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Running head: FORMAL REPORT
Amira Al Badiya
West Virginia University
In today’s global environment, companies of all sizes are establishing operations in
foreign markets. This type of expansion often provides many benefits, including greater
opportunities for better growth. Companies keep adopting strategies that are aligned towards
joining the global market. The rise in business expansion can be attributed to the decline in many
barriers to international trade during the last half of the 20th century. As such, companies started
pursuing global business strategy in quest for global competitive advantage. The allure of global
markets is mesmerizing. Companies that operate in highly competitive or nearly saturated
markets at home, for instance, are drawn to look overseas for expansion. However, the decision
to expand to the international market is not one that is made in haste. Managers must ensure that
they determine the value of that expansion to stakeholders before making the decision. Notably,
Companies can easily underestimate the costs of entering new markets if they are not familiar
with the new regions and the business practices common within the new regions. For some
companies, a misstep in a foreign market can put their entire operations in jeopardy. Therefore,
companies must ensure that they collect adequate information on the target location and business
factors that affect that place before making the decision to expand.
Companies often embark on an expansion strategy for various reasons. Some of those
reasons include to improve cost effectiveness of their operations, to expand into new markets for
new customers and to follow global customers. As these companies look for growth in new areas
in the world, they prioritize which countries to enter. Because many markets look appealing due
to their market size or low-cost production, it is important for firms to prioritize which countries
to enter first and to evaluate each country’s relative merits. To best understand the countries, a
company must conduct due diligence and identify factors affecting business in various countries
then make the right decision.
This report presents an analysis of various factors within specific countries and determine
which country is best to start business. Basically, the report conducts due diligence on the
business influencing factors that could fall into the categories of economic environment, political
environment, cultural and social environment, and technological environment, such as market
demand, competition, infrastructure, tax incentives, etc. The report shall present findings on
business factors from china, Japan and India, since the company intends to expand to Asia. The
report shall be organized as follows; the report begins with a table of contents, then a summary
of the findings of the three countries under review. The findings section shall present some of the
factors affecting business decisions in those countries. Finally, the paper shall present a
conclusion and a recommendation identifying the selected country. We are conducting this
analysis following a request by the CEO of Vivint solar to look at the best Asian country for
expansion. As such, the target audience for the report is Vivint solar’s strategic planning
committee who will review the findings of the report and make up a decision on the
In this section, we present some of the underlying principles that guide the process of expansion
to other countries. Organizations can adopt different entry strategies depending on the choice.
These strategies differ in the degree of risk they present, the control and commitment of
resources and the return on investment they promise. Companies can either opt to go
international through non-equity mode which includes export and contractual agreements, or
through equity mode which involves the use of joint ventures and wholly owned subsidiaries.
The market-entry technique that offers the lowest level of risk and the least market control is
export and import. The highest risk, but also the highest market control and expected return on
investment are connected with direct investments that can be made as an acquisition . For the
case of this company, we propose that the company makes direct investments. This is the best
approach since the company will be guaranteed to have huge return on investments regardless of
Notably, for any business to be successful in its expansion, the company must follow
seven key actions. The first critical action to successful expansion is setting the right strategy and
priorities. Here, the company needs to ensure that the best strategy for expansion is selected and
that the strategy chosen does not put the company in jeopardy. Once that has been done, the
company must develop skills to evaluate, plan and execute entry into a new market. If the
company cannot develop these skills within its employees, it could outsource. Next, the company
should understand cultural, product and regulatory differences within various countries. Once
that is done, the company should get the right advice for management decisions. Consequently,
the company should build a strong management team and create a risk and governance structure
fit for its purpose. From the factors identified, this report shall dwell on one factor, which
involves analyzing business and cultural factors of each country.
Vivint Solar is a leading full-service residential and industrial solar provider in the United States
serving over 21 states. As part of each sale, the company designs and installs the system,
allowing customers to enjoy the benefits of affordable, renewable energy. The company has deep
installation prowess, having completed over 120,000 installations throughout the United States.
Today, Vivint Solar is one of the largest full-service residential solar providers, with over
139,000 customers . The company’s vision statement is to be an organization that encourages
innovation and information sharing amongst its stakeholders to ensure that quality products are
provided. On the other hand, the company’s mission is to ensure that it provides an environment
that not only encourages success and happiness, but also well-being of employees and
consumers. The company values people and has ensured that it treats individuals with respect by
letting care and concern for all to guide the company’s actions. Additionally, Vivid solar
champions clean energy and opts to take risks. The driving force of the company is its belief that,
regardless of position or title, each of us is leading the way to a clean, sustainable world.
The energy industry is going through reformation, driven by consumer demand for choice
and control. Most people and countries are adopting solar energy hence an indication of
potential growth. The company has recorded a tremendous growth in size, and has approximately
5000 to 10,000 employees. The company’s revenue is approximately $ 100 million to $ 500
Million, making it a big corporation. Since the demand for solar energy has increased globally,
the company opts to expand to capture potential customers. The company focusses on
installation of solar services and sales parts of solar systems.
Country A: Japan
Japan is an island country which is located Far East of Asia and it bordered by the Sea of Japan
to the east of Pacific Ocean to the east and spans from the sea of Okhotsk in the north to the East
China Sea and by the Philippine Sea in the southern side.
Culture/ Politics/ Government
Politics in Japan are conducted in framework of a multiparty bicameral parliamentary
representative democratic constitutional monarchy whereby the emperor is the celebrated head of
state and the prime minister is the head of the government and the head of the cabinet which
directs the executive branch. The culture of Japan has changed abruptly over the millennia from
the country’s prehistoric period to its contemporary modern culture which absorbs influences
from Asia, Europe and North America. The government of Japan is a constitutional monarchy in
which the power of the emperor is limited and it’s relegated primarily to ceremonial duties. As in
many other countries, the Government is divided into three main branches i.e. the Legislative,
the Executive branch and the judicial branch.
The economy of Japan is a highly developed free-market economy. It’s the 3rd largest in
the world by nominal GDP and the 4th largest by purchasing power parity and it’s also the
world’s 2nd largest most developed economy. In 2016, its per capita GDP was at $38, 937. Due
to a volatile currency exchange, the Japan’s GDP as measured in dollars fluctuates sharply.
Analysis of Factors
Japan is a leading country in many activities like innovations, boasting a highly attractive
business and living environment within one of the world’s largest economies. Japan has a stellar
reputation among western and Asian companies which are attracted by its capabilities, personnel
and well-developed laws, such as intellectual property rights. Many industries also are attracted
to start their works in Japan because of its developed consumer base. The huge ready market is a
trend setter among regional economies and is utilized by many businesses as a test location.
Some businesses say japan is a good country for testing products which are new to the market
and other businesses say that it is a good country as it offers a good environment for business
expansion. Japan has also become home to popular business giants like Apple, BMW, MercedesBenz, Microsoft, Chanel, Louis Vuitton, Tiffany & Co., and the list goes on. These brands have
enjoyed and still enjoy a good share of the Japanese economy. If their presence in Japan wasn’t
profitable, they’d already left by now. So, in essence, Japan has all the opportunities and
resources a business needs to excel in. What is needed is to put on the thinking hat and churn out
those beautiful ideas.
Japan’s free-market economy has earned it second place in the world’s GDP ranking and
fourth-largest in purchasing power parity (PPP). There are diverse business opportunities in
Japan; Japan has the most significant electronic goods Industry in the world and also comes in
third in automobile manufacturing. In the same token that Japanese consumers are highly
educated, their workforce is extremely learned as well. There are over 600 universities in Japan,
which speaks to the extraordinary value placed on education in Japanese culture. With this level
of education comes the understanding of the importance of the advancement of the collective.
Japanese workers are highly devoted to the companies that they work for and strive toward the
success of the group over the success of the individual. Their workforce adheres to pillars of
further developing expertise, increasing knowledge, and attention to detail.
Japan also wouldn’t be able to compete as a global player if they didn’t have a highly
developed infrastructure. With telecommunication technologies, well-built roads, highways,
factories, airports and harbors, Japan has positioned itself to play a pivotal role in the
international marketplace. Now more than ever, venturing into foreign markets is an increasingly
viable option. Taking measures to start a business in Japan can lead to many exciting
opportunities for your company. Being the third largest economy in the world, the Japanese
market offers a quick business launch, a highly educated population, and a well-established
infrastructure that is built around facilitating global commerce. These attributes are what makes
Japan a strong competitor in the international marketplace, and a worthwhile realm to expand
Country B: India
India, country that occupies the greater part of South Asia. Its capital is New Delhi, built
in the 20th century just south of the historic hub of Old Delhi to serve as India’s administrative
centre. The rate of growth in the number of factories and employment from 1860 to 1940, places
Indian development on a par with Russia and Japan. In monsoon south Asia, however, the
seasonal boom and slack in economic activity was on a scale not visible in many other societies
causing large fluctuation in demand for money and interest rates within the year, a phenomenon
that is historically prompted return-hungry financiers keen to reap the windfall during periods of
high activity to keep money idle in the slack season rather than being lent long term.
The ability to buy a product is vital for a marketer. It can be in terms of income
distribution, economic conditions of nation, credit availability. India being an emerging economy
has slots of potential markets. The availability of infrastructure, the business development, the
policies, and the distribution of income are also important parameters. A high inequality in
distribution will lead to limited potential as the market is widely controlled by few riches which
has the purchasing capability.
Social cultural Environment
The market should adjust the decisions with respect to the cultural and social beliefs.
McDonald’s had to stop its products containing beef, as cow is regarded as goddess in India. But
in many cases, firms are able to dilute the cultural beliefs by exposing them to a new culture.
Archie’s has made its market in India by promoting different occasions like Valentine’s Day,
Father’s Day and Friendship Day. The companies which are consistent with the cultural beliefs
and are able to attract the loyal customers more easily and can retain them more effectively.
Political and Legal Environment
It consists of Government Regulations, policies, social groups etc. Any kind of business
must be abided by the legal policies of the nation. Protects customers from exploitation by the
businessmen. Protects interest from society. Protects companies from unfair competition. There
are various kinds of laws India like Consumer Protection Act, Environment Protection Act,
Indian Contact Act, Competition Law etc. Every citizen is required to be abided by the Indian
Constitution. Policies like displaying the Expiry date, MRP, and Green Circle on vegetation
Food Product also influence the marketing decision.
A market must be aware of recent technological updates. Being technologically upgraded
and the latest technology provides competitive advantage over the competitors. There are
unlimited opportunities for innovation and every competitor tries to exploit the new usage of the
product. The innovation can be in terms of the new usage, new package, new material, and new
method of production or even new kind of promotion. The recent era has seen many
indescribable innovations like Tata Nano, Apple I phone, Kindle E-reader, M-Commerce, Micro
Credit, etc. Infrastructure plays an important role as it is necessary to have well developed roads
to facilitate faster transportation of goods. Tax incentive is whereby tax imposed by the
government on goods and services sold by the various businessmen is reduced to a level that is
favorable to all. This is very vital as it ensures that consumers make reasonable profit in the due
course. Market demand is essential in a technological environment as the product produced
should be based on the current technology.
It is related to population and population mix. It is people who contributed to demand. It is
manpower which help in the production and supply. Thus as a marketer, on must understand the
demographics of the nation. India is ranked second in terms of population after China. Provides
an exceptional opportunity for business. The high population growth has attracted many FMCG
firms and retailers in countries like China and India whose markets are yet unexplained.
Country C: China
China is an emerging economy that offers lot of market opportunities for foreign investment.
Although the country has a huge potential for economic growth offering access to a large market and
considerable savings in labor costs, caution must be used due to differences in the political and
cultural environment that create risk and pose uncertainty for foreign investors. According to the
Chinese Constitution, "The People's Republic of China is a socialist state under the people's
democratic dictatorship led by the working class and based on the alliance of workers and peasants."
China would be the most appropriate company to establish business because the company
has proven to be growing and has a promising future. Besides, most factors identified make it
easier to do business in the country. We recommend that the company to invest in this country
since it serves as a hub of economic growth and has customers who want to utilize our products.
Today, many companies intend to expand their businesses to external markets across the
international sphere. However, taking a business abroad demands a wide range of
considerations to ensure that the decision being made is accurate so as to minimize on
costs. Starting business in any country means that the organization intends to take risks.
Therefore, various factors should be considered before making the decision.
The purpose of this report is to analyze various factors within specific countries and
determine which country is best to start business.
The findings of the report will help a long way in helping the company’s CEO to make
the best decision regarding the country to invest on.
The report will focus on factors affecting business in China, Japan and India since those
are the three countries in Asia identified by the company.
The report shall be organized as follows; the report begins with a table of contents, then a
summary of the findings of the three countries under review. The findings section shall
present some of the factors affecting business decisions in those countries. Finally, the
paper shall present a conclusion and a recommendation identifying the selected country.
The report was requested by the CEO of Walmart company, a united states’ based
technology firm that intends to expand. The target audience of this report is the board of
management of the organization that will review its findings and come up with a decision
on the same.
G. Literature Review
Various studies have been conducted on the topic of factors affecting business in various
countries. In a study by Mcathy, the top five major factors considered by companies
when selecting locations include costs, infrastructure, labor characteristics, government
and political factors and economic factors. Other scholars have identified other sub
factors within the businesses. These factors play a bigger part in determining what
options are considered in selecting locations to start businesses. Other factors include
accessibility of the place, visibility and others. These factors have direct implications on
major policy decisions to be made in business.
Ahlstrom, D., & Ding, Z. (2014). Entrepreneurship in China: an overview. International
Small Business Journal, 32(6), 610-618.
This article gives an overview on the nature of business in China and gives an
analysis on some of the things that can be considered when setting up business in the
country. The article will be useful in identifying some of the ways to conduct business in
Shapiro, J. (2016). China's environmental challenges. John Wiley & Sons.
This article on the environmental challenges of china explain the business
environment of the country ...