Pre-Masters in Graduate Certificate in International Business

(GCIB)

Assignment No: 2 (Group Report)

Title: Advantages and Disadvantages of Mass Tourism

Word Count: 1,370

Subject: SHAM8783

Prepared by:

DMU ID: P15XX7544

DMU ID: P15XXX558

DMU ID: P15XXZV2X

DMU ID: P1ZXDXZ06

Date of submission:

2-09-2004

Submitted to:
Sergent Löwenstrolph
 Abstract

The project report involves discovering counterfeit products and their effects. This report aims to

find out the impacts of counterfeiting with the relevant statistics. Analyse the markets for counterfeit

and pirated products. This report highlight the importance of distinguishing those consumers who

knowingly purchase counterfeit or pirated products, from those who are deceived. It helps the

customer to aware that they are being deceived by the counterfeit products. This report also tries

to find out the way to combat against counterfeiting.

 TABLE OF CONTENTS

1.0 Introduction 1

1.1 Purpose

1.2 Aim

2.0 Counterfeit Products 2

3.0 Effects of Counterfeiting 3

3.1 Effects on Consumers

3.2 Effects on Companies

3.3 Effects on Economy

4.0 Analysing the Economic Impacts of Counterfeiting 4

5.0 Findings 5

6.0 Conclusion 6

7.0 Recommendation 7

8.0 Reference
1.0 Introduction

The practice of producing goods similar or identical to the original product produced by registered

trademark, which deceive the consumer is counterfeiting (OECD, 2013). It is possibly an illegal

profit oriented act which effects both purchaser and producer. On the one hand, when purchaser

receives the counterfeit product, there is the possibility of losing trust towards the original product.

On the other hand, the reputation of genuine product producer’s may get affected. Counterfeiting

is mostly popular in different areas like luxury brands, electronics, pharmaceuticals, and so on. In

most of the places, counterfeit products are found in cheap prices. These products are mostly

found in different countries of Asia, Eastern Europe and Latin America. In comparison, developing

countries manufactures more counterfeit products than developed countries. Mostly, consumer

gets deceived from online shopping than rational shopping. Counterfeiting is not only practiced in

useable product, it can also be found in intellectual and entertainment fields i.e. books, novels,

movies, music and so on.

1.1 Aim

This report aims to analyze the effect of counterfeit product and how counterfeit product is being

effecting in terms of consumers and company’s economy. We have used some evidence and

statistical data, to provide proper information for the outcomes of it.

1.2 Purpose

The main purpose of this report is to analyze the effects of counterfeiting and how companies are

affected with this illicit trade as well as to aware both consumer and companies how counterfeit

products are effecting market and damaging the status of the companies and consumers

purchasing .

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2.0 Counterfeit products

Counterfeited products have indistinguishable trade mark from the original one. So, it’s

manufacturing and selling is around the world, mostly in developing countries. Some of them are:

designer or luxury goods like: Prada, Chanel, Fendi, Gucci, Nike, Adidas, Vans, Crocs, and so on.

electronic equipment like: cables, fuses, circuit breakers equipment for domestic work, and many

more. Personal and home care products like: Shampoo, Shop, hand wash, etc. Music, CDs, DVD,

pharmaceuticals, etc. this are the product which are being counterfeit. The chart below illustrates

the percentages of people in UK who buy counterfeited products in 12 months. This figure has

ascertained that various luxurious products as clothes, watches, leather goods, shoes & jewelry

are mostly counterfeited goods.

Figure: counterfeit product. (Zurich, 2007)

According to Organization for Economic Co-operation and development (OECD) counterfeit

product is being increasing. In 2008 the total costing $250 billion was counterfeit but now it’s all

most increase by 2.5% US dollar which means $461 billion (Commerce, 2016).

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3.0 Effects of Counterfeiting

A counterfeiting is an illegitimate act and it has affected the both consumers and brand owners with

economically and socially. This section has identified the impacts of counterfeiting on consumers

and the companies which accounting huge losses in global economy.

3.1 Effects to consumers

Counterfeited products are almost same as genuine one with inferior quality. As a consequence,

consumers often get confused while buying these products. Sometimes they have to pay almost

same price as original for pirated products. When the service doesn’t meet with their expectation,

they might have negative experience and create unreliability towards the branded products.

Counterfeit products are harmful for both economic and health aspects. Trade of counterfeit drugs

is growing in global market and it has endangered many people lives and the people who died with

consumption of counterfeited drugs cannot be measured. (Zurich & Research, 2007)

3.2 Effects to Companies

Company and brand faces several implications with illicit trade of counterfeited products. Imitation

of genuine product reduces the brand value and goodwill as well as lessens company’s

profitability. Companies are losing their business and revenue which supposed to be gained from

their brand impression lost to the counterfeiters.

3.3 Effects on Economy

Counterfeiting is being a challenging illegal practice that has immensely affected consumer,

government, market and many business entities. It has created extensive harm on consumer’s

health and safety, employment, firm’s investment and cost of operation. It causes negative impact

on the price and sales of original product so, firms are bearing extensive loss and also their brand

3
value and status are in the risk of dreadful conditions. According to Arlee Sowder, American

business industries lose nearly $200 billion revenue every year due to counterfeiting. In terms of

employment, nearly 2.5% million job worldwide have been dismantled by counterfeit black market

(Sowder, 2016).

4.0 Analysis on economic impact of counterfeiting

An overview to impacts of counterfeiting in economy is briefly analyzed in this section. However, it

has mostly affected in the economic sector, which is also discussed below.

Counterfeit products have serious cost in the economic development to some of the luxurious

brand. They have to face many challenges to sustain the competitive global market where large

number of new products have been discovering every year. This illegitimate act has compelled to

big company to invest large sum of money to research new product and fight for anti-counterfeit

activity. On the other hand, counterfeited products are mostly traded in black market and shipped

around the world without paying taxes to the government, this situation seems to affect the whole

economy of country. While analysing core impact of counterfeiting, the act is growing globally and

endangering health of user’s physical, mental as well as health of companies’ goodwill.

To emphasize, rising usage counterfeit products globally has dominated the domestic market as

well. We think that, we would get chance to consume almost same commodity in cheaper price but

in reality, the revenue generated by this trade has neither contributed to the original brand nor to

our local economy. Lastly, unhealthy trade makes the whole economy suffer negatively which

might stop growth of each and every development, from investment of money in business to

investment in infrastructure.

4
5.0 Finding

Increasing uses of internet has facilitated counterfeiters to spread their market to all around the

globe which has affected almost all top companies around the world. The transactions made by

counterfeit products are booming and estimated 1.7 trillion in 2015. The table bellows illustrates

the figure of estimated price of counterfeit products in 2008 and 2015 prepared by International

Chamber of Commerce. (ICC, 2011)

Because of counterfeiting the transactions of counterfeit products has been extended and the

transactions of finance is being increasing. The consumer buying counterfeit product is being

deceived because they buy trusting original product, unknowingly they buy pirated products. It is

beneficial to the consumers of developing countries where they can find similar branded product in

cheap price.

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6.0 Conclusion

During preparing this report counterfeiting activity found rapidly growing around the world and

affecting both consumers and companies economically. Counterfeiters are getting benefecial

advantages from their infringement which is supposed to be earned by main company or brand

who produce branded products and set their image in the market. Now a days, the area of

counterfeit products has victimized most of the products which is consumed on daily basis to

luxurious products. As a consequence, user of counterfeit products and developer of branded

goods are both dissappointed with this illigal act.

6
7.0 Recommendation

Its is recommended that, every parties and sector should act against counterfet products by either

refusing or stopping buying pirated products. It might seems affordable for a while but when it

enters in the market and start black marketing the every products, the government will face huge

loss which is also considered as every citizens of the country. Thus, government should strictly act

upon this iligitimate trade and observe the market day by to to acknowledge the fake product. An

anticounterfeiting strategies and policies should be followed up by both brand owners and

government seriously. Counterfeit products are mostly imported from developing countries and

supplied to Middle East, Europe and America. Hence, supervision on border, airport and seaport

costume should be given more priority to stop this trade. Internet has played vital role to

emphasize ilicite trade of counterfeiting, so the social networ developer also should help

comapanies and government to identfify the connectivity between traders and block the

transactions made via email and online shopping.

Overall, everyone must ’say no’ to counterfeit products and should perform genuine buy and sell to

keep balance economic structure within the country.

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8.0 References

Commerce, I. C. o., 2016. OECD report shows growth in counterfeiting, losses to global economy. ICCWBO,
pp. http://www.iccwbo.org/News/Articles/2016/OECD-report-shows-growth-in-counterfeiting,-losses-to-
global-economy/.

ICC, 2011. Estimating the global economic and social impacts of counterfeiting and piracy, London: Frontier
Economics Ltd.

OECD, 2013. COUNTERFEIT. [Online]

Available at: https://stats.oecd.org/glossary/detail.asp?ID=5015
[Accessed 20 April 2016].

Sowder, A., 2016. The Harmful Effects of Counterfeit Goods. [Online]

Available at: http://www.athens.edu/business-journal/spring-2013/asowder-couterfeit/
[Accessed 21 April 2016].

Zurich, E., 2007. Problem-Analysis Report on Counterfeiting and Illic , s.l.: July.

Zurich, E. & Research, S., 2007. Problem-Analysis Report on Counterfeiting and Illicit, European Union:
BRIDGE.