Doing Business Abroad   Term Paper ID:27215 Click to get this paper

Essay Subject: Examines the legal, cultural, & economic factors that businesses should consider before beginning overseas expansion.... More...

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Paper Abstract: Examines the legal, cultural, & economic factors that businesses should consider before beginning overseas expansion. Paper Introduction: Doing Business Abroad Introduction There are many reasons that organizations want to expand overseas, including those listed. However, there are also many problems associated with doing business abroad, particularly in countries that are outside of the Western developed world. Language difficulties, less developed infrastructure, and cultural differences can present problems to organizations. In this paper, the focus is on looking briefly at the legal, cultural, and economic factors that businesses should consider before beginning overseas expansion. Legal Factors Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. On the other hand, as Broad and Cavanaugh (1995) note, there areeconomic opportunities in the impoverished regions of the world that do notexist in the more developed countries. Business law covers a wide range of topics, such as contracts,copyrights, incorporation, environmental issues, foreign investment, fraud,joint stock companies, labor relations, patents, sales, securities, andshipping, among others. For example, Japanese policy regarding importsis continually changing as it responds to political pressures from abroadthat might threaten its own exports (Hinkelman, 1994). However, the mostaccepted form of business entity for foreign participation is the jointstock company. Language difficulties, less developedinfrastructure, and cultural differences can present problems toorganizations. Dealing with the Chinese. (1992). Foreign Policy, Winter 1995, 18-36. For example, in Japan, there are several different options forforeign investors in the creation of business entities. (1994). E.G. Doing Business AbroadIntroduction There are many reasons that organizations want to expand overseas,including those listed. There isconsiderable pressure to maintain face at all times and the successfulforeign business operator must help to ensure this for his or her Japanesepeers (Morrison, 1994). The government alsois trying to respond to changes in the demographics of the economy and inthe system of lifetime employment. Don't neglect the impoverishedSouth. NY: Houghton-Mifflin Company. In Japan, for example, one of themajor philosophical concerns of Japanese society, including Japanesebusiness, is harmony. Face is lost when the individual is insulted orcriticized; teasing is not a concept that transfers well on the globallevel. Morrison, T., Conaway, W.A. Business owners who are concerned about thelegality of specific actions are able to request the opinion of theDepartment of Justice regarding any proposed business conduct. In order to negotiate Japanese businesssuccessfully, the U.S. Broad, R. In Arab countries, family connections are the cruxof business relationships. Also important in Japan is the concept of face, which is similar tothe North American idea of pride and fear of humiliation. Business owners may makelegal payments to facilitate government action, but not influencediscretionary decisions. In the Pacific Rim, gifts and asking about the individual'sfamily are important. and Cavanaugh, J. All of these have created political problems, and long-termeconomic problems, even those they are advantageous to business in theshort-term. There are also countries in which legal issues might be in flux. Face is inalterablyconnected with the individual's status within the group, and with therespect accorded to that individual. Far EasternEconomic Review, July 1 , 1997, 14-18. Gilley, B. Seligman, S.D. In Central America and South America, businessrelationships are oriented toward friendship. For example, there has been agreat deal of publicity about the use of child labor and sweatshoppractices in the creation of some clothes lines, Nike shoes, and soccerballs. And Borden, G.A. The laws governing this joint stock company (orcorporation) are similar to those found in the United States and Germany.It can be 1 percent foreign owned and both initial capital and annual netearnings can be repatriated (Hinkelman et al., 1994). Thus, a wealthy class seems tobe emerging, in many instances, but not a solid middle class that couldsupport growing business within the country. Japan Business. Another problem that Broad and Cavanaugh (1995) indicate is becomingmore severe presents a long-term problem for business people. Learning to bow. Although China has promised to leave HongKong's capitalist system alone, it has indicated that it will interferepolitically and that it will change the laws to make them more inaccordance with Chinese political requirements. For example, Hong Kong, that very British (and very Chinese) ex-colonyalso relies on the understanding of face in relationships betweenindividuals at the personal and business levels. For example, Taiwanese law requires all foreign shipping companies andtheir agents to register with the Ministry of Communications and theministry of Economic Affairs. Hinkelman, SeriesEditor. Ignorance of appropriatebehaviors, and attitudes, can delay negotiations and create frustratingconditions for both Japanese and North Americans attempting to worktogether. Holbrook, MA: Bob Adams, Inc. They are forbidden from operating as rivertraffic. Kiss, bow, orshake hands. There are issues that represent a mixture of legal and culturalfactors. Et al. References Feiler, B. Global financial integration: A new priority. For example, lack ofinfrastructure and political instability stymie growth in much of thedeveloping world. In the long-term, however, if Nike wants to keep selling itsshoes, it needs a thriving global middle class, not just a global wealthyclass. Business owners are subject to the Foreign Corrupt Practices Act whichmakes it illegal to bribe people for the purpose of obtaining or retainingbusiness or influencing a discretionary decision. The first actions theChinese took were to outlaw certain kinds of political demonstrations andparties; it clearly asserted its sovereignty and this could mean changesfor business as well (Gilley and Sherry, 1997).Cultural Factors Even more potentially troublesome for the business seeking to expandoverseas are cultural factors, since these are generally unwritten rules ofbehavior. (1996). UN Chronicle,33, 6 -63. (1994). For theJapanese, however, face is at the center of the culture. In this paper, the focus is on looking briefly at thelegal, cultural, and economic factors that businesses should considerbefore beginning overseas expansion.Legal Factors Periodically one reads about a businessman from this country who hasbeen exposed as offering bribes to government officials or private partiesin other countries in order to smooth business operations in that country.In some countries this is expected, but it is also illegal in this country. (1997). Genzberger, C.A. Some of the activities of Western business are perpetuating thisproblem, since companies tend to look for countries with cheap laborsupplies and low business costs. They notethat just as the disparity between the richest countries and poorestcountries is increasing, so is the disparity within countries. One of the most important factors in Pacific Rim countries, Arabcountries, and in many Central and South American countries isrelationship. Taiwan Business. Hinkelman,Series Editor. The same is true throughout the Pacific Rim, with cultures that havebeen influenced during the modern era by the United States and GreatBritain, but have been influenced even longer by Chinese culture, Taoism,Buddhism, or Confucianism. Instead, respectful treatment requires good manner, compliments,and very positive feedback to the individual (Seligman, 1989). E.G. This does not fit well with some American concepts of competitivenessand individual accomplishment. Besides being subject to the laws of the United States, a businessowner is subject to the laws of the country to which the business hasexpanded. San Rafael, CA: World Trade press. (1989). model of development, thereis an increasing gap between the rich and the poor. While there are a number of good books on the subject, it isstill difficult for the individual to enter a new culture, feelcomfortable, and behave appropriately. There are other economic factors that need to be considered, such asthe role of the government in the country's economy and the needs of thecountry. Some of the beliefs in other countries may be very counter to commonbusiness attitudes in the United States. Hinkelman, E.G. They note that emerging nationsoften have a higher growth rate than more developed nations, although thereare other problems that discourage investment. These cultural factors, along with many others relating to businessetiquette and social relations make the difference between successfuloperation in Japan and lack of success. NY: Warner Books. Emerging nations can beas disparate as Brazil and Hungary, with problems including civil unrest,lack of infrastructure, and years of corrupt and authoritarian governments. San Rafael, CA: World Trade Press. businessperson must be able to subdue thoseattitudes and behaviors in favor of more harmonious and peaceful ones. One of the ways that Westerners often offend in this respect is byteasing the individual. This concept, the concept of wa, emphasizes theimportance of the group above the importance of the individual and theimportance of the stability of society (Feiler, 1992). As lifetime employment becomes lessuniversal, there are new opportunities for outside business operators tohire Japanese men and women who have been left out of that system. In some instances,there is also pressure on the middle class, with the middle class seekingthe kinds of benefits of the Western middle class, but not being able toachieve it in the current global economy. Doubt and desire. Forexample, the changeover in Hong Kong from British colony to part of China,might create legal difficulties for businesses seeking to trade with HongKong, or through Hong Kong. (1995). However, there are also many problems associatedwith doing business abroad, particularly in countries that are outside ofthe Western developed world. (1994). And Sherry, A. These may be quite different from laws in theUnited States and may be more stringent for foreign operators than fornationals, as with shipping and sales requirements. In the short term, this is advantageous,but in the long-term it creates a number of different kinds of problems,both in the developed and developing world. These are issues that are constantly changing as the individualcountry's economy evolves. However, because American ships are governed by Article 22 of theTreaty of Friendship, Commerce and Navigation between the two countries,American ships do not have to fulfill duties, charges, or conditions thatare not imposed on Chinese ships (Genzberger et al., 1994). The relationship comes first, and the business willfollow if the relationship is well-built and maintained (Morrison et al.,1994).Economic Factors One of the topics that has been much under discussion in globalbusiness circles is the issue of emerging nations and businessopportunities, and problems, in dealing with them. This isthe kind of factor that businesses need to take into account beforeexpanding their operations. Even in theemerging nations, which tend to copy the U.S. In all of these countries,the preparation for doing business is working on the relationship betweenthe individuals. 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