International Business Environment Essay Example

2010 (Jiangsu Jinsheng Official Website, 2016). This created a better platform for the business to be hosted in the largest European machinery production sector in Germany with high-quality CNC machine production tools. It applies innovation and technology to deliver high-end point tools to its consumers (Jiangsu Jinsheng Official Website, 2016).

Organizational Framework

The organizational framework of Jiangsu Jinsheng is influenced by five main elements that determine its structural and corporate culture. Their primary corporate purpose is to use science and innovation to achieve the consumers’ needs in an efficient and effective manner. They apply innovation as the main business strategy to making a better and satisfied customer. In their business philosophy, the customer comes first with much focus and emphasis on “detail” as the key driver of success. They corporate value is to enjoy their work as they enjoy life. Lastly, the company values their employees’ health, family and career in order to achieve a sustainable business environment (Jiangsu Jinsheng Official Website, 2016).

Internal Organisation

Jiangsu Jinsheng Industry Co., Ltd is a customer focused company; therefore, all its activities are tailored towards realizing the needs of different customers depending on product category. Therefore, the company has a functional internal Organisation structure where the internal functions of the company are divided into numerous departments that accomplish a given purpose (Jiangsu Jinsheng Official Website, 2016). For example, the customer care departments deal with the client needs, the marketing department looks at marketing requirements of all brands as well as involvement in different corporate social responsibilities in the society, while the production line ensures that the products manufactured are of high quality and meets the consumer’s desires. The board members and management

line in cohort with the marketing departments implement different market entry procedures depending on the region and product penetration (Jia, Gosling, & Witzel, 2015 p. 45).

Foreign Entry Strategy

Jiangsu Jinsheng Industry used partnership as the primary foreign entry strategy into the German market. The move happened in the year 2010 when EMAG the leading German Toolmaker suggested he required a partnership with a Chinese Pan Family, who owned Jiangsu Jinsheng Industry (Jia, Gosling, & Witzel, 2015 p. 49). This step created a joint venture between the Chinese company and the German-based companies. The Host Company indicated that the primary reason for partnering was based on the fact that Chinese companies were growing at a faster rate while on the other hand the German-based company was going down. Following this, the Chinese company had to adopt the cultural and EMAG’s values so as to have a smooth business environment (Jiangsu Jinsheng Official Website, 2016).

Corporate Social Responsibility

Before its partnership with EMAG German, Jiangsu Jinsheng Industry was still engaging in Corporate Social Responsibility activities which included; supporting education centers, environmental activities and ensuring healthy working environment for its employees. Though, entry into the foreign market expanded its sphere of service to supporting educational centers, Rehabilitation centers, and sporting activities in both China and Germany (Jiangsu Jinsheng Official Website, 2016).

The Impacts of Culture and Institutions on Internal Organisation

Developing countries such as China are faced by a much narrow resource base, high degree of openness and weak institutions as compared to other advanced economies such as Germany (Kenna & Lacy, 1994 p.56). Diverse culture and strong institutions in German industrial background wholly influenced the Internal Organisation of the Jiangsu Jinsheng Industry.

For example, cultural differences come hand in hand with language challenges. Therefore, the Jiangsu Jinsheng Industry had to learn the German language so as to communicate effectively with their German based consumers as well as the EMAG toolmakers who are their primary Host (Jiangsu Jinsheng Official Website, 2016).
Variously, the collaboration between Jiangsu Jinsheng Industry and EMAG German toolmaker had significant impacts on the process, structure and internal strategies used by the Jiangsu Jinsheng Industry in China. Changes had to be adopted for the company to integrate the structure, people, policies, and processes employed by EMAG German. For example, the organizational hierarchy of Jiangsu Jinsheng Industry had to be changed to house the employees and personnel from the Host country. Also, the chain of command at Jiangsu Jinsheng Industry had to change so create space for the chain of command from EMAG. Administrative structures and job structures had to be altered to avoid duplication of skills within a given department. This meant that the policies and process of conducting business in Jiangsu Jinsheng Industry had to take a new phase in accordance with German-based business ethics (Jiangsu Jinsheng Official Website, 2016).

Another impact of culture and institution on Jiangsu Jinsheng Industry was the strategic company variations. That is, an alteration in the enterprise’s purpose, mission, and overall goal. Merging with EMAG meant that Jiangsu Jinsheng Industry had to change its business and production strategies in order to blend with the Host Company’s needs. For example, the company had to partner with different marketing and advertising institutions in German so as to orient the world about its machinery and other systems (Lamson, 2010 p. 118).

Also, the company was

expected to employ more German based employees so as to integrate and balance cultural barriers within the main production lines. At first, it was difficult to adopt the culture, but the foundation laid by EMAG made it easy for the Jiangsu Jinsheng Industry products to venture smoothly into the foreign market investments. Moreover, the management and production lines had to be customized in a way that they adopt the policies and procedures applied by EMAG Company initially. For example, the board members increased from six to eleven after adding the five executive board members who were spearheading the EMAG business world (Lamson, 2010 p. 34).

In essence, entry into the foreign market transformed the organizational culture of Jiangsu Jinsheng Industry so as to accommodate, the culture, the organization structure of EMAG and its employees into the main production line. The Internal Organisation of the Jiangsu Jinsheng Industry had to extend so as to adopt the needs and strategies applied by the Host Company. For example, the marketing department from the Jiangsu Jinsheng Industry Home strategy had to adopt the German based advertisement policies which were not present in their small and compressed market share. Basically, the culture and institutions in German positively influenced the internal Organisation of original Jiangsu Jinsheng Industry (Jiangsu Jinsheng Official Website, 2016).

The Impacts of Culture and Institutions on Corporate Social Responsibility

Germany is one country that respects the social welfare, education, and innovation as pillar of economic development. Following this, most companies craft their work activities in a way that respects the social welfare of the society. Norms, values, and attitudes are some of the important values that form the building blocks for

every country’s business culture. Culture determines the behavior, the influences, and attitudes towards products manufactured in a given market segment. German business environment is controlled by procedures, laws, and rules that determine how different players in the production industry engage with the environment and the community in general. These policies and procedures influence how business is conducted in these advanced nations (Lamson, 2010 p. 89).

The German administration takes issues of environment and social welfare seriously. This is then adopted by companies and institution working in here. For example, the inclusion of Green party into political platforms speaks a lot about German and its social responsibility. The force behind this political influence is reflected in public and private companies engaging in socially responsible activities such as environmental conservation, education or even charity work (Lamson, 2010 p. 23). Therefore, Jiangsu Jinsheng Industry had no other option rather than adopt the German National Culture and Institutions way of doing things. As a result, Jiangsu Jinsheng Industry began supporting different charity organizations in both German and China. For example, in 2010, the company began donating Charity Federations in China. For instance, it gave 30,000 RMB to Paring Support activity in Ying Chun of Yao. The same year, it also donated more than 2.3 RMB to local education institutes. In 2013, the company supported Shenzhen One Foundation after the deadly earthquake that occurred in Yaan Sichuan on April 20th, 2013 (Jiangsu Jinsheng Official Website, 2016).

Due to the inspiration gained from Germany, the company has been supporting different rehabilitation centers such as Tibet Blind Rehabilitation and training center. Their ability to participate in numerous social welfare activities was influenced by the

management’s ability to apply the German cultural expression in business. Therefore, Jiangsu Jinsheng Industry had no other option other than adopting the German way of doing things so as to get linked with the German local cultural business context. In essence, it was important for Jiangsu Jinsheng Industry to adopt the nation’s culture and institution management as it opened up a better market for their products and machinery (Jiangsu Jinsheng Official Website, 2016).

According to Frankel et al. (2006), smaller companies operating in advanced economies have to adapt to their culture and institution strategies of the HOST country so as to maintain a better and stable business performance. Engaging in this international environment meant that Jiangsu Jinsheng Industry had to actively participate in the value-added activities. Its participation in international markets made it possible for the company to efficiently transmission its products to international markets (Frankel, 2006 p.25).

The Impacts of Culture and Institutions on Foreign Entry Strategy

The partnership between EMAG Toolmakers German and international Jiangsu Jinsheng Industry seem to be placed on numerous foreign entry strategy. Some of the strategies aimed at benefiting the EMAG tool makers only. For example, EMAG toolmakers in Germany appear to apply the Strategic alliance technique to lure Jiangsu Jinsheng Industry into a partnership. The institutions aim to explore different innovations and opportunities used by Jiangsu Jinsheng Industry so as to offer quality products to their consumers (Lamson, 2010 p. 45).

Therefore, the cultural and institutional background of Jiangsu Jinsheng Industry was influenced to adopt the strategic alliances so that it can expand its market share while reducing its market costs. This corporate strategy in Germany was aimed at increasing the innovation

and production efficiency of EMAG, bridge the gap to additional capital and products from China and access new technologies and competitive moves in a cheaper and trusted way. The strategy impacted directly on China’s foreign entry strategy as the technique applied prepared a ready market for their products even without extensive marketing (Lamson, 2010 p. 49).

Initially, Jiangsu Jinsheng Industry had to fund the whole investment cost for sub-branch companies established in new markets. But the institution in German only required a 50% stake in its joint business venture. Basically, this approach positively influenced the capital ability and stability of Jiangsu Jinsheng Industry because not much was required to establish its ground in Germany. That is, the strategy used only required a smaller amount of investment, provided a better approach for understanding the host company, their customers, and the policies in the Host County. Also, Jiangsu Jinsheng Industry used to manage their new branch adequately in case a new business venture emerged, but the institutions in German required a 50/50 contribution which meant that the management costs would be shared among the participating companies. Having this in mind, the company had an easy way of establishing its ground in German machinery manufacturing (Jiangsu Jinsheng Official Website, 2016).

Creating a business entity in a new country pose challenges for different company owners due to cultural, language barriers and lack of know-how on business and political systems. But the joint venture system applied by German-based companies made it easy for Jiangsu Jinsheng Industry to learn local partner’s culture, policy and business systems, and languages which made it possible for the enterprise to have a stronger ground in the host

country. Variously, it made it easy for Jiangsu Jinsheng Industry to share market development risks and cost with EMAG making it easy for it to have a founded start in Germany (Jiangsu Jinsheng Official Website, 2016).

Though, the foreign entry strategy was somehow exploitative on Jiangsu Jinsheng Industry as the company had no control over their technology and innovations it gave the Chinese an opportunity to reach the international market levels. By having a joint venture, it was now evident that EMAG had the right to utilize the innovation and technology owned by Jiangsu Jinsheng Industry to produce machinery based on consumer preference and needs. Therefore, regardless of the fact that EMAG German cleared away for Jiangsu Jinsheng Industry to establish its market in the European Union, it also had some hidden benefits from this small company. In essence, the culture and policies of institutions in host countries must be followed for a new business to have a stable base in business.

Summary

When a company decides to move from a “developing” ground to an “advanced” economy, it cannot rely on its old method of production and conduct business. The company requires adopting new culture and institution policies used in the Host country. In essence, the new corporation must adapt to the diverse rules and regulation in the host country, different currency, taxation tables and community norms and values (Sedoglavich, Hill & Field, 2008 p.15). According to a study by Mitchell, (2009), new companies need to learn communication techniques, consumer behaviors and the culture of the people before engaging in any business activity (Mitchell, 2009 p. 87). In our case, Jiangsu Jinsheng Industry used a Host company EMAG

to venture into the German market. Though the mother company had already laid a firm foundation for the integration, Jiangsu Jinsheng Industry had to follow the policies and culture of German to stabilize its business in the international market. The merger acted as a better strategy for Jiangsu Jinsheng Industry to expand internationally making it easy for the company to learn the traits and norms of Germans in more sober mode. EMAG was being operated according to local preferences and culture which meant that Jiangsu Jinsheng Industry was only required to adopt the policies and procedures of the mother company as far as production rules and regulation are concerned.

Conclusion

According to the research finding, managers need to understand the institution and culture of the countries they opt to expand their companies to. Understanding the culture of the Host country makes it easy for the new business to adopt to their marketing techniques, production regulation and taxation policies. It helps the company in building a stronger organizational strategy that smoothly integrates the organization mission and vision in accordance with the host countries rules and regulations (Sedoglavich, Hill & Field, 2008 p.46).
In our case, EMAG had already mapped the market share for Jiangsu Jinsheng Holding to venture into the machinery manufacturing industry in German. But regardless of this smooth transition, the Host country culture and institutions affected the internal organization, the corporate social responsibilities and foreign entry strategy of Jiangsu Jinsheng Holding. The company had to change most of its organizational structure, employee, advertising means and production lines ethics so as to fit in the production system of EMAG toolmakers in Germany. Therefore, as a company moves into

a new region, with different norms, values, languages, rules and preferences, the management must be prepared to change some of the critical company pillars such as mission, vision, and philosophy. Understanding and adopting the culture in the new country helps the company in laying a stronger foundation for success (Hamilton & Webster, 2012 p. 47).

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