Global and Intercultural Operation Essay Example

12GLOBAL AND INTERCULTURAL OPERATION

Global and Intercultural Operation

Global and Intercultural Operation

Introduction

Due to globalization and technological advancement, the global business environment has changed considerably (Allen et al., 2004). The trade restrictions have been reduced allowing companies to explore foreign markets. This has led to profitability for some enterprises and failure to others. One important factor that organisations should take into consideration is the choice of the foreign market. A firm should analyse the suitability of a market before deciding to explore it (Richardson and Smith, 2007). Japan is considered the third largest economy in the world. It is one of the most important trade partners of the United States (Hutchison and Westermann, 2006). It will therefore be a good idea to expand business operations to Japan. This research paper will highlight the cultural differences between the United States and Japan in terms of gender, race, religion, etc. The report will also evaluate the system of government, regulations and ownership restrictions in Japan. In addition, it will assess the economy and the pros and cons of doing business in the country. Lastly, it will evaluate Japan’s foreign exchange and banking system to determine the factors limiting the transfer of funds from the parent company.

Cultural Differences between Japan and the United States

In Japan, gender roles are strict. In the country, there are few female Executives and politicians (Alston and Takei, 2005). Women are usually expected to quit after marriage to take up household jobs. The concept of masculinity is respected in Japan as men are expected to take up superior positions at work and at home (Hutchison and Westermann, 2006). The United Sates is considered a country of equal opportunity for both men and women. In contrast to Japan, women in the United Sates can take up superior positions at work and are not limited by social expectations (Chesterman, Ross-Smith and Peters, 2005).

Religion

The United States and Japan have different attitudes towards religion. Japan is dominated by Buddhists. About 40% of Japanese identify themselves as Buddhists and only 1% of the population are Christians. Religion in the country is only reserved to traditions and superstitions and does not really affect business operations (Alston and Takei, 2005). On the other hand, the United States’ population is less religious than most countries. However, most people in the country are Christians. With recent occurrence of terrorism, many businesses are reluctant to hire Muslims. The stereotypical perception that terrorists are Muslims has affected their chances of being hired (Smola & Sutton, 2002).

Japan has yet to address the issue of racism that is witnessed in the country. Racial discrimination has affected people of non-Japanese origin in Japan posing a hostile environment to them (Alston and Takei, 2005). People with different skin colour are often discriminated and shun off from the community. On the other hand, the United States is one of the countries in the world with people of mixed races. Although few cases of discrimination have been witnessed in the workplace, most American corporations have implemented diversity policies that favour everyone irrespective of race (Alston and Takei, 2005).

Social Class

People in the United States are often grouped into social classes; rich, middle class and poor (Alston and Takei, 2005). Social class affects how people are treated. People from the upper class category often experience favouritism in all aspects of their lives while the poor are not given any priority in the society. The same things affect the Japanese. There is biasness in the country which is based on social class (Alston and Takei, 2005). People of high status are regarded highly and receive attention compared to people of low status.

Disability

Even with disability policies in place, Japanese have negative perceptions towards people with disability. In the country, disabled people are considered unhealthy, defective and deviant (Smola & Sutton, 2002). Most companies shun away from hiring people with disability since they consider them incapable of participating in job welfare. In the United Sates, many legislative changes have been made to change the perception of people about people with disability. People in the country are more open to people with disability and consider them economically capable of benefiting the economy (Smola & Sutton, 2002). In contrast to the Japanese, the Americans recognize the ability of these people rather than their disabilities.

Japan is among the fastest aging nation globally. The elderly are considered healthy and financially conformable. People therefore expect them to live independently after they retire from work (Smola & Sutton, 2002). With a strong desire to work, people in the country work until they are very old. In contrast to Japan, the United States has the perception that the elderly need to live with family members or in home institutions (Alston and Takei, 2005). People in the country retire early compared to those living in Japan and often depend on their families during older age.

Sexual Orientation

Japanese people discriminate people on the basis of sexual orientation. People hide their sexual identities in the country as they can affect their potential to get jobs. Companies are not open to gays and lesbians in the workplace which affects their opportunities for promotions (Smola & Sutton, 2002). On the other hand, the United States is more open to different sexual orientations. The country has raised awareness of the issue which has changed people’s attitudes towards gays, lesbians and transgender.

Value Systems and Beliefs

Japan is a secular society which has enabled people form a harmonious relationship founded on empathy and social obligations. The most important values guiding people in the country are harmony, order and self-development (Sivakumar and Nakata, 2001). The Japanese rely on social relationship and emphasize the benefits of harmony. Most people avoid open competition and confrontation to maintain harmonious relationship and work towards fulfilling social obligations in the community. The United States’ value systems and beliefs differ significantly from those of the Japan (Sivakumar and Nakata, 2001). The value system of the Americans has allowed the country to assimilate different people from diverse backgrounds. The value systems and beliefs of the United States is based on three aspects; individual freedom, equality of opportunity and competition and hard work. People live independently and have an equal change for success through competition (Sivakumar and Nakata, 2001). Unlike in Japan, people in the United States take responsibility for their lives and live as individuals not as a community.

Evaluation of System of Government and Regulations

The system of Japan’s government is based on constitutional monarchy whereby power is limited and is consigned to ceremonial duties. Just like in many countries, the government is divided into Executive, Legislative and Judicial branches (Miwar and Nihon, 2002). It is a unitary state with 47 administrative divisions. The system of the government is controlled by the Cabinet who is appointed by the Emperor. The Emperor is the symbol of the country that represents the unity of the people. The government structure is composed of the National Diet which involves the House of Representatives and the House of Councillors. These houses are the sole law-making organs in the Japan. The government supports foreign investment and have come up with regulations that favour foreign businesses (Miwar and Nihon, 2002).

There are several regulations put in place for business people. For instance, Japanese government do not necessitate import licence for products and can be imported freely. However, for goods such as hazardous material and perishable foods, businesses are recommended to have licences (Miwar and Nihon, 2002). The country prohibits the import of explosives, pornography materials and counterfeit currency among other products. Any products that can have a negative effect on the Japan’s economy are banned from entering the country. Several documents are required during clearance and lack of such documents would bear legal consequences (Miwar and Nihon, 2002).

Ownership Restrictions in Japan

Restrictions on foreign ownership are the major barriers to inward Foreign Direct Investment. The restrictions in Japan are meant to limit the share of foreign companies’ equity capital (Hutchison and Westermann, 2006). Ownership restrictions have been applied to different industries such as telecommunication sector, shipping industry, natural resource sector and airline industry. Strict obligatory screening and long approval processes are used as a means of limiting FDI. The Japanese government have established a condition that foreign investors need to show economic benefits before being allowed to operate in the country. These provisions only apply in certain sectors (Hutchison and Westermann, 2006). Japan has also discouraged foreign direct investment inflows by enforcing constraints on the ability of foreigners to work in association with foreign companies. A foreign company is obligated to conform to numerous policies. For instance, nationals or local employees must form a majority of the board of directors in foreign companies (Hutchison and Westermann, 2006). This undermines foreign control over holdings and discourages them from investing.

Economic Condition of Japan

Japan Enjoys economic freedom which has been brought about by political stability. The country’s judiciary is considered independent and fair (Miwar and Nihon, 2002). The occurrences of direct exchange of money between government official is rare but the close relationship between companies and government official creates a climate prone to corruption and riggings. The top corporate tax rate is 23.9% while the income tax is 40.8%. Government spending has been equated to about 39.9% of the total GDP. The process of operating business in Japan is streamlined but bureaucracy is often stifling causing challenges that may discourage entrepreneurial growth (Miwar and Nihon, 2002). Trade is very important to the country’s economy. Japan has low tariff rates meant to encourage international trade. Although Japan’s economy is stable, it has been in stagnant mode for many years now. Economic stagnation will require serious reform that can challenge economic and cultural interests. The country is faced with large public debt which has affected the private-sector activities (Miwar and Nihon, 2002). In addition, disparities in productivity in different sectors have continued to widen and it lags behind when it comes to pursuing bilateral trade agreements due to intense foreign competition.

Pros and Cons of Conducting Business in Japan

Companies, irrespective of size often reap benefits when exploring new markets. The foreign expansion process takes time but the results are rewarding (Alston and Takei, 2005). Doing business in Japan is beneficial since it entails untapping new market. Japan is among the countries with high population and its population growth rate is high. Expansion to Japan means that an organisation will have access to a larger customer base (Alston and Takei, 2005). The company can offer products and services that are not available in Japan their demand is high. Expansion is such as country will ensure the company establish eager customers without the threat of intense competition.

Also, expansion of business in Japan enables an organization to have access to favourable business climate. Japan is known for its favourable economic conditions than most countries (Alston and Takei, 2005). The country has not been affected by the global economic recession and the government policies favour foreign companies. The economic climate is more business-friendly with low taxes and fewer legal and environmental regulations. Also, local workers are disposed to working for lower wages which may be beneficial for international companies. Japan has low threat from terrorism and other crimes which is beneficial for companies (Alston and Takei, 2005). While other countries have been faced with terror attacks, Japan has a secure economy which can motivate companies to exploit business opportunities. The government has implemented legislations and reforms related to security that are meant to present future security attacks (Alston and Takei, 2005).

One challenge an organisation will face when doing business in Japan is cultural misunderstanding. Although there are several Japanese who are proficient in English, it is rare to find employees who understand both languages to navigate through business negotiations (Pryor, Butler and Boehringer, 2005). Communication is very important in any organization but language barrier makes it hard for employees to communicate. Expatriates will face communication challenges when interacting with local employees and this may result in conflict and misunderstanding. Also human resources may pose challenges when doing business in Japan (Pryor, Butler and Boehringer, 2005). Employees in the United States are used to having a flexible line of authority; Japanese are more comfortable with a hierarchical structure (Miwar and Nihon, 2002). This may cause tension between expatriates and local workers. Also, the business will face challenges related to business culture. To be successful in Japan, an organization will require changing its business model that has served in the parent country. The business model will need to be flexible to accommodate the differences witnessed in Japan which can be strenuous. In addition, doing business in Japan will be faced with cultural challenges (Miwar and Nihon, 2002). Expatriates will be faced with culture shock due to cultural differences between the United States and Japan.

Foreign Exchange and Banking System

In the past, the Japanese Yen traded between 200 and 250 per United States’ dollar. However, recently the western economies decided to devalue he dollar. This strengthened the yen with exchange rate of about 80 yen to the dollar. However, with the current global economic recession the yen has devalued to 109.14 Japanese yen when traded with dollar. The value of the exchange rate affects the profits of companies operating in the company. The profit will be low when the company reports its earnings in dollars.

The Japanese banking system is undergoing changes due to financial system deregulation and competition in the global market. However, the connection between banks and companies in the company has remained high and extends beyond simple lender-borrower relationship. This relationship has been beneficial to companies since they have a mandate to borrow in excess according to their needs. Overall, Japanese banking system is relationship oriented rather than truncation oriented like that of the United States. The banks have not been affected by the global financial crisis due to the restricted exposure to controlled securities.

One factor that will affect transferring funds to the parent company is the high charges of transfer in most local banks. However, banks such as Citibank allow companies to wire money for free. Another factor affecting funding transfer is the exchange rate. The yen to dollar exchange rate keeps on fluctuating which could affect profitability level. Delivery time is also another factor affecting the decision to transfer money to the United States. Transfer of money may take long and the option of having an immediate transfer may be expensive.

Conclusion

In order to expand and grown, an organisation needs to explore foreign markets. One potential market is Japan. Japan and the United Sates differ considerably in terms of how they perceive race, gender, sexual orientation etc. There are many benefits and challenges facing foreign companies operating in Japan. For instance, cultural differences, language barriers, and economic issues may affect the profitability of a foreign company in Japan. However, even with these challenges, Japan political stability, high population, cheap labour and economic growth may be beneficial to firms. In addition, the Japanese banking system has created a climate that supports borrowing of the large amount of funds which is beneficial to companies. Japanese banking system is a relationship oriented rather than truncation oriented like that of the United States. Generally, Japan is a great market that should be explored by American corporations.

References

Allen, R.S., Dawson, G.A., Wheatley, K.K., and White, C.S. (2004). Diversity Practices: Learning Responses for Modern Organizations. Development and Learning in Organizations, 18(6): 13–15.

Alston, J. & Takei, I. (2005). Japanese business culture and practices: a guide to twenty-first century Japanese business. New York: iUniverse.

Chesterman, C., Ross-Smith, A. & Peters, M. (2005). The Gendered Impact on Organisations of a Critical Mass of Women in Senior Management. Policy and Society, 24(4): 69-91.

Hutchison, M. & Westermann, F. (2006). Japan’s great stagnation: financial and monetary policy lessons for advanced economies. Cambridge, Mass: MIT Press.

Miwar R., G. Nihon K. (2002). An Overview of Modern Japanese Economic History, 2nd Ed. (in Japanese), University of Tokyo Press

Pryor, B., Butler, J. & Boehringer, K. (2005). Communication apprehension and cultural context: A comparison of communication apprehension in Japanese and American students. North American Journal of Psychology, 7(2): 247–252.

Richardson, R. M. & Smith, S. W. (2007). The influence of high/low-context culture and power distance on choice of communication media: Students’ media choice to communicate with professors in Japan and America. International Journal of Intercultural
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Sivakumar, K. & Nakata, C. (2001). The stampede toward Hofstede’s framework: avoiding the sample design pit in cross-cultural research. Journal of international business studies, 32(3): 555-574.

Smola, K. W. & Sutton, C. D. (2002). Generational Differences: Revisiting Generational Work Values for the New Millennium. Journal of Organizational Behavior, 23(4): 363-382.