Essay on "Business Enterprise and Innovation"

Essay 10 pages (2876 words) Sources: 10

[EXCERPT] . . . .

Businees Enterprise and Innovation

Innovation in Thailand

The following ages focus on analyzing the innovation process in Thailand. The Introduction reveals the points-of-view that this paper intends to address. This is followed by a section that describes important issues about the business environment in Thailand, in order to understand the factors that affect companies' activity in this country. The Innovation process in Thailand presents some of the most important characteristics of the Thai innovation process. The Recommendations section describes important factors that companies that want to invest in the Thai innovation process must take into consideration. The Conclusions section presents some of the most important issues addressed by the paper.

Introduction

The business environment that is significantly influence by the process of globalization determines companies to develop different types of strategies that allow them to create competitive advantage. Some of them focus on reducing the prices of their products. This objective is usually reached by addressing the outsourcing strategy of some of their processes. This helps them reduce production costs, which leads to reduced prices of these companies' products and services. This allows companies that use outsourcing to increase their market share.

Other companies prefer to focus on strategies based on differentiation in order to create competitive advantage. In such cases, companies study their competitors and determine what types of products and services they should develop in order to produce differentiation. It is difficult to establish which strategy is the most efficient. This is because the success of these strategies varies in accordance with the characteristics of each industry. In the case of mass products, like food and clothes, it is recommended to develop strategies based on price. But in the case of products and services that are purchased by smaller groups of customers, it is recommended to focus on strategies based on differentiation.

Another successful strategy that can be used by companies in order to create competitive advantage is based on developing innovation processes. In numerous businesses, especially those characterized by increased use of technology, innovation is very important. Technological developments play a very important role in helping companies expand their business. Innovative products and services have been observed to significantly influence companies' success on the market.

External Business Environment in Thailand

Economic environment

Thailand has a very well developed infrastructure that attracts investors in the country's economy. The country's government understands the demands of the globalized business environment, and the fact that in order to improve the country's economic situation it is necessary to support private initiatives, from both the national and the international environment. In other words, Thailand's economy strongly relies on free enterprise. Much of the Thai economy is based on export industries.

The policies developed by the government that are oriented towards investments are reflected by Thailand's strong economic growth. The country's exports, mostly machinery, electronic components, agricultural economies, jewelry, represent more than half of GDP and are the most important economic drivers. However, the economic and financial crisis has also affected Thailand. As a consequence, most of the country's economic sectors have reported problems. But the Thai economy has significantly improved, also as a result of important levels of exports (CIA, 2012). It is expected that the country's economy will continue to improve.

The most important industries in Thailand are represented by tourism, textiles and garments, agricultural processing, beverages, tobacco, light manufacturing, computers, furniture, plastic, automobiles, and others. The most exported commodities in Thailand are represented by textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computers and electrical appliances. The most important exports partners are China, Japan, the U.S., Hong Kong, Malaysia, Singapore, and Indonesia. The most imported commodities in Thailand are represented by capital goods, intermediate goods and raw materials, consumer goods, fuels, and others. The most important imports partners are Japan, China, the UAE, the U.S., Malaysia, and South Korea.

Social environment

Thailand reaches a 67,091,089 population. The ethnic groups in the country are Thai 75%, Chinese 14%, and other 11%. The languages in Thailand are represented by Thai, English, ethnic and regional dialects. The religions in Thailand are represented by Buddhist 94.6%, Muslim 4.6%, Christian 0.7%, and others 0.1%.

Cultural environment

The cultural characteristics are very important when analyzing countries' business environment. The important cultural differences between countries represent important factors that influence customers' behavior in these countries, relationships between different countries, and economic relationship between countries with different types of cultures. These companies' international success relies on their ability to understand these cultural differences and to develop strategies in accordance with the cultural environment of the countries they want to address.

In order to analyze Thailand's cultural environment it is important to take into consideration the cultural dimensions developed by Geert Hofstede. These cultural dimensions are represented by: power distance, individualism and collectivism, masculinity and femininity index, uncertainty avoidance index, long-term and short-term orientation. These are important characteristics of the Thai culture that can help understand the behavior of customers, companies, and authorities.

Power distance index

This cultural dimension reflects how less power members of the society accept the fact that the power is not equally distributed. It also reflects how societies handle different inequalities between people. Thailand's power distance index reaches a score of 64, which is slightly lower in comparison with average Asian countries. This means that inequalities are accepted in this society. Hierarchical ranks have important privileges and employees show their loyalty towards these ranks. Relationships between managers and employees are formal, and the information flow is hierarchical and controlled.

Individualism and collectivism

This index reflects the preference for a social framework that allows people to take care of themselves and their family, or to prefer group organization. In other words, it reflects the level of independence within the society. Thailand reaches a 20 score on individualism. This means that Thailand is a very collectivist country. This also reveals the importance of loyalty within groups in this country. Thai are not confrontational people, and it is difficult for them to express disagreement. Business with Thai relies on developing strong relationships, which means that patience is very important. It is also recommended to be careful in not producing offence to Thai people.

Masculinity and femininity index

This indicator reveals the masculine orientation of the society that is reflected by a preference towards achievement, heroism, assertiveness, and material rewards. The feminine orientation of the society is reflected by a preference towards cooperation, modesty, and quality of life. In this case, Thailand has a 34 score, which means that this is a feminine society. This is the lowest masculinity score in comparison with Asian countries. This reflects the reduced levels of assertiveness and competitiveness. It also reflects the society's orientation towards traditional roles of males and females within the society.

Uncertainty avoidance index

This dimension reveals society members' comfort with uncertainty. Thailand reaches a 64 score in this case. This means that the country prefers to avoid uncertainty. In order to reduce the level of uncertainty, the country's government develops strict laws (Hofstede, 2010). This is intended to increase control and to reduce risks.

Long-term orientation

This dimension reflects society's position on traditions and values. In this case, Thailand has a 56 score. This means that people in this country respect tradition and inequalities between people. The most important values in Thailand are represented by working hard, having a sense of moderation, investing in personal relationships and network, flexibility, and others.

The Innovation Process

In order to understand the innovation conditions in Thailand, it is important to describe the innovation process. The steps of the process of innovation are represented by strategic, thinking, portfolio management and metrics, research, insight, innovation development, market development, and selling. The innovation process is intended to help companies create competitive advantage. Therefore, in the strategic thinking step, companies try to determine how the innovation they are investing in can add value to their strategic objectives (Morris, 2011). During this step companies also try to identify the activities where innovation is expected to have the greatest success potential.

Innovation portfolios are managed in order to reduce the risks associated by this process. The research process is important in identifying these risks, but also in identifying technological developments, customer needs and preferences, and others. It is important to identify these preferences of customers in order to be able to orient the innovation process towards these preferences.

It has been observed that innovation is one of the most important factors that determine economic development. Therefore, in order to expand their business on international level, most companies prefer to address countries that are able to support innovation. These are countries where governments support an innovation oriented environment through laws and policies, but also through financial incentives provided to companies that want to invest in innovation.

Such a country is Thailand. The country's government understands the importance of innovation and its effects on the national economy. Therefore, the government tries to support the innovation process by investing in developing the country's infrastructure and by developing several programs that focus… READ MORE

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