The long-term success of any business organization depends on, in addition to appropriate financial decisions, the management's focus on the fundamental principles of ethical business. According to Dorbin (2012), ethical decision making is primarily based on the integrity of business managers, fairness, trustworthiness, and mutual respect. Although these ethical business principles are vital for any business organization, it is the management's responsibility to make proper decisions and set proper ethical standards for everyone. Therefore, as Kuligowski (2019) explains, leaders must be intrinsically motivated to act correctly, make ethically acceptable choices, and discount unethical choices with better options. Such becomes important when a company plans to launch into the global market.
Andrews’ team is a simulated company intending to expand into a global business. The management intends to select a country in which they will launch their first international branch. As an ethical business entity, they must analyze different countries' political, economic, socio-cultural, technological, environmental, and legal aspects before deciding. Comparing the choice country with the United States will also inform the management's decision-making process. From this comparison, they will determine the need to adjust their operational procedures before launching business in the selected country.
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Choice of Country
The management developed a preliminary list of possible destinations by selecting some of the world's best economies. These included China, India, New Zealand, and Singapore. China and India were the most preferred countries owing to their fast-growing economies and large populations of over one billion people (LeFebvre, 2011). Singapore and New Zealand were dropped primarily because of their low population and slow economic growth. Because of recent trade wars between China and the US, it was deemed risky to invest in China (Rappeport, 2019). In support of India's economic prosperity, Raman (2016) explained that India possesses the capacity to become a global economic superpower by 2025. Therefore, the management settled on India because it is a global economic powerhouse.
Despite having selected India, the management of the Andrews team needed to compare the two countries using the PESTEL model because the two nations differ in several aspects. Religion was the first factor considered. While the United States of America consists mainly of Christians, India is different because it consists mainly of Hindus and Muslims (LeFebvre, 2011). Economically, India ranks fifth in the world while the US tops the list. The Indian business culture, according to Sheth (2008), differs from the US because it bases on clanships and friendships, which is different from the capitalistic nature of the US. The detailed PESTEL analysis below compares India and the US by describing their political, economic, socio-cultural, technological, ecological, and legal environments.
PESTEL Analysis
Political Factors
Politically, India and the US are similar. The two countries utilize a democratic system of leadership where political parties with different ideologies participate in free and fair elections (Patil, 2018; Masih et al., 2019). Besides, the countries also share similar taxation systems that require citizens to pay income tax, service tax, property tax, and sale tax (Patil, 2018; Masih et al., 2019). The governments of the two countries use privatization policies to improve efficiency and productivity. Consequently, India’s political environment resembles that of the US.
Economic Factors
Economically, there are minor differences between India and the US though the two nations are similar in most aspects. The US is the world's largest economy, while India is the fifth. Also, most multinational companies originate from the US. These include Google and Apple, globally recognized telecommunication companies that shape global socio-economic landscape (Masih et al., 2019). On the contrary, India does not have any significant global influencers (Patil, 2018). Nonetheless, India is a significant participant in healthcare research and innovation.
Social Factors
India and the US differ significantly in their social architectures, although both are highly populated. While Hindu and Islam are the main religions in India, Christianity is the dominant faith in the US (Masih et al., 2019). Mostly, the religious groups in these countries coexist in peace. However, Hindu extremists often cause violence in India. The government's inability to control Hindu extremists damages India's reputation as a global business destination (Patil, 2018). On the other hand, the US is a free country, although racial injustices happen from time to time.
Technological Factors
India continues to develop technologically. Over the last few years, the country has innovated smartphones, fast internet, online gaming systems, and computer software. Also, the country has manufactured electronics like televisions, freezers and fridges, automated laboratory analyzers, and life support machines (Patil, 2018). The country's focus on information technology has placed it strategically as a global supplier of technology experts. These technological advancements have significantly reduced the cost of doing business. On the contrary, the US ranks among the most technologically advanced countries in the world (Masih et al., 2019). Technology giants like Facebook, Microsoft and Apple are based in the US. These companies invest resources to make business processes easy in the US.
Environmental Factors
India has recently tightened its focus on global warming and climate change because these have significant effects on agriculture, tourism and insurance. Alongside this new focus, the country has implemented strict laws to limit pollution (Patil, 2018). On the other hand, the US is a county of diverse geography, wildlife, and climates. While the country's diverse climate attracts many tourists, the possibility of severe climate-related disasters is high (Masih et al., 2019). These disasters happen frequently and disrupt daily activities significantly.
Legal Factors
Businesses should operate within the confines of the law. American business laws are clearly stated and detailed, unlike Indian ones (Miles, 2006). This clear statement of business laws in the US primarily derives from the country's individualistic system in which everyone takes full responsibility for their actions. In India, laws are not clearly stated and sophisticated as in the US because of the country's corporate business landscape (Miles, 2006). Also, while US business people communicate by confrontation, Indians believe in community coexistence (Patil, 2018). Resultantly, business communication in India takes a friendly tone. Based on the differences, business operation in India may be easier than in the United States.
Cultural or Ethical Differences
Ethically, India and the US are similar. Business managers from both countries believe that business should primarily focus on generating profits, and ethical concerns should be treated as secondary. Research confirms that US business managers rely on sophisticated frameworks to make ethical decisions while Indian counterparts depend mainly on intuition (Jackson, 2001). Concerning organizational loyalty, Sheth (2008) describes that India's collectivistic culture leads employees to consider loyalty to the organization as paramount. This is not so in the United States because the country's individualistic culture leads people to focus on individual gains. According to Arrindell (2003), a collectivistic culture enhances a person's understanding of their role in making ethically sound decisions, whereas an individualistic one tends to dilute ethical principles. Overall, India's ethical standards are strict, while the US's standards are lenient except for grave mistakes that demand legal punishment.
Change of Operations
In the last few years, many multinational companies have entered the Indian market. Such entry has primarily resulted from improved business policies, increased opportunities, and fair competition (LeFebvre, 2011). Often, these organizations did not need to adjust their operations significantly. Thus, by choosing to invest in India, the Andrews team will not need to change operational procedures significantly because of the many similarities between India and the US. According to LeFebvre (2011), while business in India is conducted in English, there is a minor requirement that business managers study the culture of the locals because the population is composed of mainly Hindus. The local manager should ensure business operations are customized to fit the culture of local Hindus. Besides, Indians value corporate loyalty more than individual loyalty. Since the company is accustomed to a western culture where individualistic systems reign, there will be a need to adjust the company's customer focus to a collective one. This modification will ensure company success in the region. Hence, the company should incorporate Indian culture through the adoption of a corporate business system.
References
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