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Pages:
14 pages/≈3850 words
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32 Sources
Level:
Chicago
Subject:
Business & Marketing
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Other (Not Listed)
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English (U.S.)
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Topic:

Business Groups And How Their Business Are Run To Generate A Profit (Other (Not Listed) Sample)

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THE TASK WAS A BUSINESS ASSIGNMENT ESSAY ON THE DIFFERENT CATEGORIES OF BUSINESS GROUPS AND HOW THEIR BUSINESS ARE RUN TO GENERATE A PROFIT

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Content:


DIFFERENCES BETWEEN SOES, PMCS AND FCCS
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INTRODUCTION
In the 18th century, China had the largest and richest most advanced economy in the world. However, this economic performance began to dwindle in the nineteenth century and by early twentieth century, it was disastrous. China was among the poorest countries in the world by 1949 and urgent action was required. The Great Leap Forward, a series of famines where millions of people lost their lives, further worsened the Chinese economy.A number of economic strategies were adapted from 1949 all through to 1978 which saw the Chinese economy turn around. The first of these strategies was the big push strategy. This strategy saw the Chinese government allocate huge amount of its money to boost the construction of new factories.
Deng Xiaoping, after taking over power from Mao Zedong, pushed hard to lead economic reforms in China. The agricultural sector was the main target of Deng's reforms. He introduced the household responsibility system in 1979 and it was a game changer. Under this system, he decollectivized agriculture by giving farmers reduced quotas and allowing them to sell any food beyond their quotas in the free market. This system was very successful as it raised the standard of living of many people within a very short period of time. Agricultural outputs rose by 8.2% annually after this reform compared by only 2.7% before the reform. Another reform in this sector was the increased production of cash crops instead of just concentrating on food crops such as grain and rice.The production of meat and vegetables also increased largely. In addition to this, agricultural trade was liberalized which saw China change from a country of food shortages and famines to a food exporter. Xiaoping also open up trade and did away with trade barriers that were hindering foreign investments. 
The dual-price system saw the Chinese industrial sector transform from being stagnant to being vibrant. The establishment of Town Village Enterprises (TVEs) contributed greatly to the growth of industries. TVEs referred to companies located in villages and townships. Before 1978, there were only 1.5 million TVEs in China but this number had risen to a whopping 12 million by 1985. The number of people employed by TVEs also increased from 28 million to 135 million. TVEs contributed heavily to the growth of the economy as by 1992, their output was 1.8 trillion yuan when compared to only 49 billion yuan in 1978.
China, just like most countries, has rules and laws which guide on how one can open, run and dissolve a company.These rules are almost similar to those of the United States although there are some notable differences. Initially, all Chinese companies were state-owned enterprises (SOEs) but as the economy grew, people-managed companies (PMCs) and foreign capital companies (FCCs) were introduced after the economic reforms. These three types of companies have varying culture and management styles and these differences will be discussed herein.
STATE-OWNED ENTERPRISES (SOEs)
Companies in China are categorized depending on their ownership. Basically, there are three types of companies; state-owned enterprises (SOEs), foreign capital companies (FCCs) and people-managed companies (PMCs).A state-owned company refers to any company which is owned or run by the government, whether central or another level of government. Before the first phase of the economic revolution, all companies in China were SOEs and their objectives were to bring forth tax income, preserve and also increase the value of government assets and to contribute a portion of their profits to the government. Examples of SOEs are Air China, Bank of China and China Railway among others.
Organizational Structure of Air China
The organizational structure of Air China is hierarchical as there is a clear pathway of power and authority. The company's management philosophy is the main guideline to the policies adopted by the company. Air China has a culture of teamwork and it views itself as one big team comprised of several smaller teams.
Company's Mission
Air China's mission is “to meet customers' demand and to create mutual value” (AIR CHINA). Air China has the responsibility of maximizing its profits for the sake of the shareholders. In order to do this, the company identifies the needs and preferences of the customer and meets them. This is referred to as customer centricity and it is much more than the old adage that “the customer is always right”. A company that is customer-centric places the needs of the customers at the center of its business.All decisions that are made have to add value to the company by attracting new customers as well as retaining old ones.
Sustainable Competitive Advantage
Air China has a number of competitive advantages over its rivals.
* Network Strength- over the years, Air China has managed to build an international route network where there are key markets for airlines. These include Shanghai, North America, Japan, Europe and Korea. The network helps the company stay ahead of its competitors.
* Brand- Air China has a strong brand as the country's flag bearer and also the fact that it has emerged as the top Chinese airline over the past few years. This attracts new customers and also helps in gaining customer loyalty.
* Cost control- the airline uses effective methods which help to reduce expenses while at the same time maintaining the quality of its products.
* Corporate social responsibility- Air China practices good CSR which further endears it to its customers which gives it a competitive advantage over its rivals.
PESTEL Analysis
Political

* Instability in some countries causes travel bans
* Strict regulations
* Since Air China is an SOE, it receives support from the Chinese government.

Economic

* High cost of living
* High fuel prices
* Labor demands
* High operation and maintenance costs
* Global economic crisis
* Competition from low-cost airlines

Social

* Change in customers' preferences
* Improved communication through the use of technology has reduced the need for physical meetings between business executives.

Technological

* Airlines must stay up to date with the latest technological advances
* Use of technology reduces some expenses.
* Leads to improved customer care services.

PEOPLE-MANAGED COMPANIES (...

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  • Business Groups And How Their Business Are Run To Generate A Profit
    Description: The task was a business assignment essay on the different categories of business groups and how their business are run to generate a profit. The Great Leap Forward, a series of famines were millions of people lost their lives, further worsened the Chinese economy....
    14 pages/≈3850 words| 32 Sources | Chicago | Business & Marketing | Other (Not Listed) |
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