Feasibility Study For Establishing A Defense Business In The USA – Comparative Management And Environmental Analysis

Comparative Management Analysis

Purpose 

I am working as an International Management Consultant (IMC) that examines the feasibility establishing the business in the international locations. The client is looking to expand the business of weapons under the category of defense. The demand for defense products and services is increasing across the world and having a significant impact on the GDP of nations. The defense industry is having rapid growth and market share in the home country that encouraging the client organization to expand the business at international level (Kideckel, 2018).

Scope 

The demand for defense weapons is high in the market of USA. The client is looking to open a shop in this country. The report will conduct a comparative management between two different environments. The comparative management refers to the analysis of similarity and differences among business management system from a different context. Moreover, the report will conduct an environmental analysis of USA region to identify the feasibility of weapon business. In that process, the report will analyze factors like political, legal, economical, geographical and cultural to establish the business. In the end, the report will provide recommendations for improvement in the potential issues that could influence the business development process of defense organization.

Political environment 

The political conditions of USA are strong and following democratic set-up for managing the internal and external operational and functional activities. The parliament is developing and implementing rules and regulations for managing the living and business environment of the country. The Australian weapon organization is looking to open a shop in the USA, but in the recent time, the incidents related to gun culture and easy policies of buying weapons is going to be changed by the government (Coxon and et al., 2016). The national and local governments are feeling the pressure of high demand and easy availability of defense weapons.

The government is seeking for developing hard policies and procedure to overcome the incidents of shooting in public places that harming the society. However, the government is concern about the defense strengthens and developing power for protecting the country from outside attacks. Now, client organization needs to analyze the new policies and changes in the political scene to establish the shop in the USA.

The legal environment of USA defense industry is strong and having various policies and regulations regarding the establishment of the weapon shop. The commercial sector of the defense industry is analyzing the participation of foreign organizations to establish a business in the USA. The country is having supremacy in defense-related technology and selling of weapons across the globe. Therefore, leading authorities of USA defense has applied hard policies for allowing a foreign organization to start operating their business in the country.

Environmental Analysis of the USA

The percentage of foreign defense organization in the USA is less than 0.1% due to an international security interest. The licensing process and documentation could be the major barrier for Australian client to start a business in the USA (Moon, and Kang, 2015). In addition to this, defense authorities are having the monopoly in the market as the legalization began with Sherman Antitrust Act of 1890 which provide authority to block the merger and acquisition of foreign organization in the defense sector.

The GDP of USA is over $16.760 trillion and considered as the world’s largest economy. The economic system of the country is well developed and gathers its strength from the services and manufacturing industries. In the current scenario, the unemployment rate is high and affecting the growth of various sectors. For client organization, it is important to understand the taxes and investment functions of USA as the government will not allow for direct investment in the defense business (Shipman, 2017). The US-based defense organizations are doing well to provide the weapons and services and exporting to various nations across the world.

By exporting the defense-related products and services the country is earning more than $89.4 billion. Hence, it can be considered that economic condition of defense industry of USA is good and not require the support from the foreign organizations to influence their internal process. The national government has increased the budget of defense up to 20% for the year of 2018-19 which shows that economic condition for a particular industry is good (Lee, and Back, 2016). Additionally, the local people are investing high on personal defense facility that can be an opportunity for a client organization.

The geographic environment of the country is not as good as Australian. The major natural resources that easily available in the country involve coal, copper, uranium, gold, mercury, natural gas, nickel and zinc. The total area of the country is 9,826,675 km and availability of land is 93.24% and 6.76% water. The country is sharing the border with Canada and Mexico. The environmental issues of country involve water shortage, high air pollution, volcanoes and tornadoes. However, the growth of region compare to Australia is good and having a competitive advantage over manufacturing related to defense products and services (Rahman and et al., 2015). There are two primary water borders is the southeast between Florida and Cuba and Florida and Bahamas. The land area of USA is higher than Australia. The level of temperature varies among locations as the USA has the large area.

Political Analysis

The histories of both countries are having distinct differences in the past and current context. The USA colonies are following traditional Catholic culture and having a significant contribution to the development of the country as a superpower hub. Most of the population is pursuing business and providing services for promoting the innovation and efficiency within the defense and other sectors. This position is consistent with the USA long history of antitrust legislation (Schermerhorn and et al., 2014). The government has all rights to make changes into policies to achieve the desired capabilities.

On the other hand, the Australian government is allowing international migrations for managing the operations and changing the policies to improve technical capabilities. Australia is following European culture and expanding the defense capabilities by having merger and acquisition with commercial sector firms from overseas locations. The manufacturing industry of Australia is growing with rapid speed and adopting the changes with lesser environmental issues. In spite of that, the technical advancement is a major strength of US in the current time (Wrench, 2016).

The technical background of USA defense is much stronger than Australia. The country is having advance tools and technical resources related to defense operation and activities. The expenditure of the USA on technology development and innovation is 7.24% of overall GDP in 2017. On the other hand, Australia is growing nation is the area of technology. The national government is establishing an agreement with some nations for promoting the technical activities and maintaining growth in technology (Fong, and Tanabe, 2014). The expenditure of country on technology is 2.9% of total GDP. The infrastructure of both countries is having vast differences as the USA is having railways areas of 293.567 Km where Australia has 36.978 Km. The waterways of US is approx 41.009 km and Australia is having 2,000 only. The numbers of airports in the USA are more than 13,513 and Australia has 500.

The culture of both nations considering defense sectors is having significant differences. The USA people are more aggressive and following values of the country to maintain a higher position in the world. The American people are having active participation in defense-related operations and developing new ideas for protecting the traditional value and society. The management of society in USA context involves consideration of country first. The gun culture of USA is affecting society and people are protesting to increase strictness in licensing of weapons (Binder, 2016).

Legal Analysis

This kind of change will affect planning of client organization to offer products and services in the US. The population of USA is 326,625,791 and Australia is having 23,232,416 until July 2017. The growth rate of population in the USA is 0.81% and Australia is 1.03%. The diversity in culture and social values could have a significant impact on the establishment of business for an Australian client. The Australian culture is not having much influence on defense-related functions (Tushnet, 2017). The people of Australia are good at learning and possess the hard work into business and other activities. The defense culture and weapon are not much famous in Australia.

Table 1: Culture

Activities	Differences	Managed through
Decision making	Collaborative approach (USA) Individual (AUS)	Proper discussion over terms and conditions of business
Ethics	Lack of transparency (USA) Fair (AUS)	The consideration of international standards
Values	Strong internal values (USA) Mix social culture (AUS)	Respect to belief and value of individual
Social Equality	Less (USA) Less (AUS)	Proper communication between business ventures

By considering the analysis of external environment of USA and Australia, it has been recommended to client organization to manage functions and relationship with the higher authorities of USA defense. The expansion of defense-related business in the USA is hard for the foreign organization. In spite of that, the client can set up the business at near to Mexico border. The demand for defense-related products and services in this region of USA are high (Brewster and et al., 2016). However, the policies and procedure of developing business in the USA is hard but consideration of ethical standard and having a mutual understanding regarding manufacturing and selling of defense products would be helpful for the client organization.   

References

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Fong, Z. V., & Tanabe, K. K. (2014). Comparison of melanoma guidelines in the USA, Canada, Europe, Australia and New Zealand: a critical appraisal and comprehensive review. British Journal of Dermatology, 170(1), 20-30.

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Tushnet, M. (2017). Comparative constitutional law. In The Oxford handbook of comparative law.

Wrench, J. (2016). Diversity management and discrimination: Immigrants and ethnic minorities in the EU. Routledge.