Japan Is a Magnificent Country for Investment - Essay Example

Country Analysis: Japan Power Distance Presently, it has been d that, Japan is a magnificent country for investment. Hofstede defined power distance as “the extent to which less powerful members of the institution and organizations expect and accept that power is distributed unequally” (Baumann, 2007). A country like Japan scores highly in power distance. In countries with elevated power distance, the citizenry obey the rules of their superiors .These countries have a strong relationship dependency involved. The older generation is carried with high regard due to respect for old age. In carrying out business with parties from elevated power distance countries, the managers used or should have title at least on the same level as those they are negotiating with. On the other hand, cultures that have low power distance should have the inequalities reduced. Japan is ranked at 54 while the United States of America is ranked at 45. Uncertainty Avoidance According to Hofstede, countries with low uncertainty avoidance index score have innovative approaches and risk investment tendencies. This are attributes found in entrepreneurs. Uncertainty avoidance is the reality that vagueness about the prospects of the future is a basic fact of human life with which we try to cope through the domain of technology, law and religion. Uncertainty avoidance is also the extent to which individuals feel endangered by situations. This leads to people creating institutions that deal with these. Hofstede used stress, employment stability and rule orientation to identify. Countries are then ranked as low or high concerning uncertainty avoidance. Squat uncertainty avoidance means that, there is a strong willingness to take a risk. On the other hand, high uncertainty implies a lower willingness to take risk. Hofstedes notes that, in societies where there is high uncertain avoidance, there tends to be a generational gap amid the old and the young. High uncertain avoidance cultures are concerned with rituals and traditions and often follow exceedingly complex rules and regulations. Individualism Individualism refers to preference of closed surrounding environment, in which it is understood that, one must mind for themselves and their close relations as opposed to the entire cluster in which one is an associate. Individualism can be referred to as an appraisal of the emotional dependence and autonomy of a person. The culture of a country is scored high in this sense if there are favourable responses to items such as , having a satisfying job which leaves you with enough time for yourself and the family. Uncertainty Avoidance In reverence to Geert Hofstede’s civilizing magnitudes, Japan’s uncertainty avoidance is the second famous cultural attribute. Nations high ceilinged in uncertainty avoidance, possess such character as security actions, uneasiness in amorphous situations and emotional expressions that are elevated. Japan is ranked in the top cream category worldwide at position eight with 92 as its undisputed score. As pointed out by their towering tally in collectivism, the people of Japan are seekers of peace and accord. This passive course is highlighted by their propensity to shun ambiguity. For instance, in judgment making, the simplest and most direct solution is always sought. To circumvent unstructured circumstances happening, there is further demands to match to group models in order to uphold utmost cohesiveness. One research exposed that Japanese scholars deem answering a query in class an extremely uncertain condition, and for that reason evade doing so except if they are sure of the response or there is comprehensible group accord. The people of Japan are in addition extremely detail-oriented, a further instance of uncertainty avoidance. Employees prefer careers involving area of expertise and value clear-cut instructions from their employers. Numerous communal rules and rites delegate the apposite behavior for meticulous circumstances so that there is hardly ever uncertainty concerning how to ensue. However, there are still a few instances where foreign persons have to conform to be acknowledged, for example taking out one’s shoes prior to entering a house or taking a shower in Japanese way. Career Success/Quality of Life Presently, the people of Japan, particularly, the youth began shunning traditional way of thought, career success. Mostly the youth do not fancy getting promotions in their places of work. An article, which summarizes this roughly, reports about this issue. It is articulated that, the Japanese workers who do not require their positions upheld or them getting ahead has risen. These people hate promotions and seem to deem that they do not need employment except for the management and those who hold big responsibilities. These people commence to be self centred, thinking personally of themselves rather than being holistic. Conventionally a number of Japanese women esteemed cosiness and content in Job as opposed to success in career. There existed a number of men who perceived their institutions or the economy of Japan via an international outlook in history. Japan: Short-term wins or long-term losses? There is belief that the fundamental positive case for revival in Japan remains integral. Data that is send overseas remains tough, and even though the outside face of the economy of Japan is surpassing the domestic, there is expectation to see crystal signs of advancement domestically in the impending periods or months. It is articulated that the stock market should be propped up by the renewed fiscal motivation and easy financial policies- as opposed to some other global areas. The Japanese authorities are not seen leaving their loose financial attitude in the coming or near prospect. Population Demographics Population of Japan was found to be 126,475,664 by July 2011. Age structure Ranges from 13.1% of juvenile (0-14 yrs), 64% (15-64yrs) and 22.9% are 65 years and over. Ethnicity of Japan Constitutes Japanese 98.5%, Koreans 0.5%, Chinese 0.4%, other 0.6%. It is worthwhile to note that up to 230,000 Brazilians of Japanese origin migrated to Japan in the 1990s to work in industries; some have returned to Brazil (2004). Shintoism 83.9%, Buddhism 71.4% are dominant religions in Japan where as on 2% of them follow Christianity and other 7.8%. Japan has Japanese as its National Language. The literacy rate for 15 and above is 99% this means that both male and female in the country are aware of the importance of education and government has made it convenient by spending 3.5% of GDP on education. Tertiary education in Japan is highest among Organisation for Economic Co-operation and Development (OECD) countries. 44% of 25-64 years old have completed higher education in Japan. Similarly the enrolment program which was 87.8% for 3-4 years old in primary section is also higher when compared to other OECD Countries. This constitutes USD 9673 for the Annual expenditure in private and public sector for an individual student in 2008. Business enterprises from multinationals of US will surely have the services of well educated and learned task force available for their disposal. However, as education brings awareness so the cost of the labour can increase. Compensation Japan makes up 8.87% of the world economy with Gross Domestic Product worth 5498 billion dollars, according to the World Bank. It has the second largest industrialized free market economy in the world. Japanese productivity is more inclined towards industrial sector and relatively less towards agriculture, distribution and services. Also, Japan has fewer Natural resources and relies on trade for raw materials with other countries. Afghanistan per capita income is $1,000 (2011 estimate) and is ranked 212 amongst the countries. Japan per capita income is $34,300 (2011 estimate) and is ranked 37 while Indonesia ranks 151 with per capita income is $4,700 (2011 estimate) and Somalia’s per capita income is $600 (2010 estimate) with 220 ranking. US stand out way ahead of the countries with $41,663 Per capita income. In Japan different rates apply dependent on region as well as business sector. Japans minimum wages range from ¥ 642 to 821 per hour for all workers. Also, Japan’s labour law states that cost of extra pay and temporary pay must be paid additionally to the minimum wage. Keeping the labour laws, work force, literacy of Japan in mind, multinational will have to manage relatively higher rates rather than Afghanistan, Indonesia or even Somalia. Religion Shintoism 83.9%, Buddhism 71.4% are dominant religions in Japan where as on 2% of them follow Christianity and other 7.8%. Shinto worship innumerable divine nature spirits called kami. Shinto followers practice moral and ethical values to guide their day to day life’s and relationships including harmony, facade and Loyalty. In most cultures religion forms the premise for life, Similarly Japanese follow set of principles which affects their behaviour. They believe in harmony, keen on maintaining a social status and would certainly remain loyal to clan or a group. This would create an aura of hard work, focus and eventually success for the multinationals venturing out in Japan Ethics Japan ranks 8 on corruption perception index while U.S ranks 24th. Corruption remains an important and prevalent issue for the country. As per transparency International, bribery is also critical concern regarding the business in Japan. Overseas bribery is carried for having projects and business. Also, Japan is ranked among 28 other countries in bribery perception index of 2011. Universalism accentuates rules that apply to a universe of people, while Particularism highlights exceptions and particular cases. The U.S. is one of the most Universalist of societies (7 out of 46); Japan is one of the most particularistic (40 out of 46). Multinationals will have to sort out the precarious conditions of bribery and corruption according to the beliefs and principles set forth by them rather than falling prey to the current practices of doing business in Japan. Setting high standards and competitiveness will earn them the path to success. Also, it is worthwhile to note that Japanese are Particularistic in their approach. This might add further doubts in doing business in Japan. But considering their norms, religion and culture Japan provides effective and propelling opportunities for multinationals. Other information: Natural Hazards Japan is situated on fault lane and has frequent earthquakes because it is closer to major sub- duction zones with many dormant and some active volcanoes. About 1,500 seismic occurrences are noted (mostly tremors) annually; tsunamis; typhoons. Therefore the multinational will have to take this into account when considering to expand in Japan. PART II: BUSINESS ENVIRONMENT Political Risk Japan has Constitutional monarchy with a parliamentary government. The constitution was devised in 1947. Prime minister is the head of the government with legislative and judicial civil law system in place. Democratic Party of Japan (DPJ), Social Democratic Party (SDP), People’s New Party (PNP), is few among many political parties operating in Japan. After the derailing situation of the country struck by tsunami, Prime Minister Kan’s of DPJ resigned on downward popularity. DPJ selected former Finance Minister Yoshihiko Noda as party leader in an internal election. Noda won the election and was sworn in as Prime Minister by the Emperor on September 2, 2011. Prime Minister Noda has focused on “ittai kaikaku,” or integrated reform that combines fiscal severity with an increase in consumption tax. Since then the stability has prevailed. Japan has established diplomatic relations with world and it is the world;s third most largest economy. Japan extends significant economic assistance in World trade organization to many countries. Japan provides an incremental tax credit for R&D work. Japan’s Ministry of Internal Affairs says over 70 percent of Japanese inns and hotels are of the view that they don’t want foreign guests like last year. This is primarily due linguistic barrier as per the ministry. However people of Japan are found to be fairly good to foreign people. Police officials in Japan describes that Mafia is more deep-rooted in Japan than in U.S as 83,000 gangsters operate in 22 crime groups. Mob groups constitutes an economy worth 20 trillion yen ($242 billion) a year. Therefore, The National Police Agency and other government departments are exerting pressure to stamp out and evade mafia links from various business sources, specifically construction. Finance ministry has also taken measures regarding back accounts as it scrutinises before offering accounts and denies to those with mafia connections to prevent money-laundering and cut-off loans to mob related companies. In the wake of all the political, crime, mafia and terrorism, Japan still has the potential to be lucrative and sustainable market for the investors as it is the world’s 3rd largest economy. People in Japan although have linguistic barriers, yet they are friendly. Mafia is being curbed by government officials and it has gained political stability. The conventional terrorism acts have least been reported in Japan. Ultimately providing a conducive environment for business. Economy Japan Inflation (average consumer price index) was 99.98 in 2010. Japan has maintained the range from 99-100 since 90’s. Whereas, U.S has Inflation (average consumer price index) 12.53. Unemployment Rate in U.S is on the rise with 9.633 in 2010. Japan has unemployment rate of 5.060 in 2010. Japan has Gross Domestic Product worth $ 5,855,000 while U.S ranks first in the world with $ 15,060,000. GDP in Japan grew at an average of roughly 1% yearly in the 1990s. Due to financial crisis in 2008 the demand for Japan’s goods tumbled, the Bank of Japan reported real GDP growth of -5.5% in FY 2009. Japan recovered slightly in 2010 and reported real GDP growth of 4.4%. Due to the disaster in 2011 bank of Japan injected US $ 325 billion in to the economy. Therefore, the government adjusted its GDP for FY 2011 to 0.5 %. Both countries have trends of progress. Japan as well as U.S is propagating a message of conducive and stable environment for the investors. The trends of GDP are ever increasing. This implies that business ventures are likely to be successful in growing economies like Business Possibilities Japan is the ranks 3 among other countries as we analyse the GDP. Since WWII it has made phenomenal progress. The government structure has augmented the way forward. It has devised policies conducive to business, education and health. People have been allowed to follow religion and sets of principles. Mostly, however follow Shintoism. The religion has strong influence on Japanese regarding belief, social status and loyalty. People have strong and firm beliefs with a desire to maintain healthy social status and being loyal to their clan at the same time. The education sector has excelled in Japan. Although government spends on 3.5% of the GDP on education, yet Japan has 99% literacy rate. People have the knack to study and even go abroad for further studies. Government of Japan facilitates them with scholarships and aid etc. Youth is more prevalent in Japan and keen on excelling and competing with others. The pay rates are relatively higher when compared to other countries primarily due to the improved education as they have realized that education brings prosperity. Although Japan is industrialize, free world economy providing favourable conditions for enterprises, yet there are some concerns like mafia and mob syndicate controlling and penetrating in the various business sectors. Government has taken appropriate measures and imposed ban by declaring them illegitimate. Geographical position of the Japan sometimes hampers its progress due to Natural Disasters and compensation accordingly. This ultimately impacts the Political structure and it trajectory. Apart from the Japan has consistent and durable political system providing premise for good business. Japans economy is on the rise and with investors pouring in; future endeavours are more likely to be successful. Both production value and employment figures in the context of the services industry as a whole indicates that Japan as an industry at the growth stage. 2008 saw the maximum overseas investment in Japan worth US$130.8 billion. Electronics and automobile business prospered. Financial crisis which began in 2008 also caused a decline in Japan’s overseas investment. Manufacturing and non-manufacturing both suffered. Investments have been steady in manufacturing companies, but the rising trend was seen in finance, insurance, wholesale and retail along with mining. So, the multinational venturing out in Japan with stable and huge reserves would probably want to follow the run of mill and investing in Automobiles manufacturing, transportation and electric machines. However, the non-manufacturing proves to be luring as well at the same time. Japan provides conducive and compelling environment for the future endeavours of multinationals. It has multitude GDP along with effective and hard working task force willing to work at reasonable rates. Free economy with industrialized trends, lull and intriguing work force with government prodigy preluding non hegemony environment for the Multinationals. References 1. Affairs, Bureau of Public. "U.S department of State." diplomacy in Action. 5 April 2012 . 2. Anna Fedec, Antonio Sousa. Trading Economics. 5 April 2012 . 3. Baumann.A. Influence of Culture on style of business Behavior between Western and Arab managers. München: GRIN Verlag GmbH, 2007. 4. Hampden-Turner, Charles M. Building Cross-Cultural Competence. Yale: Yale University Press, 2000. 5. IMF. Econ Stats world Economic Outlook data , IMF. 5 April 2012 . 6. International, Transparency. Transparency International. 1993. 5 April 2012 . 7. OECD (2011), Education at a Glance 2011: OECD Indicators, OECD Publishing. doi: 10.1787/eag-2011-en Read More