Mark & Spencer Company in Australian Environment

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Mark & Spencer Company in Australian Environment

For Mark and Spencer, Australia is a potential country to expand its business and gain a new market. Australia represents a small, open economy with unusual wage-setting institutions. During the past twenty years, its development has been similar to that of most nations in the Organization for Economic Cooperation and Development. Australian GNP in 2007 was US$718.4 billion, just over US$34,359 per capita. Australias share of consumption expenditures in GDP is almost identical to the OECD average; it is thus somewhat below the US share and well above that for Japan and for Germany. Investment is a higher proportion of GDP in Australia compared to the OECD average, but Australia does not have a large investment share in OECD terms, eight other OECD countries invested a higher share of their GDP, and another two countries invested about the same amount, despite the Australian raw materials boom. Like OECD countries, Australia has shown a trend toward larger government; Australian government consumption has risen more rapidly than the OECD average, but government outlays in Australia are still well below the OECD average. Indeed, government outlays as a percentage of GNP in Australia were slightly below those of the United States.

The low export and import shares in output seem to belie the description of Australia as an open economy: among OECD countries, only the United States, Japan, Spain, and Turkey have smaller shares of trade in GDP. The low trade share is in part a result of Australias location and transportation costs and in part a consequence of quotas and high tariffs. Despite the small shares of imports and exports, many of Australias macroeconomic problems are associated with its opennessfor instance, the problems of exchange rate management, resource booms, other foreign-induced demand changes, and foreign interest rate movements. Changes in the commodity composition of imported goods have been less marked. Machinery and other manufactured goods made up 37.7 per cent of imports in 2000 and a similar 38.3 per cent in 2005. The shift in the sources of imports matched that in the destination of exports. Since the early 1990s, Australia has had a substantial deficit in its goods account with the United States and a surplus with Japan. The cyclical behaviour of Australian trade shows the correlation of growth rates in total real GDP, real nonfarm GDP, real farm GDP, real exports, real imports, and net exports. Net exports are negatively related to the growth of GDP and nonfarm GDP but positively though insignificantly related to farm GDP. The correlation between trade and GDP is quite low, suggesting that domestic disturbances and shock absorbers, in the case of external disturbances, are important.

Australia had little inflation and a low level of unemployment; both rose in the early 200-, but the most rapid increase in inflation in Australia followed the wage explosion. The CPI inflation rate rose above 15 per cent in 1989 and only slowly came down to the single-digit range by the end of the decade after a prolonged period of high unemployment. The Reserve Bank is a semi-independent body subject to government control. The Secretary to the Treasury sits on the board of the Reserve Bank, and the government has the right to overrule the board. When it does so, the board is supposed to report on the disagreement to the Parliament. It has not yet made a formal report of a disagreement, though there are descriptions in the annual report of episodes in which the Reserve Bank influenced government policy.

The world economy is changing rapidly. Leading those changes have been the countries in the Pacific basin. International trade has been intimately involved, having grown faster than output, particularly in the fast-growing countries during the 1990s. However, international trade contracted when the world economy suffered recession. Thus trade may have been both the handmaiden of growth and the mechanism spreading economic distress. The policy stance of Australia with respect to both trade and direct investment is also investigated. From a regional viewpoint, it is the developed and developing countries of the Pacific basin that are Australias largest trading partners. They have provided markets for about 60 per cent of Australias exports since the early 2000s. Australia is also buying more from the Pacific basin; the import share has risen from about 49 per cent in the early 1990s to 59 per cent recently, about the same as exports. In the early 1990s, it was Europe that had 60 per cent of the shares. The findings of the CMS analysis are that all Australias lost market shares can be attributed to an unfortunate commodity composition of its exports. Specializing in wool, meat, and grains was very unlucky. Australias market distribution was positive on balance as the slow-growing United Kingdom market was more than counterbalanced by the fast-growing Japanese market. The competitiveness measure was also positive, particularly in Japan.

Export successes were achieved in minerals in which Australia increased its market share in Japan and in alumina (which is classified as an industrial chemical). But at the same time, market losses were suffered for iron and steel, transport equipment, electrical machinery, instruments, and metal manufacturersmost of which are so-called elaborately transformed manufacturers. Australian exports are predominantly natural resource-intensive. This is by far the major characteristic of Australian exports. The natural resource share was about 85 per cent; it rose slightly to 87 per cent in the mid-1990s and dropped to about 85 per cent in the 2000s. Hence the decline in the natural resource share may be underestimated. Australian exports that are human capital intensive also became marginally less important over the decade.

Australia has a stable political system and a stable civil society. The main feature of Australian society is cultural diversity. The cultural values of Australia are similar to other English speaking countries: these values, that is, that individuals must work hard to accomplish objectives and the positive sanctions to work, achievement and activity, were brought over by some of the immigrants and were necessary for surviving and taming the wilderness. They became known as the Protestant ethic. Constant control and discipline of self are required. Australians are informal. This, together with goal orientation, means that Australians tend to be on the expressive side. Perhaps this is because their country is inhabited by many immigrants. In the course of history, Australians have had to break down social barriers again and again. This could be a different experience from living in a more settled country. In such a case, it may be harder to avoid those you grew up with; friendship tends to start early in life and lasts many years. The value of basic human equality and democracy is so ingrained among Australians that many of them became shocked and even frightened when they perceived that the communist world undermined such a value in substance and officially claimed otherwise.

The power distance of a culture is reflected in the superior-subordinate relations in business organizations. A short power distance is an inducement to greater volume and variety of vertical communication and participative decision style. As previously mentioned, Australia has a medium power distance. It is common for such countries to advocate participation in the managers decisions by his or her subordinates; however, the initiative towards this is supposed to be taken by the manager. The value of equality in the Australian culture sometimes conflicts with the values of individualism and freedom. Opportunities, value standards, policies and practices apply to all in this culture; at the same time, a person who, on his or her own, is able to make it and stand out above the crowd is much admired. Opportunities involve low competition and large population, English speaking consumers and absence of great cultural differences between Australia and the UK.

Works Cited

Pittengrew, A. M., Thomas, H. Whittington, R. Handbook of Strategy and Management. Sage Publications, 2006.

Schien, E. H. Organizational Culture and Leadership. Jossey-Bass, 1996.

Hill, C.W.L. International Business: Competing in the Global Marketplace, McGraw-Hill/Irwin; 5 edition, 2004.

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