Introduction:
Japan is a small country that has a population of 127.3 million which is significantly high providing a ready market for products and services. The population is also composed of both skilled and unskilled labourers providing ready labour force. The country’s purchasing power parity stands at $38,216 thus providing an advantage for a new entrant into the market. Additionally, Japan’s location provides a strategic advantage since it dominates the entire Asian, Middle East and African economies.
Singapore and Japan both have a democratic political system, which gives our company the ease and freedom to do business in Japan. Moreover, dealing between two democratic countries with stable politics reduces the political risk since from history, there are no democracies that have gone to war with each other. On the other hand, while Singapore follows common law and Japan follows civil law. This will be a disadvantage for our clients because there will be no flexibility in judgment as they apply only the civil law and this might affect the transaction cost due to uncertainty (Stone, 2015, p.56).
According to the ease of doing business report data, Singapore is ranked number one in ease of doing business worldwide while Japan is Ranked 34. Also, according to the economic freedom index Singapore is ranked number 2 and Japan ranked number 22 worldwide. On global competitiveness, Japan is ranked number 6 whereas Singapore is ranked number 2 due to the types of industries in existence.
Rule of law (Japan & Singapore):
According to the economic freedom index, in 2016, Singapore and Japan ranked 90%, 80%, respectively which is the highest rate of strong intellectual property rights regimes compared to the world. This is an advantage to secure our company and innovative productions as our work depends on IT. On the other hand, corruption levels are lower in Japan than Singapore but well higher than the world average. In Japan, a close relationship among companies, politicians, government agencies cause some level of corruption, which is something we have to be aware of to avoid any kind of corruption that might lead to legal issues (Devine, 2010, pp.347-372).
Limited Government:
The tax rate in Japan is very high compared to Singapore, where as in 2016, the top corporate tax rate in Singapore is 17 %, the tax rate of top corporations in japan is 24% and it’s expected to increase significantly as the government spending amount in Japan is 42.3% of GDP. This indicator will increase the burden of cost to our company and increase the tax expenses and the transaction cost.
Regulatory efficiency:
The regulatory environment of both countries is efficient with no minimum requirement to start up businesses. However, labor market wages rule and the lingering regulatory rigidities in Japan are discouraging the growth of entrepreneurship. The rule of a lifetime-employment guarantees and seniority-based wages might affect the productivity of our company if we follow Japan Labor market (Afifi et al. 2013).
Open market:
According to the economic freedom report of 2016, Japan government restricted many imports such as agricultural products, screens, investments in several sectors of the economy such as telecommunications (Well, 2015).
The measurement of informal institutions, their advantages and disadvantages:
Singapore and Japan both have a high context culture so we are familiar of Japan culture that most of our communication relies on underlying unspoken conditions or assumptions. Therefore, it is very important as it will add value to us because we understand this culture very well and, thus, will help us to avoid any complicated issues such as contract drafting. This can act as an advantage and a marketing strategy for our company in this new market (Gordon, 2014, p.90).
According to the Hofstede Dimension of Culture, Japan has a low power distance compared to our culture which is an important factor for us to accept and understand the difference between the two cultures. The difference will help us treat the boss and employees as equals in their rights, have informal social interactions and narrow range of salaries. Bear in mind the employees on this culture seeks to be involved in the decision making and expecting that their bosses are willing to give them a chance to participate in management style. Many foreigners have experienced a negative impact on their business due to this system which will lead us to expect a very slow decision making process (Ehiri, 2009, p.78).
While Singapore is characterized with a collectivism culture, Japan is between both because Japanese are considered as collectivistic by Western and Individualists by Asian standards. Being in between collectivism and individualism gives a positive indication to our company to have flexibility in the decision making process.
Japan is considered as a very highly masculine society and thus has a restricted rule among gender lines which is the opposite of Singapore. In this case our company will face a problem in hiring females on a managerial level because it is against the culture in Japan. This may affect our performance and lose the benefits of our talented females (Chiaburu & Teklab, 2013, pp.282-290).
Japan reported to be the most uncertain country on the earth; this is due to the natural disasters that it has gone through during the history, which will enhance positively our company’s future safety and stability. The ranks of long term orientation in both countries are high since both are likely to put long term planning so no conflict or difficulties will happen (Stone, 2015).
As Singapore is a liberal market economy (LME) and Japan is a coordinated market economy (CME). The coordinated market system that exists in Japan has an advantage over the British and American systems which act similar to the Singapore market. The coordinated market economy do not have the day to day disruptions experienced in liberal markets. Japan’s market thus makes it easy for new multinationals making entry into the market easy.
The table below explains the differnces between the two types:
Why Japan:
Our stragtic goals of expanding and invest in Japan are:
Increasing our market through Japan which has the world’s market size of telecommucations industry and the tenth highest population in the world The telecommunications industry in the country has a size of 98.8 million Yen representing 10% of the GDP thus the largest industry in the country.
Strong PPP of $38,216 which provides an ease of doing business in Japan for us.
Our main focus is on improving innovation and business business sophistication which is stronger in Japan. The below table shows global competitiveness index 2014-2015
Low cost of real estate : This is an advantage to us since it will reduce the cost of doing business. For example, it will be cheap to acquire offices in Japan and pay employees since their expenditure is not high.
Recerch and development in Japan:
Japan is ranked highly in research and development. The country is ranked 4th in the world behind the United States, the European Union and China. Research and development (R&D) in countries is measured by the use of the domestic R&D expenditures as shown in the figure below;
The total expenditure in research and development in Japan during the 2014 fiscal year stood at 18.97 trillion yen which marked a 4.6% increase from the previous fiscal year. The expenditure on research and development marked 3.87% of the GDP which is a 0.12% increase from the 2013 fiscal year (UNESCO, 2015, p.98).
Research and development in Japan in terms of sector performance is seen to be led by the business enterprises which stood at 13,586 billion yen which accounts for 71.6% of the total expenditure. On the other hand, universities and colleges research and development expenditure stood at 3,696 billion yen accounting for 19.5% while the public institutions and non-profit organizations R&D expenditure stood at 1,689 billion yen accounting for 8.9% (UNESCO, 2015, p.70).
Market analysis of telecommunications industry in japan:
Nippon Telegraph and Telephone Corporation: It has a market capitalization of US $83 Billion. The company has the largest market share in Japan.
NTT Docomo: The market capitalization figure for this company is US $80 Billion. The company is the second largest telecommunications company in Japan.
KDDI Corporation: Its market capitalization stands at US $64.8 Billion. It is the third largest telecommunications company in Japan.
SingTel Company Resources and Capabilities:
The Best Kind of Investment in Japan:
Japan is regarded as a global leader in the information communications technology industry. A merger or partnership with Nippon Telegraph and Telephone Corporation would help increase the dominance in the market. However, due to the large market share of the NTT, it would be easy for our multinational to partner with NTT in provision of a different unique telecommunications service. This type of partnership will help broaden and grow our brand in the country.
The advantage of this partnership is that it will increase the competitive advantage of our multinational additional to increasing the market share. The company has an advantage of being the largest in Japan and third largest in the world in terms of revenues. A partnership with them will definitely help our multinational gain ground in Japan rapidly. The only disadvantage that can exist is that there is a possibility of NTT requiring a larger sharecapital from our multinational which will hinder our souvereignity. This can happen due to the market share and revenue size of the company at large.
A partnership in the telecommunication and information technology industry will help grow our brand significantly considering the country has a very good ground for the technology.
References
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Caldwel, K. (2016). Japan: 'One of the best investments of the next decade'. The Telegram, [online] p.35. Available at: http://www.telegraph.co.uk/finance/personalfinance/investing/10340638/Japan-One-of-the-best-investments-over-the-next-decade.html [Accessed 27 Feb. 2016].
Chiaburu D.S., Teklab A. G., 2013. Emergence of telecommunications engineering in Japan. Journal of Asian Industries, 20, 282-290.
Chua, A. (2016). Singapore Telecommunications (SingTel) | [online] Eresources.nlb.gov.sg. Available at: http://eresources.nlb.gov.sg/infopedia/articles/SIP_1610_2011-03-21.html [Accessed 27 Feb. 2016].
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Ehiri, J., 2009. International Business. New York: Springer-Verlag.
Gerhard B., 2002. The institution-based view of strategy: How to measure it. Academy of Management Journal, 39, 779-801
Gordon, J.S., 2014. An empire of wealth: Strategies of planning for a new business. New York, NY: Harper Perennial.
Plunkett, Jack W., 2008. Plunkett's Telecommunications Industry Almanac 2009. Plunkett Research Ltd.
Stone, D., 2015. The emergency of telecommunications industry: The unrealized glory of Japan. New Haven: Yale University Press.
UNESCO. (2015). UNESCO science report: towards 2030. Paris : UNESCO.
Wall, E. (2015). 3 Reasons to Invest in Japan. MorningStar, p.23.
