apply rules to punish foreign firms selling goods below fair market value in their local market. These intervention strategies focus on protecting domestic producers from foreign competition.
UAE Government Intervention Strategies
The UAE government has its own strategies to protect the Emirati music industry especially its wholly-owned entertainment company, ThinkFlash. It intervenes in many aspects and an example is by passing of laws that protects intellectual rights, security police during events, and employee assistance. The government prioritized protection of intellectual property to protect the rights of musicians (Olson, 2011, n.p.). As a result, it encourages them to produce more albums and perform in a concert in UAE where they sell high. The government also provides security police in every event that ThinkFlash produce. UAE police is in charge of crowd control, ticketing, and health and safety to give a safe and memorable experience to all event attendees. UAE government helps people who work in ThinkFlash. Since most of employees in this exciting field are young and ambitious Emiratis, the government set up student programmes and internships to further their knowledge and skills. For non-UAE residents, the government gives them a chance to Emiratisation.
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Political and Economic Arguments for UAE Intervention
In terms of market, ThinkFlash holds most events during UAE holidays to boost sales when more people are on vacation. The government welcomes artists with premier hospitality by taking them to some tourist spots to give them a memorable experience and encourage them to come back to UAE. The government also intervenes financially by imposing Ad valorem taxes to artists performing on events. The political argument for UAE government’s intervention in ThinkFlash is that it is essential to protect jobs. As explained above, ThinkFlash provides above average benefits to its employees which affect consumers as they pay higher amount to avail tickets to attend events. In economic argument, the government protected ThinkFlash until it became viable and globally competitive which what most economists refer to as the infant industry argument. Today, the company is competitive enough to expand in Japan as it is capable of raising needed funds without additional support from the government.
Political and Economic Systems
The four political systems are collectivism, individualism, democracy and totalitarianism (Hill, 2005, p. 37). A government uses collectivism theory when it gives the best for a certain group, community, or society and not individual interests. In relation to business, it is political system where the government controls firms and organizations to represent all the people in a country. Individualism is the opposite of collectivism where the government believes that each person should work for their own advantage. Democracy takes place when government gives its citizens a power to be directly involved in decision-making by voting for officers and representatives. Lastly, a government practices totalitarianism system when it monopolizes power through communist, religious, or tribal party.
The four economic systems are market, command, and mixed economies (Hill, 2005, p. 39). In market economy, private individuals own all profit organizations which depend on supply and demand. Command economy is a system where a government owns organizations and allocated resources to its people. Lastly, mixed economy is combination of market and command economy where private individuals own some organizations and government controls the rest. In relation to the market in UAE, ThinkFlash is one of the enterprises that UAE government owns to help society as a whole, rather than private individuals. This system is same with Japan which is a democratic nation their people vote government officials who will govern the country. Japan also has mixed economy which is helpful since it allows ThinkFlash to move freely in the Japanese market.
The Strategy of International Business (Week 7)
Business Value and Core Competencies
Business value pertains to the financial condition, customer relations, employee satisfaction, supplier value, and ethical value of an organization. There are many ways to create value in general. An organization must make realistic goals and promises about its products and services to build credibility on customers. With the use of information technology, an organization can also create business value through high technology systems. Advance technology can improve transaction speed and accuracy which are essential to increase productivity and performance. Giving leadership training programs and seminars to employees can also add to business value as it helps an organization to keep and attract skilled workers. Lastly, business value develops by strengthening core competencies which are important to an organization’s long-term success. These strategies to create business value are also effective upon ThinkFlash’s expansion in Japan. The company must create value in Japanese market by attracting and retaining skilled employees; exceeding customer expectations; building a good reputation; keeping high standards in event production; and encouraging teamwork and cooperation among employees.
It is important for every organization to always follow its core competencies since these are internal factors which are unique to their business. ThinkFlash’s main core competency is innovation. It is unique to the entertainment company because ThinkFlash is the pioneer and leading live events company in UAE. Although the company conquered the UAE entertainment industry, its innovation continues as it now expands in the United States and Japan.
Economies of Scale, Learning Curve, and Location Economies
Economies of scale pertain to increase in production units which decreases costs from suppliers and creditors. This concept is beneficial to ThinkFlash for the reason that event suppliers usually offer discounts for bulk orders and shippers may decrease shipping costs for large volume of items. Companies use the Learning Curve principle when they face trouble in introducing a product or a service or entering a new market. ThinkFlash faced same problem and used this theory when they entered the United States market. The company successfully entered the foreign market as it efficiently anticipated that entering the American music industry was too early and its alternative strategy is to invest in field of sports like the UFC. Lastly, Location Economies are regions or areas where a firm establishes its business. Organizations consider transportation and distribution costs of raw materials in choosing a location (Encyclopædia Britannica, 2015). As for ThinkFlash, Japan is the best place to expand in Asia because it is an island nation. Hence, transportation and distribution of raw materials is easy compared to other East Asian countries.
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Competitive Pressures in Japan Market
The two types of pressures in the Global Marketplace are pressures for cost reductions and pressures to be locally responsive (Hill, 2005, p. 52). ThinkFlash relates to pressures for local responsiveness in many ways. For instance, consumers differ in tastes and preferences which is a challenge to the company when they hold concerts featuring different artists. On the other hand, it will be an extra pressure to them to expand in Japan because of its different customs and traditions. To end these two pressures, an organization can use the four basic strategies; global standardization, localization, transnational, international (Hill, 2005, p. 54). Among these four strategies, transnational strategy suits ThinkFlash Company. It aims to meet
low costs through the three concepts discussed above. Transnational strategy is effective since cost pressures are intense in Japan market as well as the pressures for local responsiveness.
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Flash Entertainment. (2013).ThinkFlash About Us. RetrievedMay15, 2015, from http://www.thinkflash.ae/>
Hill,C.W. (2005). National differences in political economy. InInternational business: competing in the global marketplace(7thed., pp.36-54). Boston: McGraw-Hill/Irwin.
Magloff,L. (2015). How do I create business value? RetrievedMay15, 2015, from http://smallbusiness.chron.com/create-business-value-5266.html>
Mmajunkie.com. (2010, January 12).Abu Dhabi-owned Flash Entertainment buys 10 percent of UFC’s parent company | MMAjunkie. Retrieved from http://mmajunkie.com/2010/01/abu-dhabi-owned-flash-entertainment-buys-10-percent-of-ufcs-parent-company>
Olson,M. (2011, December 13). New copyright laws to curb film and music pirates.National[UAE], p.B6. Retrieved from http://www.thenational.ae/news/uae-news/technology/new-copyright-laws-to-curb-film-and-music-pirates>
Statista Inc. (2012).U.S. Music Industry - Statistics & Facts. RetrievedMay14, 2015, from http://www.statista.com/topics/1639/music/