1
Running Head: Business Environmental Analysis Report: Japan
Business Environmental Analysis Report: Japan
BUSI 605
School of Business, Liberty University
2
Running Head: Business Environmental Analysis Report: Japan
Abstract
This paper has the purpose to explore into a deep business environmental analysis of doing
business in another nation, which in this case will be Japan. The country is in an island and he
four main islands are: Shikoku, Kyushu, Hokkaido, and Honshu, making about 97% of the
country’s land area (Owuor, 2019). Mainly by analyzing the Japanese culture through their
business customs and in other areas, such as, international trade activities, international
Institution activities, natural resources and environmental sustainability, political forces, legal
forces, economic and socioeconomic forces, financial forces, implications for US managers, and
last but not least integration of faith and learning.
3
Running Head: Business Environmental Analysis Report: Japan
Introduction
Japan is a country on the east coast of Asia and the country consists of four main Islands,
which are: Hokkaido, Honshu, Shikoku, and Kyushu. The country has a very rich culture and has
been occupied by humans for tens of thousands of years. Their population according to the world
bank in 2018 is 126.5 million (Marious, 2020). Japan and some other countries in Asia had a
huge financial crisis in 1997, what was called by some people as “financial panic” and as
consequence of the slow response, the country was left with deep “wounds” (Karube Kensuke,
2017). As consequence of the financial crisis in Japan, many people decided to save more and
spend less, hence a huge negative impact in business product and services demand, which
according to Kuepper, “This contributed to deflationary pressures that encouraged consumers to
further hoard money, which resulted in a deflationary spiral” (Kuepper, 2020), which was the so
called “lost decade”.
International Trade Activities
In order to try to recover from all the debt and deflation that were happening in Japan’s
economy, in 2012 the second Abe administration used a strategy called three pillars of
“Abenomics”, which consists of: monetary policy, a flexible fiscal policy, and a strategy for
growth (kennedy, 2020). Unfortunately, despite all those efforts Japan could face some economic
challenges in 2021. Those economic challenges are also caused by the pandemic (COVID-19),
hence affecting manufacturing and has caused exports and tourism to dwindle (kennedy, 2020),
but before the pandemic Japan was doing better and was investing in electronics and innovated
products.
4
Running Head: Business Environmental Analysis Report: Japan
In 2019, before this pandemic started, Japan was the most important trade and investment
partners for the United States. Also, in 2018 Japan surpassed $300 billion in trade in goods and
services. The country depends a lot in the import of natural resources and a good example of that
is the fact that Japan is the largest net buyer of food products in the entire world (export, 2019).
Unfortunately, the long-term relationship that Japan has with the United States has been tense
over the years mainly because of political waves and the cancelation of the TPP in 2018 (Solís &
Urata, 2018). But the alliance between Japan and the United States could be very beneficial
opportunities for Japan in sectors such as space, defense, and security (export, 2019).
International Institution Activities
Any international institution is crucial for international decision makers and it is also
“central focus of international relations scholarship as well as of policymaking efforts around the
world” (Duffield, 2007). They tend to help avoid conflicts between nations and over the years
many different international institutions, such as, regimes, conventions, treaties have improved
and grown a lot in importance between nations success (Duffield, 2007).
Japan interacts with many different international institutions in areas, but the one that
stands out is in finance and development areas (financial policy). Although, in comparison to
other developed nations Japan’s foreign direct investment is relatively unstable (export
enterprises, 2020).
According to the FDI, Japan’s stock in 2019 was around USD 222,5 billion and they
remained the largest investors in the world. The multinational companies in Japan had an
investment growth of 58 percent and “reaching a record $227 billion, due to an increase in cross-
border mergers and acquisitions” (export enterprises, 2020). The main countries that Japan
5
Running Head: Business Environmental Analysis Report: Japan
invested in were: United States, the United Kingdom, France, and South Korea with nearly 85
percent of the FDI inflows.
All the international investments that Japan did in 2019 were directed towards: towards
electric machinery, finance and insurance, chemicals and pharmaceuticals, transportation
equipment production and real estate (export enterprises, 2020). In 2020 the country has rank 29th
out of the 190 countries in the World’s Bank report with a solid net foreign creditor position and
its main strength as a leader in advanced technology and R&D (export enterprises, 2020).
Natural Resources and Environmental Sustainability
According to Geringer, environmental sustainability is “the state in which the demands
placed upon the environment by people and commerce can be met without reducing the capacity
of the environment to provide for future generations” (Geringer, 2016). The concept of
environmental sustainability, when used in a business context could be related to environment,
society, the economy, people within the economy, or even the organization (Geringer, 2016).
As mentioned before, Japan is a country known for not having any major natural
resource, such as natural gas, oil, gold or coal, which makes Japan a dependent on imported raw
material and energy and that is why Japan is known as the largest importer of liquefied natural
gas and coal and also the second largest importer of oil in the world (Owouor, 2019).
Political Forces
Legal Forces
6
Running Head: Business Environmental Analysis Report: Japan
Economic and Socioeconomic Forces
Financial Forces
Implications for US Managers
Integration of Faith and Learning
References
Jansen, B. Marius; Masai, Y. Encyclopedia Britannica.(2020, November 05). Japan. Retrieved
November 10, 2020, from https://www.britannica.com/place/Japan
Kensuke, K. (2020, May 30). Lessons of the 1997 Financial Crisis in Japan. Retrieved November
10, 2020, from https://www.nippon.com/en/currents/d00360/
7
Running Head: Business Environmental Analysis Report: Japan
Kuepper, J. (2020, August 05). Japan's Lost Decade: A Brief History and Lessons Learned.
Retrieved November 10, 2020, from https://www.thebalance.com/japan-s-lost-decade-
brief-history-and-lessons-1979056
Kennedy, J. (2020, November 06). 3 Economic Challenges Japan Faces in 2021. Retrieved
November 10, 2020, from https://www.investopedia.com/articles/investing/123015/3-
economic-challenges-japan-faces-2016.asp
Solís, M., & Urata, S. (2018). Abenomics and Japan's Trade Policy in a New Era. Asian
Economic Policy Review, 13(1), Retrieved from https://onlinelibrary-wiley-
com.ezproxy.liberty.edu/doi/full/10.1111/aepr.12205
Japan - Market Overview. (2019, June 09). Retrieved November 11, 2020, from
https://www.export.gov/article?series=a0pt0000000PAu7AAG
(n.d.). Retrieved November 15, 2020, from https://www.export.gov/article?
series=a0pt0000000PAu7AAG
Duffield, J. (2007). What Are International Institutions? International Studies Review, 9(1), 1-22.
Retrieved November 15, 2020, from http://www.jstor.org/stable/4621775
Foreign direct investment (FDI) in Japan. (n.d.). Retrieved November 15, 2020, from
https://www.nordeatrade.com/se/explore-new-market/japan/investment
Geringer, J., Minor, M., McNett, J., & Ball, D. (2016). International Business. New York, NY:
McGraw-Hill/Irwin Education.
Owuor, S. (2019, August 22). What Are The Major Natural Resources Of Japan? Retrieved
November 15, 2020, from https://www.worldatlas.com/articles/what-are-the-major-
natural-resources-of-japan.html
Powered by TCPDF (www.tcpdf.org)
