Doing Business in the Emerging Markets - Term Paper Example

Doing business in the emerging markets December 9, Doing business in the emerging markets Globalization has been beneficial toeconomies and one of the advantages is development of economies such as those in the Asian region. While the economies have been opened the rest of the world, though direct investments and international trade, distinct characteristics identify the regional market from markets in other regions such as those in the United States and those in Europe. It is therefore important to understand business environment in the region, that continues to experience economic growth, strategies for successful business operations in the region, and cultural obstacles that one might have to overcome for success in the region Overview of the Region and Strategies that might Facilitate Success in the Region Overview of the region One of the characteristics of business environment in the Asian region is government regulation. This is more significant among big firms and means the organizations’ lack of autonomy. The government outlines guidelines for organizations’ strategies, unlike in the west in which organizations develop strategies that depend on market forces. The regulation ensures a level of uniformity across organizations and is therefore a threat to competitive advantages due to strategic approaches. In addition, the regulations could be sensitive to political needs in the region and not to market forces and could therefore favor some industries than others. A level of volatility in regulation is therefore is therefore likely. Possible protection from unfair competition is however an advantage in the region (Hipsher, 2008). Another distinguishing feature of business environment in the Asian region is weak regulations on human resource. Governments impose fewer “labor relations requirements, environmental regulations, and information reporting requirements” (Hipsher, 2008, p. 90). Fewer labor relations requirements grants organizations greater freedom and bargaining power in the job market. With significant effects of market forces, organizations can bargain for cheap labor that they can do in jurisdictions with minimum wage requirements. Even though minimum age for employment protects minors from exploitation by employers, this could disadvantage some minors who need work for their survival and the liberal environment offer benefits to both minors and employers who may workers on a short term or irregular bases. Fewer environmental regulations also mean lower operational cost companies can avoid costs on environmental pollution. Corporate social responsibility is therefore the major environmental regulator on organization and this means that organizations do not need to incur unnecessary costs that inappropriate legal restrictions would impose. Fewer regulations on information reporting however mean that organizations have greater power to protect their private information from stakeholders such as competitors who could use such information for their competitive advantage. Freedom on information reporting also allows organizations to protect information on their clients and products and this identifies ethical principles of autonomy and privacy (Hipsher, 2008). Business operations in Asia are also less formal, compared to operations in regions such as Europe and the United States. Operations and agreement in Asia are based on relationships and not written contracts and regulations. While this may present a threat to performance, culture ensures performance and the focus on relationships ensures an environment for long-term business associations. Requirements for financial disclose by listed companies are also fewer in the Asian region than in other regions and this has the advantage of maintaining privacy for strategic advantage over competitors (Hipsher, 2008). Strategies that might Facilitate Success in the Region Barriers to operations and trade in the Asian region cannot be overlooked and can arise from non-tariff regulations, cultural difference, and competition. Political barriers can be overcome through negotiations that can be between governments or between individuals. A foreign investor of a group of investors could petition their government to enter bilateral talks with a country in the Asian region. This would aim at eliminating barriers for better success opportunity. Management strategies can however solve barriers due to cross cultural differences and competition. Sensitivity to the market towards identification viable industries and products is one of the strategies for success. This means comparative analysis of possible regulations on each business opportunity and associated level of competition and profitability. A decision on the most viable opportunity is then made. Collaboration with local people or entities is another strategy for success in the region and this aims at developing a link between a business and the local people as well as developing knowledge for operations in the region. Ensuring innovation for customers’ utility, use of technology, and soliciting governments’ efforts for a fair playground are other strategies for success in the region (Zimmerman and Blyth, 2013). Cultural Obstacles that one might have to Overcome for Success in the Region Cross-cultural differences exist and offer barriers to international business environments. In order to succeed in the region, therefore, a company has to overcome the challenges. One of the cultural obstacles that a company has to overcome in the region is the sense of inferiority among Asians. Asians tend to have a sense of imperfection that according to them aids continuous learning and is therefore a positive trait. This may however mean a weakness to a foreigner, especially an American with superiority complex, who may perceive incompetence among Asians. The trait however implies a strong moral standard and ability to grow and means possible disregard of qualified workers. This barrier may also influence employment of foreign workers who may not be as competent and the locals and the use of foreign workers may have other consequences such as negative attitudes among locals. Communism is another social obstacle that a business may face in the region. People tend to care so much for one another that the care affects personal decisions and actions. The care for family or peer may mean decision or action that may compromise an organization’s interest as an Asian may prefer to help an associate when a conflict of interest arise between saving the organization’s interest and meeting the interest of a family member or a peer. Preventing occurrence of such conflicts and mitigating consequences of actions, should the conflict occur, are possible strategies for resolving the obstacle that is entrenched in the people (Nagarajan, 2013). A company may face inability to work with teams. Asians prefers to work alone because of fear that other people may have negative opinions against their work. This could be related to fear of failure that is inferred on a person’s facility and induces bad family image. The fear to work in teams undermines possible collaborations for innovations or possible peer evaluation and correction for improvements. In addition, the fear also limits efficiency of supervision and therefore undermines possibility of a person learning from mistakes and improving on the mistakes. This also means leadership challenge in ensuring a common goal, organizational goal, among employees in the culture. Members of Asian culture also shy away from self-promotion. This identifies humility among the population but may lead to inefficiency among foreigners. While a native manager may understand the cultural orientation and seek to identify people’s achievements for recognition, a foreigner may wait for employees personal reactions for recognition. Management by a foreigner may therefore fail to recognize performance and fail to motivate employees. Initiatives for identifying achievements by every employee are therefore necessary for ensuring that every employee’s efforts is recognized (Nagarajan, 2013). Another cultural orientation among Asians is preference of working within comfort zones. This means that a person is not likely to make sacrifices for desired objectives and therefore threatens success in unfavorable conditions. It may also suggest incompetence to a foreigner and strain work relationship while setting goals within an employee’s comfort zone or offering motivation for extra efforts would be solutions. This also suggests the need for close interaction with employees in order to understand their capacity for appropriate job allocations. In addition, Asians prefer to work in isolation and this requires an organizational structure that focuses on individual efforts. Conflict avoidance is another cultural trait in the region. People tend to value relationship and in case a conflict is eminent, involved parties compromise with the aim of avoiding conflicts. This however undermines possible benefits conflict management and resolution because conflicts help in identifying weaknesses that can then be managed. Conflict avoidance also fails to resolve issues that may arise between members of an organization and may threaten interpersonal relations. Consequently, measures are necessary for promoting pro-activeness among employees for effective conflict management and conflict resolution. Another cultural trait of people in Asia is silence and is taught across generations. This means that a person may note a concern but fail to report it or act on it, especially is an action could lead to conflict. The trait therefore increases exposure of an organization to risks that could have been prevented had they been reported in good time (Nagarajan, 2013). Cultural differences between Asians and other cultures establish obstacles that a business must overcome in order to be successful in the Asian region. Cultural orientations such as humility that could be misinterpreted to mean inferiority, high-level allegiance to family and peer, fear of working in a collective environment, and fear of confrontations are some of the cultural obstacles in the region. References Hipsher, S. (2008). Expatriates in Asia: Breaking free from colonial paradigm. Oxford, UK: Elsevier. Nagarajan, K. (2013). Business challenges in Pan Asian community: Making tradition work. INSIGHT into Diversity, 8(1), 70-95. Zimmerman, A. and Blyth, J. (2013). Business to business marketing management: A global perspective. New York, NY: Routledge. Read More