Supply Chain Management and Sustained Competitive System

Question: Discuss about the Supply Chain Management and Sustained Competitive System. Answer: Introduction The purpose of the report is to present a competitive analysis between Australia and New Zealand regarding their competitive position in the world market. The report aims to make a strategic analysis on behalf of French Innovation, a French science based company, which seeks to expand its innovation activities to a country in Australasia. The competitive position of Australia and New Zealand are analysed from the global competitive report 2016-17 published by World Economic Forum. According to the WEF report of 2016-17, score of New Zealand is 5.31 with position at 16th place and that of Australia is 5.19 with position at 22st place among the 138 countries (weforum.org 2017). This figure indicates that competitive environment is better in New Zealand in comparison to Australia. The global competitive index is based on three sub index such as basic requirements for business, efficiency enhancer and innovation and sophistication factor. The innovation index consists of business sophistication and innovation. The main findings of the report are that growth rate in global economy has slowed down as global competitiveness has been decreased after the global financial crisis in 2007-09. Therefore, monetary policy is not the only factor for the decreasing economic growth rate. The report finds out the position of economic development along with their competitive position in the world market. The decision of business expansion will be taken base on the competitive advantage of operating in each of the two countries. Competitive advantage in a country depends on the market efficiency, which in turn depends on the demand condition, orientation of buyer (Dunning 2013). This demand condition forces companies for innovation of product and services. The report suggest the company for choosing right country for business expansion for innovation based on several parameters analysed in the global competitive index. Four key factor s influencing innovations such as availability of venture capital, innovation capacity of the country, domestic market size and availability of scientist in the country are analysed Position of economic development As discussed by Heron and Siles?Brgge, (2012), indicators of economic development of a country is progress in education and other social infrastructure, standard of living, increase in factor productivity, reduction in poverty. Education and improvement in productivity is the most important indicator of the innovation. Investment in education by both public and private sector, investment in research and development facilitates the growth of human capital in the country. Human capital formation enhances the rate of growth o innovation in different field of society. Australia Index/ranking New Zealand Index/ranking Infrastructure 5.6 / 17 5.3 / 27 Health and primary education 6.6 / 10 6.6 / 6 Higher education and training 5.9 / 9 5.9 / 10 Financial market development 5.4 / 6 5.8 / 1 Innovation 4.5 / 26 4.6 / 23 Capacity for innovation 5.1 /22 5.3 / 17 Quality of management schools 5.4 / 17 5.3/ 24 Table 1: Index for progress in education (Source: weforum.org 2016-17) Australia is a progressive economy in terms of economic development and investment in higher education. Australia ranks 37 for enrolment in primary education and ranks 3 for enrolment in secondary education. Enrolment in tertiary education index is 86.6 with ranking 8. On the other hand, New Zealand ranks at 6th position for investing in health and primary education. Therefore, position of New Zealand is better compared to Australia in terms of enrolment in primary education (Rugman, A.2012M., Oh, C.H. and Lim 2012). However, innovation in different sector depends on the investment in tertiary and secondary sector. Development in higher education is better in Australia along with innovation. Quality of business education is greater in Australia compared to New Zealand. Table 1 indicates that Australia is more progressive compared to New Zealand while education and primary health is concern for economic development. As quality of management school is of high standard in Australia, it is evident that innovation in business would be greater in this country (Moran 2012). However, development of financial market is greater in New Zealand compared to Australia. Competitive position of two countries Competition position of a country is determined by intensity of local competition, effectiveness of the anti monopoly rule, taxation, tariff barriers, labour market efficiency. Competitiveness of a country determines by the ease of doing business in this country. Table 2 shows that the extent of local competition is greater in Australia in comparison to New Zealand. However, the table indicates that New Zealand is more efficient to create dominance in the international market. New Zealand government has been successful in implementation of the competition policy. As discussed by Yarbrough and Yarbrough (2014), competitiveness of a country is determined by the extent of liberalism followed by the country that is its market share, anti monopoly policy taken by government, percentage of corporate profit, tariff rate on import and degree of customer orientation. Government undertake anti monopoly policy to increase competition in the consumer goods market to secure the interest of the consumers. Hovenkamp (2015) mentioned that there is competition in labour market also as human resource is the most important part of innovation. Innovation in a country is determined by the capacity of the country to attract and retain talent, which in turn depend on the availability of job, job related infrastructure in that country (Saeidi et al. 2015). It can be evaluated from the competitive analysis between Australia and New Zealand that New Zealand holds better ranking in the global competitive position. Choice of country based on overall competitive position Global competitive index indicates the global competitive landscape of a country based on certain parameters. Improvement in financial market is important parameters, which is essential to attract foreign investors. Easy availability of fund, fewer restrictions in the institutional factors influence the competitive factors and foreign investment in different sectors. In the view of Blakely and Leigh (2013), commodity prices remain low in the competitive market to facilitate customer. Anti-monopoly policy of government provides advantages for domestic consumers. Mitrou et al. (2014) argued that anti-monopoly policies encourages economic efficiency and deter success of a firm with capability to acquire market share. However, in the context of globalisation, anti monopoly law facilitates investment in education, research and development. Foreign firms are encouraged to invest in the domestic industry. Investment from multinational companies increases to create more job opportunity in th e domestic economy (Miller, Kim. and Holmes 2015). Therefore, labour market also becomes competitive and scope of innovation increases as brings competitive advantage in the market. As per findings of WEF, there is problem of financing in Australia along with policy instability and inefficient capacity to innovate. It can be evaluated from table 2 that anti monopoly practice is more effective in New Zealand in comparison to Australia as per ranking among 138 countries. However, market size in Australia is greater and infrastructure is developed than New Zealand. Major indicators suggest that French Innovation needs to invest in New Zealand as this country has greater business friendly environment, which can facilitate innovation. Rule for the evaluation of the national competitive advantage Competitive advantage among nations is evaluated through opportunity cost according to international trade theory. Trade theory suggests that a country would have competitive advantage if it can produce greater output using same unit of input. Competitiveness of nations and their competitive advantage is determined by labour cost; invest in innovation or human capital formation, rate of interest, economies of scale (Northouse 2012). Demand for domestically produced goods in home country and that in international market and firm strategy are determinants of competitive advantage. As explained by Ricardo model of trade, country, which has less opportunity cost of producing a commodity instead of other goods, that country, has competitive advantage in producing that good (Maddison and Denniss 2013). As stated by Mitrou et al. (2014), factor endowment, firm strategy, rivalry, demand condition and presence of supporting industry in the economy. National advantage determinants for Australia and New Zealand are goods market efficiency, labour market efficiency, market size and business sophistication. Human capital formation is an important determinant. It has been from table 2 that the Australia is more efficient in talent retention, however, New Zealand is comparatively efficient in talent attracting. Price regulation in a country is another factor in determining macroeconomic environment. Australia ranks 1 in controlling inflation in the economy. Low inflation is advantageous for low commodity price. Labour market functioning in Australia is not efficient with high tax rate, high unemployment rate. Choice of country based on the four key factors Venture capital availability: Australia has 44th rank in the world in this index. New Zealand is at16th rank. Financial market in New Zealand is more reformed compared to that of Australia. After 2014, New Zealand government has brought a reform in financial market in terms of liberalisation (nzvca.co.nz 2015). Availability of license, credit has now been easier. Therefore, availability of fund from New Zealand financial sector has been easier (Rugman, Oh and Lim 2012). Capacity of innovation: Australia has 22nd rank and New Zealand has rank 17th. Higher and tertiary education system in New Zealand is more competent than Australia. Although Australia has infrastructure for bringing innovation for product development in different sectors of the economy, New Zealand is more capable in utilising both physical and financial resources for the human capital development required for innovation (weforum.org 2017). Availability of scientist: Ranking of Australia and New Zealand are respectively 17th and 25th. It can be inferred from the data that Australia is more able to retain their talent in the country compared to New Zealand. Domestic market size: 20th for Australia and 63rd for New Zealand. Number of customer for a product and supply of product in the market determine market size. Based on the positions of two countries in the global competitive report, it can be said that business operation and product innovation are advantageous for a new business in New Zealand. Australia has a wider market, however due to institutional constraints; there is less opportunity for innovation. Reasons for recommendation and conclusion The global competitive index published by World economic Forum states the ranking of the countries in terms their index. Global competitiveness is determined by some institutional, infrastructural components such as property rights, firm values, structure, government resource allocation, government regulation. Social infrastructure such as school, university and other research organisations, required research intuitions for both science and business innovations. New Zealand is preferable country for investment as it has more developed and efficient social infrastructure to support innovation undertaken by French Innovation. Human capital is important factor for innovation to be taken place. Government plays important role in human capital development. Private sector also participates in the development process. Establishment of more school, universities for higher education and increasing number of research institutions, talent retention and attraction policies influence innovation. Improvement of social infrastructure, organisation pay and performance policies are helpful in talent retention. However, it can be concluded from above discussion that although Australia and New Zealand both are developed nations, there are still some institutional barriers for opening business in both countries. Economic and political environment are comparatively stable in New Zealand. Therefore, French Innovation needs to invest in New Zealand for innovation. Market size of New Zealand is small compared to Australia. However, there is still some scope to invest in New Zealand as future prospect in this country as the financial market and government regulations are supportive for investme nt and innovations. References Barney, J.B., 2012. 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