Critcal Business Issue in Business in New Zealand

Critical issue in business New Zealand

Global Competition in New Zealand

Research Proposal

BIBM787

Professional Practice

Tutor: Trish Clokie, Dhammika Silva

Submitted by: Robin Singh Gill

Student ID: 16443761

Abstract

This research would be focusing on global competition from New Zealand’s perspective. The main highlight of the research will on three topics, foreign direct investment and its consequences on local businesses, stiff competition from Asian markets, dependence on exports and imports. Firstly, it is very easy believe that FDI did bring in new technologies to this as well as job creation but it put pressure on the local businesses. Yet there is a restriction to it. Other than that New Zealand businesses facing stiff competition from Asian economies for example the milk industry is having a rough ride in NZ because of the rise in Chinese milk exports. There is too much milk in the market. And thirdly it has been pointed out that New Zealand is heavily dependent on its exports for thriving market as well as imports. New Zealand market is small economy which cannot satisfy its large economic goals without its exports. Almost majority the of Milk production in the country is for export purposes. The research data has been accumulated from varies sources like New Zealand statistics. Effects and problems of the global market competition has been highlighted in this research.            

Introduction

The research illustrates the critical issues of global competition in New Zealand market.  But this issue is not only confined to New Zealand but it is itself an in international business concern. The dimensions of the global village are that everyone is a part of it but not by choice. That goes for New Zealand as well. The problem faced by this country is reconnoitered. It was because of FDI that most of the corporations in New Zealand are owned by foreign entities for example except Kiwi bank almost every New Zealandia bank is owned by Australian entities.

A glance at Asian competitors and how it is a defining issue for New Zealand’s farmers and sustainability of New Zealand’s economy. New Zealand dependence on the production of primary goods since it’s not oil or mineral rich country. And even its milk industry is pretty much owned by a handful of companies like Fonterra. So, aggregation of market share is not healthy for an economy    

Aim

The primary aim of the research is to reiterate the fact that how much the global competition is affecting the New Zealand’s economy. In other words, this research is conducted to know for a fact that how much outside competition is stirring local producers of New Zealand. Primarily focusing on the factors which lead to this critical issue

Objectives

The main objective of this research is to delve into the paradigm of global competition and its impact on the New Zealand’s businesses.  The research will be focusing on the difficulties faced by local SMEs and corporations as well. It is further elaborated as:

Foreign direct investment and its consequences on local business:  It can be easily formulated that FDI (foreign Direct investment) has brought some new technologies with new jobs as well but it also has some adverse effect on the host’s local businesses. And mostly because of cheap china produced products the local marketers cannot compete with them.

Stiff competition from Asian countries: As it can be said that New Zealand’s main industry is Agriculture based so because of that much of the work is labor intensive. Which in turn lead to more cost of production as the wage rate is fixed. There is no other way of doing it, for example the production of asparagus is a labor intensive which cannot be performed by any machine with that accuracy. This industry faces tough competition from the products produced in china. Not only china but India and Bangladesh are affecting the productions capability of domestic businesses. Looking at the example of Whittaker’s and nestle would be apt for the understanding.  

Dependence on exports and imports: New Zealand is a country in the southwestern Pacific Ocean which is not very well connected to any other ocean routes. On top of that it doesn’t have any natural reserves of crude oil or mineral deposits. So, it must import most of the economically quintessential products from other countries. Likewise exports of agricultural product is one of the main source revenue. Leaving it in a position where it cannot control the international market on its own. That’s why its dependence on others to protect its interest in the international waters is imminent.  

  Literature review

New Zealand is a country of just 4 million people and a location on the geography peripheral of the world’s economy. So, it is likely to qualify as a small economy, and its economic development is heavily dependent on the inflow of foreign commodities (technology, capital, migration) (Peter & Joanna, 2009). Its economy gravely dependent on export of primary commodities like tourism, dairy, aluminum, fruit, forestry, meat. So basically, its dairy industry is now facing defining challenge from the international producers like India and China. The literature review consists of the following sub-topics

Foreign Direct Investment

The world is becoming more and more interconnected Foreign Direct Investment (FDI) is rampantly becoming an intriguing topic. For New Zealand, it is a major issue that how it connects with world because of that fact it imports most of the technology and have a shallow domestic capital base (New Zealand Institute of Economic Research, 2016). Yet number of New Zealanders are skeptical about FDI. Resistance to further FDI has been proven consistently through the means of several polls. The FDI inflows have risen by an average of 8.2 %per year over the past twenty years (New Zealand Institute of Economic Research, 2016). Talking about the risk of FDI a particularly sensitive issue is sovereignty, often a deficiency of sovereignty is framed like it’s a risk that kiwis are disenfranchised in their own land. Or as John Key said it about FDI: