Business in Japan: Challenges and Threats

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Executive Summary

Before a firm decides to venture into doing business in Japan, a lot of factors have to be considered and market entry strategy crafted and executed. It is essential for a firm to conduct a survey of the Japanese market to determine the available market opportunities and the underlying challenges before venturing into doing business. It is significant that a firm speaks to a local exports and imports market expert.

The market analysis will enable the firm to determine the situation of the intended market. Therefore, firms intending to do business in Japan must carry out their value chain analysis and SWOT analysis to determine their strengths, weaknesses, opportunities and threats before deciding to do business in Japan.

Introduction

Japan is second largest world economy after the US. The country has an attractive business opportunity for both domestic and foreign investors. However, before venturing into doing business in Japan, it is essential to conduct market research in order to acquire vital information about the country’s market situation.

Venturing into business in Japan requires business organizations to have a better knowledge of the intended market place. This requires firms to gather information to aid them in decision making (Doing business in Japan, 2011). This essay paper seeks to examine doing business in Japan.

Overview of Japan

Japan is located in north eastern Asia and has a population of approximately 126 million people with its capital city being Tokyo. The country is a constitutional monarchy with a parliamentary democratic monarchy and a multi-party system. The official language is Japanese and English is the second language which most Japanese understand.

Major partners in trade include the US, China, Taiwan, Hong Kong, UAE, Australia, South Korea among others. Japan is renowned for the manufacture of world class automobiles and consumer electronic products such as home appliances, transistors and radios among others (Nishiyama, 2000, p.1).

Barriers to Business Communication

There are two major factors that could bar intercultural business communication in Japan. These factors are differences in culture and language. A foreign business organization must ensure their employees are either bicultural or bilingual, otherwise business communication might prove to be difficult and frustrating (Nishiyama, 2000, p. 9). Besides language barriers in communication, Japanese use their culture as the basis of their understanding and perception and this could jeopardize intercultural business.

Essential Information to Gather Before Reaching the Decision on Doing Business in Japan

One crucial piece of information that an organization needs to gather before making decision to do business in Japan is concerned with market accessibility. An organization must first determine how accessible Japanese market is. This is because each business organization and each market is unique and an organization intending to export must be well equipped with valuable information on the target market place. This information will be valuable to an organization in its initial approaches into the new market.

To venture into business in Japan’s market, it is crucial for a firm to have information on the business operations and activities of major local and foreign market place players and potential competitors.

This will enable the firm to gauge their competitive opportunity against other market place players and achieving their performance goals. Knowledge of competitors will also enable that particular firm to craft and execute business strategy that would give the firm competitive advantage against the existing players in the Japanese market place (Sato, 2011, p.161).

It is also essential for the firm to gather information on the eating habits of Japanese customers. The knowledge of the cultural and contemporary eating habits will enable the firm to determine which products and services to produce. For an organization intending to venture into breakfast cereals business for instance, this information will help the in cutting down unnecessary operation costs resulting from of logistics.

Businesses must gather information on laws and regulations that regulate both local and international business activities. Complying with regulations and laws in the business activities is a legal requirement and a firm must be well equipped with all the legal requirement of doing business in Japan (Doing business in Japan, 2011).

Venturing into Business in Japan

Every culture has its own linguistic characteristic. Doing business in Japan will require a firm to gather information on how to break down cultural and linguistic barriers that would pose challenges to marketing the business.

Information on cultural and linguistic characteristic of the Japanese people will enable a firm in crafting and executing a variety of business options and strategies on gaining competitive advantage against competitors. Before venturing into business in Japan, firms have to consider their own capabilities, resources, as well as past experience in foreign business operations. Firms must engage in gathering information that would enable them get this information.

It is important to consider gathering information on establishing business relationships with local agents in Japan. Local agents have knowledge and contacts that would enable firms to promote their products. This establishment of local relationship plays a critical role in addressing language, cultural, as well as institutional challenges to the promotion, distribution and selling of their products and services.

Firms must also gather information on market entry strategies before venturing into doing business in Japan as the country’s market is a highly competitive one. This requires business firms intending to venture into this market to craft and execute business strategies and develop value chains that would give them competitive advantage against existing industry players and other potential new entrants.

Business Meetings and Occasions

Japanese business place is characterized by official attire and one is expected to dress appropriately not casually when meeting business clients and partners. In a business meeting, the sitting arrangement id determined by ones’ status and one is expected to stand until the superior tells one to sit. Non-alcoholic drinks are served at the beginning of the business meeting. Gifts are appreciated and one is expected to carry a small souvenir to present to the host. It is important to take notes during meetings (Doing business in Japan, 2011).

Conclusion

Japan provides a favorable business environment with has a vibrant market. However, many challenges and threats to business exist. Being the second largest superpower after the US, the nature of competition in Japan is very high. In addition, barrier to cross cultural business such as culture and language differences must be addressed in order to enable a foreign business perform well in the Japanese market place.

References

Doing business in Japan. (2011). japan-guide. Web.

Doing business in Japan. (n.d). PKF. Web.

New to exporting? Here’s how we can help. (2011). ukti.gov.uk. Web.

Nishiyama, K. (2000). Doing business with Japan: Successful strategies for intercultural communication. Hawaii: University of Hawaii Press.

Sato, K. (2011). Industry and business in Japan. New York: Routledge.

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