A Brief Analysis

Introduction

External influences affect the types of products developed, the nature of positioning and market segmentation strategies, the type of services offered and the choice of business to acquire. The increasing complexity of business today is evidenced by more countries developing the capacity and will to compete aggressively in world markets. The external influences that affects a business venture in the global market varies from country to country. Establishing a new business venture in an area such as Japan would require an analysis of its cultural and economic environment. The Japanese market is considered to be the world’s most lucrative market. The biggest problem is how to get into it. Japan is known throughout the world for its economic successes, yet Japanese society remains an enigma to many outside its borders. The analysis conducted in this paper will present the positive and negative aspects of opening a in the Japanese market.

Brief History

Japan, an island country is a series of Eastern Asia island chain between the North Pacific Ocean and the Sea of Japan, east of the Korean Peninsula. It is slightly smaller than the state of California. With a population estimated at 127 (July 2004), Japan is three times more densely populated than Europe as a whole and twelve times more densely populated than the United States. 2 While retaining its time-honored culture, Japan rapidly absorbed Western technology during the late 19th and early 20th centuries. After its defeat in World War II, Japan recovered to become an economic power and a staunch ally of the US. While the emperor retains his throne as a symbol of national unity, actual power rests in networks of powerful politicians, bureaucrats, and business executives. The economy experienced a major slowdown starting in the 1990s following three decades of unprecedented growth.3

Business Venture

Establishing a restaurant, specializing in Caribbean and Japanese cuisine will offer a different flair of food service in the Japanese market. The Japanese are known for mixing business and pleasure by entertaining business partners. The typical Tokyo business day includes working from 9 to 6 or so, then going to dinner with business associates, then visiting a bar to relax over drinks or maybe even sing karaoke. Many Japanese businesspeople don't get home until midnight, only to repeat it all again the next day. If you enjoy the nightlife, Japanese business can be lots of fun. In addition, they are known for their preference of quality service and support. They are walking bulletin boards. They will market your business because of their value on quality and service. Based on these known pointers, establishing a new business venture in Japan would seem like the ideal investment opportunity. Creating an environment with a pleasant atmosphere, good eating and a relaxing atmosphere for conducting business agendas would seem practical.

Analysis of the Cultural Environment

When doing business abroad, a company should first determine what business practices in a foreign country differ from those it’s used to. Management then must decide what, if any, adjustments are necessary to operate effectively in the foreign country. As Americans increasingly interact with managers in other countries, it is important to be sensitive to foreign business culture. Too often, we come across as intrusive and manipulative. The effective approach to taking a company global is to do extensive homework regarding the cultural environment before placing operations in a foreign market. International companies must evaluate their business practices to ensure that they take into account national norms in their behavioral characteristics.4

Positive Aspects

The number-one concern of Japanese businesspeople is not price but quality and service. Because of this, the Japanese will gladly pay more for a product than most other people. Japan is respected the world over for its safe living standards, customer loyalty and honesty. As a result, there are many benefits to doing business there. The Japanese are the most discriminating buyers in the world. They demand the highest quality in the products they buy, and also expect top-notch support and service. Their laws even forbid the selling of counterfeit items such as fake Rolex watches or Nike shoes--fairly common in other sophisticated cities such as New York City and Seoul, Korea. More than any other nation, with the possible exceptions of Taiwan and Hong Kong, the Japanese are trend-driven. This means the typical shopper asks, "Is this item new and in style? Do my friends have it?" If so, price is of secondary concern.5

Negative Aspects

Language, culture and value systems differ among countries, and this can create barriers to communication and problems managing people. Foreign communication differences can be detrimental to the success of business in a foreign country. Knowing proper business practices is imperative to establishing a good rapport in a foreign country. According to Strategic Management by Fred R. David, “when negotiating orally with Japanese executives, one must periodically allow for a time of silence and must not ask, “How was your weekend?” which could be viewed as intrusive”.6 Most Japanese managers are reserved, quiet, distant,