Essay on Gaining Global Reach: Challenges of Expanding Business Internationally

Introduction

The process of a business is easy but the biggest challenge is growing it to compete effectively in the dynamic international market. Internal and external business environment create opportunities, and threats, affecting the success of the business. At the introduction of an organizational lifecycle, entrepreneurs focus on exploiting the domestic market before expanding to the international market. However, the process of getting global is not as easy as starting a business (Parnell, 2015). The process is complex and costly to execute. Businesses must develop an international business strategy, focusing on how to reduce cost operations and enter new markets effectively. The process of developing a global strategy starts with the establishment of critical reasons and long-term goals and objectives, as well as market positioning. For example, business expands to the international market because they want to have a global concentration and synergies. One method of entering the international market is through mergers and acquisitions, and this helps to manage complexities involved. Through mergers and acquisitions, a business will adopt the culture of the host country, and avoid ways of doing business that would contradict local business practices. The essay compares and contrasts the cultural systems of the host country Japan and the home, which is the United States.

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Economic Environment

Japan has economic freedom of 72.1 according to the 2019 index, and this makes it the 30th freest economy in the world. However, the score dropped by 0.2 from the previous one and this is because of the declining efficiency in the judiciary (The Heritage Foundation, 2019). The trade freedom exceeded the fiscal performance of the nation. In the Asia Pacific region, the country is ranked 8th and scores more than international averages regarding economic freedom. The Japanese economic growth grew by 1.7% in the 2019 index (The Heritage Foundation, 2019). Its gross domestic products were $5.4 trillion and this makes it an economic hub in the region. Per capita income was $42, 832 (The Heritage Foundation, 2019). Factors driving the country's economic growth include flexible fiscal and economic policies, as well as the introduction of structural reforms aimed at reviving various sectors of the economy.

Although the government wants to promote trade liberalization, rising tensions in the international business environment are overshadowing it (The Heritage Foundation, 2019). The government must implement policies that protect domestic companies, as much as it wants to expand its economic growth. It means that being the host country; a merger could help to enter the market since direct entry would face complexities and limitations. Also, through the merger, the business could have equal opportunities like the domestic company.

The rate of unemployment in Japan is 2.8%, while the inflation rate is 0.5%. Foreign direct inflow is $10.4 billion (The Heritage Foundation, 2019). It shows that the economic environment is attractive to foreign investors. Also, the low-level of unemployment suggests that the country's economy is doing well, and many households are financially stable. Economic growth in an economy has a direct effect on organizational performance. Therefore, the economic outlook is attractive to global investors; hence, the best destination to be the host country.

On the contrary, the United States has an economic freedom score of 76.8, occupying 12th internationally in the 2019 index (The Heritage Foundation, 2019). The score recorded an increase of 1.1 points from the previous index. The improvement is a result of improvements in the tax policy and government integrity in doing business (The Heritage Foundation, 2019). In the Americas region, the United States is ranked 2nd and its score is relatively above is above regional and international expectations. The unemployment rate fell to its lowest; standing at 4.4% since 2019 and this is because of the establishment protectionist policies, raising tariffs for international companies operating in the economy (The Heritage Foundation, 2019). Also, new tariffs improved the performance of various sectors of the economy, such manufacturing, creating more jobs for the people. However, the policies make it challenging for foreign investors to invest in the economy.

The gross domestic products were $19.4 trillion with economic growth of 2.3% (The Heritage Foundation, 2019). The income per capita was $59,501, while foreign direct investment inflow was $275.4 billion (The Heritage Foundation, 2019). It means that the country is doing better than Japan in all aspects of the economy. The similarity between the two economies is that their economic freedoms exceed regional averages, and international expectations. Also, they have a positive economic outlook, suggesting that they are doing well economically. However, the unemployment rate in the US is higher with 4.4% compared to 2.8% in Japan (The Heritage Foundation, 2019). It means that the host country may experience some skills shortage due to a low-level of unemployment. Therefore, the home country should consider exporting specialized skills to the host country to work alongside the local workforce. Additionally, the host company must consider adjusting product prices to fit the economic needs of the Japanese people and the host company.

Business Norms and Work Ethics

The culture and norms of doing business in Japan are different from western culture. First, Japanese culture is group-oriented. Companies operating in the economy accomplish tasks through tasks. The country is known as the funder of team working. Managers and employers value team solidarity than individualism (Wolf, 2013). Managers organize tasks in groups and even employees form formal and informal groups focused on accomplishing a task without the involvement of the management. The culture has influenced the mindset of all employees and employers. Further, the norm affects some business practices. It impacts appreciation efforts from the management. While it is vital to recognize individual efforts, managers and employers in Japan recognize team efforts. Singling out and praising an individual from a group could disintegrate group efforts and lead to a conflict of interest.

On the contrary, the culture of doing business in the home country is that managers value individual contributions and productivity, encouraging individualism. Business leaders believe in the power of praising individuals rather than groups (Wolf, 2013). In this regard, there is a big contrast regarding business ethics in Japan and the United States. This norm implies that the home company should consider changing its business practices and adopt teamwork and avoid praising individuals at the expense of a team. The management of the home company must ensure it understands communication practices to avoid singling and praising individuals in Japan since this could be embarrassing to any group and other employees, leading to a poor working relationship, as well as creating conflicts among employees.

Another significant norm different between the host and home country is the treatment of age. In Japan, age is equivalent to seniority in the workplace. Most individuals holding senior management positions in companies are older compared to those they lead. Hierarchy is paramount in the Japanese labor force. The culture considers elderly people to possess the required experience to improve the performance of their companies (Wolf, 2013). On the contrary, the home country treats all people with equality. Discrimination is an offense in the workplace in the United States. Discrimination factors include age, gender, religion, and age. The home country treats all employees with equality, as long as they meet job requirements. The western culture believes that new and young employees are better equipped with current knowledge in the digital world, and utilize their skills and competencies to enhance organizational productivity. It means that the home company from the home country should consider training its employees so that they understand and apply the norm in the workplace. For example, they should respect elderly people in the workplace to avoid conflicts.

Additionally, corporations in Japan place the interests and welfare of their employees first before anyone else. The culture has seen the growth of various sectors of the economy, such as manufacturing because employees participate in the management process by being part of the management decisions. The management style in Japan empowers employees compared to managers because they are exclusive sources of information (Wolf, 2013). Business leaders invite employees in different forums to give their opinions and information that help in formulating strategic management decisions. On the contrary, business culture in the United States indicates that business leaders put the interest of their shareholders first before employees. The United States culture is not superior since an organization cannot meet the needs and requirements of the shareholders without having a self-motivated workforce. Therefore, the merger must consider how to align the Japanese culture in the business to avoid conflict of interest among employees in the host country.

The Japanese approach to work is superior according to the Maslow hierarchy of needs. Maslow theory argues that various factors influence the motivation of employees (Wolf, 2013). Organizational success does not depend on the number of employee complaints, but the type of claims they raise that are detrimental to the strategic planning process. Therefore, employees from the home company should consider changing their practices and incorporate the Japanese culture, and this would improve their adaptability.

Political and Legal Systems

The political and legal systems in the host and home countries affect the merger in different aspects. Japan is an independent country. The judiciary is fair to all businesses in the country without discriminating against foreign direct investment inflows. The constitution protects the interests of businesses, including intellectual property. The business environment is attractive to foreign investors, as long as they adhere to the policies of doing business in the country. The corruption level is low in the country, suggesting that businesses can compete effectively. However, the close relationship between politicians, government agencies and companies creates an environment that favors corruption rates (The Heritage Foundation, 2019). However, there is a traditional political practice where companies offer retired government positions in top Japanese companies. Besides, the process of registering a business is streamlined, although there is bureaucracy. Considering these elements, the political and legal environment in Japan is favorable for the merger since the policies do not discriminate against foreign companies.

Besides, the political and legal environment in the home country guarantees the protection of property rights. Any company innovating new products have the right to register their intellectual properties for protection (The Heritage Foundation, 2019). Also, the US has an independent judiciary that makes decisions without any favor or fears. The political stability in the home country offers opportunities for domestic and international companies to venture into business, as long as they engage in legal businesses. However, the protectionist policies developed in 2018 aim to protect the domestic market for local companies, although indirectly (The Heritage Foundation, 2019). In this context, the merger has a potential for success because of the prevailing political systems in the two countries. However, the m...