Introduction
With the increased application of technology, globalization has been fast-tracked with nations adopting non protectionist trade systems. In the long run, the operations of multinationals has been facilitated. This paper will discuss the expansion plan for the Forth Right Technologies Inc. It will examine the three options available for the company to venture into. The three options are the Kingdom of Saudi Arabia, the People’s Republic of China and the Republic of South Africa. This paper shall carry out a matrix in which various conditions present in the three nations shall be considered. In the end, the paper will give the recommendation on what market the multinational will benefit from most given the prevailing dynamics. At the onset it should be appreciated that identification of the right market assumes political, social and economic considerations.
Economic System
On the surface, it may appear that all the three countries are capitalist systems. However, a keen observation reveals differences that would impact on the multinational company. In Saudi Arabia, the market is capitalistic with perfect competition being entertained. The company will hence be subjected to less interventions. In addition, the greater population of Saudi’s have the purchasing capacity that grants them the ability and willingness for the products. This is not the case for South Africa and China. In both of these two countries, the economic system is socialist in approach with government intervening in the market. In addition, both two countries boast of a large population but whose disposable income is low. This would impact on the ability and willingness of the consumers to purchase the products.
Political Environment
The political environment of the three countries also differ. The systems in all the three countries posit some kind of instability. However, it can be stated that the rule of law in South Africa is most entrenched hence suggesting of a political stability. In the Kingdom of Saudi Arabia, the system is still heavily laden with the monarchical system where political power is vested on the King. This posits an unstable system given the Arab Spring revolts. On the other hand, the political structure in China though blossoming and growing has some communist tendencies that threatens the stability of the system given the intention to adopt pure capitalism. This has seen the nation’s political structure rely on the dictates of the presidency. This puts the political regime along the rule of man.
Legal and regulatory environment
All the three countries have a robust legal and regulatory environment. With the introduction of ISO certification and the increased observation of reporting standards of accounting, auditing and managerial reporting all the three countries can be reported to have a robust legal and regulatory environment that ensures that fair competition and all the legal requirements are adhered to. In addition, it is the observation of this paper that the legal regime in China is strongest with stringent requirements needed for entry into the market. In South Africa, the requirements are more flexible while the requirements in Saudi Arabia are within the middle of the two extremes.
Technological environment
The technological environment denotes the development of technological infrastructure in the three countries. It should be appreciated that the three countries have above average infrastructural developments. However, the Chinese market is ranked top in technological infrastructure. In relation to information technology, the Chinese market has embedded in its systems facilitative technological applications that can support the sale and consumption of the information technology products. The same can be said of Saudi Arabia. The system is highly technologized and the country’s market has entertained numerous applications of technology. In that vein, it would be proper to make the assumption that this market is receptive of information technology products given its history with the technology products. However, the state of technology and their appreciation in South Africa is a little backward if examined comparatively. It should be appreciated that the South African economy is slowly exiting the developing-nations category into the developed world. This could explain the backward technological abilities if compared to the other two countries.
Ethical environment
Ethics are relative depending on the country’s moral beliefs and subscriptions. The ethical environment in the Republic of China is more assertive and strongest to the other two. This could be explained by the fact that China being a bigger economy and given its latest responsible approach in world affairs, has the duty of discharging its ethical and moral obligations to its citizens and the world much pronounced. South Africa follows suit in ethical realism and stability. However, in South Africa, the ethical fabric is much complicated given its political structure which derives from influences from diverse races especially Africans and Europeans. This has seen the ethical concerns assume a diverse character as they originate from the ethic bases of the diverse constituents. However, the actualization of ethics is more progressive in South Africa as compared to Saudi Arabia. In Saudi Arabia, the ethical concerns have assumed a less pronounced character. This perhaps could be explained by the fact that the country lacks an elaborate rule of law and institutionalism. In that context, most of the rules emanate from the Kingdoms and draw motivation and inspiration from the religious teachings and the Sharia law. However, this is not to suggest that the country lacks an ethical compass especially within the corporate structure. It should be appreciated that despite the Islamic legal practise, the markets are controlled by ethical standards from professional standards of international characters.
Social responsibility indicators
Social responsibility relates to the response given to societal needs by the organizations. These responses could be proactive or reactive. In proactive in that they are originated from the organization without the influence of external bodies and reactive in that they are pursued in reaction to the already occurring situations in the market. China again leads in social responsibility among the three emerging markets. The performance can be explained in the international and domestic pressure on China based firms given China’s unique and essential role in the world. As it stands, the economy of China is approaching top most almost beating the Western giants the United States of America. Consequently, there has been pressure on the firms in China to act responsibly and to undertake corporate social responsibility. The situation in South Africa and Saudi Arabia is less rigid and this has been reflected in the overall performance of the firms already established in South Africa and Saudi Arabia. In the long run, it should be appreciated that corporate social responsibility is more reactive in nature and would spread as long as more corporates entertain the ideas.
Cultural dimensions
In this era of multicultural approach to management and work, information technology has not been left behind. It is the paper contention that culture though influential in business operations, has almost little effect to information technology products. This is because information technology products and services cut across the cultural divide. However, it is essential in the same breadth that South Africa given its white citizenry influence has a culture that is more entertaining of information technology products as compared to the other two.
Suitability of country to multinational
Given the above information, the three countries would be suitable for the multinational based on a number of different parameters. The Republic of China would be suitable due to its enormous population that would inform a large market for the products, its robust legal and regulatory framework that would protect the interests and place of multinationals in the economy and its ethical and social corporate responsibility that arises from its recently pronounced roles in the world. The Republic of South Africa would be suitable for its compatible cultural practises that connects well with information technology products, its large population that provides a market and its robust political structure that is stable. The kingdom of Saudi Arabia would be suitable for its technological development, its relatively rich economy that provides willing and able buyers and its robust legal and regulatory framework.
Recommendation
However, in light of the foregoing, it would be advisable for the multinational to expand into the People’s Republic of China. This is premised on the fact that China offers the best package for the multinational. With the robust legal and regulatory environment, the large population and the stable political environment buoyed by a blossoming economic environment, China offers the best package for the multinational.
References
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