Global Trade

Global Trade and Production

MT220-01: Global Business

“Korea is probably more heavily influenced by Confucian values than any other business culture, including China. Confucian ethics emphasize the value of collective group harmony, respect for authority and therefore management, as well as the all embracing importance of family, clan and friendship (WorldBusinessCulture).” An acquisition is action in which a company buys most, if not all, of the target company's ownership stakes in order to control the target firm (Hill, 2010). A Greenfield venture is action to enter into a new market without the help of another business who is already there (Hill, 2010). Acquisitions have quite a few advantages. In this case, acquisitions avoid barriers to entry which prevents high start up costs and prevents new competitors from entering China’s market. Another benefit of this acquisition for Zip-6 is it can quickly gain the experience and assets of Lotse Tsangsung. This business already complements what Zip-6 does. With the increase in staff and efficiency, Zip-6 can increase output and improve profits. Greenfield ventures also have positive effects on businesses. They offer an opportunity to preserve and replicate valuable corporate cultures abroad. “This is a very important advantage for many international businesses, where transferring products, competencies, skills, and know-how from the established operations of the firm to the new subsidiary are principal ways of creating value (Hill, 2010).”

The negative sides of acquisitions could be employee retention and productivity. Some employees may fear future layoff and will start looking for other jobs or quit after the company introduces its new plan. The possibility also exists that the buyer could fire extra employees if it has too many workers doing the same tasks after the buyout. A company that has a hierarchical structure may buyout a company which is much more flexible and allows workers more control over their...