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Introduction
Tokyo is one of the biggest cities in Japan. It is a city that is dominated by numerous business activities making it densely populated. People travel from far and wide to come and settle business deals in the city. The need for people to transact businesses in the city requires transport means to move from one place to another and this has led to a high demand for taxis in the city. There are many companies offering taxi services in the city. However, these companies have not managed to satisfy the huge population that is ever in need of this service. This makes the city a potential market for anyone who wishes to establish a taxi business in Asia. Globalization has opened geographical boundaries making it possible for people to establish and run businesses in foreign markets. To effectively run the taxi business in Tokyo, one need to understand his or her competitors, have a clear understanding of customs that may affect the taxi business as well as come up with strategies on how to run it.
One may opt to establish an office in the city or look for a local partner to help in managing the business. It will also require one to look for human resource personnel to help in running the business (Alimiene & Kuvykaite 49). Competition in every industry results in businesses in the industry making loses if not well managed. Companies may steal ones brand name, logo or patent and use it to enrich themselves. This calls for a person establishing taxi business in Tokyo to be aware of the available means of protecting the brand or patent of his business. In case ones products are pirated, one should be aware of the steps to take.
Demand for taxi services in Tokyo
Tokyo is the capital city of Japan. The city is highly populated with approximately thirty two million people living there. Socioeconomic activities in the city have led to demand for transport services. The city is currently experiencing a high influx of tourists from different places. Consequently, demand for taxi services in the city is increasing day in day out. There has been a change in population structure of the city with it being dominated by the old generation. This implies that need for transport among these people is high. Over the time, tourism business in the city has rapidly grown. The city receives tourists throughout the year. As the tourists move around the city they do not use public transport means. They have always opted to hire taxis. This trend has increased the demand for taxi services in Tokyo. Demand for transportation services in the city is better reflected by the increasing number of taxi businesses in the city (Alimiene & Kuvykaite pp. 51-63). Based on demand and financial status of the person, there are different categories of taxis to use. People travelling in groups have increasingly started using taxis. This is because they are able to share cost of the services and the fact that taxis are more convenient than buses. Business activities in the city go for twenty four hours a day for seven days. However, rail transport services ceases operating at midnight. This leads to people wishing to move around the city on business to use taxis. This is due to taxis being more convenient compared to buses. Taxis are highly used in the city for ferrying people from the airport to different destinations within the city. As people continue visiting the city, demand for taxi services will continue going up.
Competition in taxi business in Tokyo
Taxi business in Tokyo is not a recent issue. For many years there have been people participating in the business. Most of them have learnt the trend in the business hence being able to predict changes in business with time. For a person wishing to venture into taxi business in Tokyo, one has to be ready to face competition from local as well as national taxi business companies already established in the city. Before a person decide to use a taxi, most of the customers usually have a prior knowledge of some taxi companies in the area. As a result, most of them make calls to be picked from specific place. Most of the existing companies have established themselves making it easy for them to get customers (Alimiene and Kuvykaite 65-72). Competition among these companies is low as every company has customers who prefer to use its services. For a new company, it will be difficult to overcome competition from these local and national companies. This is due to its brand not being known in the market. Customers will not be willing to hire taxis from a company they are not aware of its services.
Some of the local competitors in taxi business in the city include Sky gate Shuttle and Jet partner. These companies have gained control of the business in the city with each company offering different rates of charges to services offered. The companies have numerous categories of taxis that charge different prices. Their flexibility in offering affordable transport services have made them effectively covers the entire taxi business. A new taxi business being established in the city would have to ensure that it offers competitive services to be able to overcome competition from these companies and gain market share. This may become difficult for a beginning business due to high capital required to be invested to offer quality and more superior services than the already existing companies (Calof and Beamish 115-120). Japanese government issued transport deregulation rules. This has led to numerous local companies emerging which deal in taxi services. As a way of overcoming competition in the industry, companies have started lowering their prices to attract more customers. This may be difficult for a starting company as it would take time for the company to gain returns on its investment.
Adapting to the Asian market
To effectively exploit the potential market, foreign companies requires adapting to local business customs. It is only through this that they can be able to align their services with the needs of their customers. Adaptation (also referred to as centralization) helps the foreign company understand the organizational structure of their competing firms hence being able to organize themselves accordingly. The company is also able to understand the set regulations that govern their operations. This saves the company from violating operational regulations which may lead to its operations being terminated. Adaptation to local business customs helps foreign businesses offer services similar to those offered by local companies. In return, they overcome competition and increase their market share (Calof and Beamish 121-130).
After establishing a taxi business in Tokyo, it will be required to adapt to local customs. The high competition in taxi industry requires a company to offer competitive services. This can not be possible for foreign companies operating in the city. The company needs to learn about the domestic cultural tastes and operation strategies to be able to attract customers. Changing its operations to resemble those local will help it offer services that are consistent with customer needs. To be able to adapt to the local customs, the company need to conduct a thorough study of the citys customs and regulations prior to its establishment. This can be through sending staffs to the city to analyze the taxi business industry and external forces that drives it. From the study, the organization can understand about customer preferences as well as market regulations. This information will be vital in helping the company modify its services to resemble those offered by other taxi companies in Tokyo (Calof and Beamish131).
There are numerous Japanese customs which influence performance of businesses operating in Tokyo. Failure by business operators to understand these customs may result in their business not attaining their objectives. Exhibiting a different model of business operations may send a negative impression on people living in the city. They may have a perception that the operators make no commitment to his or her business thus associating the business with poor services. This may lead to the business failing to make use of the available opportunities. The society living in Tokyo is very complex and group-oriented with a firm emphasize on using all means available to overcome direct confrontation (Nishiyama 98). To gain market share in the city, one is expected to develop a sense of trust, loyalty and commitment in his customers. Most of the decisions are made based on groups rather than individuals. Understanding these customs would help a foreigner operating a business in the city to effectively relate with customers. To learn the various customs in the city that may affect the taxi business, one can use different ways. There are many literatures that talk about Asian customs. Going through these literatures would help a business operator in equipping himself with the necessary information about customs that may hinder operations in his business.
At times, information obtained from the literature sources may not be enough to help one establish a business that does not violate these customs. This would require for a more effective way of understanding the customs. Another way of learning about customs that may affect your business in Tokyo would be by liaising with people operating the same business in the city. This is one of the most effective ways of learning the customs. As these operators have come face to face with the customs, they have first hand information about some of the challenges experienced when managing the business. From them, one can learn about some cultural practices within the city which may have not been captured in the literature and still affects operation of taxi business in the city (Nishiyama 112-132). Prior to officially opening a business in the city, one may also opt to conduct a pilot study of the market by operating a small taxi business. From this, one would learn about customer behavior and preferences in the business. Consequently, it would be easy to establish a business that meets all customer needs as one has a clear information about all customs that would affect his or her business.
Establishing the business in Tokyo
There are different steps that need to be followed when establishing a company in Tokyo. Prior to its operations, one is expected to consult the officers responsible of regulating the taxi business in the country. It is from these officers that one will be able to understand all the requirements his or her business ought to meet. One will also understand on how he or she can effectively manage his o her business in the city. It is after understanding the requirements and approximating the costs associated with establishing the business in the city that one will embark on applying for work permit. It is possible for an individual to establish a business in the city without having to come up with a formal entity. Unless dealing in financial sector, one will not be required to register the business for it to be authorized to operate in the city (Nishiyama 243). However, the business will have unlimited liabilities thus subjecting the operator to levying personal income tax for all income generated in the city.
Another requirement when establishing taxi business in Tokyo is the operator to secure a long-term visa. This will allow him or her to operate his business without influence from the domestic taxi businesses established in the city. This will save one from having to provide a native guarantor or to have a spouse who is Japanese citizen in order to be allowed to operate the business in the city (Trade and Enterprise para. 1-4). Despite one having the required visa to operate a business in the city, there is a problem in getting clients or soliciting for funds from the country. Most of the people in the city are not willing to deal with business operators who do not have corporate logos in their business cards. One will be required to come up with corporate logo for his or her business so as to be able to get financial support from domestic business financiers.
After establishing the business in Tokyo, it will be imperative for the company to open an office in the city. This will facilitate in managing operations associated with the business. As the business prepare for incorporation, it will be required to open a branch or representative office. A representative office will be opened without having to incur government registration requirements. The office will also not be liable to domestic tax. Despite its staffs qualifying for management visas, the business will not be allowed to participate in local business activities. However, the presence of this office in the city, one will be able to conduct market research, advertise the business as well as negotiate for various startup requirements. On the other hand, if one opts to open a branch office, he will be able to use the office in conducting business activities. However, one will be required to notify all government agencies responsible of regulating the taxi industry in the city. The office will be required to register with Legal Affairs Bureau and give a legal representative who is a resident of Tokyo (Urde 117).
There are numerous costs associated with establishing business offices in Tokyo. These ranges from office rentals to office fit outs. Office rental costs are charged based on the location of the office, space provided by the office, condition of the building where the office is situated, market demand and other general facilities provided in the office. There are other costs associated with office renting such as security deposit, real estate agents commission, key money, utilities such as electricity and others. The standard period of renting an office in the city is two years but one can renew the rent if he or she wishes to continue operating from it. Depending on business operations, one will be required to fit out the office (Urde 118-123). Apart from buying office equipments, one may lease or purchase already used equipments.
Financing the taxi business
There are different sources of finance to the taxi business. One may opt to source finance from home company. If one is opening a taxi business in Tokyo having opened a similar business back at home, he or she can use income from the domestic company to finance the business established in Tokyo. The city is considered as one of the international financial centers. Its economic growth has made it possible to finance both local and foreign companies wishing to establish themselves in the city. There are numerous local financiers in the city that may be willing to fund the business. These can act as a source of fund for the taxi business. There are different costs associated with establishing a taxi business in Tokyo. These range from office management cost, tax, costs associated with paying the workforce and cost of buying the vehicles used for transport. The overall costs associated with office management in the city range from ¥11, 420,000 per year for an office comprising of a single local staff to ¥34, 240,000 per year for an office comprising of three local staffs and a senior manager. Additional costs include cost for purchasing vehicles which is approximately ¥200,000 per car and salary for a single employee which is approximately ¥ 200,000 per year (Urde 125-133).
Getting a local partner or establishing a wholly-owned taxi business
Based on the kind of office established in the city, one may decide to look for a local partner or establish a wholly-owned business. If one has established a branch office, he or she can set a wholly-owned taxi business in Tokyo. The office can be responsible of managing business activities of the company. For a person who does not have enough information about the market and customs that affect taxi business, it would be advisable not to open a wholly-owned business. Rather, one may opt to look for a local partner who would help in directing business operations in the city. Getting a local partner will also help the business get local financiers which would be hard for a wholly-owned business. It is hard for foreign businesses in Japan to experience substantial growth without local partners. Hiring people f to work in the company also becomes hard. With most of the people in Tokyo not speaking English, it would be very hard to relate with clients (Whitely 47-52). It would require one to know their language or else look for a local partner who will facilitate in enhancing relationship between the business and the clients. To get a local partner, one may opt to enter into the business as joint venture between him and a resident of the city. Another way of getting a local partner can be through getting a spouse from the city that is willing to join in running the business.
Organizing the business structure
To effectively manage business operations, it requires the operator to be close to the business. This helps one in identifying areas that need to be improved to help the business enhance customer satisfaction. One is able to monitor his or her staff and ensure that they are always productive. Competition in taxi business in Tokyo calls for those running the business to continuously adjust their operations to attract more customers. This can only be achieved by being in close proximity to the market. It is imperative to organize the business structure in a way that it will be possible to successful monitor the market. This will only be achieved by establishing local headquarters. By having local headquarters, decision making process on matters affecting the business will be improved hence making the business more reliable. It will be possible to conduct market research through headquarter thus identifying market forces affecting the business and looking for ways to address them (Whitely 54).
Getting qualified staffs for the business
Every business depends on qualified workforce to develop and sell its products or services. Organizations with well learned employees experience new innovations regularly enhancing their performance. One of the main reasons why foreign companies fail to achieve their objectives is failure to get the right employee to work for them. There are different ways an organization can sue to hire qualified employees. Some of these can be outsourcing the hiring process, conducting employee recruitment programs or attracting qualified employees from other companies by offering competitive packages. In bid for the taxi business to get qualified employees to work in Tokyo, the business will organize for employee recruitment programs (Whitely 58-74). This is where it will advertise all its vacant positions and take the imitative of meeting all the interested employees. It is from this set of potential employees that the company will select the most qualified. The selection procedure will entail taking all the interested parties through various interviews and tests. For jobs that would appear hard for the company to determine the best people to assign, it will outsource the recruitment process to external firms responsible of employee recruitment. These outsourcing companies have experience in job specifications hence making them select the best employees for organizations. By offering competitive packages and working conditions, the company will attract qualified employees working with other taxi businesses in the region to work for it. The company will focus on recruiting local employees and experts so as to gain market share. Local experts have knowledge on forces affecting the industry as well as customs of the target market. This will help in ensuring that the business adapt to these customs so as to attract customers (Hoshi & Kashyap 321).
Protecting the companys brand, logo and patent
In a competitive market, weak organizations tend to steal brand names, logos or patents of the superior organizations and use them in making profit. This disadvantage the superior company as most of its profit is taken by these firms. The high rate of competition in taxi business in Tokyo requires the business to come up with mechanisms of protecting its brand, logo and patent from being pirated by other companies. To safeguard the companys brand, logo or patent, one will be required to ensure that he or she has established a good relationship with customers (Hoshi & Kashyap 328-349). This will help the company in making its brand known to the public thus becoming hard to be pirated by other companies. Registering the business brand or patent with the necessary authorities will scare competitors from pirating the brand. In case the companys products are pirated, one is supposed to report the matter to the necessary authority for actions to be taken. This is the reason why the company ought to register its patent, logo and brand.
Conclusion
Establishing businesses in foreign markets has never been an easy task to most investors. This is due to conditions required before being authorized to work as well as competition experienced in these markets. To effectively operate a taxi business in Tokyo, one will be required to ensure that the business adapt to the customs in Tokyo market. This is in bid to overcome competition from domestic companies. It will be imperative to establish a local headquarter so as to successfully monitor business performance. Acquiring the most qualified personnel for the company will help it in gaining competitive advantage. This can be achieved through organizing for employee recruitment programs, outsourcing employee recruitment activities as well as offering competitive packages to employees. The company will have to register its brand, patent and logo to prevent them from being pirated by competitors. In case its brand or logo is pirated, the company will be required to report the matter to the relevant authority for stern actins to be taken.
Works Cited
Alimiene, Monika and Kuvykaite, Rita. Standardization/Adaptation of marketing solutions in companies operating in foreign markets: an integrated approach. Engineering Economics, 56.1 (2008): 49-72.
Calof, Jonathan and Beamish, Paul. Adapting to foreign markets: Explaining Internationalization. International Business Review, 4.3 (1995):115-131.
Hoshi, Takeo & Kashyap, Anil. Corporate Financing and Governance in Japan: The Road to the Future. Platino: Massachusetts Institute of Technology Press, 2001. Print.
Nishiyama, Kuzuo. Doing business with Japan: successful strategies for intercultural communication. Hawaii: University of Hawaii Press, 2000. Print.
Trade and Enterprise. Costs of setting up an office in Tokyo. 2003. Web.
Urde, Mats. Brand Orientation: A Mindset for Building Brands into Strategic Resources. Journal of Marketing Management, 15.1 (1999): 117-133.
Whitely, Richard. Eastern Asian Enterprise Structures and the Comparative Analysis of Forms of Business Organization. Organization Studies, 11.1 (1990): 47-74.
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