EXECUTIVE SUMMARY
The United States of America (USA), usually known as the United States or America, is a nation made out of 50 states, a government area, five noteworthy self-overseeing domains, and different belonging. US is world’s third or fourth largest country by total area. United states have china as its largest trading partner followed by Canada and Mexico.
This research project emphasizes on overall business, economic, political, and cultural system in United States. Also, this report includes different types of trade policies and regulations as well as various marketing strategies of US. Politically USA is divided into three branches; executive, judicial and legislative. In respect of economy in USA, mostly it has free market and private owned industries and its average political stability index is 0.48.
United States expands through three major sectors towards foreign direct investment such as manufacturing, chemicals and transportation equipment industry.
In business culture, Americans mainly give importance to time and punctuality. Also, during the business meeting they make conservations to the point and gift giving is completely inappropriate in US culture. Communication style is polite and people meet and greet people with smiling face and respectfully. Americans believe that key factor for success is hard work.
According to recent consumer trend in United states, consumer prefer to buy products online. In this country higher purchasing power is of the people of age between 45-54 years. Direct exporting is the main market entry strategy for foreign investors to enter into US market. Manufacturing is main sector for FDI (foreign direct investment) in US.
POLITICAL AND ECONOMIC BACKGROUND
United States has the world’s largest economy after china and most technological and diverse economy in the world. The united states have free market and private enterprise economy in which the interference of government is very little in areas of health, retirement and transportation, unlike Japanese. Moreover, American economy is most productive. Large number profitable companies are Americans companies. After that second largest growth period of American economy was witnessed in 1990 because economy grew by average rate 3-4 and also unemployment rate decreased. Moreover, great profit was experienced in stock market. This growth period was ended, due to decline in growth of high technological sector. Also, United States is the largest producer of food, because U.S has great natural resources that are responsible for economic growth. (Nations Encyclopedia, 2018)
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Despites various advantages in field of economy, there is few problems as well. The economy is unable to produce enough products for consumers needs so the USA faces the problem of trade deficit mainly in manufacturing goods. The trade deficits responsible for $447 billion dollars. In 2000, $270 billion dollars are consumed in FDI to overcome the trade deficits. Another problem is that some of us people in high income levels while other lives in poverty reason is that because of technological advancements the unskilled workers are bounded to minimum wage jobs. (Nations Encyclopedia, 2018)
United States of America (capital Washington, D.C.) is a federal republic. It has 50 states and some territories.
Whosoever is of age over 18 years has right to vote, to select the candidates from two main political parties (the Republicans and the Democrats) and some smaller parties (Green Party, Libertarian Party and Reform Party). (Nations Encyclopedia, 2018)
Government System of United States
In USA federal government has three divisions-
1) Executive branch is one which is leaded by the President. It also consists of vice president and cabinet. This branch carries out law in country.
2) Legislative branch- It is headed by bicameral Congress; consisting of Senate and House of Representatives. This has responsibility of making law.
3) Judicial Branch- This branch is leaded by Supreme Court, although it also consists of various regional courts. Law evaluation is done by judicial branch.
Each of three branches has equal powers. They can control abilities of each other.
For instance: President can reject proposal made by congress. Congress also have right to approve or reject the nomination of president. (United States Country Report , 2018)
POLITICAL HISTORY AND STABILITY
Unites States being the part of Britain followed the British System that was considering hereditary Queen or King (George King 3) had all the authorities over nation. At that times Parliament had ability to impose powers.
When United States won war from Britain, authorities decided to built a political system which is different from ongoing British system, thus powers were divided among three branches: Legislative, Judicial and Executive. Even though United States comprise of 13 states with varying population but it is not allowed to have more political powers in hands of states those have large population size. Thus, constitution’s Legislative branch is resulted in House of Representatives (followed by Great Compromise (based on population size)) and Senate (followed by Jersey plan (based on equal representation of all states)). (A Short Guide to the American Political System, 2018)
Political stability can be measured by using political stability index (examine the extent up to which government of a nation could have ability to face and compress violence and terrorism) which has values 2.5 for highest stable and -2.5 for least stable ranking. Between 1996 to 2017 USA has stability index with average value of .48 and it has minimum value -.23 in 2004 and maximum 1.08 in 2000. (The Global Economy , 2018)
POLICY AND REGULATIONS
United States of America follows a trade policy that focuses on national security and prosperity. There are five features of the trade policy: 1) Embracing a trade policy that is of national interest 2) Fortifying the US economy 3) Arranging better exchange bargains that work for all Americans 4) authorizing U.S. exchange laws and U.S. rights under existing exchange assentions 5) improving the multilateral exchanging framework. The new trade policy features a reduction in US trade deficit which would lead to more efficient markets. The US government is also focusing on improving trade deals like NAFTA and KORUS with other countries. (Office of the United States Trade Representative, 2018)
Currently, United States has signed free trade agreements with 20 countries including Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru and Singapore. Apart from these, US have also signed the Transatlantic Trade and Investment Partnership with the European Union and United States- Mexico- Canada Agreement which is a multilateral trade agreement. It recently withdrew itself from the Trans- Pacific Partnership (TPP). (Office of the United States Trade Representative, 2018)
The main trading partners of US are China, Canada and Mexico. The main exports of US are Air Planes and Helicopters, Refined Petroleum, Gas Turbines and Integrated Circuits while the main imports include Cars, Crude Petroleum, Computers and Vehicle Parts. The Ease of doing business index ranks countries according to the business operations and environment they are being dealt with. United States is ranked 8th among all countries in the Ease of doing business index. (Trading Economics, 2018)
ANALYSIS
The administration’s exchange arrangement influences the business by making it easier to conduct trade across international borders. Trade policy of United States incorporates the burden of import duties, amounts on imports and fares of specific products, and endowments for nearby makers to help them against worldwide rivalry. This is useful to many business organizations operating in the US. Trade is integral to worldwide economies. Trade Policy helps the U.S International Trade to develop quickly, enhance profitability and economy. Major sectors attracted towards foreign direct investment in United States are manufacturing, chemicals and transportation equipment industry. (Tradeology, 2018) . Trans- Pacific Partnership and Transatlantic Trade and Investment Partnership are the most important trade agreements that greatly affect the economy of United States. Both of them focus on enhancing trade and investment with other nations. (The Balance, 2018)
EVIDENCE
Exports/Imports of US
Recent import of wooden seat frames took place on 30th July 2018 from China to USA. Carbides were imported from Brazil on 30th July 2018. (Info Drive India, 2018)
Health Care and Technology sectors have greatly boosted the US economy and have benefited from international trade among other nations.
Due to high tariffs being imposed, the most negatively affected industry is the steel and aluminum sector because of high tariffs imposed on steel (25%) and aluminum (10%). (Fortune, 2018)
BUSINESS CULTURE
Various types of values influence etiquette and behaviors of American workplace. These values are described below-
Meet and greet-in business meetings, during the introduction everyone meet with other with firm handshake and friendly smile. Everyone gives a person his or her personal space of three and four feet, during the meeting. Also, in American culture, everyone is called by his or her first name, regardless whether he or she is your boss or co-worker. Moreover, when you must introduce yourself to other, you should stand up and tell your full name and job position to introduce yourself. (Inter Nations, 2018)
Small talks-once persons start making small talks, persons become personable and social, but it’s not about discussing digestive problems and marital crisis. Small talks include the topics of discuss the hobbies, leisure activities and discuss us sports teams. (Inter Nations, 2018)
Communication style- communication in US culture is friendly and to the point. People express their feelings politely, but clearly and if you didn’t get any anything you can ask directly. Moreover, in American business meetings peoples like to hear to the point rather than talk around the issue. In contrast, you cannot be over-rude and negative during the conservations that will show the unprofessional attitude. (Inter Nations, 2018)
Fundamental principles of business-American business culture are efficiency related and money-driven. For Americans, time is money; people do not have time to waste in business. Also, the culture based on beliefs that key to success is hard work instead of status or age. Decision making is also well-defined process in the organization. Final decisions are made by the person with chief authority, but everyone can freely express their opinion and view in the decision making, no matter their positions and age in hierarchy. (SantanderTrade, 2018)
In American culture, they are giving more importance to the quality of product and services rather than the personal relationships. So, they do not emphasis on building relationship for successful business. (SantanderTrade, 2018)
Time management-the Americans are punctual. Business meetings are timed advance and having a common agenda, everyone should follow that. Everyone must organize the entire topic for meeting according the time framework that is assigned in advance. If anyone is late and unable to reach at work on time, he/she should tell co-worker by making call, even if they are late by few minutes. (SantanderTrade, 2018)
Gift policies- because of anti-bribery policy in Americans, they are restricted to offer gifts in business meetings. Offerings of cash gifts are clearly inappropriate. In the internal policies of business, nobody offers any type of gifts in business. Even, offering lunch to the business parties is considered as a bribe. (SantanderTrade, 2018)
Hofstede’s Framework
Initially, four dimensions was introduced that could distinguish one culture from other. Later, fifth and sixth dimensions were added. These are: Power distance, Individualism versus Collectivism, Masculinity versus Femininity, Uncertainty avoidance, Long- or short-term orientation and Indulgence versus Restraint.
United States has less power distance and people feel free to be entitled to certain amount of power. Moreover, people express freely their opinion regardless their job position. In terms of individualism versus collectivism, the peoples are self cantered and emphasis on their individuals’ goals. In America, people take less responsibility of other actions and outcomes. Regarding masculinity and femininity, United States scored 62 on Geert‘s scale that shows masculinity tendency. People give more preference to money rather than interest means choose that job they enjoy.
United States has low uncertainty avoidance. Money lenders are willing to lend money to people, they were not sure they pay back loans which means they willing to take risks means low uncertainty avoidance. Also, US have short term orientated, that means US reflected importance of short-term gains and profits. This will also show countries strong sense of nationalism and social standard. USA is an indulgent society with relatively high percentage. People of United States are happy and give importance to leisure times and less gender inequality, household tasks are equally shared. (MindTools, 2018)
MARKETING
In United States, consumers are health conscious as they eat good food and drink, focus on well sleep and relaxation, and they also use various mindfulness techniques like meditation. Consumers invest their money on those goods and services which are trustworthy. They are addicted to the social media which gives them knowledge about current trends in the market. Nowadays, they prefer buying products online which is helpful in comparing one product with another. The above mentioned are the current consumer trends in USA. (10 Hot Consumer Trends 2018, 2018)
In this country, the highest purchasing power is of the people between the age of 45-54 years because they get pension and they are socially secure. Additionally, they are wise, and they know where their money is worthy. (Foster, 2015)
There are three market entry strategies which are usually adopted in order to enter US market such as direct exporting, indirect exporting and partnerships/alliances, direct exporting is most effective from all these approaches. In direct exporting firm has whole control of the business, they set their own price, make their own rules and regulations. Moreover, they earn high returns by adopting this market entry approach. (US – Market Entry Strategies, 2018)
ANALYSIS
Manufacturing sector is the leading sector for Foreign Direct Investment (FDI) in US. In past 20 years, this sector is the largest beneficiary for FDI in US. In 2017, 40% of the America’s FDI was owned by this sector. Most of the investment in manufacturing sector is in chemical industry. Most of the Foreign Direct Investment (FDI) in America is from by United Kingdom. In addition to this, Foreign Direct Investment (FDI) in this sector create jobs, increase investment in Research and Development (R&D), development of the economy and contribute to the US exports. (Manufacturing Leads as Top Sector for Foreign Direct Investment in the United States, 2018)
EVIDENCE
Following is the data of consumer spending in different sectors of year 2013: –
Consumers of 35-44 age group spend maximum on housing that is $20,619. (Foster, 2015)
Consumers of 45-54 age group spend maximum on transportation that is $10,782. (Foster, 2015)
Consumers of 35-44 age group spend maximum on clothing that is $1,960. (Foster, 2015)
Consumers of 45-54 age group spend maximum on entertainment that is $3,070. (Foster, 2015)
CONCLUSION
Overall, it seems that United States is a stable economy. Politically no one has more power than others, all political powers are equally divided in three branches of political system. United Kingdom is the major country for Foreign Direct Investment in United States. Foreign Direct Investment is the best way to do business in U.S in various sectors such as manufacturing, chemical and transportation. Direct export is the best market entry approach to enter into the US market.
Americans believe that best way to get success is hard work, not status and age matters. Everyone express their ideas and viewpoints freely during decision making, whatever the position of that person be in hierarchy.
REFERENCES
10 Hot Consumer Trends 2018. (2018). Retrieved from Ericsson: https://www.ericsson.com/en/trends-and-insights/consumerlab/consumer-insights/reports/10-hot-consumer-trends-2018
A Short Guide to the American Political System. (2018). Retrieved from : http://www.rogerdarlington.me.uk/Americanpoliticalsystem.html#History
Fortune. (2018). Retrieved from http://fortune.com/2018/03/02/trump-steel-aluminum-tariff-industries/
Foster, A. C. (2015, December 10). Consumer expenditures vary by age. Retrieved from Bureau of Labor Statistics: https://www.bls.gov/opub/btn/volume-4/consumer-expenditures-vary-by-age.htm
Info Drive India. (2018). Retrieved from https://www.infodriveindia.com/trade-data/advance-search.aspx?productdescription=chemicals&isimport=1&datatype=4&searchtype=1&queryid=3301361
Inter Nations. (2018). Retrieved from https://www.internations.org/usa-expats/guide/29456-jobs-business/us-business-culture-16263
Manufacturing Leads as Top Sector for Foreign Direct Investment in the United States. (2018, September 28). Retrieved from Tradeology: https://blog.trade.gov/2018/09/28/manufacturing-leads-as-top-sector-for-foreign-direct-investment-in-the-united-states/
MindTools. (2018). Retrieved from https://www.mindtools.com/pages/article/newLDR_66.htm
Nations Encyclopedia. (2018). Retrieved from https://www.nationsencyclopedia.com/economies/Americas/United-States-of-America-OVERVIEW-OF-ECONOMY.html
Nations Encyclopedia. (2018). Retrieved from https://www.nationsencyclopedia.com/World-Leaders-2003/United-States-POLITICAL-BACKGROUND.html
Office of the United States Trade Representative. (2018). Retrieved from USTR: https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2018/2018-trade-policy-agenda-and-2017
SantanderTrade. (2018). Retrieved from https://en.portal.santandertrade.com/establish-overseas/united-states/business-practices
The Balance. (2018). Retrieved from https://www.thebalance.com/u-s-regional-trade-agreements-3306275
The Global Economy . (2018). Retrieved from https://www.theglobaleconomy.com/USA/wb_political_stability/
Tradeology. (2018). Retrieved from https://blog.trade.gov/2018/09/28/manufacturing-leads-as-top-sector-for-foreign-direct-investment-in-the-united-states/
Trading Economics. (2018). Retrieved from Trading Economics: https://tradingeconomics.com/united-states/ease-of-doing-business
United States Country Report . (2018). Political Risk Yearbook , 1-6.
US – Market Entry Strategies. (2018). Retrieved from Ceintelligence: http://www.ceintelligence.com/content_manager/contentPages/view/us-market-entry-strategies
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