Expanding Walton into Singapore or Applying Global Mindset - Case Study Example

EXPANDING WALTON INTO SINGAPORE: APPLYING GLOBAL MINDSET By Name Course Instructor Institution City/State Date Table of Contents EXPANDING WALTON INTO SINGAPORE: APPLYING GLOBAL MINDSET 1 Table of Contents 2 Executive Summary 3 Part A: The Case Study 4 1.0 Introduction 4 1.1 The Company Profile 4 1.2.0 Singapore’s Economic, Political, Social, and Cultural Dimensions 5 1.2.1 Economic Dimension 5 1.2.2 Political Dimension 6 1.2.3 Social Dimensions 6 1.2.4 Cultural Dimension 7 2.0 Integration and synthesis 7 2.1.0 Venturing into Singapore 7 2.1.1 Intellectual capital 8 2.1.2 Psychological Capital 9 2.1.3 Social Capital 10 2.2 Resources for successful Entry and Barriers 10 3.0 Opportunities and Challenges for Walton in Singapore 11 Conclusion 14 Part B - Reflection 15 References 17 Expanding Walton into Singapore: Applying Global Mindset Executive Summary Singapore is widely recognised as the best country to do business since the cost of starting a business is exceedingly low as compared to other Asian countries. Besides that, other factors such as taxes, business licensing, investor protection as well as credit legal rights, make Singapore a favourable business environment. Besides that, the country has high transparency levels as well as reliability in regulatory, economic and business affairs. Furthermore, the country’s political structure is very stable and the existence of strong and well-governed judicial and domestic institutions makes Singapore an attractive business environment for multinational companies like Walton. The living standards in Singapore are exceedingly high, and this offers Singaporeans and expatriates to have an enjoyable life. Additionally, political stability, as well as economic environment, has attracted multinational companies to expand into Singapore. The tax rate system is very low and the country’s strategic location offers companies an additional advantage over those operating in other neighbouring countries. There are more opportunities in Singapore than challenges for the companies. Still, the operating costs could be somewhat higher for new entrants and to attract the talented employees is exceedingly challenging. Therefore, Walton will have to study as well as accept the challenges of Singapore business environments so as to be successful. More importantly, Walton should understand how to organise business negotiations and meeting with the Singaporeans since the existing culture has an effect on the business relations. This report seeks to apply the global mindset with the objective of expanding Walton into Singapore. Part A: The Case Study 1.0 Introduction 1.1 The Company Profile Basically, Walton is brand headquartered in Dhaka, Bangladesh and run by Walton Group. The company’s main activities involve producing, exporting and selling home appliances, consumer electronics, automobiles as well as mobile phones. Walton always place emphasis on the supreme priority with the objective of realising customer satisfaction. The company has a large network for sales and after sales services both locally and overseas. Hitherto, the company’s products have gained a substantial market share at the local level and are progressively gaining an international market share for its world class quality products that are exported globally. Walton is widely recognised for its quality products, innovative technology as well as ease of use. The company has numerous manufacturing plants in Bangladesh and also has numerous subsidiary companies, which are normally utilised for distributing the company’s products in the global market. Walton’s competitive advantage is attributed to its state-of-the-art manufacturing facilities where products are innovatively designed according to the aspirations and needs of customers. The company global presence is not only associated with franchising and exporting, but also through contract manufacturing, sourcing of accessories and raw materials , in addition to R&D partnering. Walton has achieved competitive advantage by focusing its strategy on establishing an attractive brand both in the domestic and global markets. Furthermore, the company has aggressive expansion strategies that have enabled it to expand successfully to the international market. 1.2.0 Singapore’s Economic, Political, Social, and Cultural Dimensions Since the advent of 21st century, Singapore has exhibited a remarkable economic growth.  Presently, the country is considered to be a high-income economy. Evidently, the economic growth is steered by a number of factors such as increased foreign investment and the growing external and local demand. 1.2.1 Economic Dimension With the view to the economic dimension, Singapore economy according to Polevikova (2013, p.17) is an exciting free-market economy. The country’s economy is growing exceedingly fast to an extent that its per-capita income is currently the highest in the ASEAN. More importantly, the Singapore business environment is corruption-free and has become the most competitive countries in the world. The country’s economic growth has been steered and strengthened by the motivated and educated workers. The economy’s diversification is attributed to the huge investments made by the government, which consequently, has made industries such as tourism and pharmaceutical very successful. Singapore economic success is also attributed to its strategic geographic location. Furthermore, the foreign worker provides cheap labour, which has enabled Singapore to cut costs and increase productivity. Still, the country’s economic performance are facing some challenges such as shortage of labour as well as declining productivity. 1.2.2 Political Dimension In comparison with other Asian countries, Singapore political risk is exceedingly low. Democratic governance in the country has resulted in the lowest political risk and increased political stability. Currently, the stability in Singapore has resulted in peace as well as an improved living standard. Additionally, political stability in Singapore has led to improved business opportunities. Still, opposition parties’ freedom of free speech has been limited. Furthermore, the opposition parties are required by the existing laws to be careful with regard to political comments so as to reduce the likelihood of the imprisonment and defamation suits. The potential for speaking freely has been reduced by the fear of legal suits. 1.2.3 Social Dimensions In terms of social dimension, the social characteristics of Singapore appear to be similar to those of the Eastern countries. The Singaporeans hold closely the traditional family values, although the younger generation appears to lean towards the western values and culture. Imperatively, Singaporeans are hard-working individuals seeking to fulfil their material needs. Therefore, Walton should anticipate higher purchasing power from the end-users. The level of literacy in Singapore is exceedingly high since primary schooling is compulsory. Their ability of Singaporeans to speak both Chinese and English languages has made the country attractive for foreign investment and international trade. In most areas, the legal rights of both women and men are the same, which includes education, business, employment and civil liberties. 1.2.4 Cultural Dimension There is centralisation of power in Singapore; therefore, managers normally depend on the on rules while employees are always told what to do. Furthermore, the flow of information is selective while communication is indirect while open conflicts have to be avoided. In Singaporean culture, politeness comes before a truthful feedback. Additionally, being humble and modest is exceedingly important and conflicts are dodged both in work and private life. While discussing an issue the involved parties are expected to be cautious and virtue is always emphasised. 2.0 Integration and synthesis 2.1.0 Venturing into Singapore The global mindset according to Cseh et al. (2013, p.490) can be defined as a concept, which involves holistic competencies, and normally is related to the mindset required in the context of the global business in order to make business decisions that are strategic. The Global mindset is normally related to organisations as well as individuals. Therefore, the global mindset is a cognitive structure that is highly complex typified by the articulation of and openness to different strategic and cultural realities at the local and global levels. The figure below shows a Global Leadership Mindset paradigm adopted in Cseh et al. (2013, p.491) study. Fig One; Global Leadership Mindset Model (Cseh et al., 2013, p.491) A global mindset encompasses psychological attributes, cognitive ability, and knowledge, which promotes leadership in different cultural environments. Therefore, the major components of the global mindset are intellectual capital, social capital and psychological capital. A person who is culturally intelligent possesses a cognitive ability to understand the new cultural environment and may also acquire behaviours required in such an environment (Story & Barbuto, 2011, p.379). 2.1.1 Intellectual capital Knowledge and innovation have become new measures of competitiveness in Singapore economic growth with the institution of higher education at the core. Still, measuring intellectual capital as contributing factor to Singapore economic success is still at the infancy stage. Still, the intellectual capital development pattern points out that Singapore is currently moving towards the type of intangible assets that is most advanced (Sharma, 2010). Basically, measuring the intellectual capital is very important in business management because it can more accurately and thoroughly measure the performance and value of the company. Singapore is considered to be a knowledge-based society; therefore, knowledge forms a greater part of the company’s wealth and a product’s value. As opined by Chen et al. (2004, p.196), the intellectual capital approach is very important for companies seeking to be informed about the performance and value. The intellectual capital focussed on the future and value creation, and has three basics components: human capital (employees’ creativity and skills), relational capital (the company’s relationship with external stakeholders) and structural capital (non-human assets such as patents and copyrights). 2.1.2 Psychological Capital As stated by Singh (2009, p.234), psychological capital is the positive ability that involves of four attributes; self-efficacy, resilience, hope as well as optimism. Most Singaporeans have a strong sense of efficacy, which consequently has improved their personal well-being and accomplishment in various ways. Individuals with a high sense of individual competence are inclined to take challenging tasks rather than avoiding them. Singaporeans normally wait to be told what to do: therefore, they do not have a superior deep-down interest and profound obsessions in activities that seek to sustain their efforts despite several failures. Therefore, it is difficult to determine how fast they can recover their self- efficacy following setbacks or failures. The aforementioned four human capacities that form a person’s psychological capital are crucial in building strength as well as enriching people’s weakening spirits. Chen and Lim (2012, p.813) posit that workers with a high sense of efficacy are confident they will perform well in their jobs since they have the right and skills. 2.1.3 Social Capital In Singapore, individuals without social capital are normally isolated, and lack the opportunities within the society and could suffer various hardships, which includes poor health and financial troubles (Chua et al., 2016, p.138). In spite of its modernity, Singapore is considered be a strong a patriarchal society and the patriarchy is clearly seen in the work-family interface. Whereby there is a prevalence of gender-segregated roles as women continue playing a more active role at their home even after actively engaging in the paid work. Paradoxically, even though Singapore women have outperformed their men counterparts in terms of educational attainment, they are more likely to become housewives. In Singapore, much emphasis is placed on the formal credentials at all stages of worker’s and student’s life (Chua, 2010, p.8). Furthermore, ethnic groups according to Chua et al. (2016, p.148) have jobs’ occupational contacts, which differ by social class and prestige. 2.2 Resources for successful Entry and Barriers In order for Walton to successfully enter the Singapore market, the company should utilise the foreign direct Investment as the mode of entry. The investment environment in Singapore is very open, and the country’s agency tasked with promoting investment place emphasis in securing major investments in the high-value service and manufacturing areas. The direct investment would be beneficial to the company because Singapore has no restriction on the repatriation or transfer of capital or profits to overseas countries. Through foreign direct investment (FDI) the company will directly own the facilities in Singapore and would also be able to transfer of resources, which includes personnel, technology, and capital. The FDI can be done through the establishment of a new enterprise or acquiring an already existing company. Undoubtedly, direct ownership would offer Walton a high level of control in its Singaporean operations and would also be able to learn and understand Singapore competitive environment and consumers. To successfully enter the Singapore market, Walton must dedicate a high level of commitment and resources. Walton will face some barriers while trying to enter the Singapore market: for instance, the domestic market is small and the competition is very intense. In comparison to other Asian countries, the domestic market of Singapore is relatively small; therefore, finding unexplored niches is very difficult. Furthermore, the cost of everyday operations could be high given that it is very costly to attract and retain skilled labour because the Singapore labour market is very tight. Another barrier is attributed to the law that requires all foreign companies to at least have one Singaporean director when starting a business in the country. Therefore, finding a competent person to fill the position of director could be very challenging. 3.0 Opportunities and Challenges for Walton in Singapore In Singapore, the government policy encourages foreign and private enterprise investment, in addition to a highly-skilled workforce, coherent labour relations, well-built infrastructure, and political stability offer Walton a great opportunity to explore the Singapore market. Furthermore, Walton would benefit from Singapore’s transparent and efficient bureaucracy as well as far-reaching preferential trade connections. Businesses’ foreign ownership has no restriction, and there is no requirement for companies to report or register the foreign capital investment or technology agreements. Another opportunity is attributed to the accessible incentives (tax incentives and financial incentives), which would be instrumental to Walton’s success in Singapore. Some of the financial incentives offered by the Singapore government are in form of subsidies and grants while tax incentives are mostly industry-driven and may include reduced rates of withholding and income tax, tax holidays, as well as investment allowance. The Singapore robust economic and physical Infrastructure offers Walton an opportunity to capitalise on the excellent air and shipping links so as to distribute its products. Walton can use Singapore as a hub to run its global and regional business operations owing to the country’s superb telecommunications infrastructure as well as quick access to the banking facilities. Singapore offers Walton an opportunity to benefit from its network of approximately 18 bilateral as well as regional free trade agreements, 70 all-inclusive double taxation agreements, 39 investment guarantee agreements and nearly 24 trading partners (PWC, 2013, p.11). Another opportunity is the skilled workforce, which has been the pillar of the country’s success. Singapore has a literacy rate of over 90 per cent; therefore, Walton will have a vast pool of resources to use. In addition, the cooperative as well as the cordial relationship that exists between business, Singapore government, and trade unions makes the country’s business environment more attractive. Walton will also benefit from Singapore’s intellectual property laws, which have been enforced with the objective of protecting businesses’ innovations and ideas. Given that Singapore’s port is free, Walton would be able to reduce operation costs because there is no export or import duties on equipment and raw materials (PWC, 2013, p.28). Furthermore, Singapore economy is widely is stable and since the country’s financial system is well-regulated; Walton would be able to tap easily into Singapore liquid and deep capital markets as another way of raising funds. In spite of the abovementioned opportunities, Walton would face a number of challenges while doing business in Singapore: for instance, Singapore has a small domestic market, which consequently increases the cost of doing business. Besides that, anti-foreigner sentiments have started increasing because of the widening income inequality and this has led to tighter restrictions on foreign workers, which includes quotas. Furthermore, Singapore is an open economy, which can be affected by global economic downturns. The main pushback against expanding into Singapore is the higher costs, but most resources are concentrated within its borders. The existing restrictions on foreign workers have led to the talent shortage. Given that Singapore is a small market, the talent pool is exceedingly small. Therefore, the Singapore government should introduce the right policies that would retain local talent and attract foreign talent. Although most companies are offering benefits and perks to their Singaporean employees, there are still some hiring challenges; for instance, companies with tight budget expectation find it challenging to meet the expectations of the job seekers. These challenges can be solved by coming up with measures to reduce costs and improve the ability to attract and retain talented employees. Walton would have to develop a cost-control system that could bring immediate savings and improve its competitive advantage. This can be achieved by eliminating unnecessary costs and inefficiency as well as redesigning processes so as get rid of time and effort duplication. More importantly, Walton should utilise automation and technology so as to eliminate challenges attributed to manual work. In order to attract talent in Singapore, Walton would have to digitalise their hiring processes because the majority of generation Z and Young millennial workers are digital natives. Therefore, Walton will have to follow the future employees into the digital world by increasing its digital investments so as to include the recruitment processes. Furthermore, companies that think small are more inclined to attract talented employees as compared to those that think big. To make sure that the company does not fall short of employees’ expectations, Walton should make its work culture more creative in order to promote transparency and offer the employees and opportunity to grow quickly. Conclusion In conclusion, this report has applied the global mindset in order to expand Walton into Singapore. As mentioned in the report, stable government and political stability make Singapore a preferred destination for many foreign investments. The government agencies work with the business sector closely with the objective of promoting economic growth. Furthermore, the country has a robust legal system, which makes the business environment corruption-free. The country has strong intellectual property laws, which have successfully protected foreign investors’ innovations and ideas. Singapore infrastructures are excellent and would enable Walton to manage its Singaporean operations effectively. Walton would also benefit from Singapore’s extensive trade links, competitive tax system, harmonious industrial relations and skilled workforce. This report has critically discussed the economic, political, social, and cultural dimensions in Singapore and has identified the possible entry mode in Singapore as well as the possible barriers. As mentioned in the report, FDI is the ideal mode of entry for Walton and possible barriers include talent shortage, small domestic market and high business operation costs. Besides that, the report has discussed the global mindset framework aspects with focus on the intellectual capital, social capital and psychological capital. The global mindset as mentioned in the report encompasses cognitive ability, psychological attributes as well as the knowledge that define the success or failure of businesses in different cultural environments. The report has highlighted some of the opportunities for Walton in Singapore, such as highly-skilled employees, improved infrastructures and extensive trade connections. Some of the challenges that Walton would possibly face in Singapore are related to talent shortage and the costs of running the business. Therefore, it can be recommended that Walton should start investing in the ‘safe bets’ by ensuring that its infrastructure can successfully support the expansion strategy. The ‘safe bet’ is the ongoing efforts to develop the infrastructure, which may be achieved by eliminating regional or departmental silos and using performance drivers and leading indicators that are aligned with the Singapore expansion strategy. Furthermore, the company should start a process of identifying the strategies that would likely succeed such as growing the adjacent opportunities and core business. Furthermore, Walton should ensure that it successfully makes the transition from investment to profitability by concentrating on the process. Given that the domestic market of Singapore is very small, Walton should choose the business function that it would take to Singapore so as to derive economies of scale. Part B - Reflection We worked together by first ensuring that the topic was well understood by all the group members and then allowing every member to express their own ideas without interruption. Furthermore, every member reflected on the interactions and activities of the group through open communication. The group work was successful because all group members were allowed to share their feelings, ideas, and thoughts. More importantly, the group members were open to diverse viewpoints and new ideas and were keen listeners. The group members exhibited support for this report and exemplified a sense of team loyalty. The group members communicated their opinions in a manner that respected others group members. Ever member of the played a crucial role in writing the report, but first the report was divided into numerous parts. The first member was tasked to write the executive summary and the introduction part of the report. The second member was tasked to research and write about the global mindset framework aspects that would be utilised to assess starting a business in Singapore. In addition, the second member was tasked to describe the resources that would support Walton entry into Singapore and also outlining the possible market entry barriers. The last member was tasked to write the opportunities and challenges that Walton would face in Singapore and also provide alternative solutions. Every member was tasked to write a conclusion of the part, which was eventually integrated into one conclusion by the first member. Without a doubt, the report writing has enabled me to learn how to develop a beneficial group climate and I have also learned how to become productive in a group setting. The report writing enabled me to understand the significance of individual accountability and responsibility, constructive feedback, and problem solving. Thanks to the report, I can now plan and manage my time and I am able to rotate group roles so as to maximise my learning experience. In the future group assessments, I would try different roles so as to diversify my efforts and bring different capabilities. In the future, I would promote group cohesion through improved communication techniques and successful identification of roles. I would try to develop effective teamwork through shared practice and experiences. I will also try to improve some aspects of team performance through the team- and relationship-building activities that would promote mutual understanding and boost morale. References Chen, D.J.Q. & Lim, V.K.G., 2012. Strength in adversity: The influence of psychological capital on job search. Journal of Organizational Behavior, vol. 33, pp.811–39. Chen, J., Zhu, Z. & Xie, H.Y., 2004. Measuring intellectual capital: a new model and empirical study. Journal of Intellectual Capital, vol. 5, no. 1, pp.195-212. Chua, V.K.H., 2010. Social Capital And Inequality In Singapore. Thesis. Toronto: University of Toronto. Chua, V., Mathews, M. & Loh, Y.C., 2016. Social capital in Singapore: Gender differences, ethnic hierarchies,and their intersection. Social Networks, vol. 47, pp.138–50. Cseh, M., Davis, E.B. & Khilji, S.E., 2013. Developing a global mindset: learning of global leaders. European Journal of Training and Development, vol. 37, no. 5, pp.489 - 499. Polevikova, M., 2013. Business Environment in Singapore. Bachelor’s Thesis. Lappeenranta: Saimaa University of Applied Sciences. PWC, 2013. Doing business in Singapore. Research Paper. Singapore : HSBC Bank Hongkong and Shanghai Banking Corporation Limited. Sharma, Y., 2010. GLOBAL: What is intellectual capital? Does it matter? [Online] Available at: http://www.universityworldnews.com/article.php?story=20101216202444580 [Accessed 1 August 2016]. Singh, S., 2009. Psychological Capital as Predictor of Psychological Well Being. Journal of the Indian Academy of Applied Psychology, vol. 35, no. 2, pp.233-38. Story, J.S.P. & Barbuto, J.E., 2011. Global Mindset: A Construct Clarification and Framework. Journal of Leadership & Organizational Studies, vol. 18, no. 3, pp.377– 384. Read More