Authentics VS Fakes in Global Industry

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Authentics VS Fakes in Global Industry

Prepared by Ranee Sirirushneekorn

Submitted to Professor Stephanie Hughes

Business Strategy, Implementation, and Control

MGT685

Spring 2005

Northern Kentucky University

Personal Learning Paper: Reading in class and Business Week article “FAKES!”  

The concepts from strategic management that we covered in class for the past four weeks are definitely reflected in the real world of business. Several theories and strategies mentioned in class mostly related or can be beneficially applied to the current business environment. The increase in global trade or globalization made business much more aware of external environment factors; i.e. up-to-date trends and technologies in order to sustain a competitive advantage or to at least survive in the intense competition as addressed in Chapter 2 or two??? (Dess, Lumpkin, Taylor, 2004). Furthermore, according to Chapter 3 or three????, companies need to constantly pay attention to the internal environment; i.e. input such as material, knowledge workers, and intellectual property within the company to capture the relevant information in order to adapt or maintain an effective strategy.

Overall from the article “Fakes!”, an ever-rising flood of fakes is coming into the world market. According to Business Week (February 7, 2005), counterfeiting accounts for 5% to 7% of world trade. This is one of the biggest challenges in the era of globalization. Multinational companies and outsourcing companies affected by this counterfeits’ problem as well. The article states that businesses outsource some activities such as production to less developed countries, for example China, which has a lower labor cost. Their aim is to export those products to sell in the foreign market. However, the same production also creates counterfeits and supplies them to both its local markets and the rest of the world.

Ultimately, counterfeiters cost the original companies a lot of money. Year by years, the original companies put maximum effort to research and develop the new products to response with the consumer’s behavior and market trends. However, those original works were imitated aggressively by the counterfeiters. One obvious example, highlighted in the front cover issue, is the case that Honda CG125 was knocked off by the Chinese counterfeiters. They make millions of motorcycles each year which sell for less than half of the real Honda.  The increase in the capabilities and the gain in experience, knowledge and technology from originals made things possible for the counterfeiters.  In other words, if the things can be made, they can also be copy easily and quickly.

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From the Porter’s five forces analysis, global trade is mainly threatened by the forces. First, “the threat of substitute products” influence in the global market. Globalization arise the competition throughout the world. Moreover, technology such as Internet made information easier to access to rest of the world. Eventually, everyone from everywhere can get the same relevant up-to-date information which allow them to compete in every possible way efficiently and effectively. There is always a demand for the products in the market. That is starting point that arouses the counterfeiters to find ways to copy those demanded products in order to ...

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