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Comparative Global Business Environment Systems With Planned International Business

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Question:

Business environment of the chosen country that are relevant to the planned international business- 

In general, the following aspects should be included in your report:

• Cultures of the country and their implications for business

• Political and economic systems of the country and how they may affect your intended business

• Nature of business systems in the chosen country, focusing on business organisation, leadership, human resource management and change management principles, and how each may affect your business operations

• Differences in finance and banking systems between that country and home country and how these may affect your business and what countermeasures you may need

• Any difference in legal systems between that country and home country and how these may affect your business and what countermeasures you may need

• Important ethical matters of that chosen country and how they may affect your business operations.

 

 

Answer:

Introduction to the report

The present report is centered on critical assessment of differences between two nations in terms of the aspects that important from business point of view. There a number of aspects that are considered by an organization that plans to start business in a different country. These aspects include internal aspects such as organizational culture, business management, leadership, human resource management business ethics and change management (Ball and McCullogh, 1996). The external aspects mainly include aspects such as national culture, political systems, economic systems, financial systems, banking systems and legal systems. The present report has been developed on the basis of a scenario that states that an organization dealing with manufacturing and selling of bicycles has decided to start business in China and the requirement is to analyze differences between home country and host country in aspects stated above, their implications on the organizations and the steps that are required to be taken on the part of the organization to come up with critical issues.

Part I. Background information

The company that has been referred to in order to fulfill the aims and objectives of the present study is Malvern Star which is renounced bicycle manufacturing and selling company of Australia. The study involves critical assessment of the cultural differences, economic systems, and political systems that an Australian company will face when it plans to start manufacturing and selling business in China. The company has decided to enter China through FDI. The study also encompasses critical assessment of the differences in business organizations, business leadership, human resource management and change management procedures that prevails between Australia and China and the implication of the same on the new business venture of Malvern stars. The implications of differences in finance, banking systems, legal systems and business ethics between these two nations have also been critically analyzed along with steps that are required for resolving cross cultural issues. 

 

Part II. Cultural, political and economic implications

Implications of cultural differences

A critical examination of cultural difference between China and Australia from the business point of view of business reveals some interesting observations and inferences (Gesteland, 2005). From the Chinese point of view, this reflects an expanding level of resilience towards diversified cultures especially foreign cultures. This means that Malvern Star needs to understand the cultural inclinations of Chinese stakeholders especially the customers, business partners, suppliers, distributors and employees in order to make sure that Chinese culture is honored at any condition. This in turn will help to ensure that closer trade relationships are well established leading to increase in revenue, profits and market share of the company in China (Child, 1994).

Implications of political system

China is having a single party system of government run by the Communist Party of China. Earlier the Chinese government was characterized by stringent rules and regulations in each and every economic and industrial aspect.  Barriers and restrictions to foreign trade were extremely high. However, in recent times, there has been a realization on the part of the Chinese government about the benefits of international trade to the nation and role play of the same in the development of the nation (Czinkota et al., 1989). As a result of that, the Chinese government has started loosening the intensity of stringency thereby allowing for international business to grow.  In this context, a critical analysis of the prospects of Malvern Star in china revealed that there are ample opportunities for the company to expand business and market share in the Chinese market in light of the fact that political constraints and challenges will be low (Hall and Hall, 1990).

Implications of economic systems

A critical examination of the implications of economic systems of China on a bicycle manufacturing and trading company like Malvern Star have been done effectively with specific  connections to China. The examination revealed that economic changes affected social behaviors and educational policies and systems (Dahles and Wels, 2002). Obviously, the mentality is changing pretty much consistently all around China, independent of the effects of international business evolving in the nation. The results of the examination nonetheless, recognized minor doubts on the part of China on whether an Australian company will discriminate in against Chinese in what they are producing and selling in China. China is still not a significant business sector for Australian items. Australia is one of the major exporters of resources  to China and the way of this business sector is altogether different, is on the ground that it is commanded by Australia's major players like that of Malvern Star organizations (Harris et al., 2004). Considerable degree of government regulations prevailing in china is expected  to repress international business however, chances are higher that this is not a big issue in light of the fact that China has started loosening stringent government regulations and encouraging, international business and trade. Thus Malvern Star is expected to low level economic challenges in china especially in terms of Government regulations.

 

Part III. Character of business systems

Implications of nature of business organizations

As far as business organizations and their management is concerned, a critical examination is revealed that the main organizational culture differences relevant to business management, prevailing between Australia and china are in terms of  individualism / collectivism, power distance, uncertainty avoidance, long term and short term orientation and masculinity / femininity (Daniels and Radebaugh, 1998). The critical examination revealed that Australia is high on individualism, power, risk inclination, masculinity and short term orientation. On the other hand China is high on collectivism, centralized power, risk avoidance, femininity and long term orientation. This indicates that doing business in China is not an easy task as far as the perspective of business management is concerned. Therefore, it would be better for Malvern star to provide appropriate pre departure training to the home country employees so that adaptation period can be reduced and cultural differences can be managed in a very effective and efficient manner.

As far as implications are concerned, the critical analysis further revealed that relationship with Australian organizations would enhance administration processes in China especially in context to general management, corporate governance and organizational change management (Folsom et al., 2009). A closer relationship with Australian organizations would enhance straightforwardness in corporate administration in China. These discoveries are reliable with prior exploration directed by Hill, (2006) who watched that the act of corporate administration in China needed a considerable upgrade if Chinese companies were going to adequately take part in the worldwide economy. There are many Chinese managers who believe that administration is a basic issue that would profit from introduction to Australian administration styles. On the other hand, the beliefs of many Australian managers are also on the same note as they think that business administration’s of both nations can increase through cross border investment and business proliferation.

In this context, the step that can be taken by the company in minimizing the negative effects of these organizations is appropriate management of differences (Keillor and Wilkinson, 2011). The company needs to make sure that proper coordination and communication prevails among the Australian and Chinese employees in such a manner that learning objectives and strategies are concentrated and appreciated more than cultural differences. Appropriate training is necessary so as to ensure that the employees run how to identify cultural differences and convert these differences in to organizational advantages (Hill, 2003).

Nature of business leadership

It is already known that Australia and China holds opposite positions as far as business cultural dimensions are concerned. The opposite standpoints of these two countries in context to power distance, uncertainty avoidance, business mentality, work culture and business orientations have remarkable implications on business leadership concepts prevailing in the two countries. In Australia leadership behavior is more inclined towards autocracy characterizing stringency, straight foreword rules and regulations, individual responsibilities and accountabilities and that too with orientation towards short term goals and objectives (Kritzer, 2012). On the other hand, China is quiet opposite and business leadership in China is more inclined towards team work, collective responsibilities and accountabilities, long term orientations towards goals and objectives and flexible accountability and responsibility rules. In light of the fact that Malvern Star have to work with a cross cultural team within the organization and cross cultural stake holder outside, it can be stated that organizational leaders of Malvern Star needs to be provided with proper training so that they can cope with the leadership differences and increase acceptance of the same in the eyes of cross border employees (Liu, 2013). The major prerequisites necessary in this regard are good knowledge and respect for Chinese culture, proper initiatives in developing close relationships with internal and external stakeholders and undertaking appropriate steps towards management and minimizing cultural differences (Lee and Lee, 1999).

In order to resolve leadership behavior differences, Malvern Star needs to develop leadership behavior within the organization in such a way that the same aids in proper understanding of the differences and solving the difference issues in a simple and coordinated manner (Nolan, 1996). The utilization of transactional leadership concept is best in this regard in light of the fact that this leadership process encourages active participation from the team and involvement of each and every member of the team. In a cross cultural business context, transactional leadership is also helpful in the sense that evolution of diverse ideas occur and along with participation of diverse talents.

Nature of human resource management

A critical analysis of differences in human resource management systems between Australia and China reveals that the main differences are with respect to the dimensions of power distance and individualism / collectivism. In China, selection, recruitment, training and development procedures are taken up on the part of an organization in such a way that the same reflects power distance and maintenance of the same across of the employees of the entire organization (Mandal, 2000). Coordinated activities and active participation of decision making from managerial and employee side is less prevalent in China. On the other hand, In Australia, recruitment, selection, training and management activities are manages so as to prepare employees and managers in coordination with each other (Ricks, 2000). The employees are actively motivated towards engagement in decision making procedures of the organization. In order to minimize differences in human resource management systems, it is necessary on the part of the company to bringing modifications in the selection, training and recruitment procedures in such a way that the new employees learn to take individual responsibilities along with working in teams as and when required (Zinzius, 2004). Adapting to systems of the both the countries is the key to success because of the fact that advantages of both systems can be utilized and disadvantages can be minimized.

Nature of change management

A critical evaluation of the nature of change management in Australia and China reveals remarkable differences. The major differences are on the grounds of power distance, uncertainty avoidance and long-term / short term orientation (Rugman and Brewer, 2001). In Australia, organizational changes are implemented and managed in such a way that benefits of the change can be derived to the greatest extent possible by taking a considerable amount of risk. Implementation of the change process is done on the basis of stringent rules and regulations and applying force to some extent. In most of the cases, only a single change manager is appointed to govern over management and implementation of the change. On the other hand, in China, organizational changes are initiated and implemented in such a way that benefits of the change can be obtained through collective approach towards successful implementation.. Implementation of the change process is done by seeking support from the employees affected by the change and providing positive assurance by describing the benefits of the change. Implementation and management of the change procedure involves collective efforts from managers and employees (Mitchell, 2009).

In context to resolving the difference between change management systems, it can be stated that that Malvern Star in China need to change its change management system and incline the same towards system used by Chinese. This step on the part of the company is associated with dual advantage. First, it would be easy for the company to enjoy long term benefits of the change as coercive implementation of change never settles for long run (Yang, 2003). Second, it would be easy to motivate host country employees in making them inclined towards the positive effects of the change and motivate them to participate in the process.

 

Part III. Financial legal and business ethics differences and their implications

Implications of finance  and banking systems

A critical analysis of the implications of financial systems of China on Malvern Star's business venture revealed some important features relating to trade finance and investment finance (Taylor, 2002). The stand points of China with regard to trade finance and investment finance are different. Chinese understudies considered that Chinese organizations were not decently educated about prospects of Australasian organizations in terms of the profits that can be made by tying up with Australian companies in business. This is attributable to the fact that Australian shopper items have limited presence in the Chinese local market as contrasted and the prepared accessibility of American and European items. Thus, it can be stated that investment in business in China, by a bicycle manufacturing company like Malvern star will bring in financial resources to the nation and improve acceptability of foreign investment and trade in Chinese domestic market. As far as banking system is concerned this is almost the same in both the nations after both the have undergone through series of financial reforms in the past (Rugman and Hodgetts, 2003). Moreover, under the effects of globalization and proliferation of internal banks, there is not much difference in the banking system of these two countries.

Implications of legal systems

The business law elements prevailing in Australia are considerably different and this the reason why a number of commercial disputes have raised recently. The nature of commercial disputes arising out of difference between business laws of these two nations are characterized by disputes between Chinese exporters and Australian importers and disputes arising because of Australian organizations executing business in China. The major reasons behind these disputes are lack of understanding about Chinese legal system, limited dispute resolution systems, legal and structural issues in context to arbitration in china and conduction of prosecutorial discretion (Niemeier et al., 1998).

With a view to resolve this issue, the Australian Government has taken a number of steps. The Australian Government has started communicating with Australian business organizations for providing helpful information on the steps that can be taken to enhance arbitration in commercial disputes between Australia and China. The government has decided to utilize arbitration clauses as a part of its initiatives in resolving commercial disputes between Australia and China. These steps on the part of the Australian government will surely be helpful as far as the new business start up of Malvern Star in china is concerned.

 

Implications of ethical perspectives

An analysis of the implications of ethical perspectives in context to Australia and china reveals that coordinating ethics into the choice making process in administration is not an easy task. The analysis reveals that Australians are not really keen towards addressing ethical questions and also watches that people in business associations will regularly experience a decision making methodology, and after that take a gander at the moral ramifications of that choice. On the other hand, in china, ethical perspectives are taken in to consideration in such a way that the same can be incorporated in an effective and efficient manner and can be used as apparatus of examination (Selmer, 1998). Administration has the capacity and experience in decision making procedure which delivers successful and creative results, which can turn out to be a game changer on the off chance that it brings a diverse or extraordinary point of view to the leader. While there are no insurances with reference to how this will influence an organization's primary concern on gainfulness, it can be stated that Chinese organizational morals propel the organizational leaders to survey essential suspicions about the organization's objective, which he or she can reject or amend (Mole, 2003). Solution to the differences in business ethics can be found out by the company only by accepting the ethical aspects prevailing in China. There is no other way out mainly because of the fact that there cannot be a negotiation or a mixture of procedures and principles as far ethical differences are concerned.

Conclusion

With increase in globalization, cross border differences are exacted to prevail at workplace in a more intense fashion. Thus, it becomes imperative for the management team of Malvern Star to effectively cope up complex differences that prevail between business situations and cultures of Australia and China and deal with them in such a way that this difference gets converted to benefits for the organization. This will aid a lot in striking out the disadvantages of cross border business differences and accomplishing company mission and objectives with extreme efficacy. Moreover, absence of this difference will increase resource utilization efficiency of the organization to a great extent.

The senior management team of the company will have to manage and coordinate with the internal and external stakeholders in such a way that an environment of coordination, delegation and synergy prevail. This in turn will help the organization to equip itself in the best possible way in the process of fighting the rivals and gaining suitable competitive advantage. If the organization becomes successful in coping up with cross border differences with China, it would be very easy for the company to do the same across the globe. 

 

References 

Ball, D. & McCullogh, W. (1996) International business. Chicago: Irwin.

Burns, R. (1998) Doing business in Asia. South Melbourne: Longman.

Child, J. (1994) Management in China during the age of reform. Cambridge [England]: Cambridge University Press.

Czinkota, M. et al. (1989) International business. Chicago: Dryden Press.

Dahles, H. & Wels, H. (2002) Culture, organization and management in East Asia. New York: Nova Science Publishers.

Daniels, J. & Radebaugh, L. (1998) International business. Reading, Mass.: Addison-Wesley.

Folsom, R. et al. (2009) International business transactions in a nutshell. St. Paul, MN: West.

Gesteland, R. (2005) Cross-cultural business behavior. [Copenhagen, Denmark]: Copenhagen Business School Press.

Hall, E. & Hall, M. (1990) Understanding cultural differences. Yarmouth, Me.: Intercultural Press.

Harris, P. et al. (2004) Managing cultural differences. Amsterdam: Elsevier/Butterworth-Heinemann.

Hill, C. (2003) International business. Boston, Mass.: McGraw-Hill/Irwin.

Hill, C. (2006) Global business today. Boston, Mass.: McGraw-Hill/Irwin.

Keillor, B. & Wilkinson, T. (2011) International business in the 21st century. Santa Barbara, Calif.: Praeger.

Kritzer, A. (2012) Forex for Beginners. Dordrecht: Springer.

Lee, C. & Lee, J. (1999) Handbook of Financial Econometrics and Statistics.

Liu, S. (2013) Innovation management in knowledge intensive business services in China. Berlin: Springer.

Mandal, P. (2000) Proceedings of the International Conference on Managing the Asian Century.

Mitchell, C. (2009) A short course in international business culture. Petaluma, CA: World Trade Press.

Mole, J. (2003) Mind your manners. London: Nicholas Brealey Pub.

Morrison, T. et al. (2001) Dun & Bradstreet's guide to doing business around the world. Paramus, NJ: Prentice Hall.

Niemeier, S. et al. (1998) The Cultural Context in Business Communication. Amsterdam/Philadelphia: John Benjamins Pub. Co.

Nolan, J. (1996) Australia business. San Rafael, Calif.: World Trade Press.

Ricks, D. (2000) Blunders in international business. Malden, MA: Blackwell Publishers.

Rugman, A. & Brewer, T. (2001) The Oxford handbook of international business. New York: Oxford University Press.

Rugman, A. & Hodgetts, R. (2003) International business. Harlow, England: Prentice Hall/Financial Times.

Rugman, A. (2005) International business. Harlow, England: Prentice Hall/Financial Times.

Selmer, J. (1998) International management in China. London: Routledge.

Taylor, C. (2002) New directions in international advertising research. Amsterdam: JAI.

Vos, R. & Koparanova, M. (2011) Globalization and economic diversification. London: Bloomsbury Academic.

Yang, D. (2003) Intellectual property and doing business in China. Amsterdam: Elsevier Science.

Zinzius, B. (2004) Doing business in the new China. Westport, CT: Praeger.

 
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