• Submitted By: mltiger5
  • Date Submitted: 02/16/2009 3:10 PM
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Case Study

Matt Locke

MGT 448- Global Business Strategies

Watson T. Ragin

November 24, 2008

In the case of Merrill Lynch in Japan the legal challenges in which confronted the global business are the restrictive regulations the company encountered made investment banking difficult to offer the Japanese private clients a full range of service as clients in the United States received. “For example, foreign exchange regulations meant it was very difficult to sell non-Japanese stocks, bonds, and mutual funds to Japanese investors” (Hill, 2009). As a direct result of the situation Merrill Lynch in 1993, closed six branches and backed out of the private client market in Japan. In the ‘90s Japan embarked on the deregulation of the financial services and as a result restrictions against Merrill Lynch were removed. “For example, the relaxation of foreign exchange controls meant that by 1998, Japanese citizens could purchase foreign stocks, bonds, and mutual funds” (Hill, 2009). The cultural challenges Merrill Lynch endured in Japan were the business was the first foreign firm in Japan in the 1980s. “The company found it extremely difficult to attract employee talent and customers away from Japan’s big four stockbrokerages, which traditionally had monopolized the Japanese market” (Hill, 2009). The struggles of the four stockbrokerages continued and in 1991 the countries stock market crashed. In 1997 one of the stockbrokerages declared bankrupt and the Japanese government decided the country would adapt to the foreign entry into the financial service. The changes in Japan were clear to Merrill Lynch only a small percent of households had investments in mutual funds. In 1997 Merrill Lynch began to consider the reestablishing of the private market in Japan. The ethical challenges for Merrill Lynch was how in which to enter the Japanese market. The initial consideration of joint control with Sanwa Bank would sell Merrill Lynch’s mutual funds to Japanese...

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