Merrill Lynch in Japan Case Study
Merrill Lynch is an investment banking business and the world’s largest underwriter of debt and equity. Merrill Lynch’s investment banking operations has had a long global reach and is looking to reside in Japan. In this paper I will describe the legal, cultural, and ethical challenges that may confront Merrill Lynch in this case study as well as the various roles that the Japanese government will play and examine some of the strategic and operational challenges that faced the global managers (Hill, 2009). Japan’s efforts to regulate its economy failed. Japan’s restraining regulations made it almost impossible for Merrill Lunch to offer its Japanese private clients the range of services that they could offer in the United States. Due to Japan’s four stockbrokerages, who customarily monopolized the Japanese market, made it complicated to attract employee talent and clients away from the local businesses. The Japanese government controlled what services could be purchased from private international firms and would not permit Japanese citizens to invest in financial services outside the Japanese country. In 1993, Merrill Lynch admitted defeat and pulled out of Japan. Due to its legal and cultural regulations, Merrill Lynch knew they could not beat Japan’s government regulations. Merrill Lynch looked at the private client business from an ethical viewpoint and did not want to go against the Japanese government in anticipation of expanding globally in Japan in the future. The role of the Japanese government was primarily to protect themselves from private foreign financial firms from controlling the Japanese market, and to build their economy from within the country. This in turn caused Japan’s economy to rapidly fail. By mid 1990’s Japan embarked on a wide-ranging deregulation of all its financial service industry (Hill, 2009). In 1997 the conditions changed under the WTO agreement permitting...
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