Essay On Global Business Management

The purpose of this study is to present, discuss and analyse the various contextual facts about global business. It highlights how the operations of MNCs can be affected by the political, legal and economic system of a nation. the purpose will be fulfilled by answering three of the five questions chosen and using the related cases and materials already provided as lecture materials.

 

Political economy is related significantly to the political, economic and legal systems of a country and it varies from one country to another. A multinational corporation (MNC) having its operations in different corners of the world must be sensitive to these factors. They need to be concerned about the changes happening to the economy, politics and legal system of that country in order to make relevant moves to ensure the opportunities are leveraged and the threats could be avoided. Considering the “Opening Case”, China has a different policy toward the trade industry in the country. China subsidises both state-owned enterprises, like the steel companies and Huawei. These have created tensions at the global level, especially with the United States. China is a different country and has been scripting its economic success with a different governing mindset, something not really practiced in the Western part of the world. It is not easy to know what is happening in China in regards to the business and government intervention into it. Due to this very fact and China’s political interference in the economy and trading, Obama’s reign and Trump’s reign have already indulged in a kind of war with China.

 

Considering the business scenes and political landscapes in China are different from Western nations, MNCs willing to operate in the country should have an extensive understanding of the advantages and disadvantages of operating in China. For example, Chine promotes production in China and funds such companies in respective circumstances. On the contrary, China imposes tariffs on imports that would be an addition burden on companies who are operating in China but are not willing to source materials from within the country. Such companies either will abide by the political-legal landscapes of the nation or decide to shift to another country, which in no way should be an ideal decision to consider.

 

Talking from the perspectives of the managers, they will be burdened with cost-cutting strategies, if such companies are to pay for the import tariffs. In the context, they would like to take various possible steps to cut the costs to the possible extent to ensure their business remains in profit even under adverse business conditions. Some of the possible solutions that could be opted for cost reduction include layoffs, salary cuts for executive-level personnel and reduced spending in marketing and advertisement activities. There are both advantages and disadvantages going for lay-offs if we talk about this particular option only. One of the advantages will be the fact that only the most filtered, quality and experienced professionals are only retained. This should support the handling of critical tasks and earn more client trust for the business. In addition, there will only be experienced employees on the board. But there could be plenty of legal problems associated with lay-offs and also the employer might be questioned for the kind of support they have extended to the laid-off employees. In case, these things are not met, the consequences could be worse for the company. Having only the experience people on the board is a good thing to have, but it also leads to the fact that the highest salary drawers in the business are only retained. Instead of getting the work done from some fresh people rather looking for the senior lads could be a possible solution, if the quality and experience issues could be handled with utmost supervision on-the-job.

 

In addition to all the above, the managers in companies who are operating in a country with an unfavourable political environment, like China, should take concerned with rapid changes at the country’s political, economic and legal levels because this could add some risk factors as well as lead to major losses. The managers will be burdened with handling not just their internal business issues, but also identifying possible solutions to the problems faced in the external environment. The corruption system in the country and the level of protection given to businesses for their intellectual properties and rights will all matter to the managers. They either will have tasks to make new strategies relevant to the political and economic landscape in their country of operation or quit for nothing and decide to move to another place. 

 

The cultural comparison between Japan and Singapore based on Hofstede’s cultural dimensions is shown below:

 

The above is a cultural comparison between Japan and Singapore based on Hofstede’s Dimensions of Culture.     

 

Japan is regarded as a very collectivist and cooperative society where people like to go out of their way to favour others. Leaders have this tendency to protect their department by doing things, which are possible to do. The leaders do not hesitate to take the credit for their team and take chances to safeguard their show of average performance. But the problem is this leads to quite a hierarchical structure existing in the organisation that slows down the communication and so, the promotion of the employees. Singapore, on the other hand, is the most individualistic society in the world, where people do not cooperate with others and rather backstab their rivals to death. Leaders do not take accountability for the poor performance of their subordinates but never miss an opportunity to take the credit for something they have not contributed significantly. Promotion is relatively fast, but job security is low. That means there is no assurance of who is going to retain their jobs at the end of the day. 

 

 

In regards to business people responsible for business meetings and developing new businesses, this would mean taking care of the cultural senses of their Japanese counterparts. Managers in Singapore like or dislike someone basis their perceptions, and not on performance. For grabbing an opportunity to form ties with a Japanese company and enter the Japanese market, it is necessary that during the deal the reasons to enter the market are presented based on factual pieces of evidence and not just for having some perceptions about the company and its managers. 

 

Japanese look for long-term success instead of looking for short-time gains. On the other hand, Singaporeans look for short-term results. This suggests Japanese look for long-term success rather looking for short-term gains. So, a panel of people representing a Singaporean company to a host of people in Japan to form a business relationship with them should take concerns with the fact. Their proposal should not reveal that they are in hurry to get the results. Instead, the proposal should demonstrate that the Singaporean counterparts are looking for a longer relationship and they have plans to support such a thought process. For instance, the emphasis should be on retaining employees with the best compensation package and offering regular pieces of training to those who may need it. 

 

In Japan, local professionals are given priority over foreign. Only those who are exceptional and do not have a match equivalent to their skills in the local Japanese professionals can be hired. In regards to forming a deal with a major Japanese client and entering the market, it is necessary that the concerned Singapore company must be willing to accept such conditions, once the deal is signed between the two parties. There should not be a negotiation in terms of sending expatriates to Japan, but only in case, the chosen sets of people are comparatively better than them to be Japanese counterparts. 

 

Noting that there are huge cultural differences between Japan and Singapore as mentioned above, it is important that such differences or the ones which could matter to a business deal are taken into consideration. The spokesperson of a company from Singapore should be willing to present himself or herself as if they are desperate about working with a Japanese company. That feeling in the Japanese managers about the deal will come, only if there is something agreed upon from either side. 

 

Uber’s expansion to the global region is full of some successes and failures. There are definitely some lessons in Uber’s failure in some markets, such as in China. Things that have worked in favour of Uber in the United States should not be the same elsewhere due to unfamiliar political, cultural and economic environments. These unfamiliar circumstances put unforeseen pressures on the business models of ride-hailing services. In addition, the rental service segment is a popular business model globally. So, Uber is bound to receive tough competition from local clones of Uber. For example, Lyft in the United States gives strong competition to Uber. Curb, a taxi-hailing app, is not available in more than 60 cities in the United States. 99taxis is widely popular in Rio and across Brazil and ix is also expanded into Europe. “Careem” is operating in multiple cities in the Middle East and Africa. “Didi Dache” now covers hundreds of cities and is also regarded as the Uber of China. “EasyTaxi” is the world’s biggest app for hailing licensed taxis. The company has expanded beyond Central and South America and cities in the Middle East, Asia and Africa. “Gett Taxi” is widely available in Russia, Israel, Manhattan and London. “Grab Taxi” is the most popular in Southeast Asia. “Ola” has remained the largest ride hailing service in India.

 

The success of Uber may or may not be replicated in the other markets. Notably, the Asian markets are different from Canada, US and Europe. Everything is different from culture to expectations among these nations. Localisation stood out to be the main ingredient of Uber’s marketing strategy for the Asia Pacific region to stay ahead in the competition from local rivals. But Uber needs to know that flexibility in the payment service is key for doing well with the local people and working aggressively with its localisation strategy. For example, cash payments are the most suitable in emerging markets, where credit cards are not significantly used. In China, Uber could have done well by partnering with Alibaba’s Alipay system that the Chinese mostly use to pay.

 

Uber has not been so successful outside the US. After China, Uber is also struggling in Europe. Uber mistakenly thought that the business model that made them successful in the US will also come helpful in other parts of the world. In doing so, it has underestimated the challenges of operating at a foreign level, such as political, economic and culturally different landscapes in countries other than the United States.

 

 

If I were Dara Khosrowshahi, the CEO of Uber, I could have done things differently. I could have carefully studied our policies and practices, and assessed those in relation to each specific country. In addition, I would have looked to asking permission from the relevant authorities in the locals of a foreign nation to understand the market and get their support, which could have been useful at times of difficulty. I would have invested time in forming relationships with the unions of the different countries to represent the taxi drivers, instead of aggressively competing with them. I would have also collaborated with a local body such as Ola in India, which Uber never did. This sort of action becomes important when you have too much competition in the local and the possible way out is in reducing the number of competitors in the market. 

 

Global managers must be careful with their approach to business strategies because the study has found that this is not just sufficient to take concerns with the organisational internal matters. In addition, the political, economic, and legal systems of other countries must be given serious regard. A Singaporean company willing to enter the Japanese market by collaborating with a major Japanese company should be careful about the cultural differences the two countries share together. Uber needs to consider a few things for smoothly and successfully operating in the different parts of the globe. They cannot be the same way as they have been in the United States. To ensure they are not repeating the mistakes they did in China, they must work on the pieces of recommendations enclosed in the paper.