Pirelli's Business Strategy and Environment in Japan

This report examines the business environment of Pirelli, a multinational tire manufacturer, as it expands into the Japanese market. It begins with an introduction to Pirelli and its global operations, highlighting the company's decision to enter Japan and the importance of understanding the local market. The main body of the report analyzes the Japanese business environment, including cultural aspects, economic factors, and the exchange of resources. It also provides statistical data on import and export trends in Japan. The report identifies key issues and challenges for businesses operating in Japan, such as bureaucratic processes, construction permits, taxation, and waste management. Finally, the report applies the PESTLE analysis framework to assess the political, economic, social, technological, legal, and environmental factors influencing Pirelli's business in Japan, offering a comprehensive understanding of the market landscape.

Business in a Global context

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Analysis of the business environment in Japan and also allocate the relevant information ......3
Main issues and challenge for affecting the business and its environment in Japan .................6
Develop the discussion on the analytical frame work of business such as Pestle analysis ........8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
A Business organization and its environment exchange the information among
themselves. It is a process of strategic planning that involves an entire exploration and clear
understanding about the international market. It offers the opportunities and threats along with
the pressure and limitation which influence the structure and its functioning of business. Pirelli
firm is a multinational company which based in the Milan, Italy since 1922. The organization is
5th largest Tyre manufacture firm that established their new business in Japan. Furthermore, This
report will describe the factors, issues affecting the business environment in country. Moreover,
PESTLE analysis will discuss in the report which helps company in analyzing the business
environment of country.
MAIN BODY
Analysis of the business environment in Japan and also allocate the relevant information
Pirelli is a multinational company based in Milan that listed on the Milan stock Exchange
Since 1922. The organization is 5th largest Tyre manufacture firm that established their new
business in Japan. The organization is exporting their product and services across the world such
as Europe, Latam, Nafta etc. Pirelli operates the commercially in over 160 nations and it has 19
manufacturing sites. Pirelli was founded in Milan in 1872 and stands as a global brand all over
the world. There are around 3,000 employees and 5.3 Billion turn over in 2017.
In Today's world, Pirelli has maintained its position in market because it always shares
their global Tyre segment details to another agencies. The organization has decided to expand its
business in Japan because they want to explore their demand and products. Japan is a powerful
country in terms of innovation that help for organization to put some innovative concept in their
product development (Collings, Mellahi and Cascio, 2018). In this way, it will increase the
demand of consumers. First of all, the organization tried to increase the performance and
efficiency in global market. Pirelli is a leading organization for expanding the business across the
world. This organization is concerned about the business environment and culture in japan. it is
needed for organization to create an effective business environment in proper manner. It is based
on the Tyre manufacturing firm behind the Goodyear, Bridges-tone and Michelin etc.
The organization need for managing and controlling relevant information about the
external environment for the purpose of planning, control and decision making. Time to time, It
is an essential for business to adopt new changes and behavior according to the environment.

The business culture of Japan is one of the most misunderstood aspects of business doing,
it is not surprising because many people has established the business but the culture affects the
business operations and functions. Especially in terms of B2B business because many Foreign
exchange company have wrong perception towards the environment. Pirelli is very successful
company so that they can start their business in Japan through investors and distributor.
Sometimes, it is risky for dealing with the japan business and their culture. Fortunately, Japanese
business culture cannot be impenetrable barrier in the successful enterprise because it proved by
the largest companies exist in market such as Chanel, Vuitton and Microsoft etc. These are the
multinational companies who are already successfully established business in japan market.
Japanese business environment and culture is different to other US and Europe but it doesn't
make more risky.
At the certain aspects, Japanese business environment is very long terms stable and
resulting to build a strong relationship with the suppliers and partners. Truth and Loyalty are
main component of business that help for Pirelli company that easily understand that how to
swim with the business environment and culture of Japan.
Furthermore, Pirelli firm is identifying the relevant information regarding the business and also
analysis that help for firm to handle the problem, issues and complexity and uncertainty in the
business environment (Costa, Soares and de Sousa, 2019). Therefore, the organization always try
to collect and gather all the information about the economic activity, socio-political changes
market condition, competitive activities etc. This firm needs to transmitting the information to
the other external agencies and exchange the data which is important for developing a good
interaction with others. In this way, It easy for Pirelli to connect with the agencies and develop
an effective relationship between them.
Pirelli exchanging resources in japan-
The organization and its business environment exchange the suitable resources. The
company needs some specific input related the equipment, finance and man power etc. These are
the important element that help for managing the business culture and environment of japan
(Costa, Soares and de Sousa, 2019) . Typically, there are five resources required by organization
to divided into different ways.
 Money
 Manpower

 Material
 Equipment
 Method
An organization uses these type inputs to produce the good and services in marketplace.
These inputs are required to interact between the market and firm (Dong, 2018). It is in the form
of collaboration and competition. Pirelli is continuously manufactured the product and sell their
item in marketplace. It is important for organization to maintain their environment because it
depends of business culture for sales their good and services.
Hence, Business environment and culture can impose its on the organization therefore,
There are some specific time or scenarios when the Pirelli holds a position in Japanese market.
This organization is considered as a power and culture that influence the external aspects of
business environment (Dong, 2018). It is usually happened the organization has command over
the information and resources. The organization with higher degree of power over the business
environment which has freedom to perform actions.
Japan benefits from strong rule of independent and laws in terms of judiciary. It also
applied the commercial law in the foreign organizations. It will implement the policy, procedures
and implementing the legislation. This will help for organization to manage and control their
business operations and functions in proper manner. Sometimes, Pirelli firm faced the structural
problem because rapidly increasing the populations which puts more pressure towards the
finances and size of workforce.
JAPAN : Import and Export of good through new business from 2010- 2017 (in A Billion U.S.
Dollars)

(Source : Import and Export goods in Japan. 2018)
According to Figure, The statistical data shows the value of import and export of good in
every years. In this way, the value of good from japan amounted around 698.10 Billion US.
Dollar.
Expanding the Pirelli business in other country is not easy task but start a business or
become successful in japan. It is developed country which can use the technology in the business
development process. In this way, it easily penetrates the Japanese marketplace. In terms of
modern techniques, they just expert in their programming language and easily understand the
numerous type of calculation in proper manner (Ebert, 2018). Pirelli firm is mainly focused
towards the standardization where handle all the hard stuff and manage in accurately.
On the other hand, Policy making always influence the new business by Japan ruling
coalition, bureaucracy and interest groups etc. Japan is one of country that bargaining process
between the bureaucrats and politician. There are new legislation proposed for new business that
help for managing and controlling their business environment or culture. In Japan , there are
Illustration 1: Statistical Data

many oppositions democratic party dissolved that impact on the economy of country and new
business those who are just established their branches in different cities. In Japanese business
culture, Men still dominate the industry and business, it given more preferences to employer's
reputation and job (Hamilton and Webster, 2018). Pirelli firm is expanding their business in
Japan and they also choose the young people those who are extremely talented to handle the
business culture and their environment. A good employee always may stay with another
employees. In this way, it will develop an effective relationship between manager or staff
members. It is required for Pirelli company to create a healthy environment where senior and
juniors are communicated with each other. They also share the important information and data
related the business operations or functions.
Main issues and challenge for affecting the business and its environment in Japan
Japan has become leading and cleaner country which is responsible for nation to maintain
their industrial activities that contribute towards the environment issues. The biggest issue in
Japan is management of waste and it will create a large amount of trash in the society. There is a
lack of space that accommodate the trash production (Hughes, 2018). There are different type of
issues affecting the business environment in Japan.
Starting An enterprise- It is the starting process of starting a business in Japan, with
follows different layers such as bureaucracy to navigate before the company. Pirelli firm is
required to communicate with legal affairs Bureaus of Ministry, inspection office etc. The
organization faced many problems regarding the permission and interaction with the Japanese
Government.
Dealing with construction permits- Pirelli needs to take permission related the
construction according to the international financial corporation and world bank etc. It is needed
for involving the several types of department and other local authorities.
Registration of property- For establishment of business, Pirelli manufacture is required
to follow all the rules, regulations and lengthy procedures etc. It is necessary for seller to seal the
impression and successfully done the payment procedures at post office (Hughes, 2018). In
Japan, It is an essential for organization to maintain the business environment and their culture.
Many foreign based companies has successfully established their business in japan.
Paying taxes- The Japanese tax system is basically a type of victim of nation love to their
bureaucracy. which can soak up the 340 hour a year in time management (Kasemsap, 2018). The

organization is paid the 14 different type of payment annually. The tax rate of business at 33%. It
is difficult for new business such as Pirelli to pay the more tax. In this way, it is identified that
paying taxes also challenges issues in the business and its environment.
Protecting investors and getting credit- Japan is the simply follow the financial system
that obtain the credit. The legislation and legal system always offers a good protection to the
investors. In this way, Pirelli firm will not generate certainty as streamlined.
Waste and Recycling- There are large number of waste generated in Japan in 2014
approximately 52.62 million tons. This type of waste is increasing that directly impact on the
severe shortage of different sites and also increase the incidence of illegal waste dumping. In this
way, The living environment and industrial activities will seriously cause due to waste (Liu and
Lin, 2018). It is very difficult of Pirelli firm to start their business. Therefore, it is requirement
for country to improve the facilities and services. They also take serious action towards the
treatment of waste.
Develop the discussion on the analytical frame work of business such as Pestle analysis
Pestle analysis is a framework or tool that help for analyze and monitor the micro
environment of business process. It is usually useful when starting a new business in Japan and
also engineering in a foreign market. This framework is needed for business development to
identify the need and requirement. Every business has calculated their estimate overall cost of
business and then planning to expand their operations or functions in other countries. For
Example- Pirelli is also expanding their business process in japan.
Political Factor- This is the factor that how and what ways to degree a Japanese
government intervenes in the economy of japan. Especially, This factor includes political
stability, environment laws, tax policy and procedures, labor law, traffic and restriction of trades
etc (Tallman, Luo and Buckle, 2018). It may be included the good and services which Japanese
government want to provide the best facilities to the new business so that they easily established
their business. Furthermore, Government always influence the business to maintain the
infrastructure of country, education and health.
Economic Factor- This factor include the exchange and inflation rate, economic growth
and interest rates etc. Japanese government has a difficult to manage the business activities due
to high growth rate and interest rate. Economic Factor has major impact on the business decision
and their operations. For Example- The interest rate affects a cost of nation and their capital

therefore, How can extent the business growth and development in Japan. On the other hand,
Exchange rates also affect the price of exporting good and services what they organizations
supply the good and services.
Social Factor- This factor involves the health consciousness, cultural aspects, safety and
security, growth rate of population, career attitudes and age distribution etc, These are important
factor that impact on the business environment and their growth. In Japan, The Latest trend
always affect the demand of consumers and product. Japan government has tried to maintain the
business process to maintain the social culture. (Spremic, Turulja and Bajgoric, 2018). Social
factor is important for any type of business because it directly impacts on the communities and
society of Japan. In Japan, Population is a major threat that impact on the smaller and less
willing workforce. Furthermore, many companies has changed their management system and
also adopt the new strategies for maintain the social trends in global marketplace.
Technological Factor- This factor is mainly include the technological aspects related the
automation, technology incentives and change the rate of techniques etc. Japan is mainly used
the Innovative technique that help for determine the barrier to entry, influence the outsourcing
decision and minimum efficient production level etc. Technological factor affect the quality, cost
because it leads to increase the innovation in business process. In this way, Japan has increased
their productivity and profitability in marketplace. For Example- Japan is one of the most
advanced telecommunication system that help for business to share the new information from
one firm to another. Many business are not possible due to the communications and connect with
the modern devices.
Environmental Factor- This factor include the environmental aspect's and ecological
such as climate change and weather etc, which may affect the industries and their business such
as insurance, tourism and farming etc (Tallman, Luo and Buckle, 2018). It is needed for Japanese
government aware about the potential impact that harm the entire climate changes in the
organizations. In this way, how the Japan operates and manufacture business in global
marketplace. It is both important for creating a new markets and also destroying the existing
ones.
Legal Factor- This factor include the consumer law, health and safety, discrimination
law, employment law and antitrust law etc. These are the legal factor that require for Japanese
government to maintain their business rules and regulation in proper manner (Tallman, Luo and

Buckle, 2018). In japan, This factor affects that how a business operates in Japan and maintain
the demand of products. For Example- Legal environment is the main element in the Japan
where all people can work as employee, director and independent contractors etc. Each and every
people enjoy their rights or benefits in proper manner.
CONCLUSION
As per discussion, It concluded that A Business organization and its environment
exchange the information among themselves. It offers the opportunities and threats along with
the pressure and limitation which influence the structure and its functioning of business. As
above discussion, It describes the business environment and Pirelli company is establishing their
business in Japan. There are different type of factors and issues affecting the business
environment. The analytical framework such as Pestle analysis applicable in the organization to
identifying their need and requirement.

REFERENCES
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Online
Import and Export goods in Japan. 2018. [Online] Available through :
<https://www.statista.com/statistics/263654/export-of-goods-from-japan/>