The Sany Heavy Industry Co., Ltd is China’s largest pro- ducer of heavy equipmen

Question

The Sany Heavy Industry Co., Ltd is China’s largest pro- ducer of heavy equipment. In fact, it is the fifth largest producer of this type of equipment globally. In 2014, its revenue was decreasing because of the downturn of overall GNP in China. Sany’s total sales revenue in 2012 was $12.9 billion, well behind industry leader Caterpillar at $65.9 billion. However, Sany has a goal of eventually unseating Caterpillar as the industry leader. Sany plans to achieve $47 billion in annual sales within 10 years. Sany has already surpassed Caterpillar as a leader in its Chinese domestic markets. Sany has four core businesses: (1) cranes, (2) road construction machinery, (3) port machinery, and (4) pumpover machinery. While each is distinct, some similar technologies are used in the production and equipment. Furthermore, similar technologies allow similarities in production processes and equipment for certain parts. Therefore, there is a transfer of knowledge across these businesses. In addition, customers and mar- kets share some similarities because all relate to some form of construction. For this reason, in the United States, Sany has become a major sponsor of a Chevrolet on the NASCAR auto racing circuit. Sany America’s marketing director, Joe Hanneman, said that research showed NASCAR racing events to be the primary recre- ation event for people in the U.S. construction industry. Sany invests 5 percent of its annual sales in R&D to continuously improve the quality of existing products, identify new technologies, and develop new products. Through the end of 2012, Sany held 3,303 patents as a result of its R&D efforts. Indicative of its intent to be a technological leader in its industry, Sany has developed new postdoctoral research centers to attract top research scientists. In 2013, the company was awarded China’s National Technology Invention Prize for its “super- length-boom” technology. Although it has been pursuing technological inno- vations, Sany was recently accused of patent violations by Manitowoc, a diversified producer of equipment including large cranes. In 2014, a judgement went against Sany concluding “one Sany crane product infringed one of Manitowoc’s patents and that six trade secrets of Manitowoc were both protectable as trade secrets and misappropriated.” This is a negative signal for Sany as it seeks to pursue more diversified growth outside of China. Sany continues to grow organically and through acqui- sitions. For example, in 2012, it acquired Putzmeister, a well-known concrete pump manufacturer. In addition, it has established subsidiaries in many countries, including the United States, Germany, and Brazil, to enhance its inter- national equipment sales and broaden its market reach. Largely because of its major goal of internationalization, it is moving its corporate headquarters from Changsha to Beijing for enriched international connections.

How does the level of change in gross domestic product (indicator of country economic health) influence a firm like Sany?

Explanation / Answer

The Gross Domestic Product is the financial estimation of every single completed great and administrations delivered by all laborers and organizations inside the fringes of the United States. Gross domestic product's impact on business is generally minor from the outlook that GDP is made because of business movement. Thus, business influences GDP. Be that as it may, GDP is a large scale monetary pointer of the quality of business, relative abundance of laborers and the general quality of the economy and is utilized by business and speculators to decide productive capital organization.

Gross domestic product is assessed by the Federal Reserve to reset financing costs. Amid times of financial development the Fed will build loan costs to moderate business action keeping in mind the end goal to control expansion.

At the point when the economy is contracting GDP will manage that financing costs be brought all together down to animate business and utilization. A lower financing cost implies that the cost of capital is less expensive for organizations and purchasers when they assume obligation. The hypothesis is that lower rates will empower financial movement.

Business utilizes GDP numbers to decide if to increment or lessen work. What's more business assesses business openings locally so as to build up their money arrangement methodologies.

For example, if monetary development is down then the organization will set aside more trade out case deals keep on declining. Administration will assess capital cost ventures in light of GDP information and won't put resources into plant and hardware amid recessionary circumstances. The outcome is a self-sustaining financial decay that will proceed until the point that a positive impetus changes assessment.

Positive GDP development numbers give an impetus that assembles certainty with the goal that business feels good burning through cash on contracting new representatives, extending operations, purchasing new hardware and building new plants.

These occasions are what drive US monetary development which is accomplished through the formation of employments, which prompts more utilization by means of interest for merchandise and ventures since more individuals are occupied with financial action, in this manner requiring an expansion creation of products and enterprises.

Business likewise assesses the GDP of different nations with an end goal to misuse capital venture openings, increment showcases or to move operations. In this manner, government's intercession into business and markets can have unintended outcomes that power business out of the nation because of administrative or other government strategies saw by business counterproductive.

At last the administration utilizes the GDP numbers to endeavor and control and control the economy while business utilizes the GDP information to settle on key business choices disregarding the administration's interruptions.

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