Discuss about the International Business Strategy for Boston Properties.
About Boston Properties
Boston Properties Inc. operates as a self managed and administered real estate investment trust or REIT in United States. Boston Properties owns, manages and also contributes in developing high quality office properties and suits in America based along significant regions like Boston, Los Angeles, New York and also in other areas like San Francisco and Washington DC. The company was formed during 1970 in Boston owing to the joint efforts of Mortimer B. Zuckerman and Edward H. Linde. Its current headquarters is based in Boston. Boston Properties is traded in the New York Stock Exchange (NWSE) as BXP. Along with office properties, Boston Properties also focuses on the development of retail, residential and hotel properties in United States(Boston Properties, Inc. , 2016).
Market Entry Into Sweden
Boston Properties focuses to gain an effective market entry into Sweden. The country is chosen by the management of Boston Properties owing to the existence of an integrated economic system compared to other international regions. Further, the commercial climate in Sweden is observed to be technology driven in nature that contributes in conducting transactions in an easy and faster fashion. The government of Sweden largely encourages the growth of foreign investment and international trade in the region that potentially contributes in enhancing the level of completion in the trade and economic sector in Sweden (Swedish Institute., 2016). Further, Sweden tends to possess an effective pool of trained and qualified human resources that would contribute in conducting the business and trade functions in an effective fashion. Increased investments are generated by the Swedish government in the ambit of Research and Development and also in the development of Information Technology infrastructures. The existence of an innovative working climate, increased productive and skilled workforce and also an open economic system potentially help in attracting foreign investors to invade the region. The region also reflects a competitive tax climate in the form of existence of tax exemptions and reliefs on capital gains and interests respectively. The operation of private enterprises in Sweden contributes to around 90 percent of the total industrial production in the region where the service sector contributed to 68.8 percent of the GDP of the country during 2013 (Swedish-American Chambers of Commerce of the USA, Inc., 2015).
Foreign Market Entry Mode
The American companies like Boston Properties Inc. can effectively focus on the formation of strategic alliances like generation of joint ventures with other companies while also focusing on generation of licenses and contracts with existing institutions based along in Sweden. Formation of joint ventures and also the generation of licenses and contracts are observed to be effective market entry modes for Boston Properties in that it contributes in reduction of risk and also in faster expansion and penetration of the real estate company in the Swedish market (Holm et al., 2015). The use of the above market entry modes like joint venture, licensing and generation of contracts would help Boston Properties Inc. in gaining effective market entry in the Swedish real estate market. Formation of joint ventures and other such licensing and contractual agreements with existing companies in Sweden would help Boston Properties in gaining potential access to markets, business resources and existing channels and networks possessed by such companies. The same would effectively help Boston Properties in developing an effective presence in Sweden (Swedish Institute., 2016).
Corporate Strategy of Boston Properties
The corporate strategy of Boston Properties is effectively reflected in the following statements. The management of Boston Properties essentially focuses on developing business bases in such areas that reflect increased consumer demand regarding premium and high quality office spaces. Further, Boston Properties aim in carrying out its business activities in such regions and also aim to expand to such economies that reflect increased barriers to entry for foreign ventures. The same helps in reducing the level of competitiveness based on reducing the access of companies to existing resources and infrastructures. The management of the real estate company also focuses on undertaking challenging tasks in that the same helps in optimal utilisation of the skill and resources base of the institution. Taking on challenging tasks contributes in creating a niche market. Boston Properties aims in incorporating effective technology and other resources for enhancing the quality of the office, residential and hotel properties developed. Incorporation of effective communication and transportation facilities potentially help in addressing the needs of potential consumers. The company management also focuses on acquiring of potential assets and real estate properties while also aims in expanding across the business territory based on the development of joint venture agreements with regional companies. Boston Properties Inc. also focuses on enhancing and creating needed value and demand for its real estate properties (Boston Properties, Inc., 2016).
Potential Implications of Formal and Informal Institutions
Formation of Joint Ventures in Sweden is identified as an effective agreement generated between two or more firms for performing through an institution. The joint venture is carried out through an institution that is limited by shares, or a firm generated out of a trading partnership, or based on limited partnership or that identified to be formed as a non-trading partnership (IBP, Inc., 2015). Sweden being a competitive and free economic system and also driven by an innovative and skill based work culture largely attracts the flow of foreign direct investment. Way back in 1993, the Swedish government had generated regulations that had contributed in generation of a transparent and liberal economic system attracting potential FDI in the region (Invest in EU, 2016).
The Swedish organisations reflect organisational members interacting with each other in a casual fashion. The people also tend to wear casual clothing in the workplaces. The Swedish firms reflect reduced chain of command that helps in conducting of effective interactions and also in taking of decisions in a collaborative fashion. The Swedish people though punctual in nature focus on taking ‘sacred breaks’. The organisational members are required to communicate in Swedish and know the tax laws of the region (Swedish Institute., 2016).
Joint Ventures are not specifically defined under the Korean Law. Joint Ventures of the type corporate and contractual are conducted in South Korea where the corporate JVs are corporations that are governed and run by members that have formed joint ventures or by directors appointed by the joint venture members. The contractual joint ventures are observed to be formed based on the generation of joint venture contracts between two or more people without the need for incorporating an organisation. In the founding documents regarding formation of joint ventures, foreign languages can be effectively used by the members. For registration purposes of JVs however documents are translated in Korean languages. Statutory limits are not established regarding number of members required for forming of joint ventures (Practical Law, 2015). The Korean government reflects positive attitude pertaining to the gaining of increased FDI from different international regions. The government potentially understands the value of FDI and thus encourages its flow in the region. The FDI flow in South Korea however is affected by lack of transparency and also changes in the regulatory mechanisms (U.S. Department of State , 2013).
The South Koreans tend to first bow and then focus on shaking hands with the expatriate people. The subordinates tend to bow to their seniors while the seniors in the organisation are the first to shake hands. The actual meeting is preceded by the generation of information regarding the parties to be involved in the meeting. Effective greetings are required to be made through the presentation of fruits, chocolates and flowers wrapped in an effective fashion. The gifts are required to be wrapped in red and yellow colours. Effective relationships are required to be made with the South Korean people while also appointments are required to be made in advance of around 3 to 4 weeks. Conservative dresses are required to be worn during meetings (Commisceo Global Consultancy Ltd, 2016).
Foreign investors focusing on entering into Saudi Arabia are needed to effectively partner with local investors commonly known as Kingdom of Saudi Arabia (KSA) investors. The partners entered into a JV agreement are required to gain legal recognition for conducting its business in KSA. Legal entities in KSA administer and govern the conducting of JVs in the region (Clyde & Co LLP, 2013). The Saudi Arabian region reflects a positive and an attractive environment for FDI flow. The Saudi Arabian General Investment Authority (SAGIA) focuses on generation of effective information and potential assistance to investors that focus on the generation of increased investments in diverse sectors relating to Saudi Arabia. The government of Saudi Arabia focuses on creating an open and liberal economy that potentially encourages the flow of FDI in the region. The Investor Service Centre of SAGIA not only focuses on the generation of effective information but also licenses to the investors (U.S. Department of State , 2015).
The Saudis generate increased importance to the aspect of connections and networks gained on an individual level. They tend to focus on gaining personal information related to the qualifications possessed by the individuals along with their family and social networks. Gaining information on such basis helps the Saudis in generating ranks to the individuals in the firm. Further, the Saudis also lay increased importance on the parameter of effective greetings and mannerism and are also required to abide by the Islamic traditions and laws for conducting social and business interactions. The Saudi people increasingly focus on the development of effective relationship with the expatriate staffs that tend to effectively respond to their hospitality gestures (HR Zone, 2013).
Boston Properties, Inc. , 2016. Overview. [Online] Available at: https://www.bostonproperties.com/pages/about [Accessed 23 August 2016].
Boston Properties, Inc., 2016. Our Strategy. [Online] Available at: https://www.bostonproperties.com/pages/about/our-strategy [Accessed 23 August 2016].
Clyde & Co LLP, 2013. Joint Ventures in KSA. [Online] Available at: https://www.saudiarabia.doingbusinessguide.co.uk/media/383628/ME-Fact-sheet-B006-KSA-Joint-Ventures-Eng-May2013pdf.PDF [Accessed 24 August 2016].
Commisceo Global Consultancy Ltd, 2016. South Korea Guide. [Online] Available at: https://www.commisceo-global.com/country-guides/south-korea-guide [Accessed 23 August 2016].
Holm, U., Forsgren, M. & Johanson, J., 2015. Knowledge, Networks and Power: The Uppsala School of International Business. United Kingdom : Springer.
HR Zone, 2013. Doing business in Saudi Arabia - cultural considerations for HR. [Online] Available at: https://www.hrzone.com/perform/business/doing-business-in-saudi-arabia-cultural-considerations-for-hr [Accessed 23 August 2016].
IBP, Inc., 2015. Sweden Insolvency (Bankruptcy) Laws and Regulations Handbook - Strategic Information and Basic Laws. United States: Lulu.com. Available at: https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Sweden/Doing-business/Tariffs-and-regulations [accessed 23 August 2016].
Invest in EU, 2016. Invest in Sweden. [Online] Available at: https://www.investineu.com/content/invest-sweden [Accessed 24 August 2016].
Practical Law, 2015. Joint ventures in South Korea: overview. [Online] Available at: https://ca.practicallaw.com/7-617-3185 [Accessed 24 August 2016].
Swedish Institute., 2016. Taking Care of Business in Sweden. [Online] Available at: https://sweden.se/business/taking-care-of-business-in-sweden/ [Accessed 23 August 2016].
Swedish-American Chambers of Commerce of the USA, Inc., 2015. Why Sweden? [Online] Available at: https://www.sacc-usa.org/export-guides/doing-business-in-sweden/why-sweden/ [Accessed 23 August 2016].
U.S. Department of State , 2013. 2013 Investment Climate Statement - Republic of Korea. [Online] Available at: https://www.state.gov/e/eb/rls/othr/ics/2013/204670.htm [Accessed 24 August 2016].
U.S. Department of State , 2015. 2015 Investment Climate Statement - Saudi Arabia. [Online] Available at: https://www.state.gov/e/eb/rls/othr/ics/2015/241728.htm [Accessed 24 August 2016].