American MNC specializing in high-end winter sports gear
The country chosen is Finland
Abstract
For an American multinational company to set up a foreign market in Finland, there are a number of elements that the company must address before taking a step of entering into the business. They include the company environment, a plan for social responsibility and sustainability, the similarities and the differences that exist between the two countries, recommendation for cross-cultural communication and negotiations, the strategy of entry, political risk and government relations, plan for motivation and a plan for selecting an expatriate. All these elements will help in making a recommendation for entry.
The economic, political, legal and technological environment as it relates the company
Economic environment
This comprises of external factors in a business’ broader economy that can influence the business. For this particular industry specializing in high-end winter sports gear, these factors have to be considered (Kew & Stredwick, 2005). Those factors include availability of inputs, all factors that facilitate production and the ready market for finished goods. Basing on the chosen country, it experiences harsh and long winters that last up to four months in a year. This can therefore provide a ready market for winter sport gear. Additionally, Finland has been in a struggle to recover from global and Eurozone financial crisis after three years of contraction. Its state can therefore call for more investments due to the modest recovery in growth (Kew & Stredwick, 2005). This country is dominated by electronics industries hence the company shall not face a stiff competition.
Political environment
This refers to the government actions that can affect the day to day running of a business. This company being basically an American Multinational, the Finnish government may not give it special favors like any other home company (Kew & Stredwick, 2005). This will therefore require the company to cooperate with the home companies resulting into merging. Additionally, the establishment of the company requires strong government support from both countries to avoid issues of political unrest.
Legal environment
For an international legal environment, the business operation must abide with the public international law which governs the conduct and the relationship between international organizations and states as well (Kew & Stredwick, 2005). The two states must enter into agreements with one another to address specific aspects of international relationship with each other. Tax is one of the legal factors that affect business, therefore before entering any business, there is a need to understand the tax structure for the industry and since it is an international company, there are variations of tax codes from one country to another. There are taxes that support a business while others restrict the operation of certain businesses (Kew & Stredwick, 2005). Trade agreements help to address some issues of trade relationship between countries having a business transaction, including trade barriers that usually affect importation and exportation of goods and services. A product that is subject to a tariff will probably be more expensive compared to domestic products. This will therefore require the international company to ensure that its products are of good quality compared to the Finnish products in order to have a stable market for those products (Kew & Stredwick, 2005). Finally, there are also indirect barriers like local laws, customs and regulations that do make it difficult for a foreign company to conduct business in another country. This therefore requires an established relationship with the government of Finland as well as the locals. By doing this, the company will be received cordially hence being liked by the locals.
Technological environment
Technological environment of a place affects the operation of the business. Any changes in the technology will affect the company’s operation. When we look at the chosen country Finland, it is ranked with a high level of technology in Europe (Kew & Stredwick, 2005). Finland is dominated by technology industries which comprise of electronics industry, metals industry, information technology, mechanical engineering, and consulting engineering. These sub-sectors of technology enhance responsible and sustainable production. With this technology, the company will be able to make various improvements on the products in order to ensure that the products produced are of excellent quality and admirable in the market (Kew & Stredwick, 2005). Additional advantages include increased productivity and cost reduction. Therefore, in entering the Finnish market, the company has that advantage of advanced technology which will simplify the business operation in that particular country.
A plan for social responsibility and sustainability
This plan is drawn to outline various activities to be carried out by the company that will contribute to a sustainable environment in the long run (McDonald, 2011). As a multinational company to be started in a new country, much effort is needed to put a good and a meaningful start that will in turn lead to a bigger realization in the future. We will do so by effectively and efficiently using resources to produce the best of what is needed in the market to meet the expectations of the customers (McDonald, 2011). We must implement god business making to ensure measurability and sustainability.
To start with, the company will carry out a thorough research of the product in Finland. This investigation will be basically to find out the best location of the company, the best market for the products, the customers’ view on how the product should be, and how the company shall operate. Obtaining this information will help the company to operate appropriately (McDonald, 2011).
We are looking forward to providing various sports gears for all people including men, women and children. In addition to winter gears, the company will also provide attires for summer so as to have a sustainable market during all seasons but purely the company will deal with winter sports gears since Finland experiences a long winter period. Among many some of which include, snowshoeing, goggles, helmets, bags, clothes and many other items. This variety is to ensure that everyone’s need is met.
Finland’s similarities and differences to the United States
Finland is an innovative country with advanced technology just like America. Additionally, it is a modern welfare state having developed infrastructure and services just like the United States. However, these two countries have some differences. Unlike Americans who work for longer hours, Finnish work for maximally eight hours a day and forty hours a week (Ahlstrom & Bruton, 2010). This kind of system will therefore require the company to adopt that working culture while setting up a company in Finland. Unlike Americans who are paid basing on minimum wage whereby workers are not supposed to be paid less than the minimum wage, the Finnish lack a standard minimum wage to consider while paying the workers. Therefore the company must be ready to enter into agreement with the workers on wage pay.
Recommendation for cross-cultural communication and negotiations
Cross-cultural communications and negotiations are usually hard but very vital before taking a step further because you get exposed to the local customs and behaviors. In this case, there is a problem of language barrier between the two countries and this call for an understanding of cross-culture negotiation and communication (Hendon & Herbig, 1996). This gives an understanding of how people from different cultures communicate and how to deal with them in a proper manner as far as business is concerned. In this very case, the company has to employ more locals who can deal with their fellows properly more especially in sales and marketing department. We can also use internet services in business operations; this is working with people remotely rather than face to face hence evading the problem of language barrier (Hendon & Herbig, 1996). Internet is a more convenient and time saving way to mange cross-cultural communication as long as it is set according to the native language.
An entry strategy
A company can enter a foreign in a number of ways. Some of the ways include direct exporting, licensing, partnering, franchising, buying of a company joint venture, Greenfield investment, etc. For this company to be started in a foreign country, it may not start with Greenfield investment which involves the buying of the land, constructing in it and fully carrying out operations (Root, 1987). This strategy is being withheld for the start because it is so risky while starting up a business connection but can be implemented in the long run. However, the company will apply the following strategies during the start. The company will start with direct exporting which involves products’ direct selling into the Finnish market using American resources. The company will form local distributing units in Finland to represent them in the market. These distributors will serve as middlemen in this case to report back what exactly the customers say about the product (Root, 1987). The company will also apply partnering strategy as time goes on whereby it will work jointly with the Finnish companies in the production of that specific product. For more expansion, the company may decide to buy off any Finnish home country with an aim to make appropriate improvement on it so as to reduce on the existing competition in case of any (Root, 1987). This will provide the company with a status of being a local company availing with the benefits of local market.
Political risk and government relations
Political risk refers to the unexpected likelihood that a business investing in a foreign country will be constrained by the government policy of the host country. As a multinational company, we are very much aware of the political risk factors that are on our way. In case of such risks the company must be ready to manage them. Those risks are as a result of micro or macro issues for example macro political risk is an analysis of what would occur to a company if the opposition leadership comes to power (Moran & International Bank for Reconstruction and Development, 2001). Another area of consideration as regards macro political risk is government corruption for example occurrence of bribery. Micro risk issues include industry regulation, taxes imposed on specific businesses and local restrictive laws on the business. The essence of these issues is that these multinational companies are handled differently from domestic companies hence increasing the cost of business operation. Therefore as an American company looking forward to establishing operations in Finland, we are working hard to ensure that the business strategy applied makes the business sustainable in case these risks arise.
A plan for motivating and leading workers in the EU country
As a manager, I have a number of ways of motivating and leading workers in Finland in order to see the company grow. The organizational management is one of the important factors that I will put on the front line. How employees are being managed in an organization influences their productivity (Bruce, 2003). I will therefore ensure that employees are satisfied with how the organization is managed hence persuading to work hard and even develop trust for the company. The company will also employ the use of reward systems. By rewarding the hard working employees, they will always be motivated to work harder hence encouraging the poor performers to do the same. Not all forms of motivation suits any business; there are specific motivational forms that may not apply in some businesses for example thorough supervisions may not be appropriate for other cases (Bruce, 2003). Therefore I will create a friendly atmosphere for employees that will make them feel affable while at work hence making them love the work.
A plan for selecting an expatriate in the position of VP, operations
The company will need an expatriate in the position of vice president in order to oversee daily operations of the business. The process of selection is to be performed by the Human resource management department so as to get a right person with the intended qualifications. This is because the vice president takes responsibility of various duties of planning, coordinating and directing operations for the growth of the company (Tung, 1994). Additionally, the vice president also formulates training, maintains efficient team structure, and formulates policies for the growth of the company. Because of the many duties intended to the vice president and the skills required for effective operation, our preference is a candidate with extensive experience, advanced degrees and professional training.
References
Kew, J., & Stredwick, J. (2005). Business environment: Managing in a strategic context. London: Chartered Inst. of Personnel and Development.
McDonald, T. (2011). Social responsibility and sustainability: Multidisciplinary perspectives through service learning. Sterling, Va: Stylus Pub.
Ahlstrom, D., & Bruton, G. D. (2010). International management: Strategy and culture in the emerging world. Australia: South-Western Cengage Learning.
Hendon, D. W., Hendon, R. A., & Herbig, P. A. (1996). Cross cultural business negotiations. Westport, Conn. [u.a.: Quorum Books.
Moran, T. H., & International Bank for Reconstruction and Development. (2001). Exploring new frontiers. Washington, DC.
Bruce, A. (2003). How to motivate every employee: 24 proven tactics to spark productivity in the workplace. New York: McGraw-Hill.
Tung, R. L. (1994). International management. Aldershot [England: Dartmouth.
Root, F. R., & Root, F. R. (1987). Entry strategies for international markets. Lexington, Mass: Lexington Books.
