What Is So-Called Asian Business Model How Well Does The Indian Business System Fit That Model - Essay Example

?What Is So-Called Asian Business Model? How Well Does The Indian Business System Fit That Model? Describe One Other Asian System That Fits The ModelEither Better Or Worse Than India's. Table of Contents Introduction 3 Thesis Statement 3 What Is So-Called Asian Business Model? 3 How Well Does The Indian Business System Fit That Model? 5 Describe One Other Asian System That Fits the Model Either Better Or Worse Than India's 5 Conclusion 7 Works Cited 8 Introduction The business environment in Asia is quite different than other western nations. The size of Asian economy is huge, and it is characterized by diverse assortment of markets. The business model of Asia is also quite dissimilar from other western nations. The Asian business model has progressed through several periods of transformations. Several aspects such as globalization, improvement in information and communication technology, and deregulation along with evolving competition have influenced the business model of Asia (Crown, “Challenges in Asia”). Thesis Statement The discussion is based on analyzing the different aspects of the Asian business model. The objective of the discussion is to observe how the Indian business system or organizations fit in the Asian business model and to describe one other Asian system which fits the Asian business model either better or worse than India’s business system. What Is So-Called Asian Business Model? Asian business paradigm has developed through three major phases of improvement. In the first phase, i.e. during 1970s to 1980s, Asia used to pursue the features of ‘Japanese Model’ of business. According to that model, organizations tended to follow quality products and operational superiority in business. The Japanese model focused more on business growth rather than earning profit. Lifetime employment was a vital part for that Asian business model. In the second phase, i.e. from 1980s to 1990s, the rapid growth of Asian businesses resulted in gaining significance for ‘Asian Values’ based business model. Asian values business model was characterized by Confucianism, reliable, disciplined, faithful and supportive employees and managers. At that period of time, the central elements of this Asian business model were huge investment, large savings and financial growth. These elements were described as success-deriving factors for organizations by the professionals. However, in the third phase, i.e. from 1990s to present day, professionals have highlighted certain systematic deficiencies of the Asian business model, which had resulted in Asian financial crisis in the year 1997. The Asian business model had also resulted in the collapse of several Asian organizations (Delios and Singh 1-20). At this point of time, it is vital to outline the major differences between the Asian business model and the US business model. During the period of 1950s to early 1990s, the Asia business model was associated with the so-called ‘crony capitalism’. Crony capitalism is usually related with strong government participation in business. Thus, it can be observed that close association existed between the government and the organizations in this kind of business model. Such close association was directed through discussion board which was used to organize investment plans. Government assistance to organizations was related with strict performance standards about exports and technical values. In Asian business model, the relationship between business and financial system comprised long-term association between organizations and banks. This aspect had empowered Asian organizations to consider long-run vision in the investment decisions. Thus, organizations were not constrained by the threat of aggressive take-overs. Asian organizations pursued internal business practices which were different from those of Western organizations. For instance, Asia business model is related with maintaining loyal association between management and employees. Conducting business in this model is based on interpersonal relationships and formal associations. Furthermore, the business model is also characterized by the system of lifetime employment (Singh, “Corporate Governance, Crony Capitalism…”). How Well Does The Indian Business System Fit That Model? Indian business system can be termed as one of the prominent examples of ‘cronyism’. In India, government decides the success or the failure of businesses through imposing guidelines, authorizations and approval procedures. Such regulations greatly affect nearly all the businesses. The success of a business is highly dependent on relationship between organizations and politics. Such association determines the future of business growth. In India, the production and business operations are strictly controlled by government. This sort of Asian business model used by Indian organizations has helped to enlarge the recognition of businesses in India. In the past two decades, India has observed strong organizational growth along with massive increase in profits and Gross Domestic Product (GDP). Much of this business growth has been determined by the utilization of government power (both state as well as central) in order to utilize the resources. In India, the crony capitalism business model has fit well with the system as government has allowed organizations to gain higher productivity through offering several fiscal inducements. Indian business system has presented relationships between organizations and banks in terms of an allocation of resources and supply of funds at attractive interest rates (Mazumdar, “Crony Capitalism and India Before and After Liberalization”). Describe One Other Asian System That Fits the Model Either Better Or Worse Than India's Apart from India, China has a business system which also fits in Asian crony capitalism business model. In China also, the political parties regulate the businesses and assure their position by dealing out economic benefits. Although liberalization in trade in China has increased, governmental control on businesses has become strict. This Asian business system used by China is worse than Western nations’ because it has been verified to be unsustainable. Indian business system is negatively impacted by corrupted business practices which are considered to be the result of crony capitalism. Crony capitalism also has resulted in an increase in inequality in income. On the other hand, the Chinese business system has resulted in unstable regional developments and substantial income gaps due to the use of crony capitalism business model. China’s market is characterized by high level of export which is proportionately more than the GDP rate of the nation. Crony capitalism has transcended the huge domestic market of China to be underdeveloped (Hui, “China Today: Misguided Socialism plus Crony Capitalism”). However, considering the business circumstances of both nations, it can be stated that China’s business system is worse than Indian business system. During the period of 2000 to 2008, the amount of illegal capital in China was almost US$2.8 trillion which was nowhere near than India which had illegal capital amounting to US$104 billion (Ray, “Beyond Crony Capitalism”). Conclusion It is apparent that the Asian business model is unstable due to several reasons. This business model results in inequality in income and corruption in business practices. Asian crony capitalism is characterized by low level of transparency and high level of governmental interferences in business practices which hinder the sustainable growth of the economy. In crony capitalism, corrupt governments usually favor those organizations which have close relationships with political leaders thus resulting in unbalanced economic growth. Thus, Asia needs to develop an improved business model which can ensure clean and inclusive growth. Works Cited Crown. Challenges in Asia, No Date. Web. 17 Dec. 2012. Delios, Andrew and Kulwant Singh. Strategy for Success in Asia: Mastering Business in Asia. United States: John Wiley & Sons, 2012. Print. Hui, Wang. “China Today: Misguided Socialism plus Crony Capitalism”. New Perspective Quarterly, 22.2 (2005). Print. Mazumdar, Surajit. Crony Capitalism and India Before and After Liberalization. Institute for Studies in Industrial Development, Mar. 2008. Web. 17 Dec. 2012. Ray, Sankar. “Beyond Crony Capitalism”. Frontier Weekly, 44.11-14 (2011): Print. Singh, Ajit. Corporate Governance, Crony Capitalism and Economic Crises: Should The US Business Model Replace The Asian Way Of ‘Doing Business’. University Of Cambridge, Jun. 2006, Web. 17 Dec. 2012. Read More