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Setting up a Business

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Cultural Component

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Setting up a business in a foreign country involves a lot of groundwork. The firm should operate according to the trade specifications of a foreign country. Management of a company should understand the cultural practices of people around in order to produce commodities that meet market requirements.

In the Middle East, most of people are Muslims and, therefore, there are some cultural differences between them and Christians. For example, if one is to set up a meat processing company, a pork company will not be advisable. The Muslim females do not wear short skirts or tight clothes. If it is a textile firm, clothes that are loosely fitting and low cut will not preferred. The Middle East’s climate is naturally hot and, therefore, people prefer use open shoes. Gumboots might not be of great market viability (Gilsenan, 2000).

In Asia, some of the inhabitants do not take beef. A beef processing company might not be viable. Also, fish products are very marketable in that region. If one is setting up a ship building company, there is likelihood of high returns since the waters are rich in fish.

In Latin America, most of people like stylish dressing. Therefore, a textile company making short and tight clothes, which could not sell in the Middle East, will be viable in this region.

Additionally, there is high rate of tobacco consumption among Latin Americans. A cigarette manufacturing company will thrive in this area. Since most of the Latin America countries are islands with large coastal areas, a hotel company can bring a lot of returns. This is because most tourists prefer going to coastal areas to spend their recreational time

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Management System

Management systems are not universal and, therefore, a system that works in one country might not work in another country. A US system of management can work in Latin America due to a number of reasons. One is the proximity of the two areas. There is a thin line between the religious beliefs and other cultural activities between Latin Americans and North Americans. There is a large number of Latin Americans, especially Mexicans working in the US and, therefore, a US management system might not be that new (Bengoa, Sanchez-Robles, 2003).

The same system might not work in the Middle East largely because of the Muslim culture. There are some things that females are supposed to do, and there are those they should refrain from. Therefore, it might be tricky for a management structure that requires a woman at the helm. In addition, the style of advertising should be very different since the Muslim culture does not want to associate itself with the slightest form of nudity.

In Asia, the system might work since cultural differences are not that many. India, Japan, and China use almost the same system of management and technological knowledge as the US. In fact, there have been a lot of borrowings within these countries. Therefore, the systems can be used interchangeably.

Classification of Economic Systems

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Most of the Asian countries are capitalists. However, countries like China and North Korea are socialists. It is easier for a firm originating from a capitalist country to set up its base in a capitalist country. The investments and productivity will not be meeting the company’s goals but the goals of the economy in general. This is because the capitalism system of economy will encourage capital accumulation and no distribution. Therefore, a firm will derive a lot from its investments and efforts (Holliday, 2000).

Middle East countries are mostly capitalists. Therefore, it will be easier for a firm to operate in this region. The decisions made by a company will be driven by the competitiveness of the market and the need to maximize private profit. The same system applies for almost all Latin American countries.

Conclusively, Latin America and the capitalist Asian countries will be the most suitable for establishment of the international company. This is because their systems are flexible and involve relatively less bureaucratic measures and practices.

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