Razer partners with professional gamers to design, manufacture and distribute high-tech peripherals that provide a competitive edge in the game. Even in the early days of the professional PC gaming industry, the company entered the market with exciting solutions designed for gamers. To carry out the research, Razer was selected, whose products aim to develop high-tech computer accessories (About Razer). It designs and builds professional hardware for computer gamers. The range of the company includes computer mice, keyboards, mousepads, headphones, and gaming systems. Since the company develops professional gaming equipment, new and high-tech equipment is necessary for further development. Thus, Razer needs to find reliable suppliers and successfully negotiate a contract.
Since the company is constantly creating new devices, to reduce the budget for the production of actual prototypes, the company needs 3D printers. A 3D printer is a numerically controlled machine that implements only additive operations, only adding portions of the material to the workpiece. Usually, it uses the method of layer-by-layer printing of the part. 3D printing is a form of additive manufacturing and usually refers to rapid prototyping technologies. This allows designers to print the parts successfully they need without high costs for raw materials and engineers’ labor. The purchase of 3D printers will enable the company to reduce the production time for parts for some positions and increase the number of prototypes.
Thus, Razer needs a supplier who can supply a large batch of printers to all organization departments. China can become a supplier country, as this country has many successful companies engaged in the supply of 3D printers. One of these companies is Creality, which produces thousands of 3D printers per year on the market. For Razer to view China as the leading supplier of 3D printers and related equipment, it is necessary to perform a PESTLE analysis.
On the political side, China has well-developed trade relations with potent powers. However, some personal ties with the United States and South China may negatively affect the political situation and, therefore, the business environment for investors. China is developing strategies to keep raw materials and machinery low and labor costs down, making the country attractive to investors. Moreover, there are business promotion plans in China and subsidies for the country’s companies. Thus, the government is currently focused on supporting e-commerce businesses. Nevertheless, the development of enterprises in only one area leads to an imbalance, so investors need to consider their activities when cooperating with China.
Additionally, the analysis considers the country’s economic condition, which depends on its growth. China is impressive with its economic growth, which could greatly help investors. First, the labor cost in China is significantly lower than the global average, which allows investors to save money when hiring experienced employees. Secondly, China is characterized by a high GDP, which means that the country has a high purchasing power (Rahman, 2021). Thus, investors can find a good market for their products in China. However, negative economic factors can also influence investors’ decisions. China is experiencing rising inflation and skyrocketing property prices, which could affect the development of the economy. Moreover, the People’s Bank of China is raising interest rates and introducing restrictions on home purchases.
Any social and cultural aspect of a country impacts the formation of business and economy. Thus, China has the largest population with an overall literacy of about 90%. Therefore, investors get experienced employees from China at a relatively low cost. The high population is one of the reasons for the reduced labor costs (Rahman, 2021). Cities in China are growing and developing rapidly, so urban lifestyles spread more strongly. Consequently, enterprises note changes in purchasing trends and the social behavior of the population. Moreover, about 420 million people in China are active Internet users, and this number is growing every year (Guo et al., 2019). This makes the country a good area for the development of e-commerce. Internet access also allows the country’s population to make most of their purchases online. However, there are still groups of people skeptical about online shopping.
On the part of technological factors, all technical innovations have a significant impact on the intensity of activities in production, which is a factor in increasing business income. China has seen advances in technology, which has allowed the country to improve its manufacturing methods. Furthermore, the government is developing strategies to focus on innovation and drive rapid growth. Such a policy aimed at improving production can be beneficial for investors.
Ecology is not a critical factor in the country’s growth process, but it has a side effect. Recently, China has begun to increase in economic terms; urbanization is proceeding at a broader pace. In this regard, the country has established some fundamental conditions for businesses. These conditions aim to create and ensure environmental standards for the production process. However, such a system can increase the cost of the product, which will lead to a decrease in profit. At the same time, China is striving to spread electric vehicles as the primary mode of transport. Since the country has a colossal number of large-scale factories, China’s environmental policy reduces environmental emissions and production costs.
Certain legal factors in a particular country may also impact business. China is notable for having laws that can affect a country’s growth and trade. First, China has banned the world’s leading social networks such as Facebook and YouTube. Thus, these platforms cannot generate income and monetize their activities. Secondly, China has imposed restrictions on foreign investment, which has reduced the number of businesses investing in the country’s market.
Razer can rely on the following vendor country guidelines based on the analysis. China may become a supplier of 3D printers for Razer. This is because China’s market policy aims to improve and grow new technologies. Moreover, China is distinguished by its cheap labor force with high literacy and education of its population. Thus, Razer will save part of the budget and direct it to other essential production areas. China is a supplier to the whole world, making the country a reliable partner in the supply chain.
However, the company must consider the country’s rising inflation and be prepared to nominate another supplier. Since the upward trend in inflation could trigger an economic depression, Razer needs to be considered a less attractive vendor at this stage. Nevertheless, despite inflation, China is currently experiencing strong economic growth. Thereby, Razer can count on timely deliveries of high quality and honest, open negotiations. China’s policy towards foreign companies in the domestic market introduces some restrictions, but at the same time, remains open to consideration of cooperation.
A technique that can be effectively used in negotiations with foreign suppliers is consolidating the proposal with a draft agreement. This technique is based on the psychological factor that the person who made the offer first has a better chance of tipping the negotiation in their favor. The advantage of this technique is that the first offer is the guarantor of further cooperation for many professional negotiators. A pre-arranged contract can help save both parties time and money (Choudhary et al., 2018). However, the downside of this technique is being too pushy with suppliers, who may refuse to negotiate further.
An important negotiating technique is also the light requested from the suppliers. The method involves contacting one of the parties to the negotiations to discuss the issue. The second side evaluates the negotiators who asked for advice as more competent employees, which is the method’s main advantage. Moreover, when negotiating with foreign suppliers, the council strengthens intercultural communication and shows respect for the interlocutor. The disadvantage of such a system may be an unnecessarily lengthy discussion or too many questions, which will make suppliers doubt the competence of the second party.
A possible method of negotiating with foreign suppliers is the power of silence. Its primary purpose is to use silence as an opportunity to reflect on and assimilate the interlocutor’s arguments. The positive side of this method is that in silence, the interlocutor will be convinced of the importance and strength of his proposal for the opponent. However, the disadvantage of this negotiation technique may be the interlocutor’s misunderstanding of the reason for the silence, leading to misunderstanding on both sides.
In conclusion, it must be said that, according to the PESTLE analysis, China can be considered the leading supplier of the necessary equipment. First, China has developed economic relations with the major superpowers. Moreover, despite the restrictions, the Chinese market attracts foreign investors. Secondly, China has a cheap labor force, which can significantly save the company’s budget. Finally, the country is engaged in technology development, which remains one of the main points for many foreign companies.
References
About Razer. (n.d.). Razer Inc. Web.
Choudhary, N., Minz, S., & Bharadwaj, K. K. (2020). Negotiation framework for group recommendation based on fuzzy computational model of trust and distrust. Multimedia Tools and Applications, 79(37), 27337-27364.
Guo, L., Huang, J., & Zhang, Y. (2019). Education development in China: Education return, quality, and equity. Sustainability, 11(13), 3750. Web.
Rahman, D. (2021). PESTEL analysis of China (China country profile). Howandwhat. Web.