Global Business Strategy in Japan - Coursework Example

MBA (Global Business Strategy) Table of Contents Introduction 3 Geographical Analysis 4 Communication and transport infrastructures 4 Construction activity 5 Human resources 5 Registering a property 6 Economic Analysis 7 Trade Links and international agreements 7 Entering a business in Japan 7 Credit 8 Equity Markets 8 Tax Payments 9 Contract enforcement 9 Closing Business Deals 10 References 11 Introduction Japan, situated in northeastern Asia between the North Pacific and the Sea of Japan, is one of the most developed nations of the eastern world. The entire area of Japan is divided into four islands namely- Hokkaido ,Honshu , Shikoku, Kyushu having an area of approximately 8300, 231000, 19000, 42000 square kilometers and 4000 small and minor islands supporting an a population of approximately 126 million people (Japan National Tourism Organization, “About japan”). Japan went into recession in 2008, mainly because of the credit crunch and the economic recession in the US which happens to be its largest trading partner. The exporters were also hit hard due to the appreciation of the Yen. R&D spending is an important part of the corporate industrial policy of Japan and hence the client, which is a Canadian software firm, stands to gain an advantage if it plans to operate an R&D center in Japan. Moreover, large corporate restructuring banks and financial institutions are providing the finance required by the corporate houses. A good country rating is also important for the Canadian software firm as it would enable the firm to easily get access to external borrowings for itself as well as for its vendors. Moreover, it would also create greater investor confidence among the shareholders for itself as well as for its local vendors. Geographical Analysis Communication and transport infrastructures Road transport in Japan has seen a major change after the end of World War 2, after which road development was carried out on a massive scale. The roads are classified into four categories namely- national motorways, national roads, prefectural roads, and municipal roads. The development of roads in Japan is carried out mostly through the revenues generated by the toll collections. Highways carry about 6% of the total road transport in Japan and about 24% of the domestic cargo. After 1952, the government also roped in public corporations to improve the roads infrastructure in the country under the special law of road improvement. As a result of these steps high-standard arterial highway network of the country has increased by about 8800 km (March 2006) and another 6000 Km is in the construction stage (Road Bureau, Ministry of Land, Infrastructure and Transport). As far as railways are concerned Japan has a very ultra modern network of railways with the bullet trains leading the pack. Japan has a dedicated 23,474 Km of rail network as of 2006 (Nambu, T.) Japan has a total of 176 airports as of 2007. Construction activity Japanese construction companies are under the constant surveillance of the government with regards to their construction policies as the government has some strict regulations and each company is expected to strongly adhere to those regulations. As far as global rankings are concerned Japan ranks 39 as far as dealing with construction permits are concerned. When compared to the best nations in the category Japan lags behind Denmark, Korea and Malaysia but is well ahead of the other nations such as China and Japan. A software firm needs to have an ideal workplace for its employees since it is a knowledge based sector hence a good IT space with good connectivity is always important for this kind of industry hence a good construction activity always has a positive effect on the business. Human resources Human resources are the most important resources of a company. The ease of doing a business with regards to human resources is decided using two major indices viz, rigidity of employment index and firing cost measure, which is based on measuring the cost of advance notice requirements, severance payments and penalties that are due while terminating a worker. Globally, Japan ranks 17 with respect to rigidity of employment index, while it ranks world number 4 for firing costs. These ranks have remained almost constant for three years. The human resource factor assumes utmost significance in the sense that for a software company it matters the most as the people of the organization undertake most of the activities. The reason for this being that software is knowledge based organization. When compared to the other countries in the continent Japan (rank-17) ranks well above India (rank-89), China (rank-111), and Korea (152), but it scores low when compared to the economies of Hong Kong and New Zealand. Registering a property The process of registering a property consists of purchase of a property and transferring the property to the seller. Based on factors like, the length of procedures for registration, the time required to register a property and the official costs required; a comparative global ranking has been prepared in an article related to staring up of a business venture in Japan is concerned. Globally, Japan ranks 51 as far as ease of registering a property in the country is concerned with indicators like number of procedures being 6, duration (days) being 14 and cost (% of property value) being 50 . These numbers again show a consistency in their values for three consecutive years. For a software firm this assumes significance as the vendors for the Canadian software firm will base their margins depending on these factors as they would require office spaces for sales as well as for maintaining a support staff responsible for the after sales service to its end customers which are very much important for any software firm. A good ranking in this aspect would boost up the business prospects of any firm. With Japan ranking well above other Asian software giants like Korea and India this factor can form an important part which would give an upper hand to Japan. Economic Analysis Trade Links and international agreements Japan is a part of all the major business bodies like IMF, ADB etc, it is also a party to various environment related protocols (Global EDGE. “Japan: Statistics”). A good transport infrastructure is very important for any software firm as it gives the employees easy access to places which is important since software professionals routinely need to visit the clients site for executing software packages as well as for providing better after sales service to the clients. An efficient transport system also saves time by reducing the travel time which saves valuable hours for a company and its employees (Kimura, F. & Maeda, M.). Entering a business in Japan Japan ranks 64 as far as ease of doing business is concerned, but the country Is in a far more better position as far as India (rank- 121), Korea (126) and China (rank- 151) are concerned. The four main indicators, which define the rankings viz, Procedures (number), Duration (days), Cost (paid in min) (% GNI per capita) Capital (% of GNI per capita) have remained almost constant for the past three years. According to an article, it requires 8 procedures, takes 23 days, and costs 7.49 % GNI per capita to start a business in Japan. Like any other country one needs to get certain kinds of permits in order to start a business in Japan namely construction permits. Credit For any firm to grow and prosper credit financing is one of the main areas of funding the business needs. This is important for the Canadian software firm as the vendors for the company would have to search for ways of financing to serve the business needs; this factor also assumes significance particularly during the present condition of recession when equity financing is considered less viable with investors losing out confidence in risky investment avenues. As far as Japan is concerned, it ranks 12 amongst all the major economies of the world, considerably well placed above India (rank-28) and China (rank-59) and on par with Korea (rank- 12). An access to easy credit would give the vendors an easy access to finance their promotional programs, sales and after sales processes. Equity Markets Equity markets form a major source of financing for firms all over the world. Equity financing also depends on the investor’s confidence in the equity markets. This again depends on the laws governing the equity markets. Japan ranks 15th in the world this sector, well above India (rank-38), Korea (rank-70) and China (rank-88). These factors show that the investors feel more protected in the Japanese markets than the other Asian giants are concerned. Thus, any of the vendors of the company can also think of equity investments to fund their project with the Canadian firm. Tax Payments Taxes are very important for a firm as a high rate of tax would affect their balance sheets and on the other hand it would be the money raised through taxes that would help create an infrastructure in the country which is of utmost importance as far as a business organization is concerned. Japan ranks 112 among the other global economies with respect to the time required to fill taxes (in hrs) being 355, total tax rate as a percentage of profits being 55.4%. Japan ranks well above China (rank-132) and India (rank-169) but lags behind Korea (rank-43). A software company needs a good infrastructure in the form of transport, communication etc. to grow and prosper. A good tax rate can on one hand ensure savings in the profit and on the other hand provide excellent infrastructure which would be beneficial in the long run interests of the firm as well as its vendors. Contract enforcement Japan ranks 17 as far as its judicial affairs are concerned, and it leads both its Asian partners India (rank- 180), China (18 and only lags behind Korea (rank-08). An efficient judicial system ensures that all the contracts are done with little time being wasted on the lengthy judicial disputes. Since the Canadian software company needs to go through a number of contracts with the Japanese vendors, Japan would have an edge over other economies and it would end up saving precious time which would have been wasted if it were to open its business in countries like India where it would result in a lot of time destruction. Closing Business Deals This factor is the jewel in the crown for Japan as it is the numero Uno leaving behind all the other economies. This is particularly important for any software company as this is the most important step in a business contract. A good ranking in this factor ensures a good advantage for Japan as far as investment by a software firm is concerned as it has to go through innumerable contracts in its business. References Global EDGE. Japan: Statistics. July 2007. world fact book. U.S. Dept. of State Country Background Notes. September 5, 2009 . Global EDGE. Japan: Economy. 2009. Michigan State University. September 5, 2009 . Japan National Tourism Organization. About Japan. 2007. Japan. September 5, 2009 . Kimura, F. & Maeda, M. Transport Infrastructure Development in Japan and Korea: Drawing Lessons for the Philippines . November 2005. September 5, 2009 . Nambu, T. History Of Road Development, Finance And Investment In Japan. No.date. September 5, 2009 . Road Bureau, Ministry of Land, Infrastructure and Transport. No date. Japan. September 5, 2009 Read More