Abstract

The success of any given business depends so much on the environments surrounding it. The culture of the people around added to the policies that different countries and regions have concerning business transactions play a significant role in achieving the business goals and objectives. McGregor points out that prior to any investment it is advisable to carry out an analysis of the dynamics governing the success of businesses in a given area. For example, the Asian market has been changing over a period of time. The investors are moving to launch their enterprises in the Asian block, where the member states are growing the economies. The member states that world Khan, LLC is looking for are Vietnam, Indonesia, and Thailand. This paper focuses at analyzing business dynamics in the given areas along with constructing a memo that is broken down into the three sheets each giving an insight of each country.

Asian Business

Pest Data

The following data focus on the three different countries: Vietnam, Thailand, and Indonesia.

VIETNAM

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CIA Basic data:

 

GDP (PPP)

$336.2 billion

GDP Growth rate

5.2% estimated in 2012

GDP/capita

931.03 dollars

Income distribution

 

Population

88,775,500 as recorded this year

Distributions/aging/literacy

Literacy rate of 88%.

Total trade (US$)

(210 USD million) deficit

Import value

$104.7 billion estimated in 2012

Major import partners

They include the United States, Japan, China, Australia, and Singapore

Major import items

Crude oil, textiles, seafood, rice, electronics and computers, and rubber

Export value

$114.6 billion estimated in 2012

Major export partners

Her major partners include: the United States, Japan, China, Australia, and Singapore.

Majorly exports

Rice, seafood, crude oil, textiles, rubber, electronics and computers

Consumption of the population

72.3% of the Gross Domestic Product of the country

   

Global competitiveness

 

Overall rank

75th

Development stage

Depends on factors

Strongest pillar

Labor market efficiency

Top five business problems identified by the GCR

Poor ethics, corruption, doubted protection of intellectual properties, and inflation of 20%

   

Ease of doing business

 

EODB rank

109 a figure that was 107 in 2013

Three most difficult doing business issues

Bureaucratic protocols, access to financing and regulation of securities exchange

   

Advice from the US Commercial Service Country Reports

 

Major problems

Inadequate educated workforce, inflation, and inadequate supply of infrastructure

Major opportunities

Efficient labor market and large market size

   

Corruption/Political stability?

Vietnam is politically stable but the rate of corruption is relatively high.

INDONESIA

CIA Basic data:

 

GDP (PPP)

4271.51 US dollars in 2012

GDP Growth rate

6.2% per annum

GDP/capita

$4,900 dollars estimated in 2012

Income distribution

 

Population

246,864,191estimated this year

Distributions/aging/literacy

 

Total trade (US$)

8.6 billion dollars

Import value

$178.7 billion

Major import partners

They include China, Japan, the United States, Singapore, Thailand, South Korea, and Malaysia

Major import items

Main imports are oil and gas, machinery, electrical equipment, iron, steel, and vehicles

Export value

$187.3 billion

Major export partners

They include Singapore, South Korea, the USA, Thailand, China, and Japan

Major export items

Oil and gas, electrical appliances, plywood, textiles, and rubber

Consumption

63.5% of the GDP

   

Global competitiveness

 

Overall ranking

46th

Stage of development

Efficiency-driven stage

Strongest pillar

Financial market development

Top five business problems identified by the GCR

Corruption and bribery cost of business of crime and violence, unethical behavior in the private sector, inefficient labor market, and underdeveloped infrastructure.

   

Ease of doing business

 

EODB rank

Ranks at 120 according to 2014 statistics

Three most difficult doing business issues

Bureaucratic protocols, access to financing and regulation of securities exchange

   

Advice from the US Commercial Service Country Reports

 

Major problems

Policy instabilities, inadequate supply of infrastructures, and inefficient government bureaucracy

Major opportunities

Stable macroeconomic environment

   

Corruption/Political stability?

It enjoys political stability, but has high corruption rates.

THAILAND

CIA Basic data:

 

GDP (PPP)

$645.2 billion estimated in 2012

GDP Growth rate

6.5% estimated in 2012

GDP/capita

$9,500 estimated in 2012

Income distribution

 

Population

66,785,001 as of 2014

Distributions/aging/literacy

As per the 2010 Census: 33.63 million are females (50.9%), and 32.35 million are males (49.1 %) with a sex ratio of 96.2 (males to 100 females). High literacy rate of 88%

Total trade (US$)

$ 8.3 billion as per 2012

Import value

$217.8 billion

Major import partners

Japan, China, Malaysia

Major import items

Capital goods, intermediate goods and raw materials, consumer goods, fuels

Export value

$226.1 billion estimated in 2012

Major export partners

North America, Japan , Europe, India, China, and the Middle East

Major export items

Electronics, computer parts, automobiles and parts, electrical appliances, machinery and equipment, textiles and footwear, fishery products, rice, rubber

Consumption

68.9% of the countrys GDP.

   

Global competitiveness

 

Overall ranking

39th

Stage of development

Efficiency-driven stage

Strongest pillar

Market size

Top five business problems identified by the GCR

Political & policy instability, security concerns, excessive red tapes, uncertainty in property protection and persuasive corruption.

   

Ease of doing business

 

EODB rank

91st a figure reflected in 2014

Three most difficult doing business issues

Owning land in Thailand, engaging in fiduciary functions and engaging on inland communication.

   

Advice from the US Commercial Service Country Reports

 

Major problems

Government regulation on foreign investors

 

Major opportunities

Market size for goods and services

   

Corruption/Political stability?

Thai politically is unstable due to the frequent protests. Transparency in Thailand is maintained.

 

SUBJECT: Business Environments of Vietnam, Indonesia, and Thailand

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The Asian market has been changing over a period of time. The investors are moving to launch their enterprises in the Asian block, where the member states are growing the economies. The member states that world Khan, LLC is looking for are Vietnam, Indonesia, and Thailand. The memo is broken down into the three sheets each giving the insight of each country.

The PEST data above qualifies Thailand over Indonesia and Vietnam for the following reasons. Thailands economy is at the efficient-driven stage, which means that production is efficient; the major exports include automobile and parts; thus, fitting the companys field of production. The export value outweighs the import value, as the balance of payments is favorable. The large market offers the firm an opportunity to do mass production. Thailands consumption shows that there is ready demand. The country is ranked 39th in the world, meaning that it is highly competitive in the international market; thus, claiming a bigger pie of the global market. Thais GDP growth rate shows how economy is positively changing; thus, meaning that the sectors are growing at a fast rate.

DOING BUSINESS IN CHINA

Chinas economy has been growing for the decades to join top economies in the world, such as the US. It has a reputable economy in East Asia and Pacific region and is ranked 96th in the world as of the year 2014.

There are pointers, according to McGregor, that contain insights to guide willing investors on the ways to launch ventures in China. China suffers from the challenges of unequal treatment of people dictatorships, as well as failing to accept responsibility and to share information (McGregor, 2005). One should understand that in China they prefer autocratic management style. The benevolent autocrat gives directives and the supervision is highly practiced in the country. The foreigners, who are willing to enter Chinese market, have no option rather than to adapt to the already existing style.

The Chinese culture values their norms, though it is a collective culture, which is dominant in parts of East Asia pacific block: a culture that does not value transparency in all what they do in whatever situation they are. The Chinese culture is a culture that does not depend on meritocracy, but on seniority and patronage.

Chinas rush to get rich is accompanied by deep distrust of the system, and anyone outside ones immediate family or circle of close friends. This has created a business environment that is steeped in dishonesty and in dire need of transparency and fair dispute resolution systems (McGregor, 2005).

The author tries to warn the foreigners that are in quest to enter Chinese market not to trust anyone fully. The trust is not valued when doing business in China. The business transactions need ones attention, but not a Chinese representative. The author highlights the need of building a system that is transparent.

The approach of promotions in China is different from most parts of the world, as far as business management and employees welfare are concerned. The Chinese culture prefers team work, as it is built on collective dimension foundation, but when it comes to promotion criterion; it follows patronage and seniority, not a meritocracy approach. In order to get promoted, a good manager does not necessarily have to be highly educated, but instead he has to earn respect and be long time employed by the company.

Education is Chinas greatest strength and greatest weakness. The Chinese are great memorizers, mathematicians, and scientists, who run tedious routines. However, route education system leaves many weaknesses in terms of analysis and leadership (McGregor, 2005). The author eliminates the practice of foreigners to systemize the leadership that corresponds with their countries.

In China business knowledge and management competence are not justified by the language one speaks. There are a number of investors, who believe that English is the only official language that can be used by a competent manager. As McGregor (2005) advised, One should not mistake language ability with business or management competence. The smart managers who are successful do not speak in English they prefer their native language. Language does not matter or qualify one to be competent, but competence is measured by experience and success.

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The Chinese people do not value relationships when it comes to doing business in their land. The relationship comes when they benefit from the deals. McGregor (2005) tries to put it clear that China is returning to its traditional symbiotic relationship between the merchants and the mandarins. The officials and business merchants do not have a common interest. He advised the foreigners, who are in a process of investing in China, to stick to their objectives and not trying to creating relationships.

The Japanese and Koreans embrace a paternalistic management approach, where they expect the subordinates to obey their directives. The Chinese, Japanese, and Korean culture have one thing in common, whereby the management style and applications are the same. The employees welfare only applies to seniors, when it comes to promotions, which are based on seniority and patronage not on a meritocracy. The approach used is meant to maintain status quo, which they believe builds loyalty.

In conclusion, doing business in Asia has demerit factors that need patience and understanding. There are a number of ways one can adopt in order to cope up with the factors that affect their entry in Asian business. Firstly, carrying out business orientation, one comes up with the ideas to implement in order to resist the resultant effects of the Asian culture. Secondly, one can opt to do business merger and become a major shareholder. Thirdly, acquiring an Asian manager for easier entry and avoidance of cultural dilemmas might be a solution. Cultural myopia can lead to losses; hence, winding up involuntarily.

 

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