Japanese Business Culture and Practices - Example

Global Business By: Elecydyne was established in 1990. It is a Japanese SME that has offered employment to over 100 people. The company deals with production of electronic products. Productions of these products demand the top management of the company to provide necessary support. The support will ensure there is quality production of goods. Additionally, the company will expand and enter into the international markets. In order to go global, the company has to identify future key trend effects. It has to use the STEEP model. It has to select three countries suitable for Elecdyne. After selecting the countries, the company has to lay down its investment strategies. Contents Introduction 4 Strategic analysis…………………………………………………………….................................4 Future business development 4 Country decisions 8 Internal analysis……………………………………………………………………..10 External analysis…………………………………………………………………….11 Investment strategy 16 Conclusion 19 References 20 1. Introduction Elecdyne produces a range of electronic products. The company only focuses on its Japanese markets. It is the reason why the company wants to open overseas markets. By going overseas, the company shall improve both its competitive and profit margins. According to a study by (Ritzer 2009), he discusses how it is important for a company to select the best international business environment. For this case, Elecdyne’s top management have chosen Brazil, the US, and South Korea. The markets in these countries are robust and emphasizes on innovation and technology. The report is going to discuss the development of Elecdyne in these three countries. 2. Strategy analysis 2.1 Future business environment In analyzing the current and future business environment for the company, the report used the STEEP model. It is a tool that would evaluate the external factors that affect the business. Elecdyne needs to consider a range of external forces in order to make decisions. During the past, the company’s top management had their imagination limited. Personal beliefs and own experiences influenced their decisions. It is the reason why the company faced a lot of competition in their local markets. STEEP would cover the Social, Technological, Environmental, and political factors around Elecdyne. The Japanese culture favors long working hours. They want to achieve many tasks in a very short time. They are driven by the passion to achieve more. Health experts have identified issues with long working hours. Studies indicate how long working hours could cause serious health problems (Bestor 2011, 200-300). Additionally, the company operates in a densely populated area. It is an advantage to the company because there is a large market base. According to statistics, there is high number of the old in Japan (Davies 2013, 150-250). People in Japan have good career attitudes. Elecdyne wouldnot find a hard time looking for both skilled and unskilled labor. However, there is low emphasis on safety. The workers are not assured of their safety (Alston 2005, 20-180). There are many trends in social factors in Japan. It demands the top management of Elecdyne to change their management strategies in order to adapt to these social trends. Technological Japan has experienced rapid development in the technological sector. The development is a big boost to the globalization strategies of Elecdyne. For example, the company would rely on the improvement of Japanese research and development activities. The improvement makes it easy for the top management of Elecdyne to research on the best countries to conduct businesses. Additionally, Japan has experienced growth in automation and technological incentives. The growth would favor the development of any developing company, for example Elecdyne (Brannen 1998, 10-170). The rate of change in technology is on the rise in Japan. It shows how companies are assured of their future. The rise of technology assures entrepreneurs that it would be easy to determine barriers of entry and minimum efficient production level. Furthermore, a company like Elecdyne would use the advanced technological systems in Japan to influence their outsourcing decisions. The decisions are crucial for its global expansion strategies (Suzuki 2006, 20-400). The top management of Elecdyne should take advantage of the good technological state of Japan to improve their costs, quality of products, and increase in creativity and innovation. It would boost the growth of the company (Nishiyama 2006, 50-200). Environmental There are various environmental aspects in Japan. The country often experiences ecological changes from time to time. In Japan, the climate and weather change affects the tourism, farming, and insurance industries. Other sectors do not experience the effects as much (Goldman 1994, 50-300). The Japanese government usually conducts an awareness program of the potential impacts of climate change. A growing company like Elecdyne would change the way it operates and the products they offer because of the growing awareness. The awareness program would both be advantageous and disadvantageous to any company in Japan. It would be advantageous when the company opens new markets in other areas that are deemed safe to operate. The disadvantageous part comes in place when the awareness forces the companies to destroy the existing markets in areas deemed not safe to operate (Soderberg 2012). Elecdyne should ensure they have conserved the environment. It would be a simple means to prevent changes in environmental patterns. For example, the top management should emphasize on recycling of waste products. In the end, the company would experience more benefits. Economic Elecdyne is operating in an environment that experiences high economic growth. The Japanese economy is growing significantly. It has resulted to increase in investors and international entrepreneurs from across the world. The increase in economy has seen reduce in interest rates. Elecdyne could take advantage of reduce in interest rates, to lend money from banks and boost their expansion. Additionally, there are affordable exchange rates in Japan. It makes it easy to conduct international business in Japan. Elecdyne would not find a hard time conducting international business (Nishiyama 2006, 50-200). Japan in the recent past has experienced decline in inflation rate. The standards of living in Japan have improved and the people could afford to cater for themselves. The rise in standards of living has seen an increase in purchase power. Companies have experienced increase in demand thereby increase in their levels of production. Such case would be useful to Elecdyne because they could take advantage of the increase in purchase power, to produce more electronic goods. Elecdyne should hire economic advisors who would advice its top management on the trends in the economic field. For example, the company should be aware an increase in interest rate would affect the company’s cost of capital. In a period like this, the company has to cut their lending rates in order to expand the business (Nishiyama 2006, 50-200). Political The Japanese government has little intervention in the economy. They allow for democracy in the Japanese markets. In Japan, the lawmakers are not strict when it comes to issues like tax policies, labor laws, trade restrictions, and tariffs. It makes it easy for businesses to operate in Japan. It is the reason why there is a rapid rise in trading in Japanese markets. Elecdyne should take advantage of little government intervention in the economy, to improve its business operations. Japan has a good political stability. There have been no political wrangles in the country. It makes it easy for businesses to expand in Japan (Nishiyama 2006, 50-200). The Japanese government often provides some goods and services to the markets. They do so to improve the Japanese markets and the infrastructure. A growing company like Elecdyne should take advantage of the government’s provisions. It would boost their growth and expansion. The top management has to be aware of the trends and events in the political scenes. It would help them to prepare for the future. 2.2 Country decisions The top management of Elecdyne chose to operate in South Korea, Brazil, and the US. South Korea The company chose South Korea because it is situated close to the rapidly growing Chinese market. According to market researchers, South Korean domestic market is one of the top ten in the world with high purchasing power (Kennedy 2014, 1-4). Elecdyne found out South Korean’s tax policies are favorable. The policies favor foreign investment. South Korea has excellent professionals. The country is adequately filled with both the skilled and unskilled labor. According to studies, South Koreans have keen interest in education. Additionally, South Korea has a hospitable living environment (Chung 2007, 200-400). Brazil Elecdyne found out Brazil has the best investment opportunities. They have a stable economy and reliable energy sources. The country has a large domestic market hence easy to market products (Tiku 2008, 150-300). The Brazilian markets enjoy social and economic growth. Additionally, the markets are stable which makes it easy for foreign investors to choose Brazil. The Brazilians are ahead when it comes to environmental stability. It makes it conducive to conduct business (Mazzone 1992, 15-130). Economists argue that Brazil has organized social and macroeconomic structures. Such case makes it easy for foreign investors to fit well into the Brazilian market system. Furthermore, the country has richness of natural resources. A combination of natural resources and strong domestic markets makes the Brazilian economy attractive to foreign investors. Their markets are open and multilateralism. They have the best democratic stability making it easy to operate businesses (Krivonos 2006, 1-30). The US Elecdyne found out the US markets is the largest in the world. The US has a reliable and consistent economic growth. It would favor the investors’ cash. Additionally, the complex US markets make it a place for major business opportunities. It has a huge purchasing power making it favorable for a growing company like Elecdyne. Experts argue that the US markets offer the ideal conditions for testing new technologies and products (Sauvant 2009, 20-200). The US has a superb transportation and logistics infrastructure. The country has developed airports, ports and, roads across its states. It favors the operations of businesses that are international. The US has established bodies that actively support foreign investment. The bodies look after the needs of foreign companies in the US. They offer guidelines on how to operate businesses in the US (Leinberger 2006, 150-200). The US has a large pool of skilled labor. They have the excellent human resource in the world. Their workforce is diligent and highly productive. There are no gender discriminations in the US making it easy for capable female workers to exploit their potentials. Additionally, the US has stable labor-management relations. It has seen decline in labor disputes in the US (McGuire 1994, 150-270). 2.3 Internal analysis The paper shall rely on SWOT analysis. It will highlight the strengths, the weaknesses, the opportunities and the threats of Elecdyne. The analysis would help the top management of the company to carve a sustainable niche in their markets. Additionally, the managers would use this analysis to develop their careers and they will take advantage of their talents and opportunities. Strengths Weaknesses Vertical integration Knowledge of Japanese markets Low costs of production Diverse workforce Poor brand perception in local markets Low differentiation Lack of global business strategies Lack of funds Opportunities Threats Electronic market growth Growing South Korea’s electronic markets Obtaining patents through acquisitions Decline in electronic profit margins Saturated electronic markets in developed countries Rapid technological change Intense local and global competition 2.4 External analysis In external analysis, the paper used PEST. It is suitable for Elecdyne because it is a macro-economic company. PEST would discuss the Political, the Economical, the Social, and the Technological aspects of Elecdyne. They are the external environments of the company (Brooks 2014, 1-2). The table below will indicate how the economy is an important external factor to Elecdyne. The factors in the table relates to Japan. The researcher will therefore give a zero score to Japan. The score will range from (-10) which is worse to (+10) which is the best. The totals will be essential in formulating the decisions for the company. Japan South Korea The United States Brazil Political Government stability[1] (2*) 1 0 1 (0) = 0 1 (0)= 0 1 (0)= 0 Bureaucracy[1] (3*) 1 0 1 (0) = 0 1 (0) = 0 3 (0)= 0 Tariffs[1] (2*) 1 0 1 (0) = 0 1 (0) = 0 1 (0)= 0 Corruption levels[1] (6*) 2 0 1 (4)= 24 1 (2) = 12 3 (-2) = -12 Employment law[1] (6*) 1 0 1 (0)= 0 1 (0) = 0 4 (-5) = -30 Anti-Trust laws [1] (4*) 1 0 1 (0)= 0 1 (0) = 0 3 (-4)=-16 Total tax rate, % of commercial profits[2](6*) 49.7 0 64.7 (-6)= -36 27.9 (6)= 36 50.7 (-4)=-24 Time required to start a business[2] (6*) 22days 0 6.5days (6)=36 5.5days (8)=48 15days (-6)=-36 Total Average 0 0 24 3 96 12 -118 -14.75 Economic Japan South Korea The united States Brazil Interest Rate%[6] (4*) 2.3 0 10.9 (-6) = -24 4.4 (-4) = -16 0.6 (6)= 24 Unemployment rates% [9](7*) 4 0 6.50 (6)= 42 2.9 (-4)=-28 5.5 (4)= 28 Inflation Rate%[2] (5*) -0.9 0 2 (-4)= -20 3.7 (-5) =-25 5.1 (-7)= -35 GDP %[2] (9*) 1.9 0 1.1 (-3)= -27) 2.3 (5)=45 3.4 (7)=63 GDP Per Capita us$ in thousands[2] (6*) $46.7 0 $39.8 (-6)= -36 $10.3 (-9)= -54 $14 (-2)= -12 Taxes and other revenues %[6] (4*) 33.9 0 23.6 (5)= 20 39.9 (-3)=-12 24.8 (6)=24 Average wages[3] 79.67 0 6.455 (8)=24 1.602 (9)= 27 7.164 (8)=24 Credit availability in USD $ [7] (5*) 1.85 0 1.52 (4)=20 1.81 (2)=10 0.96 (6)=30 Total Average 0 0 -1 -0.125 -53 -6.625 143 17.875 Social Japan South Korea The United States Brazil Individualism [4] (3*) 46 0 71 (4)= 12 18 (-4)= -12 39 (-6)= -18 Uncertainty Avoidance[4] (3*) 92 0 86 (3)= 9 85 (3)= 9 95 (4)= 12 Masculinity[4] (4*) 95 0 43 (-4)= -16 39 (-5)= -20 36 (-8)= -32 Power distance[4] (5*) 54 0 69 (5)= 25 60 (3)= 15 93 (7)= 35 Population growth rate% [2](6*) -0.077 0 0.481 (4)= 24 1.102 (8)= 48 -0.412 (-7)= -42 Total Average 0 0 54 10.8 40 8 -45 -9 It is evident the US is the best destination for Elecdyne. In the political section in the US, Elecdyne will experience low bureaucracy, government stability, low business tariffs, low corruption levels, and good employment laws. In the economic section in the US, there is low interest rates, low unemployment rates, high GDP, and good wages. In the social section, the US people are individualistic. They believe in personal success. They are the best risk takers. Additionally, there population is growing hence expansion in markets. 3. Investment strategy The paper shall focus on three types of investments. Joint ventures Greenfield sites Mergers /Acquisitions Advantages It is easy to access new markets and distribution networks It will increase the business’ capacity It provides a framework to share risks with a partner It is easy to access big resources, for example specialized staff Offers the management with the appreciation of creating but not buying a goodwill The premises could be flexible to accommodate accessibility and operational efficiencies The premises could be up to date with latest designs, appealing to the customers’ eyes It will equip the management with skills to acquire strong strategic positions Simple and easy to start Always reduces the amount of competition Exchange of business ideas Enables to discuss weak areas of a company Disadvantages Objectives of joint ventures are not clear Partners may have different objective Imbalance in levels of expertise Poor integration due to different management styles The build up phase and growth potential is unknown Lengthy delays on openings Impact of competitors is unpredictable Disposable in come is lower Creates employee dissatisfaction Conflicting business strategies Mergers would be the perfect investment option for Elecdyne. Elecdyne is a growing company with financial concerns. Mergers would help mitigate this problem. It is a cheaper option. It will help reduce the competition in the market. The company will expand gradually with decrease in the number of competitors (Hitt 2001, 100). 4. Conclusion Elecdyne could find itself enjoying success in the global field if it lays down good strategies. STEEP analysis would identify the factors in the markets that would help Elecdyne expand. The SWOT analysis would be important in identifying its strengths and opportunities. Additionally, it will help to identify the threats and weakness within the company. According to the analysis, the US is the best market for Elecdyne to open its business. Additionally, mergers are the best investment option for the company. References Alston, J. P., 2005. Japanese Business Culture and Practices: A Guide to Twenty-First Century Japanese Business. Chicago: iUniverse. Barrell, R., 1999. Innovation, Investment and the Diffusion of Technology in Europe: German Direct Investment and Economic Growth in Postwar Europe. New York: Cambridge University Press. Baum, A. E., 2012. Global Property Investment: Strategies, Structures, Decisions. Chicago: John Wiley & Sons. Bestor, V., 2011. Routledge Handbook of Japanese Culture and Society. Chicago: Taylor & Francis. Bitzenis, A., 2012. Mergers and Acquisitions as the Pillar of Foreign Direct Investment. Athens: Palgrave Macmillan. Brannen, C., 1998. Doing Business with Japanese Men: A Womans Handbook. Chicago: Stone Bridge Press. Brigham, E. F., 2009. Fundamentals of Financial Management. Chicago: Cengage Learning. Brooks, C., 2014. PEST Analysis: Definition, Examples & Templates. Business daily, p. 2. Chen, J., 2008. Mergers and Acquisitions in China: Impacts of WTO Accession. Beijing: Edward Elgar Publishing. Chung, Y.-I., 2007. South Korea in the Fast Lane : Economic Development and Capital Formation: Economic Development and Capital Formation. Michigan: Oxford University Press. Davies, R., 2013. The Japanese Mind. Chicago: Tuttle Publishing. DIANE, 1994. Report on U. S. Trade and Investment Barriers (1993): Problems of Doing Business with the U. S.. Chicago: DIANE Publishing Company. Diane, 1995. Foreign Direct Investment in the U. S.: An Update, Review and Analysis of Current Developments. Los Angeles: DIANE Publishing Company. Donahue, R. T., 1998. Japanese Culture and Communication: Critical Cultural Analysis. Washington: University Press of America. Goldman, A., 1994. Doing Business with the Japanese: A Guide to Successful Communication, Management, and Diplomacy. New York: SUNY Press. Gouldson, A., 2002. Integrating Environment and Economy: Strategies for Local and Regional Government. Chicago: Routledge. Gros, D., 2006. Foreign Investment in the US: Disappearing in a black hole?. Chicago: CEPS. Guest, D., 1993. Industrial relations in Greenfield sites. London: Centre for Economic Performance, London School of Economics and Political Science. Havighurst, R. J., 2000. Society and Education in Brazil. Pittersburg: University of Pittsburgh Pre. Heo, U., 2010. South Korea since 1980. Chicago: Cambridge University Press. Hitt, M. A., 2001. Mergers & Acquisitions : A Guide to Creating Value for Stakeholders: A Guide to Creating Value for Stakeholders. New York: Oxford University Press. Kennedy, M., 2014. Invest in South Korea with ETFs. Exchange traded funds, p. 4. Krivonos, E., 2006. Sugar Prices, Labor Income, and Poverty in Brazil. Chicago: World Bank Publications. Lebra, T., 2000. Japanese Culture and Behavior: Selected Readings. Hawaii: University of Hawaii. Lee, K. B., 1997. Korea and East Asia: The Story of a Phoenix. Chicago: Greenwood Publishing Group. Lehmann, A., 1999. Country Risks and the Investment Activity of U.S. Multinationals in Developing Countries. Chicago: International Monetary Fund. Leinberger, C. B., 2006. The Option of Urbanism: Investing in a New American Dream. Washington: Island Press. Li, S., 2007. The Legal Environment and Risks for Foreign Investment in China. New York: Springer. Marinova, S. T., 2003. Foreign Direct Investment in Central and Eastern Europe. Moscow: Ashgate. Martin, H., 2007. Marxist Perspectives on South Korea in the Global Economy. Chicago: Ashgate Publishing. Mazzone, J., 1992. A Guide for Foreign Investors to the Brazilian Stock Market: A Special Report from Brazil Service in Collaboration with R. Sirotsky Consultoria E Planejamento Financeiro. Chicago: International Reports. McGuire, S. O., 1994. Foreign Direct Investment in the U. S.: An Update: Review and Analysis of Current Developments. Chicago: DIANE Publishing. Nishiyama, K., 2006. Doing Business With Japan: Successful Strategies for Intercultural Communication. Hawaii: University of Hawaii Press. Oh, K., 2002. Korea Briefing 2000-2001: First Steps Toward Reconciliation and Reunification. Chicago: M.E. Sharpe. Pearson, M. M., 1992. Joint Ventures in the Peoples Republic of China: The Control of Foreign Direct Investment under Socialism. Chicago: Princeton University Press. Rao, M., 2009. Joint Ventures In International Business, 2E. Chicago: Vikas Publishing House Pvt Ltd. Ritzer, G., 2009. Globalization: A Basic Text, New York: John Wiley & Sons. Rose, A. K., 2000. International Finance and Financial Crises: Essays in Honor of Robert P. Flood Jr. (EPub). Chicago: International Monetary Fund. Ryan, M., 2013. Investing In US Property: The Foreign Investors Unbiased Guide to Investing In US Property. New York: BalboaPress. Sauvant, K. P., 2009. Investing in the United States: Is the US Ready for FDI from China?. Chicago: Edward Elgar Publishing. Savada, A. M., 1997. South Korea: A Country Study. New York: DIANE Publishing. Schätzl, L., 1997. Regional Development and Decentralization Policy in South Korea. Chicago: Institute of Southeast Asian. Shapiro, J. E., 1991. Direct investment and joint ventures in China: a handbook for corporate negotiators. Chicago: Quorum Books. Singh, N., 2003. Joint Ventures International Investment And Technology Transfer. New York: Oxford University Press. Smith, R. J., 2004. Japanese Culture: Its Development and Characteristics. Chicago: Psychology Press. Soderberg, M., 2012. Business of Japanese Foreign Aid: Five Cases from Asia. Chicago: Routledge. Sugimoto, Y., 2009. The Cambridge Companion to Modern Japanese Culture. London: Cambridge University Press. Suzuki, R., 2006. Stone Bridge Press. New York: Tuttle Publishing. Tiku, P., 2008. Six Sizzling Markets: How to Profit from Investing in Brazil, Russia, India, China, South Korea, and Mexico. Chicago: John Wiley & Sons. Vasavada, N. P., 2010. Taxation of U.S. Investment Partnerships and Hedge Funds: Accounting Policies, Tax Allocations, and Performance Presentation. Chicago: John Wiley & Sons. Wilkins, M., 2000. The History of Foreign Investment in the United States to 1914. Havard: Harvard University Press. Wolf, R. C., 2011. The Complete Guide to International Joint Ventures with Sample Clauses and Contracts. Washington: Kluwer Law International. Woodward, D. P., 1998. Foreign Ownership and the Consequences of Direct Investment in the United States: Beyond Us and Them. New York: Greenwood Publishing Group. Zajicek, M., 2004. Mergers & Acquisitions - a Real Option valuation approach of investment decision under uncertainty. New York: Diplomarbeiten Agentur. Read More