1 Running head: INTERNATIONAL BUSINESS PRACTICES MGM355 2 MGM355-1403B-02 International Business Practices Roderick D. Goodrum Individual Project Phase 5 Colorado Technical University Instructor: Lester Willis 09/17/2014 Introduction Establishment of a business in a foreign land depends on strict evaluation and analysis of various factors inclusive of; the barriers to entry in the foreign nation, the legal systems, customer base, potentiality of growth, economic performance, and the cultural framework of the natives there. Failure to scrutinize such factors might impact success of the business negatively (Schill, 2014). This paper discusses the factors that a regional bank needs to consider before expanding into a foreign nation, China for this case. It uses Union Bancshares (UNB), a Californian based regional bank as an example. Possible challenges in the new environment This may be analyzed in three perspectives; educational discrepancies, cultural differences, and other social demographics. Culture refers to the values and norms held by members of a given society; the good and the bad defined by a society. Cultural conflict is felt a great depth in the work place, if the workers therein are from different ethnic origins. For UNB to ensure it gains a positive reputation in the public sector, the company’s management will need to employ workers from diverse cultural setups. Despite this move being positive in some way, the conflicts arising in the work place due to differing cultural expectations might hamper work progress negatively leading to poor performance. Another challenge is education level of potential employees within the locality within which the company plans to establish itself. Specific technical personnel might be inadequate in China compelling UNB’s management to outsource workers from far geographical locations, this is a costly process. Legal and political environments The legal systems in China are flexible rather than static. This poses a great challenge to foreign investors since laws regarding foreign investors might change negatively at the time of their investment. In People’s Republic of China, laws governing the business sector are made in the National People’s Congress (NPC) and the judicial system is vested with the power of ensuring all parties comply. When making a foreign direct investment, the first step is to describe in detail the pros and cons of the business to China’s economy, if the pros exceed the cons then the business is listed under the permitted category as long as all other factors have been fully satisfied. China is a politically stable nation despite its long term poor relation with Taiwan. This is a positive indicator for UNB since business operations are not likely to be disrupted due to political clash. Government involvement in the private sector A comparison to the US business practice is made to gauge the level with which the government intervenes in private businesses in Peop.