AFLAC American multinational
AFLAC needs to adapt its business practices to the Japanese way of doing things. Failure to do so could lead to the company’s loss of market share. Specific characteristics of the operating environment of a company must be taken into account in designing its strategy. AFLAC is an American multinational, but the bulk of its revenues result from the Japanese market. It means that this market should be protected and customer needs are satisfied.
There are various characteristics of markets that differ. A PEST analysis could show the difference between the Japanese and the American markets. The Japanese have been seen to be more health-conscious than Americans, hence the large market for supplemental insurance in Japan. Japanese culture is also more conservative than the American one. Such factors influence multinational’s operational strategies.
AFLAC has to retain its American characteristics, which give it a competitive advantage in the Japanese market. E.g. involvement in charity is largely American but gives the company a good image in Japan. The donation to education and homes for those affected by diseases enables customers to identify with the company.
Therefore, I would conclude that AFLAC should continue to adapt to the Japanese culture as this has led to its success in this market. Ignoring the Japanese way of doing things could lead to loss of customers and revenue. Customers would be unable to identify with the company. The result would be a reduction in revenues and profit. However, embracing it could result in increased revenue and customer satisfaction. The company could also learn new efficient ways of operation from the Japanese people.
AFLAC Challenges
The Japanese government’s actions can affect the company immensely. Any actions taken against multinational co-operations in an attempt to protect the local firm could cause huge losses to AFLAC. Taxes imposed on such companies could increase expenses by huge margins. Management of the Japanese part of the organization might pose a problem given the differences in the two markets. It is a challenge faced by most large organizations but can be solved by standardizing some of its operations. The government could compel the company to sell part of its shares to the locals. It means the American holding in the company would reduce. It may not please investors. The government may also require the company to hire workers from Japan, whereas there are cheaper options.
Unique Opportunities for AFLAC
Japan is developing fast in terms of technology. AFLAC has the opportunity to gain from these developments. Technology would help in increasing the efficiency of its operations and to reduce the related operating costs. The company also could introduce an exchange program for its employees. It would increase motivation greatly. The company stands to benefit from tax reliefs and government grants for companies with foreign operations.
AFLAC also has the opportunity to expand into the neighboring Asian market. The economic and social characteristics of these countries are likely to be similar. It means that the company would have a high chance of succeeding in these markets. Since the company has failed to gain market share in America, diversification into the Asian market would be a viable option.