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International business policy - multinational firm Chinese/K vs US firms in insurance industry and vice versa - Essay Example

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Date International Business Policy - Multinational Firm Chinese/K Vs Us Firms In Insurance Industry And Vice Versa Question 1 In order to enter the United States Market, it is essential for a firm like China Life Insurance to observe several concepts…
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Download file to see previous pages This will assist management in identifying the perfect sites which the business can be established and to succeed. Evidently, the strategy of establishing similar organizations and companies within one area should be avoided. Consequently, another factor, which should be, considered is the daily output of the insurance company in China and contrasts the output of firms in the United States. For example, since China Life Insurance became a public unlimited company, its market capitalization is valued at about USD$ 850 billion with over 5 million subscribers. On the other hand, an insurance company in the United States is valued at about USD$ 999 billion with over 6 million subscribers. As such, it is apparently clear that, under an efficient and effective management, the CLF can essentially enter the US market and perform incredibly well as noted by Hellmann (18). Advantages over U.S firms Such a firm as CLF is not controlled or rather managed by several managers as compared to the United States insurance firm. The US firm is virtually managed by two masters. Significantly, the levels of management in the United States firm are due to the large capital costs, protection and bypass protectionism. The large capital costs and the daily output costs are normally too vast for one single organization to handle individually, therefore, the division of the top managerial posts while, in China, the output costs are normally not too large, and, therefore, manageable by one management team. Considering protection, there are some governments that do close their territories to foreign but similar companies. As such, one finds that the United States does not allow some foreign nations to invest in their country: therefore, this denies the United States insurance firms the ability to expand their business prospects. For example, the aspect of diversity and earning from foreign investments are denied in the insurance company in the United States as opposed to an insurance company like CLF which does enjoy unlimited foreign earnings, as well as the general growth of a diversified culture. Consequently, there are several benefits of a diversified culture. For example, the organization of CLF does learn new concepts, which apparently, are applied in its daily practices. Another advantage is the increase of subscribers which is relative to the daily costs generated. Considering the bypass protectionism, this does occur when the government of the U.S does limited its products or rather services to U.S citizens only as opposed to the insurance company which offers its services to all nationals provided one does the right documents (Mattes 21). In addition to gaining more customers, another advantage is the attracting of potential investors in the country and, therefore, earning the country foreign revenue. Disadvantages There are several challenges faced by the insurance companies in China in comparison to the United States insurance company. For example, CLF is normally taxed a higher rate as opposed to the United States despite the fact there are more subscribers in the American insurance company. Apparently, the tax policy does charge more on countries with multiple jurisdictions. As such, the companies must essentially pay a small percentage of all partner members. Furthermore, another disadvantage experienced by CLF is the low-capital costs, as opposed to the high profits enjoyed by the United States insurance company. Apparently, despite the United States limiting its services to its citizens only, they ...Download file to see next pagesRead More
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