“A Critical Analysis of a Multinational Logistics Provider’s Entry into Singapore’s Global and Domestic Hub”
Business and Economics of the Asia Pacific Countries
The Asia Pacific region is known as the most dynamic region in the world accounting for over half the worlds GDP and over 60% of exports. (Chen. M. 2004). Asia's current account surplus is projected to fall by 3% of regional GDP in 2010 and 2011 and from 5% from 2007. Making a modest contribution to the narrowing of global imbalances, while vulnerabilities still remain with global financial conditions, could cause Asia's link with these advanced economies to have repercussions for the region. (IMF. 2010).
As a multinational logistics company based in the USA, whom are looking to expand their business in the Asia Pacific region, need to decide on which Asia Pacific countries best fit a potential gateway. For a freight forwarding company the most important factors that contribute to a gateway are the strategic geographical location, size of the port and airport and how accessible they are, infrastructure, customs, resources, security and technology. (Expeditors. 2010) The country which best suits these indicators is Singapore.
Singapore firstly, is in one of the best strategic locations in the region, situated between Malaysia and Indonesia and south of China makes it a prime location as a gateway connecting the East to the West. Secondly, Singapore has a highly efficient port and airport with the highest in technology and security; as far as ease of doing business is concerned, especially western business’ Singapore is the best in Asia, English being the business language as well. (Communicaid, 2009). (Chen, Min. 2004) states “the Chinese, known for their hardworking ethic, maintain close family ties and through networking dynamics have prospered in the booming economies of Taiwan, Hong Kong, Singapore and other major ASEAN countries”. Chen also states that 72% of Singapore’s population is comprised of Chinese. Therefore instigating that if the company were to hire local workers with cultural values similar to the region, Singapore would have a dedicated, efficient and strong work ethic to chose from.
Business Climate and Culture
According to (Bhaskaran,s. 2007). The culture of the business will tend to be the culture of the group that controls the organization, for example since this freight forwarding company originated in the US, even outside the US it would showcase, work values, beliefs and orientations of its US parent company as it is controlled by CEO's and directors based in the USA. However (Hofstede, G. 2007) contradicts this portrayal and states that work values, beliefs and orientations are different in different countries "because of the influence of the national culture of its employees in different countries." Singapore is widely known for adopting many successful firms of many different cultures. Opposing Bhaskaran’s view and showing that many different firms that move to Singapore can adapt to the culture. It is in fact how easy the culture of Singapore is to adapt to that makes Singapore an ideal hub for a logistics company.
Hofstede’s cultural dimensions enable the collaboration of cultures and help indentify cultural differences between Asia Pacific countries to Western countries. Moreover help a business culturally adapt to a new country. A PESTEL analysis will help diversify the differences between PESTEL factors of the USA compared to Singapore’s, and may possibly show a correlation to Hofstede’s cultural dimensions. (See appendix 1).
(Hofstede, G. 2010).
The above graph indicates the cultural differences between USA (country of origin), Singapore (new country of entry) and Asia Pacific region as a whole. This will help the company decide on what dimensions (according to Hofstede), will need to adapt to when setting up in Singapore. The biggest difference is...