Issue in International Business

Question: Discuss about theIssue in International Business. Answer: Introduction: The sector of international business has been progressing with the continuous improvements in the domain of globalization. Business is not viewed from the conventional perspective of sales and profits. The intentions of business organizations have to be directed towards long term sustainability in the market. Generally organizations prefer to break the barriers of their home country and spread their business into newer jurisdictions in order to move above the saturation in the domestic market. The key objective of globalization is expected to be realized in the additional sources of revenue which the subsidiaries or foreign units of the company would provide (Abdi Aulakh, 2012). The selection of globalization as a feasible initiative for increasing the financial prospects for an enterprise has to be accompanied with strategic decision making and comprehensive market research. The organization has to analyze the feasibility of a foreign market according to the distinct perspectives i n the external environment for the organization such as political, legal, socio-cultural and environmental factors. Rationale The selection of South Korea as a possible host country for a Malaysian company can be validated by the distinct explanations pertaining to the homogeneity of the Korean culture and the distinct concepts followed by the Korean people in their business practices. The suitability of South Korea for doing business also depends on the scope for technological improvements in the domain of telecommunication (Banalieva Dhanaraj, 2013). The report selects the case of Axiata, which is a Malaysian telecom company and it has to expand in the Korean market. The scope for increasing the functionality of services offered in mobile data, internet and digital television in the Korean market serves as a valid reason for Axiata to establish business in South Korea. However, the feasibility of Korea as a suitable market for Axiata can be justified through a brief illustration of the external environment of the region which could be especially helpful for companies looking for setting up a unit in Kore a (Buckley, 2016). The evaluation of external contexts would also help in substantiating an initial understanding of the business environment in Korea and the recommended activities which must be followed by the organization. First of all, the population of the Korean republic is estimated approximately at 49 million people in 2008. The climate of the country is moderately diverse and experiences normal weather and transitional seasons which are generally short. The legal system of Korea is also suitable for conducting business owing to the flexibility of policies and legislations pertaining to foreign businesses. The selection of Korea has to be reviewed in context of the developments in technology too. The availability of prospects for intercultural exchanges in South Korea also account for nifty investments from many foreign companies which is a viable reason for globalization in the South Korean market (Clarke, Tamaschke Liesch, 2013). The increasing investments of the Korean e conomy in research and development activities have been predominantly observable since 1997 and the growth rates outrivaled the growth rates of GDP. The Asian financial crisis was responsible for reduction of RD investments and it served as a minor drawback in the financial framework of the Korean market. However the subsequent progress made in the infrastructure of the market has resulted in a large number of companies opting to capitalize on the dynamic market conditions prevalent in the Korean market. The growth of Koreas economic facet has also served as one of the profound factors which invite foreign companies into the Korean market (Casson, 2013). The economic prosperity of Korea can be attributed to the rise in investments and savings rates alongside the emphasis on education which accounted for a massive rise in students enrolled in universities and colleges for higher education. The distinct remodeling of the industrial structure in Korea also accounted for diversification of several industries such as electronics, steel products, automobiles and textiles. The transition of the country from an agricultural to a manufacturing economy was also a significant contributor to the GDP of the nation (Dunning, 2012). Cultural Analysis of Korea: The cultural analysis of the Korean market can be illustrated through cognizable references to the population, prevalent languages, ethnic and religious classifications of the society. The location of South Korea in eastern Asia between Japan and China has proved to be a major attraction for business organizations. The capital of South Korea, Seoul is known all over the world as a prominent business hub. Climatic conditions of the country are also temperate alongside accounts of heavy rainfall in summer (Driffield, Jones Crotty, 2013). The estimated population around 49 million with a homogenous distribution of ethnicities also serve as promising indicators for the cultural affability of Korean market. The Korean population speaks single language and is characterized by profound features which make them distinguishable from other Asian population such as Japanese and the Chinese. The family values in Korean culture promote the ethics of a single family (Fainshmidt, White Cangioni, 2014). The prominence of the Korean language and the emphasis on native language by the resident population accounts for safeguarding the national identity of the country. The cultural analysis of the Korean market can derive further references from the family values, societal norms, etiquettes for behavior and the traditions involved in the culture. Koreans emphasize family values and the integration of Confucianism in the societal framework of Korea has enabled the father to be anointed as the head of the family (Forsgren Johanson, 2014). Family welfare is projected as a priority in Korean family values and the strong association between family members is also a considerable feature of the Korean culture. The scope of Confucianism enables the people in South Korea to assign appropriate value to their relationships with other individuals. The traits which can be derived from the implication of Confucianism include honor, respect for seniority, duty and sincerity. These factors are also complemented with the terms such as Kibun and Nunchi. Kibun can be considered as the self-dignity or state of mind of a person (Hovhannisyan Keller, 2015). Violation of Kibun is considered as a social anomaly in Korea and therefore it deserves a prominent mention in context of the issues presented in a South Korean market. Protection of personal interests in terms of respect and dignity is the underlying derivation which can be derived from the concept of Kibun. Nunchi is the concept which is applied for identification of the Kibun of an individual and is largely reliant on the tasks of observing voice tone and body language. Apart from these major entities, the Korean culture is also characterized with the presence of mandatory etiquettes which must be followed at all times for complying with the cultural facets of Korea (Samiee, 2013). The major highlights which have been derived from the cultural analysis of Korea implicate profound references to the concept of Confucianism and the prevalence of concern for self-dignity. The culture in the Korean market indicates concepts of Kibun and Nunchi which are unique to the Korean culture and is a cause for reflection on the necessity of preserving the dignity of an individual for building a promising relationship (Meyer Peng, 2016). Business Culture of Korea: The homogeneity of the Korean culture enables business organizations in South Korea to interact with other culture without any prominent inhibitions. Despite the affability of the Korean culture, business organizations looking for an entry into the Korean market must be acquainted about the deeper significance associated with the business culture. Business culture analysis would enable an organization to apprehend the necessary norms and practices required for conducting business in Korea as well as compare the ability of the organization to comply with the business culture in Korea (Samiee, 2013). Some key elements of business culture in the Korean market include respect and relationships, communication, etiquettes for negotiation, agreement and contracts alongside the behavior on initial meetings with Korean business personnel. The group oriented culture of South Korea enables the scope for preference to group and compliance with group norms rather than emphasizing personal prefere nces. The implications of business relationships in Korea can be validated only on the grounds of trust, familiarity and respect. Personal discussions would account for increasing familiarity while conveying the significance of the association intended by a foreign organization in Korea. It is imperative to observe that the Korean business culture is heavily dependent on relationships and trust but they believe in strengthening trust before they reach on a conclusive decision related to business deals. The Korean business culture is also indicative of saving face or protecting self dignity. The group culture of Korea must be sustained with maintenance of harmony in a novel business relationship (Meyer Peng, 2016). Therefore, organizations have to apprehend the necessity of preserving the respect of self as well as the neighboring person in business deals and negotiations. The respect for a person is derived from the status and age of the person and therefore leaders in the Korean b usiness culture are generally older people. The business culture of Korea is also marked by the distinct acceptance of Korean language as the official business language and English is not adopted in many business transactions. The tone of voice is generally quiet and modest as per the Korean standards and boisterous behavior is generally assumed as the lack of self-control in an individual (Samiee, 2013). Therefore business deals in Korea face major setbacks in terms of communication. However, the implications of using English as a suitable medium for communication have to be realized by the use of English in minimal and urgent necessities. The communications in English must be kept concise with references to major points of the business proposal (Forsgren Johanson, 2014). The Korean business culture is also characterized by the greeting etiquettes and the subtlety of gestures without any hint for direct confrontation and open disagreement. The entities observed in the Korean culture are somewhat similar to the host countrys business culture. The elements associated with the dressing and meeting etiquettes in each culture appear organized and similar in terms of scrutiny. The notable difference in the business culture of both countries is reflected in the bowing down and handshake greeting practiced in each country. Hofstedes Cultural Dimensions in Korea: The analysis of South Koreas culture from the six distinct dimensions provided in Gert Hofstedes model for culture could provide a viable impression of the embedded features of South Korean culture which can be implemented by organizations from other cultures for globalization initiatives. The first dimension in the model relates to power distance which specifies that all individuals in a society are not equal and are indicative of the differences which exist in a society. Power distance can be considered as the perception of less powerful members towards the unequal distribution of power (Driffield, Jones Crotty, 2013). The Korean culture measures highly in this dimension and hence can be characterized as a society with slight hints of hierarchy. The existence of hierarchical system in the Korean market is also characterized by centralization, autocratic leaders, subservient employees and inherent inequalities. The next element in the Hofstedes model is realized in Individualism wh ich refers to the level of independence facilitated to an individual by the society. The generic description of individualism can be attributed to the recognition of self-image of the people in a society. Individualist societies are inclined towards protection of self-interests which include preservation of requirements of immediate family as well (Jenkins, 2013). Collectivist societies on the other consider people as part of a larger group and the group is responsible for safeguarding the vested interests of the individuals while individuals are accountable for loyalty to the group. South Korea presents the characteristics of a collectivist society and the group oriented culture signifies a major part of it. The culture in Korea is primarily characterized by the commitment to family and relationships. Loyalty is perceived as a crucial attribute of the cultural framework prevalent in South Korea and hence it also enables the fostering of long term and affable relationships between m embers of a group alongside the undertaking of responsibilities by each member of the group. The relationships between employee and employer are perceived as more of a family association and any violations of collectivist principles would result in degradation of identity. Masculinity is less prevalent in the South Korean business culture according to Hofstedes model and is indicative of a more feminine society. The higher score for masculinity refers to the existence of success, competition, achievement and value systems derived from the journey from school to organizational life of an individual (Samiee, 2013). On the other hand, the feminine aspects of the society refer to the intentions of individuals to work for a living, coordinated execution of managerial efforts with consensus and value for solidarity and equality in professional domains. The resolution of conflicts in the South Korean market is generally conducted through negotiation and collective compromise. The work cond itions are also characterized by flexible working hours and supportive managers relying on employee involvement for decision making. Uncertainty avoidance dimension refers to the perception of threats and unpredictable situations and dealing with them through establishment of certain institutions and beliefs (Meyer Peng, 2016). The rigidity of the code of conduct followed in South Korea is a profound indicator of the higher degree of uncertainty avoidance as noticed in the intolerance towards unorthodox ideologies and behavior. The inherent urge for people to follow rules such as punctuality, hard work and precision can be considered as one of the significant attributes of Korean culture (Fainshmidt, White Cangioni, 2014). The Korean culture is also long term oriented as per the Hofstedes model. The higher capital rate and the preference of organizations for increasing growth rates rather than quarterly profits are indicative of long term orientation. The South Korean society is f inally perceived as restraint as per the sixth dimension of indulgence. Restrained societies are particularly irresponsive towards leisure and fulfilling personal desires. Conclusion: The report enlisted the key aspects of the Korean cultural framework and how it can be suitable for a company with its home country in Malaysia (Buckley, 2016). 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