Conducting International Businesses - Research Paper Example

? International Business Table of Contents Introduction 3 Economic and political climate for foreign business 3 Methods for marketing and distribution 4 Managerial and labor climate 5 Reference 7 Introduction Globalization has been effective in providing stimulus for multinational organizations to conduct international businesses. The area of the study of international business includes the economic policies, political systems, labor standards, environmental standards, corporate cultures, foreign exchange markets etc. This project tries to explore the above factors in the two countries, Singapore and Hong Kong for conducting international businesses. The analysis has been done in terms of the nations’ political and economic climate, their methods of marketing and distribution and also the labor climate in the two countries. Economic and political climate for foreign business Singapore has an extremely successful and developed free market economy. It also offers a corruption free and open environment where prices remain stable and the per capita GDP growth also remain high in comparison to other developed nations. The economy’s high dependence on exports of products like electronic and information technology products, pharmaceutical and growth in financial services make it a popular place for conducting business. The nation has demonstrated a GDP growth of 7.1% between the years 2004 and 2007 (CIA, “Economy - overview:”). On the other hand Hong Kong also demonstrates a free market economy which depends highly on international finance and trade. The nation’s open economy was however greatly affected by the global economic recession which makes it a less popular place, in comparison to Singapore for doing business. The residents of Hong Kong can establish RMB denominated savings accounts, the RMB denominated corporate, and the Chinese government bonds have also been issued in the nation. Moreover, the RMB trade settlement has also been allowed in Hong Kong. The nation has a GDP growth rate of 3.8% between 1989 and 2010, however the growth gradually slowed down in the year 2009 (CIA-a, “Economy - overview:”). It is apparent that the higher GDP growth of Singapore in comparison to Hong Kong coupled with a free market economy makes it more popular for conducting business operations. Also the nation’s growth in the financial sector and high dependence on trade and finance compliments the same. Methods for marketing and distribution With improvement of the Singapore economy there has been an increasing amount of affluent consumers who are able and willing to spend and consume more. In addition to this a number of new shopping malls like the VivoCity, Ang Mo Kio Hub and Central have emerged which have further added stimulus to the retail sector since 2007. The existing shopping malls like Centrepoint, White Sands and Tampines Mall have also been revamped, with the new extensions established to accommodate more number of retailers for remaining competitive. The inflows of new retailers in the selling spaces have further attracted more consumers who have been increasingly visiting them. This had boosted their growth further in 2007 (Laposte, “Singapore”). There are two different categories of consumers in the country Hong Kong. There are the local consumers, who account for 6.5 million numbers, while on the other hand the tourists, who are avid lovers of the luxury items. The tourism sector generates greater than ten billion USD of income every year. It must be noted that tourists who come for shopping in Hong Kong are primarily Chinese from Mainland. The distribution network comprises of many medium and small family-type enterprises which try to remain in groups. The larger stores like the Lane Crawford, Sogo or display a very upscale image while the supermarkets and the neighboring stores like Wing on, Jusco and Sincere remain more profitable for making bulk products. The second market is more dominated by duopoly by Wellcome and Park'n shop. Hong Kong also has a number of discount stores which are considered to be more for such products which have low shelf life (Laposte-a, “Hong Kong”). The Singapore economy demonstrates a more efficient network of distribution than Hong Kong. There has also been a large inflow of retailers in the country and the opening up of numerous shopping malls. The consumption pattern of consumers have also been opening up which has attracted the establishment of large enterprises. Managerial and labor climate As in December 2010, Singapore demonstrated a labor force of more than 3.1 million. “The National Trades Union Congress (NTUC)”, which is the only trade union, comprises of almost 99% of the total force of organized labor in the country. Extensive and stringent legislation covers the general trade and labor union matters. The Industrial Arbitration Court takes care of the labor management disputes which the labor ministry would not be able to solve. The government of Singapore has emphasized on the requirement of cooperation between the different unions, managements and the government, i.e. they have encouraged “tripartism”. They have also focused upon the resolution of disputes at an early stage. This has been effective in smooth running of the corporations and reduced the number of strikes considerably. Since the year 1986, there have not been any strikes at all (US Department of State, “Labor”). Singapore has also enjoyed almost full employment since a long period of time. Along with the economic crisis and contraction of the nation’s economy, the unemployment level had reached 4.8%. However the situation was brought under control by 2010 by the Singapore Government’s job saving steps and also the slowly improving global economy. Some of the nation’s unemployment can be attributed to the structural changes within the economy as the low skilled manufacturing operations moved across the boundaries. Since 1990, there was rise in the number of foreign workers working in Singapore which helped curtail the shortage of labor to a considerable extent (US Department of State, “Labor”). Hong Kong’s export of services and goods improved strongly in the year 2010 by 15.0% and 17.3% respectively, which was stimulated by the recovery of the world economy and the Chinese monetary and fiscal stimulus in the economy. The rate of unemployment fell to 4.3%, which was the lowest from 2008 (US Department of State-a, “Economy”). It is apparent that Singapore would be able to provide a larger and more skilled force of labor and organizations would be least likely to be confronted with the problem of labor shortage. However, the possibility of finding ample skilled labor force in Hong Kong would be difficult. Also the Singapore Government’s measures to reduce unemployment have had alarming impact on recovering the economy from the global financial crisis. Taking all the above factors into consideration, it appears that the overall scenario for conducting international business looks favorable towards Singapore as compared to Hong Kong. Reference CIA. Economy - overview:. 2011. East & Southeast Asia :: Singapore. May 27, 2011. < https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html>. CIA-a. Economy - overview: 2011. East & Southeast Asia :: Hong Kong. May 27, 2011. < https://www.cia.gov/library/publications/the-world-factbook/geos/hk.html>. Laposte. Singapore. 2011. Distribution channels. May 27, 2011. < http://www.laposte-export-solutions.co.uk/uk/markets/country-profiles/singapore/distribution-channels>. Laposte-a. Hong Kong. 2011. Distribution channels. May 27, 2011. < http://www.laposte-export-solutions.co.uk/uk/markets/country-profiles/hong-kong/distribution-channels>. US Department of State. Labor. May 21, 2011. Background Note: Singapore. May 27, 2011. < http://www.state.gov/r/pa/ei/bgn/2798.htm>. US Department of State-a. Economy. May 15, 2011. Background Note: Hong Kong. May 27, 2011. < http://www.state.gov/r/pa/ei/bgn/2747.htm>. Read More