Business investments have become very influential in all countries of the world. Each day there are several attempts by these countries to lay strategies of increasing their investment in this field both locally and globally. Market research has also been a great point of concentration by investment analysts who dedicate their efforts to coming up with the best advises for investors. Such companies engage in international transactions through establishing commercial branches all over the world.
The major incentives towards carrying out their operations in more than one country/state have been to gain strong foot hold and establishing roots in the international market. This diversification of their business activities assured them against regression in case of any terrorist attack and political challenges as in the case of single-country based business (Griffin, 2007). The variation of economy in different countries of the world has become an opportunity moistly exploited by multinational businesses which aim at acquiring cheap labor from their bases. Most of the developing countries which happen to be the preferred destinations of these businesses still face financial challenges and high rates of unemployment making their citizens available to work for multinational businesses under low payments. Technology is the current concern of every business, by investing in countries with advanced technologies these businesses are able to maximize their operations efficiently with low capital investment. E-business is also becoming the fruitful system of administering business, through this technology, these companies have been able to establish and manage several subsidiary businesses in one station.
Tax systems in many countries have been offering tax breaks to multinational businesses with an intention to encourage foreign investors. In turn multinational investors take advantage of the brakes to maximize their profit margins. According to research done in countries like U.S and China, whose citizens have established multinational companies, shows that their governments usually give billions of grants to cut their costs of investment (Griffin, 2007).
China currently has the world’s largest mobile network with the fastest growing markets accommodating over 432 million mobile phone users (David, 2010). On the other United States owns the world leading Information Technology provider the Microsoft Corporation. This makes both of them to enjoy monopolistic markets. By early this year, Japan’s venture on mobile phone telephony was rated closely equivalent to China’s. Certainly, this put China on notice over market competition.
Summary of China’s economy
In the past 28 years, china has risen from a poor and stagnant economy to a major economic power. Economic analysts have described this as the greatest modern economic success. By 2006, as David (2010) notes the country’s gross domestic product (GDP) was growing at the rate of 9.7% and the size of its size of the economy increased by over 11-folds. China also recorded 8-fold growth in its per capita GDP and its total world ranking on total trade rose to 3rd from the previous 27th. It is likely to be positioned the second world largest economy after U.S.A, though the recent studies may position it third after Japan. According to World Bank, China’s GDP covers 7.92% of the world economy and is worth 4909billion dollars. The growth is attributed to china’s shift from socialist economy to free-market economy and is described of having largest concentration of people living below the poverty line.
Summary of U.S economy
United States’ economy is the world’s largest with its nominal GDP growth estimated at $ 14.3 trillion by 2009. David (2010) observers that the US GDP growth as shown a stable trend described by low unemployment levels, many advanced research and capital investment funded by the government. The sources of finance in US is attributed to agricultural products exports, industrial manufacturing, New York Stock of Exchange which is the largest stock in the world, and international trade (Moffat, 2008).
Causes of different business expectations between the two countries
Difference in expectations between U.S and china Business leaders are attributed to so many factors including the support from government finances. China has the highest value of currency reserves summing up to 1,955 compared to U.S 77.65 in billions of dollars, while the product debt in U.S leads China by 37.5% compared to its 15.6 %. Their external debts show a very wide gap of over 13, 350 with United States of America in lead over china. (Mint.com, 2009)
Chinese business leaders can enjoy stable transaction compared to U.S which experiences multiple rises in inflation. This is evidenced by rising in oil prices which ranges from $ 110 to $ 109.72 priced per barrel. It will therefore contrarily benefit the importers as U.S is the highest energy importer. Likewise, U.S dollar becomes worthless during such times, but unlike the normal recessions, the States economy is found to be growing in terms of GDP.
Business expectations in U.S are expected to be negative for the following reasons; the U.S government is currently running a budget deficit of $ 1.8 billion per day, this result in a weaker dollar and crippling of the economy. According to economists, taxes are most likely to be raised for U.S government to be able to pay back the National Debt of over $ 8 trillion. This automatically will affect or make business expectation to be negative since these taxes will be acquired by heavily taxing all activities including the large business corporations. (Moffat.com, 2004)
China’s economy is now becoming the bigger than that of U.S hence becoming a centre of global economy. This together with their stable Chine Yuan will cause the business to boom meanwhile the States economy is recovering. In terms of linguistics, English as an international business language is becoming less important compared to Mandarin Chinese which has gain popularity within a short period of time. Global warming is another source of uncertainty to business leaders in US as it causes hurricanes, storms , floods, and ecological disasters destroying businesses ,a rare occasion in China resulting to foreign inv4esters pulling out of US to invest in Asia (Mint.com). China is only criticized by engaging in unfair business practices by lowering prices to extremely low prices thereby introducing unfair competition.
In a very ironical twist, automobile companies in US are lying off unionized workers and instead moving their factories to China. This has trend has been embrace by all the companies except Toyota Company, a Japanese company based in North America. As such, Toyota is the only company on record for hiring non-union workers.
U.S sometimes back was leading in business compared to China because of several factors including the difference in their GDP growth rates. At this time the difference in the economy was great with U.S having $ 14.3 trillion which is over 3 times the China’s 4.909 trillion. Business leaders in U.S can have several nourishment favors from their policies and economic status compared to Chinese businesses. U.S currency, the dollar, is the currency used in most international transactions and several countries and republics uses U.S dollar as their official currency or as a de faco currency in others. The federal government makes a lot of efforts to use both the monetary policies like controlling money supplies through changes in interest rates and the fiscal policies especially on taxes and expenditure to avoid rise in inflation and unemployment at the same time maintaining high economic growth thereby making business in the states to expand as well as maintain high levels of profits. All the above policies are put in place and checked by an independent Central Bank which was formed in 1913. U.S. dollar can also described as one of the most stable currencies in the whole world (Brown & MacBean, 2005).
The establishment of Trade Policy of United States of America has positively impacted on the businessmen has it gives the Congress powers to regulate and impose tariffs on international trades. This has helped in reducing monopolistic traders and unfairly traded imports and exports venturing into U.S. market making the ground fair for healthy businesses. This mandate is limited is some countries with booming economies like China. United States is the leading world importer. Also it one of the highest energy consumer, this makes merchants involved in these imports to have a greater opportunity as citizens to bid for importations. In contrast, China is the biggest importer of the U.S. product therefore the economy can not be balanced by favoring U.S. investors.
Hofstede’s cultural dimensions
Gerald Hendrik Hofstede is an influential organizational sociologist. Through his studies in interaction between national cultures and organizational cultures came up with indispensable dimensions of culture. Later, other researchers came up with the similar arguments to support his ideas. In his argument he put across the power distance concept he said, “Less powerful members of an organization or institution expect and accept the fact that power is distributed unequally”. He went on to claim that people relates to one another more equally regardless of the formal positions.
Another concept on his concentration was on masculinity where he argued about “distribution of roles between genders in society”. he went on to describe activities such as ambition, assertiveness, wealth accumulation , competitiveness as being “masculine” and that the valuation of quality of life and relationship being “feminine” regardless of whether the party involved is a male or female. concerning orientation, he argued that, “for long term orientation, people tends to value the outcomes of the future while short term oriented society value actions and attitudes affected by the past or the present”.
He went further to claim on individualism and collectiveness. The argument was that “in individualist cultures, people are expected to develop and display their individual personalities and to choose their affiliates, where as in collectivist culture, members are defined and act mostly as a member of a long term group”.
Long-term orientation was his fifth dimension added after the other four. He explained that there are actions and attitudes which if valued in the society will bring a clear distinction between the long term and short term oriented societies respectively. For a long term society, its members value actions and attitudes those tending to have certain effects on their future i.e. shame, thrift, and perseverance or persistence. If the members value actions and attitudes either affected by the future or the present then the society is termed as short term oriented. Such valued factors are: favors, gifts, and respect for tradition, immediate stability, and protecting one’s face.
In concluding his work, Hofstede discussed the uncertainty avoidance dimension, he said” in cultures having strong uncertainty avoidance, members tend to prefer explicit rule such as religious stipulation and rules governing food and formally structured activities and employees are likely to remain in their current workplaces, where as cultures with weak uncertainty avoidance prefer simple and flexible rules and informal activities. Therefore employees frequently change their work places”
Dimensions in management
Hofstede’s cultural dimensions are evident in most work place. Basing on his individualism, managers usually or ought to encourage collectiveness in the institutions they are in charge of. Individualism is a poison toward organization’s objectives but this can be of great benefits to employee’s rights. Each and every employee sets his goals to achieve as an individual only if his/her rights are observed in the work place. best managers therefore has to encourage collectiveness as an organization and also keep in mind the importance of individualism when it comes to rights of an employee (Brown & MacBean, 2005)
A manager embracing masculinity is described to be successful. Competence in the work places is as important as capital, therefore every employee regardless of his/her social or biological gender should aim at observing the “masculine” responsibilities such as competence, ambitions, wealth accumulation as they are source of motivations towards hardworking. Manager on the hand should also encourage “feminine” dimensions to facilitate good relationship between oneself and the employees and also between employees themselves to ensure good and smooth running of the institution. Powers are great achievements of every delivering manger. He/she has to keep distance between him/her and the subordinate staff though most subordinate staff is more comfortable with and demand the right to contribute to and critique the decisions of those in manages in power. Managers should allow this but to some extend by making decisions in the organization be democratic and consultative by establishing a clear chin of command for communication within the organization. (Hofstede, 2001)
While establishing the company’s goal and objective requires, the managers should be able to consider persistence/perseverance before they are met. They should be able to expect and accommodate challenges they will face while associating the staff at lower ranks in the organization.
In summary, culture in relation to an organization is shared, tangible and is confirmed by different correspondents. Cultural practices influences the way strategic plans are laid down, influences management, the way decisions are made, negotiations and agreements. Investing in different countries having different culture can make the business operations easy or difficult. In terms of business culture and organizational culture; one must have the cultural etiquette i.e. the behavioral mannerism expected in a given situation. There also emerge cultural stereotypes in how we believe in other people’s attitudes and behaviors and for a management to succeed when dealing with people of different, they ought to embrace ethnocentrism that is, viewing the world from cultural perspectives through relativism. Finally, inequalities within an organization should be minimized and the interdependencies between the less and more powerful employees be encouraged but a hierarchy in the organization should be recognized being source of inequality in roles only.