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Country Risk And Strategic Planning Analysis Paper: Target

2136 words - 9 pages

Many U.S. company's are looking to become part of the global market by either building in foreign countries or purchasing existing companies and then changing it to the U.S. company name. To do this the company must do an analysis of the risks involved in the chosen country and develop a strategic plan that will work for everyone involved as an acquisition progresses. This paper will look at the risks and assessment of Target, Inc opening a store in Japan.Political, Legal, and Regulatory RisksJapan is a bureaucratic country. It has a complex network of regulations, permissions, procedures and authorities with approval procedures for many things, which don't necessarily require approval in other countries. Many of these restrictions are designed to bar new-comers entering into the country's existing industries. This will not be the case for the Target Corporation.The political, legal, and regulatory risks of opening a Target in Japan vary. Target's plan is to acquire an existing retail store and move it under the Target brand. Target is in no way threatening to the political climate in Japan. Legally, the risk associated with opening the store could be great. The company must make sure that it is in compliance with rules and regulations regarding the store and merchandise stocks. Target must also make sure that the retailer it is acquiring has not had any illegal irregularities in the past. Customers might always associate that company with Target and risk a loss of business.Exchange and Repatriation of Funds RisksExchange rates and repatriation of funds needs to be considered with Target opening a store in Japan. By acquiring a retail store already in existence, Target could possibly inherit its distribution channels and suppliers and reduce exporting costs. Pricing will also be a factor. If the company bases pricing by US standards then the possibility of products being high in Japan are great. The exchange rate on US Dollars to Japanese Yen needs to be factored in.Competitive Risk AssessmentTarget's key competitors are already doing business in Japan and creating a strong and profitable presence in Japan. Wal-Mart and Costco have been doing business in Japan for many years. Target's entrance into the market will give people more options and make the market more competitive. These companies have done very well and Japan and have opened the door for companies, such as Target.Taxation and Double Taxation RisksThe US-Japan Tax Agreement sets the standards regarding and double taxation. The agreement outlines what taxes are covered, defines who the parties are and the context of the agreement and itemizes what is covered under the agreement. The agreement outlines the rules under which a business' profits are taxed and when double taxation comes into play. The agreement defines the establishment of permanent residence, which Target would seek to have by opening a store in the country on a permanent basis. The agreement details how the permanent...

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