Canon. Analysis of Vietnam and Thailand Business Environment

Step One: Canon Corporate Profile

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Canon, having been established in 1937 as a small laboratory for fabricating high-quality cameras, has since specialized in developing, manufacturing, and marketing a spectrum of products, including cameras, printers, copying machines along other industrial-based equipment. Via this growing lineup of products, the company seeks to continually meet and exalt the needs of the customers, both locally and globally, which are increasingly becoming more sophisticated and diversifying, just as other high-tech products in the market. For this reason, the company is increasingly gaining international confidence and trust.

The business's success is forged upon its kyosei corporate philosophy. Through the philosophy, the company is dedicated to have all people, regardless of race, culture, and language, harmoniously work and live together in an atmosphere dictated by happiness into the future. However, the macro environment presents the company with a lot of challenges in relation to availability of resources and economies in which the company is established, hence making the realization of kyosei significantly difficult. Its mission is providing an optimal value via marketing innovation, which promotes peace of mind and security, while also supporting creativity in the society. In addition, the companys vision is to become a group of businesses specializing in service creation that has a global customer focus.

However, the company aims at eliminating these hardships via corporate strategies and activities based on the philosophy. These have been rooted from its Excellent Global Corporation Plan, which have been subdivided into four phases. Phase one (1996-2000) sought to strengthen the corporates financial position by eliminating instances of wastefulness by adopting a mindset focused on optimum profitability and resource optimization. Phase two (2001-2005) sought to increase product competitiveness by adopting digitization strategies realized via innovation. Phase three (2006-2010) sought to increase growth levels by increasing its business establishments, while phase four (2011-2015) challenges the achievement of sound growth dictated by the slogan, Aiming for the Summit: Speed and Sound Growth. As such, the priority strategies that give the company core competencies dictated in this plan, which is a blueprint to its long term objectives include: diversifying the business, expanding the market, innovation, and continuous service improvement.

What interests me is that the company has always aimed at eliminating challenges through the aforementioned core competencies, which in turn have created a lot of value to the company. According to the enterprises 2014 annual report, these core competencies are encapsulated within six strategies. Firstly, it aims at becoming the leader in all its core businesses, as well as expanding its peripheral businesses. For instance, as the report asserts, the company has maintained its number one position globally with a 44% market share on digital camera with interchangeable lens. Secondly, it focuses on the development of new businesses via globalized diversification and coming up with a management system based on three regional headquarters, Japan, Europe, and the United States. Thirdly, it aim at building an optimized production system that is the best globally based on various factors, including taxation systems, risk, wages, and forex fluctuations. Fourthly, it strategizes on reinforcing sales capabilities on a global scale by capitalizing on online sales. Fifthly, it focuses on building its foundations on environmental protection by fabricating its products with energy-saving technologies, as well as using materials that have low carbon dioxide emissions and environmental burden. Lastly, it seeks to impart a strong corporate culture that features an excellent company forged by innovation.

Step Two: An Analysis of Vietnam and Thailand Business Environment

Thailand

According to World Bank (2015), Thailand progressed economically in 2011 by becoming an upper-middle income country. As a matter of fact, the country has made enormous progress economically as it moved from a low-income to upper-income country within a period spanning less than a generation. Therefore, it has experienced developmental success sustained by sturdy growth and an impressive rate of poverty plunging, especially during the 1980s, where it experienced an overall high of 8-9% in economic growth in the late 1980s, but interrupted abruptly by the Asian Crisis between 1997 and 1998. However, as reported by the World Bank, since then, Thailand's economic growth has been moderated below 4%. This is attributed to a decline in it capacity of export competitiveness, shortage of skilled labor, inadequate industrial and business knowledge, as well as political turmoil and uncertainty. These aspects have significantly affected negatively both private and public investment.

As the World Bank asserts, the economy of Thailand, despite the political uncertainty, expanded a slight 0.9% in 2014, but is expected to pick up between 2015 and 2017. As such, economically, Thailand is doing better, because as the Business Owner Toolkit (n.d) reports, it is the second largest economy in South East Asia after Indonesia. In addition, considering the Gross Domestic Product (GDP), it is the 4th richest country in the region after Singapore, Brunei, and Malaysia. For this reason, Thailand serves as an economic anchor for the developing countries in its neighborhood.

Considering the last 30 years, Thailand's level of poverty has declined from 67 percent in 1986 to 11% in 2014. This owes to the fact that the incomes have risen significantly. Therefore, poverty in the country can be ruled as a rural phenomenon as 80% of the country's total population, which is approximated to be 7.3 million, lived in the rural areas as at the year 2013. However, it is vital to point out that the poor still exist in the urban areas, which is approximated to be a third of the poor, and live in particular, in the outside of Bangkok. Certain areas, for instance, the North and South east lag behind economically, therefore evidencing the fact that economic success in Thailand has not been shared equally, especially when comparing Bangkok, the country's capital and largest urban area with the rest of Thailand. For this reason, the country is prone to income inequality, as well as lack of equal opportunities. In essence, as measured by the Gini coefficient, income inequality has fallen in the recent past, but has become consistent with a high of above 0.45.

The economy of the country is hugely based on agriculture, which according to the Business Owner Toolkit (n.d), covers 12% of the total GDP. Thailand is one of the leading exporters and producers of rice, tobacco, rubber, corn, cotton, jute, and sugar, as well as fish. Manufacturing accounts for approximately 40% of the GDP while the service industry contributes to around 46%. These have been showcased in figure 1 in the appendix.

However, the political environment of Thailand is not conducive. Recently, in 2013-2014, Thailand was faced with political crisis due to anti-governmental protests between November 2013 and May 2014, which were orchestrated by the PDRC. The culmination of the protests saw the removal of Yingluck Shinawatra, who was the prime minister, coupled with a coup, and thereby the establishment of a military junta, led by General Prayuth Chan-Ocha. Following this period of political instability, economic growth stalled by 1 percent in 2014, which was also characterized by high household debt and a sluggish global demand. In figure 2 in the appendix, the GDP grew substantially to 2014, but the political unrests led to a plunge in the economic activity, and hence, it reduced significantly as per the 2015 and 2016 GDP projects. However, it is very certain that the countrys GDP will pick up, as evidenced in the GDP projections of 2016. Following the coup, Thailand adopted measures to support economic growth, as well as restoring the investor confidence. For instance, the 2015 budget of USD 81 billion was aimed to support the country for economic sufficiency, with it being allocated to education, transportation, defense, and agriculture. The inflation rate for the country as reported by World Bank is 3.7, 1.9, 1.6, and 1.0 for 2011, 2012, 2013, and 2014 respectively. As such, it has not been constant over the years but there is a general trend that it has reduced substantially. The figure below represents the political risk of Thailand:

Thailands political risk. Source: AMBs Country Risk Report (2015).

The country is doing great compared to other countries in the following areas: monetary policy, fiscal policy, business environment, legal system, and international transactions policy. However, aspects, such as government stability, labor flexibility, regional and social stability are below average.

As at now, Thailands economy is strong, and the inflation along with public debt have been kept under control. However, some of the challenges that the country experiences include competitiveness, and in this area, the country need to make education, as well as research and development investments, ending European Unions GSP system, as well as streamlining the political structure in the country. For instance, politically, there must be a clear distinction on how the monarchy operates, the role of the Army, Judiciary independence, as well as revising the treason laws, which in most instances, appear to be draconian and disproportionate.

Vietnam

Since Vietnam launched its political and economic reforms (coined Doi Moi) in 1986, Vietnam has had a development success story. Essentially, within a quarter of a century, the per capita has grown from USD100 hence marking it one of the poorest nations, to a per capita of over USD2000 by 2014. For this reason, poverty levels have significantly reduced, specifically from 50% during the 1990s to approximately 3% by 2014. For the minorities, their poverty levels have plunged significantly. According to the World Bank, the growth rate for the country averaged 6.4% annually in the 2000s. However, due to last decades economic slowdown and crisis, it slowed down substantially. However, statistics provided by the World Bank reveal that the GDP has accelerated significantly in the wake of 2015, reaching a high of 6.3% in the first half of the year. According to the World Bank, this signifies the fastest growth rate within the first half of the year in the last five years. The nation has also managed to better its microeconomic stability, and the consumer price index rose 0.6% in August 2015.

According to the Business Owner Toolkit (n.d), Vietnamese economy has been booming for the last two decades. For instance, the per capita GDP was USD 220 in 1994, but tripled between 2002 and 2010, and reached USD 3,800 in 2013. This, as reported by the World Bank is attributed to foreign investment and international trade, and exported contributed to two-thirds of the GDP in 2014. The GDP has been increasing, which is 5.2%, 5.4%, and 5.5% in 2012, 2013, and 2014 respectively. This has been clearly shown in figure 3 in the appendix section. Its sectors, including electronics, seafood, shoe, textile, and industrial production have been experiencing continuous growth. In addition, the growth outlook for 2015 and 2016, as evidenced by the World Bank projected statistics is high.

Domestic consumption remained strong in 2014 and 2015 while the inflation rate has reduced significantly over the years. For instance, according to the World Bank, the inflation rate reduced from 9.1% to 6.6%, and finally to 5.2% in the years 2012, 2013, and 2014 respectively. The country has taken major steps to reduce th...