international management

Introduction

EnGoPlanet was born in New York City in 2016. The idea of forming the company came after the hurricane Sandy, during which half of Manhattan had no power for almost 7 days. The fact that one of the most important cities in the world did not have a proper alternative to provide its citizens with energy for their basic needs was disconcerting.

EnGoPlanet has two products, smart solar street lights and smart solar benches. EnGoPlanet Smart Solar Street Light is an innovative, modern, multi-functional lighting solution powered by renewable energy. EnGoPlanet Smart Solar Street Lights are made of high-quality components that illuminate streets, parks, parking lots, corporate and university campuses, and create an appealing modern visual environment that not only promotes renewable energy, but also reduces your installation. Energy and maintenance costs.

EnGoPlanet smart solar bench is new urban furniture that will help cities, universities, retail or business centers create better, safer and more user-friendly environments. Smart Bench will offer solar power, offering many cool features. Each smart solar table is equipped with LED lighting, charging stations and WiFi connections. Each unit can be equipped with smart sensors that can collect and measure many valuable outdoor data such as air quality, temperature, humidity.

Socioeconomic and Cultural Factors

As many cities around the world populations grow, the more conscience they become to preserve energy and its cost. Access to electricity as we currently know is crucial to a modernized lifestyle and range of improvements in developing countries. One of the socioeconomic factors with expanding EnGoPlanet into middle income countries is that its people can benefit from low cost solar powered lighting. The adoption of a technology such as this would require little maintenance and low operational costs. Though, lack of exposure to solar lighting in areas such as Canada and China may cause some speculation, it is important to understand the benefits of replacing existing street lighting as it complements the neighborhoods and pedestrians who utilize them on the daily.

Additional to its solar lighting, EnGoPlanet is expanding its solar powered charging stations. According to EnGo, one of its goals is to provide energy services to improve the quality of life, economic well-being and help to aid security in neighborhoods around the world. With these charging stations, users would be able to charge multiple devices at the same time, while allowing interaction amongst other consumers. While Canada and China both vary with the way they interact amongst each other socially, they can largely benefit from EnGoPlanet. In spite of the uncertain requirements of social and environmental policies in China and Canada, 55 percent of its population is urban in China while almost 80 percent is urban in Canada according to the National Bureau of Statistics. This is beneficial for a company like EnGoPlanet because it can provide a service for all people in both urban (and rural) areas. Additionally, these stations can be used for emergency purposes as well due to the power outages natural disasters cause in times of need of quick recovery response.

Barriers

Doing business in China and Canada present various socioeconomic and cultural barriers, as well as opportunities. But in order to move in to these new markets, whether by deploying, developing or deeping, Engo must understand how to navigate the complexities of the economic, political, and cultural context of these new markets. There are also a myriad of political issues, in both China and Canada, that will affect how or even if EnGo Planet should present their products to these markets.

China

Economic

Morgan Stanley Capital International Index (which measures equity market performance), defines China as an emerging market economy. (msci.com/market-classification) And as a result, with a GDP estimated to be $51.1 billion by 2050, China will “enjoy greater availability of jobs and better access to technology.” (Pearl,13 & 27) China’s flat and autonomous management style allow for their companies to flexible and adapt to change quickly. This gives large private-owned companies, such as Neusoft and Midea, the ability to create new products move into new industries without experience.

There is a social consciousness within Chinese society to elevate China to the largest world economy ahead of the U.S. This leads to state officials and private-businesses to cooperate for the benefit of the country. (Hout, 6) This social consciousness is a major driver to Chinese business, if not understand by foreign businesses it could become a barrier to entering the market.

As a result of China’s desire to become the world’s largest economy, they have consciously removed many of the obstacles to do business. However, while the ease of doing business in China as a whole is difficult (their rank is #78), there are cities that are relatively easy to do business in. On the Ease of Doing Business Index Hong Kong, Taiwan, Hangzhou, Shanghai and Guangzhou are ranked high in the “starting a business” and “registering property” categories. (The World Bank) EnGo Planet has to understand this relationship in order to better understand where to do business in China.

Government

In China’s quest to become the number one world economy, they are very pro-business. China scores a 4.60-5.00, compared to the USA score of 5.39-5.72, on the global competitiveness index of 2013; which measures infrastructure, transparency, market efficiency, technological readiness, business sophistication and innovation. (Globalization video) The country is working diligently to increase competitiveness, without becoming dependent on foreign assistance. However, they don’t treat foreign and domestic business equally. The government plays a significant role in the Chinese business environment. With most businesses being state-owned, there is a lot of governmental control and regulations in many industries. China rigidly manages which foreign business it allows entry into which industries. As a matter of fact, China publishes a foreign investment catalogue that lists which industries are “encouraged”, “restricted” and “prohibited”. (Hedley, 5) Also, China is ranked #77 with a score of 41, on the Corruption Perception index for 2017, so there is almost no transparency and accountability with government and business. (Transparency International) These two issues together could be a barrier to entry in certain markets.

Domestically, with the government’s global strategic vision, Chinese businesses are encouraged by the government to enter into new and innovative industries. This gives domestic businesses an advantage over foreign companies. Even though China encourages foreign companies to enter and participate in the marketplace, they limit and control how and to what extent.

The involvement of China in various political, social or economic agreements can present a barrier to entering the China market. Presently, China is involved in BRICS (Brazil, Russia, India, China and South Africa), where members have coordinated as emerging economy countries to provide financial assistance and support projects. Due to the US-China trade war that has imposed steep tariffs on imports and exports of both countries, BRICS countries are poised to become more dependent on each other.

Culture

From a cultural perspective, doing business in China also presents many barriers and opportunities. The Chinese business community takes their business relationships very seriously. These relationships dictate when, where and how they do business. Because their culture is distinctively different from US culture, a lack of cultural intelligence would be a barrier to entry.

China’s leadership style is considered masculine, according to Hofstede Insights, meaning that people are motivated by success and wanting to be the best. They are willing to sacrifice family and leisure. China’s leadership culture, which is top-down and hierarchical, reflects this philosophy; the boss directs the projects and is very clear about expectations and decisions. (Meyer, 7) Any nuances or unclear instructions can be misinterpreted and can cause a barrier in communication.

China does not focus on the longevity or quality of a product. They have the ability to prototype and produce a product very quickly. (Hout, 5) This ability could lead to EnGo Planet’s products possibly being replicated and sold at an inexpensive price.

Canada

Economic

Morgan Stanley Capital International Index (which measures equity market performance), defines Canada as a developed market economy. (msci.com/market-classification) However, Canada’s GDP for 2017 was $1.65 billion and is estimated to increase to $3.32 billion by 2050. (data.worldBank.org; Pearl,13) Which is not an significant increase for 32 years, but shows a stable and growing economy.

Government

Canada scores high on transparency and accountability with government and business, with a ranking of #8 and a score of 82 on the Corruption Perception index for 2017. (Transparency International) And an Economic Freedom ratings of 77.7, which measures the absence of government constraint in distribution or consumption of goods and services to protect or maintain liberty. (Heritage.org) This indicates Canada is a favorable business environment for foreign companies.

The recent renegotiation of the trade agreements and policies between United States, Mexico and Canada could present a barrier to entering the Canadian market. NAFTA could be replaced by USMCA (United States, Mexico and Canada Agreement), once approved by the governments of Mexico, Canada and United States. The agreement affects tariffs on steel, labor laws and the automobile and dairy industry. (Kirby, 1) USMCA may prove to be unfavorable for Canada’s economy and relations with the United States.

Culture

From a cultural perspective, according to the Hofstede Insights Index, Canada’s cultural profile is similar to the United States cultural profile. One would think, given the similarities in cultural perspective, there would be very little barriers to entering the Canadian market. Canada’s management style is top-down and egalitarian, lending to a business world of individualism and displays of initiative (Meyer, 7)

SWOT Analysis

Appendix 1

References

1. Hout, Thomas and Michael, David. A Chinese Approach to Management, Harvard Business Review. September 2014.

2. Meyer, Erin. Leading Teams; Being the Boss in Brussels, Boston and Beijing, Harvard Business Review. July-August 2017.

3. Hedley, Mark. Entering Chinese Business-to-Business Markets: The Challenges & Opportunities. Business to Business International

4. Morgan Stanley Capital International Index. www.msci.com/market-classification

5. The World Bank.Doing Business Measuring Business Regulations. www.doingbusiness.org/en/rankings

6. The World Bank.GDP Index. https://data.worldbank.org/indicator/ny.gdp.mktp.cd?view=map&year_high_desc=true

7. Pearl, Mona. Globalization.[PowerPoint slides] International Management course 557, lesson#1.

8. Heritage.org. www.heritage.org/index/heatmap

9. Transparency International. February 2018 www.transparency.org/news/feature/corruption_perceptions_index_2017

10. Kirby, Jen. October 2018. USMCA, Trump’s new NAFTA deal, explained in 500 words. www.vox.com/2018/10/3/17930092/usmca-nafta-trump-trade-deal-explained