Making decisions such as expanding globally requires a lot of research and knowledge on the part of the management. Such a decision can impact the business positively or negatively. Opening new stores globally offers great opportunities for companies that would like to expand their customer base and increase revenue. Unfortunately, a lot of setbacks are also experienced in terms of cultural differences, diversity issues, and the threat to new entrants in the target market. Hence, before Mystique Cosmetics can move to the target location, it is important to compare options, understand the challenges, and consider approaches of overcoming them.
The Pro's And Con's On Expanding Globally
Expanding globally is quite beneficial to a company because the various cultures help to strengthen it. The employees will be able to learn from one another if conflicts can be managed effectively. Also, the products will be exposed to a diverse community hence improving the chances that all available cosmetics will find a suitable client.
When the market expands, the brands visibility also increases. Hence, when Mystique cosmetics becomes well known in a given country, it will make it easier for it to consider other regions as well after some time (Rafferty & Jimmieson, 2016). The benefit of this is that they will be able to get better deals with distributors and even increase revenues.
Today, recruiting from the international community is much easier. The company can market locally and still target the international community by considering technological approaches like the websites and social media. Hence, highly qualified individuals will be targeted even though they are not in that particular country. Competition is less stiff for an international business, even though many assume the opposite (Rafferty & Jimmieson, 2016).
There is a larger customer base which limits the stiff competition that would occur in a local market with limited customers. Thus, the company will always have customers internationally, if not locally. Hence, the chances of success and survival in the market is increased. With the use of partners and online distributors, the company can get a balance before it can effectively adapt to the new environment. This move will help to balance the risks that the company may experience.
Regarding the cons, an internal business also means being able to deal with the varying time zones across the global market. Therefore, a balance is needed to enable all the facilities to coordinate as needed. The managers and leaders who must travel to the various destinations must also be able to adapt to the time changes without experiencing burnout (Rafferty & Jimmieson, 2016).
The language barrier is also another challenge that will be experienced. A diverse workforce comes with high chances of language barriers that may make communication difficult or even impossible. However, a series of applications for translation are being considered. Unfortunately, this technology is still imperfect and measures must be taken to deal with this setback.
The varying currencies may also impact the expected profits of a company. For instance, in 2015, the dollar strengthened against the Euro. This impacted the profits of many international companies. Also, the transactions needed to get the cash into the local business accounts further makes it expensive to manage. An almost similar challenge relates to the political environment. There is a risk of an international government overpowering a business situated within its borders. They may seize control over it or even nullify the business permit. In case this happens, profits may be lost especially when a lot of limits are imposed on the operations.
If the products will be shipped from the country of origin, the costs will be much higher. It takes approximately 60 days for products being shipped abroad to get to a set destination. Payments, tariffs and other costs will be incurred. Thus, the products may need to sell at a much higher price for it to earn profits. Unfortunately, there may be other companies which make the same cosmetic products locally and are charging a lower price. Thus, many customers may end up preferring the cheaper product.
Therefore, there are some incurred costs that would have otherwise been avoided by remaining a local business. However, profits and opportunities are also experienced. If a business can take in the costs of expansion and establish a reliable international manufacturing process, then the company can develop a global presence despite its size. This gives every company the opportunity of accessing the most valuable market that can meet its needs.
Germany or Japan
Currently, it is easier to do business in Germany than in Japan, particularly because of the cultural barriers that exist in the latter country. However, it is quite difficult to get established in Germany than in Japan due to the strict measures and costs associated with starting a business in the region. In Germany, the business must liaise with the local industry and commerce sector, commercial register, and office of business and standards before getting the required permit (SchollMachl, 2018).
The building permit is a lengthy procedure that many companies tend to give up on. Fortunately, electricity and water can be easily obtained. The legal environment is also strict, and getting credit can be a daunting task. However, there is an investor protection which ensures that the market is regulated and supervised to ensure suitability for both local and international companies alike.
Tax payments is a must, and the process can be time consuming. Trading across borders is relatively cheap, meaning that products can move from one country to Germany with ease (SchollMachl, 2018). A challenge comes in where an absence of adequate cross-cultural awareness is quite risky (Palthe, 2014). Both the landscape and culture must be given the necessary consideration. Also, hierarchy in business must be given the necessary importance it has as the people value it as well. Therefore, patience is a must have whenever people are making specific applications.
Japan is the third largest economy globally. Therefore, it is also a reasonable destination for any businesses seeking to go global. Unfortunately, there are many language and cultural barriers that would prevent an effective establishment of a new start up (Jones, 2020). This country is one which has not fully embraced the use of English language. They still focus on speaking Mandarin and Japanese even professionally.
This language is also not common in other parts of the world. German is becoming more widespread, as many people are learning it as a second language compared to Japanese or Mandarin (Jones, 2020). The procedure for setting up a business is also draining. Many layers of bureaucracy must be navigated before operations can officially begin. A company must communicate with the Ward office, Legal Affairs Bureau of the Ministry of Justice and many others (Jones, 2020). Getting construction permits is also difficult and takes too much time.
Property registration is yet another barrier since it not only takes up too much time, but considers the certificate of the owner's seal of impression, a stamp duty payment receipt, and an application from the Legal Affairs Bureau and payment of real property acquisitions tax (Jones, 2020). Since it features a modern finance system, it is also evident that getting credit will be much easier in this country. Investors are also better protected by the legal system.
In Japan, relationships run businesses. It is a culture that has been there for years and that every investor must understand. Also, when dealing with these individuals, respect must be showcased at all times, especially when dealing with the elders. Patience is also a virtue that is required, alongside other local etiquettes like buying gifts.
Considering the analysis of these two locations, the best destination for a start is Germany. Mystique Cosmetics has a better chance of survival in this location as there are less entry barriers and fewer cultural challenges to be experienced. It is much easier to deal with the Germans than it is to deal with the Japanese.
Anticipated Cultural Differences
When going global, some cultural differences that can be experienced relate to laws, values, attitudes and communication styles. First, freedom of speech and assembly is not always the case in every country. Therefore, in the new location, speaking openly about specific factors may be considered a serious crime and even lead to the loss of operating licenses. Enforcement of laws may also be quite different from what happens locally.
Values and attitudes are yet another difference that may be experienced. Cultural identity makes it seem like what one holds as valuable is the same across all cultures (Palthe, 2014). Unfortunately, this is not the case. For instance, in some regions, a customer has a sacred duty to her family. Therefore, asking about family backgrounds is appropriate and acceptable. However, in other regions, the same may be a grave mistake that will cost the company its clients. That is why it is important to educate enough about the expectations of the new location to avoid such mishaps.
Another difference may be experienced in terms of communication. The destination culture must be considered so that the company adapts to the preferred communication style. In one country, individuals may prefer a lot of personal space during communication. In others, it may be considered rude to maintain such distance from the individual. Physical touch may also be an issue where some prefer not to be touched at all (Desmond & Wilson, 2018). Therefore, it is important to emulate a similar style of communication as those who are in the region to avoid any conflicts and misunderstandings. In case of any uncertainty, it is even better to ask.
How the employees dress is another cultural difference that may be experienced. In some countries, employees may be expected to put on uniforms, while in others a casual attire is enough (Desmond & Wilson, 2018). This is important because the company may have to consider a uniform design that will be used by all employees in the new facility.
An important difference relates to time management. In some countries, being late is not taken lightly as it translates to rudeness and unprofessionalism. Also, when handling meetings, the exact time indicated must be adhered to in some countries while other will not mind extended by a few minutes.
Concerns With Non-Union Workplace
Mystique Cosmetics is a non-union workplace as it is a private sector company. Therefore, some employees have raised concern about a series of factors that they feel will put their positions in the company at risk. By going global, they feel threatened that the company management may act selfishly by reducing their wages. Since there is no union, the workers' pay rates are not negotiated by a third party.
The managers simply have to negotiate with the worker directly. The non-union workers do not get to enjoy guaranteed pensions. They have no luxury of negotiating retirement plan terms such as the 401 (k). That is because the employer will be the one to determine which savings options are available for the employees. Also, the employee will be given an opportunity to either sign up for it or not.
Hiring New Employees in the New Facilities
To help run each of the new facility openings, an Expatriate will be hired. It is because he or she will have a better understanding of the corporate culture and functioning of the country. Since they have been working with the company for some time before being sent to...
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