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Target速 Corporation Expansion: Summer 2012 Brandon J Mingo

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Sections Covered:   

Planned Endeavour’s

Working & Employee Cultures  

Our Company

Economic Interactions Merchandise Distribution

Corporate Social Responsibility 

Business Ethics

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Our Company: Target Corporation has a clear mission and brand promise, “Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less. brand promise. To support our mission, we are guided by our commitments to great value, the community, diversity and the environment (Our Stores).” Our company believes in outreaching to communities that surround our retail stores. A large portion of our profits goes back into community education systems such as public schools. Plans establish giving $1 billion dollars to support education causes by 2015 (Our Stores). Some background on our history and a little bit about us as a company begins in humble pursuits. The first Target store opened in Roseville, Minnesota, in 1962. Its trendy merchandise at affordable prices launched a new era in discount retailing. This “T-1” store was easy to shop, attractive to customers and always clean. It served as the prototype for every Target store opened since then, and it changed how consumers think about discount shopping (Our Stores). Today, Target operates nearly 1,770 stores in 49 states, including more than 250 SuperTarget® stores that offer an upscale grocery shopping experience. In addition to the photo processing centers, pharmacies and Food Avenue® restaurants found in almost every Target, SuperTarget stores include in-store bakery, deli, meat, and produce sections. Other innovations include the newly introduced CityTarget, which cater to urban shoppers in downtown city locations. Chicago, Los Angeles, San Francisco, and Seattle all have recently opened these shopping venues. Internationally, during 2011, Target acquired 189 Zellers sites across Canada, and we’re planning to renovate 125-135 of the retailers to become Target stores in the future (Our Stores).

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Planned Endeavors: In efforts to further develop the company and bring goods, services, and philanthropy to other nations other than the U.S. and Canada, Target will plan for new retail store locations in Tokyo, Japan and also Dubai, United Arab Emirates (UAE). Tokyo, Japan

Planned Endeavors: Location:

Dubai, UAE

An archipelago in the Pacific,

The United Arab Emirates, in

Japan is separated from the east

the eastern part of the Arabian

coast of Asia by the Sea of

Peninsula, extends along part of

Japan. It is approximately the

the Gulf of Oman and the

size of Montana. Tokyo hosts

southern coast of the Persian

over 35 million people in the

Gulf. The nation is the size of

metro area (Japan).

Maine. Its neighbors are Saudi Arabia to the west and south, Qatar to the north, and Oman to the east. Dubai has a population of over 1.5 million in the metropolitan area (UAE).

Currency:

Yen (Japan).

UAE Dirham (UAE).

Industrial Development:

First World nation with highly

The UAE has an open economy

advanced economy, 3rd largest in

with a high per capita income

the world (Japan).

and a sizable annual trade surplus. Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas output to 25%.

Political Orientation:

Prime Minister: Yoshihiko Noda

President: Sheikh Khalifa bin

(2011)

Zayed al-Nahyan (2004)

Constitutional monarchy with a

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parliamentary government. In

Prime Minister: Sheikh

August 2009 parliamentary

Muhammad ibn Rashid al-

elections, the opposition

Maktoum (2006).

Democratic Party won in a landslide over the ruling Liberal Democrats, who had been in power nearly uninterrupted for a half-century (Japan).

Federation formed in 1971 by seven emirates known as the Trucial States—Abu Dhabi (the largest), Dubai, Sharjah, Ajman, Fujairah, Ras al-Khaimah, and Umm al-Qaiwain. In addition to a federal president and prime minister, each emirate has a separate ruler who oversees the local government (UAE).

Demographics of Labor

Over 69 million, 69.8% in

4.11 million, high proportion of

Force:

service sector and 26.2% in

foreign-born employees.

industry sector (Background).

Agriculture: 7% Industry: 15% Services: 78% (CIA).

Psychographics of Labor

Hardworking, educated,

Large expatriate workforce

Force:

advanced, technologically savvy,

(CIA).

honest (Isenberg). Role in World Economy:

Japan's postwar economic

Since the discovery of oil in the

recovery was nothing short of

UAE more than 30 years ago,

remarkable. New technologies

the UAE has undergone a

and manufacturing were

profound transformation from

undertaken with great success. A

an impoverished region of small

shrewd trade policy gave Japan

desert principalities to a modern

larger shares in many Western

state with a high standard of

markets, an imbalance that

living. The government has

caused some tensions with the

increased spending on job

U.S. The close involvement of

creation and infrastructure

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Japanese government in the

expansion and is opening up

country's banking and industry

utilities to greater private sector

produced accusations of

involvement. Major center for

protectionism. Yet economic

oil and gas trade for developed

growth continued through the

nations around the world (CIA).

1970s and 1980s, eventually making Japan the world's second-largest economy (after the U.S.). Today it is the third largest and one of the most technologically advanced and efficient (Japan). Trade Restrictions:

The U.S. and Japan cooperate

In April 2004, the UAE signed a

closely in the WTO, the G20,

Trade and Investment

the Organization for Economic

Framework Agreement with

Cooperation and Development,

Washington and in November

the World Bank, and the

2004 agreed to undertake

International Monetary Fund,

negotiations toward a Free

and regionally in the Asia-Pacific

Trade Agreement with the US,

Economic Cooperation forum

however, those talks have not

(APEC) (Background). No trade

moved forward. The country's

restrictions.

Free Trade Zones - offering 100% foreign ownership and zero taxes - are helping to attract foreign investors (CIA).

Types of textiles, apparel,

Exports: Japan's main export

Exports: $265.3 billion (2011

and hard lines produced,

goods are cars, electronic

est.). Crude oil 45%, natural gas,

exported, and imported:

devices and computers. Most

reexports, dried fish, dates.

important trade partners are

Japan 16.1%, India 14%, Iran

China and the USA, followed by

10.9%, South Korea 5.5%,

South Korea, Taiwan, Hong

Thailand 5.4%, Singapore 4.4%

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Kong, Singapore, Thailand and

(2011).

Germany. Imports: $185.6 billion (2011 Imports: Japan has a surplus in its export/import balance. The most important import goods are raw materials such as oil,

est.) machinery and transport equipment, chemicals, food India 19.8%, China 13.9%, US 8.2%, Germany 4.6% (2011)

foods and wood. Major supplier is China, followed by the USA, Australia, Saudi Arabia, South Korea, Indonesia and the United

Industries: Crude Oil, natural gas agriculture, tourism/hospitality (CIA).

Arab Emirates. Industries: Manufacturing, construction, distribution, real estate, services, and communication are Japan's major industries today. Agriculture makes up only about two percent of the Gross National Product. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry rather small. Textile production is limited while import of fashions is significant (Japanese Economy). Technology present for

One of the most technologically

Over the past decade, the

textiles and apparel:

advanced nations, economies,

United Arab Emirates has made

and populations in the world,

a name for itself as a place of

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Japan has all the high-tech

excellence for

means to offer new business

telecommunications and IT.

ventures. Just recently, in order

With the most modern facilities

to ensure stability, the Bank of

and infrastructure, such as the

Japan injected more than $325

Dubai Media City, the country is

billion in yen into the economy.

the perfect place to advance

Estimates of the direct costs of

your operations (Benefits).

the damage--rebuilding homes and factories--range from $235 billion to $310 billion. In August 2011, the government revised downward its fiscal year inflation-adjusted GDP forecast to 0.5%. Government plans called for massive spending, as high as $295 billion, on reconstruction efforts in disaster-affected areas to stimulate economic growth (Background). Nature of wholesale and

Despite natural disasters and

The UAE is located at the centre

retail merchandising

worldwide recessions, the

of some of the world’s most

systems:

Japanese Economy is stable and

important trade and commerce

consumers are spending in retail

routes. Historically this has

and hard line stores (Real).

always been true and remains very much so today, making it a world class trading hub. By establishing your business operations in the United Arab Emirates, you will have access to the markets of Asia, Africa,

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Southern and Eastern Europe and the Middle East. The country has the necessary facilities to accommodate international trade, with state-ofthe-art air and maritime ports, making doing business in the UAE an attractive endeavor (Benefits). Advantages of business in

Sophisticated and wealthy

Access to a diversified economy,

the country:

consumer base, advanced

central point to world

technological development

commerce, low taxes, advanced

capacity, laws to protect

technology (Benefits).

business operations, low cost of starting business, large pool and highly skilled labor force (Isenberg). Disadvantages of business

Established competition,

Unstable area and unrest in the

in the country:

thorough research in new

middle east, still a developing

companies which leads to slow

nation, drug-trafficking, money-

decision-making, aversion to

laundering (CIA).

risk-taking, high expectations regarding documentation, followership in key segment markets, and language barriers (Isenberg). Competition to Target速 in

Daiso, Uniqlo, Daiei, Jusco,

Carrefour UAE, Fathima, Emke

the country:

Seiyu (owned by Wal-Mart

Group, Lifco Group, Lulu

Stores)

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Sources: "Background Note: Japan." U.S. Department of State. U.S. Department of State, n.d. Web. 31 July 2012. http://www.state.gov/r/pa/ei/bgn/4142.htm "Benefits of Doing Business in the UAE | Cross Cultural Training." Benefits of Doing Business in the UAE | Cross Cultural Training. N.p., n.d. Web. 31 July 2012. <http://blog.communicaid.com/cross-cultural-training/benefits-of-doing-business-in-theuae/>. "Central Intelligence Agency." CIA. N.p., n.d. Web. 31 July 2012. <https://www.cia.gov/library/publications/the-worldfactbook/geos/ae.html>. "Japan." Infoplease. Infoplease, n.d. Web. 31 July 2012. <http://www.infoplease.com/ipa/A0107666.html>. "Japanese Economy." Japanese Economy. N.p., n.d. Web. 31 July 2012. <http://www.japan-guide.com/e/e644.html>. Isenberg, Daniel. "Entering the Japanese Market." IVCJ, Jan. 2004. Web. 31 July 2012. <http://www.docstoc.com/docs/1082533/Advantages-and-Disadvantages-of-doing-Business-in-Japan>. "Our Stores." Target : Company :. Target Corporation, 2012. Web. 31 July 2012. <http://sites.target.com/site/en/company/page.jsp?contentId=WCMP04-031761>. "Real Insight into Japanese Consumer Markets." JapanConsuming. N.p., n.d. Web. 31 July 2012. <http://www.japanconsuming.com/>. "UAE." Infoplease. Infoplease, n.d. Web. 31 July 2012. <http://www.infoplease.com/ipa/A0108074.html>.

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Working & Employee Cultures: In order to comply and ease into international working environments and regulation, Target has thoroughly research both Japan and the UAE’s legalities in terms of employment and the way in which business operates. This information is displayed in the following table.

Planned Endeavors: Customs Compliance:

Tokyo, Japan

Dubai, UAE

Japan is currently the U.S. 4th

According to the UAE Trade

largest trading partner, totaling

Offices:

over 267 billion dollars worth

“US exports have increased

of goods. (Japan).

from $11.6 billion in 2010 to over $15.8 billion in 2011. The

According to the press release from Ministry of Finance or (MOF) in Japan, U.S. Customs and Border Protection (CBP) and Japan Customs and Tariff Bureau in MOF signed the mutual recognition agreement in AEO (Authorized Economic Operator) program. This occurred in the fiscal year, 2009 (Global). The trade operators who have solid security and compliance program are approved as AEO operator. With the mutual recognition agreement in US and Japan, such AEO operators will be treated well as superior

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UAE bought more US goods than any other country in the Arab world bypassing Saudi Arabia, Egypt, and Israel. Furthermore, the UAE’s purchase of US goods exceeded purchases by any US Foreign Trade Agreement (FTA) partner country in the Arab World, making the UAE the single largest import market for US goods in the Middle East for 2011 (Introduction).” “The US ran a substantial trade surplus with the UAE during the same period between 2009 and 2011. Imports from the UAE in that period averaged


trader, will have certain benefit

approximately $2.4 billion

in customs clearance, thus

annually. It is important to note

contribute to the smooth and

that even though the US enjoys

safety trade between US and

a trade surplus with the UAE,

Japan (Global).

exports from the UAE increased by 158% during the

Japan is a major market for U.S. products and has remained a strong trading partner in recent years despite the global economic recession. Especially high tariffs and trade restrictions exist only to products that are critical sectors of the Japanese economy, i.e. rice, technology, etc (Background). These measures will ensure the success of U.S. goods and services that are provided in Target stores and operation

period between 2010 and 2002 from $937 million in 2002 to $2.4 billion in 2011 with the largest value items imported by the US being aluminum, diamonds, and crude oil related products. (Introduction). Increased trade and investments over the recent years ensure positive business operation and transactions of goods and services between the U.S. based Target Corporation and the new market of Dubai, UAE.

centers located in Japan, particularly Tokyo. Child Labor:

Japanese Law provides that

The government was

children shall not be exploited.

committed to children's rights

It also provides provisions to

and welfare, and expended

protect child workers. The

resources on the welfare of

Labor Standards Law states

citizen children; however,

that, â&#x20AC;&#x153;employers from

noncitizen children received

employing children until the

fewer benefits (United).

March 31 immediately

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following the child becoming

As required by U.A.E. law and

fifteen years old. March 31 is

the International Labor

the end of a school year.

Organization Minimum Age

Children are obliged to go to

Convention ratified by the

school usually until that time.

U.A.E., no person younger

Children thirteen years old or

than 15 years old will be

older, however, may be

employed to provide services in

employed if the labor is light

connection with NYU Abu

and not injurious to their health Dhabi (Statement). and welfare, and if the employer obtains permission from the local Labor Standards Administration office. Children under thirteen years old can be employed only in motion picture production and theatrical performance enterprises, upon permission of the Labor Standards Administration office. An employer cannot employ a person under eighteen years old for extended-hour or nighttime work. An employer also cannot assign a person under eighteen years old to dangerous work, such as maintenance or repair of machinery during its operation and mining (Children’s).” It should also be noted that the

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parent or guardian may not create a labor contract in order for a child under 20 years old to work; this provision is in order to prohibit a parent or guardian from forcing children to work. This parent of guardian may not receive the wages earned by the minor in place of the minor (Children’s). The Japanese law and economy protect children from less than ideal working contracts and/or conditions. This will ensure that any Target employees in Japan will not be operating under unlawful standings within the country’s child labors laws. Compensation:

According to the Japanese

Because United Arab Emirates

Labor Standards Laws:

does not have a minimum wage, there is no mandatory

“Wages must be paid in cash and in full directly to the workers; however, that payment other than in cash may be permitted in cases otherwise provided for by law or ordinance or collective agreement or in cases where a reliable method of payment of wages defined by ordinance is

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minimum rate of pay for workers in United Arab Emirates. Pay rates must be agreed upon directly with the employer through collective bargaining or other means of negotiating a fair living wage (Minimum). The government does not impose a minimum wage or


provided for; and partial

have minimum wage guidelines,

deduction from wages may be

but in practice MOL officials

permitted in cases otherwise

are required to inspect all

provided for by law or

contracts covered by minimum

ordinance or in cases where

wage, which cover about half of

there exists a written agreement

the work force, in order to

with a trade union organized by

ensure compliance with legally

a majority of the workers at the

required benefits, allowances,

workplace, where such a union

and time of payments. Officials

exists, or with a person

do not approve any labor

representing a majority of the

contracts that stipulate

workers, where no such union

substandard wages. Salaries

exists (Japan Labor).”

depended on the occupation and employer (United).

“These wages must be paid at least once-a-month at no definite date. This does not apply to bonuses or extra wages (Japan Labor).” Emergency Payments:

Compensation packages generally provided housing or housing allowances; however, low-skilled employees were often provided with substandard living conditions, including overcrowded

“In the event a worker requests

apartments or lodging in unsafe

the payment of wages to cover

and unhygienic "labor camps,"

emergency expenses for

lack of electricity, lack of

childbirth, illness, accident, or

potable water, and lack of

other emergency as set forth by

adequate cooking and bathing

ordinance, the employer shall

facilities. Some low-paid

pay accrued wages prior to the

workers did not receive these

normal date for payment (Japan benefits, even if stipulated in Labor).”

their contracts. Local newspapers detailed numerous

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Suspension:

cases of non-payment of wages to foreign workers (United).

“In the event of a suspension of business for reasons attributable to the employer, the employer shall pay an allowance equal to at least 60 percent of the worker’s average wage to each worker concerned during the period of business suspension (Japan Labor).” Minimum wages shall be in accordance with the provisions of Minimum Wages Law. According to reports, the average national rate of Japanese minimum wages in comparison to International Currency (pay based upon U.S. Dollars) is $11.00/hour. This is slightly lower than the U.S. International Currency minimum wage rate at $15.00/hour (Minimum). Employee Benefits:

Unlike many other countries in

State and workplace benefits

Asia, Japan has its own

for local employees rival those

universal healthcare system,

offered in most western

which is comprehensive and

countries. This is especially true

relatively cheap. Although it is a in the city of Dubai. State statutory requirement for

benefits include a pension,

employers to pay for annual

built-in death and disability

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health checks for staff,

cover, and healthcare. The state

healthcare is not perceived as

pension for Emirati national

an employer-sponsored benefit

workers across the UAE is a

because of the national system.

defined benefit plan with

Everyone is offered essentially

contributions from

the same base level of care, so

government, employee and

staff is, typically, unconcerned

employer. In Dubai, some

about healthcare perks

employers contribute as much

(Washington).

as 12.5% or 15% of an employee's base pay, but are not obligated to provide anything beyond that (Paterson).

Working Hours:

Employers shall not have

The standard workday is eight

employees work more than 8

hours per day, and the standard

hours a day, also no more than

workweek is six days per week;

40 hours per week. This

however, these standards were

includes rest periods which are

not strictly enforced. Domestic

one-hour per 8 hours of work.

servants and agricultural

Employers must provide at

workers were not covered by

least one rest day per week for

the labor law and were often

employees. Overtime work

obliged to work for longer

must have increased wage rate

periods. According to the MOL

over normal pay (Japan Labor).

and the labor law, employees are entitled 2 days of annual

Paid leave is required and time gone is based upon the employerâ&#x20AC;&#x2122;s method of calculation and also employee work schedules and

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leave per month after completing each of the first two 6-month periods on the job; after the first year, employees are entitled to 30 calendar days


commitments (Japan Labor).

of annual leave, in addition to national holidays (United).

The most important and recognized national holiday is New Year’s Day On January 1st. Also in terms of Labor, Japan’s Labor Day occurs on November 23rd (Japanese Holidays).

Sources: "Background Note: Japan." U.S. Department of State. U.S. Department of State, n.d. Web. 03 Aug. 2012. <http://www.state.gov/r/pa/ei/bgn/4142.htm>. "Children's Rights: Japan." Children's Rights: Japan. N.p., n.d. Web. 03 Aug. 2012. <http://www.loc.gov/law/help/childrights/japan.php>. "Global Trade Compliance." US-Japan Agreed Mutual AEO Program. N.p., n.d. Web. 03 Aug. 2012. <http://japantradecompliance.blogspot.com/2009/06/us-japan-agreed-mutual-aeo-program.html>. "Introduction." UAE Trade Office in Washington D.C. N.p., n.d. Web. 03 Aug. 2012. <http://www.uaetradeusa.org/index.php?page=uae-us-relations>. "Japan Labor Standards Law." Japan.- Labor Standards Law. N.p., n.d. Web. 03 Aug. 2012. <http://www.ilo.org/dyn/natlex/docs/WEBTEXT/27776/64846/E95JPN01.htm>. "Japan." Office of the United States Trade Representative. N.p., n.d. Web. 03 Aug. 2012. <http://www.ustr.gov/countriesregions/japan-korea-apec/japan/>. "Japanese Holidays." Japanese Holidays. N.p., n.d. Web. 03 Aug. 2012. <http://www.japan-guide.com/e/e2062.html>.

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"Minimum-Wage.org - World Minimum Wage Rates 2012." World Minimum Wage Rates 2012. N.p., n.d. Web. 03 Aug. 2012. <http://www.minimum-wage.org/minwage/international/>. Paterson, Jennifer. Employee Benefits. Sift Unity, 02 Aug. 2010. Web. 3 Aug. 2012. <http://www.employeebenefits.co.uk/item/11122/pg_dtl_art_news/292/pg_ftr_art>. "Statement of Labour Values." NYU Abu Dhabi University & College in UAE, New York University. N.p., n.d. Web. 03 Aug. 2012. <http://nyuad.nyu.edu/about/labour.values.html>. "United Arab Emirates." U.S. Department of State. U.S. Department of State, n.d. Web. 03 Aug. 2012. <http://www.state.gov/j/drl/rls/hrrpt/2005/61701.htm>. Washington, Tom. "Benefits in Japan." Employee Benefits. Sift Unity, 05 May 2009. Web. 3 Aug. 2012. <http://www.employeebenefits.co.uk/item/8810/pg_dtl_art_news/292/pg_ftr_art>.

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Economic Interactions: This section will determine the economic, political, trade, tariffs, regulation, and Incoterms in terms of business interactions between Target and Japan/UAE. Included in the report is the Incoterms that will be in place for transactions between Target and Japan/UAE. To keep balanced trade relationship, Target would like to divide the costs of trade with the buyer/seller partnership. Target will discuss all of the terms listed in the 2010 chart in order to cover all basis in international trading. The transaction charge target will be responsible for are listed as “Seller” in the pink boxes while the “Buyer” is responsible for charges in the tan colored boxes (Chart on last page of report). Based on this scenario, the best mode of transport for both countries would be by sea, this will be more cost effective in terms of price and volume able to ship at one time. Both parties are responsible for certain charges and actions in this shipment. Through this research, Target has decided that Tokyo, Japan would be the best placement for a new City Target location. This is due to their strong economy, high per capita income and also the Incoterms discussed. Table outlining these decisions is proposed next (IBT). Planned Endeavors:

Tokyo, Japan

Economic Standing/US Comparison:

In $USD: Exchange Rate: 78 yen GDP: 5.4 trillion GDP: 15.09 trillion GNP: 4.5 trillion GNP: 15.23 trillion Per Capita:$34,600 Per Capita: $49,000 Japan has a lower per capita dollar amount than that of the The US has the highest GDP, US and UAE yet their GNP, and per capita economic stance in dollar compared to Japan and the amount is stronger than the UAE. The US is the strongest UAE and comparable to many and largest economy in the trillion dollar economies world (Economy). (Economy). Political Standing: Japan is a parliamentary government with a constitutional monarch.

Dubai, UAE

In $USD: Exchange Rate: 3.6 dirham GDP: 360.25 billion GNP: 380.51 billion PPP: $48,900 A lower rating in economic amounts compared to Japan and the US. In terms of the country’s population in numbers, their per capita is on par with many Western Nations (Economy). The UAE is federation with specified powers delegated to the UAE federal government and other powers reserved to member emirate.

No political corruption. Extensive political involvement has occurred in terms of No government corruption, yet economy due to recent natural there are disputes in Expect More. Pay Less. ®


disasters affecting the nation. “A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake in March disrupted manufacturing. Electricity supplies remain tight because Japan has temporarily shut down almost all of its nuclear power plants after the Fukushima Daiichi nuclear reactors were crippled by the earthquake and resulting tsunami. Estimates of the direct costs of the damage rebuilding homes, factories, and infrastructure - range from $235 billion to $310 billion, and GDP declined almost 0.5% in 2011. Prime Minister Yoshihiko NODA has proposed opening the agricultural and services sectors to greater foreign competition and boosting exports through membership in the US-led Trans-Pacific Partnership trade talks and by pursuing free-trade agreements with the EU and others, but debate continues on restructuring the economy and reining in Japan's huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy (Central).”

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neighboring nations over boundaries. “Boundary agreement was signed and ratified with Oman in 2003 for entire border, including Oman's Musandam Peninsula and Al Madhah enclaves, but contents of the agreement and detailed maps showing the alignment have not been published; Iran and UAE dispute Tunb Islands and Abu Musa Island, which Iran occupies” There is a high government involvement with economic recovery from the global financial crisis, “The global financial crisis, tight international credit, and deflated asset prices constricted the economy in 2009. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency. The UAE Central Bank and Abu Dhabi-based banks bought the largest shares. In December 2009 Dubai received an additional $10 billion loan from the emirate of Abu Dhabi. The economy is expected to continue a slow rebound. Dependence on oil, a large expatriate workforce, and growing inflation pressures are significant long-term challenges. The UAE''s strategic plan for the next few years focuses on diversification and creating more


Trade “On average, the applied tariff Barriers/Regulations/Tariffs: rate in Japan is one of the lowest in the world. In addition, import duties on many agricultural items continue to decrease, and tariffs in many major sectors, such as autos and auto parts, software, computers, and industrial machinery are zero. However, certain products including leather goods, certain processed foods and some manufactured goods have relatively high tariff rates. While Japan's import tariffs are generally low overall, the nation’s average agricultural import tariff (roughly 19 percent) is among the world’s highest for industrialized countries. By comparison, the average agricultural import tariff is 9.7 percent in the United States and 16.3 percent in the European Union (Trade).”

Incoterms 2010 Rules Chart:

“While tariffs are generally low, Japan does have non-tariff barriers that impede or delay the importation of foreign products into Japan. Although competition, U.S. and other foreign government pressure, as well as other factors have lessened the impact of these impediments (Trade).” Full color chart displayed on last page of document, information on Incoterms found in next box. 

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opportunities for nationals through improved education and increased private sector employment (Central).” “In April 2004, the UAE signed a Trade and Investment Framework Agreement with Washington and in November 2004 agreed to undertake negotiations toward a Free Trade Agreement with the US, however, those talks have not moved forward. The country's Free Trade Zones - offering 100% foreign ownership and zero taxes - are helping to attract foreign investors. This has attracted much attention from Target for ease of distribution of consumer goods to the stores (Central).”

Provides commercial terms published by the International Chamber of Commerce (ICC) that is used in international commercial transactions. (IBT).


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Sources: "Central Intelligence Agency." CIA. N.p., n.d. Web. 15 Aug. 2012. <https://www.cia.gov/library/publications/the-worldfactbook/geos/ae.html>. "Central Intelligence Agency." CIA. N.p., n.d. Web. 15 Aug. 2012. <https://www.cia.gov/library/publications/the-worldfactbook/geos/ja.html>. "Economy Watch - Follow The Money." The World Economy - US, Japan, UAE. N.p., n.d. Web. 15 Aug. 2012. <http://www.economywatch.com/world_economy/>. "Trade Regulations and Standards of Japan." GlobalTrade.net. N.p., n.d. Web. 15 Aug. 2012. <http://www.globaltrade.net/f/business/text/Japan/Legal-and-Compliance-Trade-Regulations-and-Standards-ofJapan.html>. http://www.i-b-t.net/incoterms.html (Incoterms Information & Chart)

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Merchandise Distribution: In order to comply and ease into international working environments and regulation, Target has thoroughly research both Japan and the UAE’s legalities in terms of employment and the way in which business operates. This information is displayed in the following table.

Planned Endeavors: Customs Compliance:

Tokyo, Japan

Dubai, UAE

Japan is currently the U.S. 4th

According to the UAE Trade

largest trading partner, totaling

Offices:

over 267 billion dollars worth

“US exports have increased

of goods. (Japan).

from $11.6 billion in 2010 to over $15.8 billion in 2011. The

According to the press release from Ministry of Finance or (MOF) in Japan, U.S. Customs and Border Protection (CBP) and Japan Customs and Tariff Bureau in MOF signed the mutual recognition agreement in AEO (Authorized Economic Operator) program. This occurred in the fiscal year, 2009 (Global). The trade operators who have solid security and compliance program are approved as AEO operator. With the mutual recognition agreement in US and Japan, such AEO operators will be treated well as superior

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UAE bought more US goods than any other country in the Arab world bypassing Saudi Arabia, Egypt, and Israel. Furthermore, the UAE’s purchase of US goods exceeded purchases by any US Foreign Trade Agreement (FTA) partner country in the Arab World, making the UAE the single largest import market for US goods in the Middle East for 2011 (Introduction).” “The US ran a substantial trade surplus with the UAE during the same period between 2009 and 2011. Imports from the UAE in that period averaged


trader, will have certain benefit

approximately $2.4 billion

in customs clearance, thus

annually. It is important to note

contribute to the smooth and

that even though the US enjoys

safety trade between US and

a trade surplus with the UAE,

Japan (Global).

exports from the UAE increased by 158% during the

Japan is a major market for U.S. products and has remained a strong trading partner in recent years despite the global economic recession. Especially high tariffs and trade restrictions exist only to products that are critical sectors of the Japanese economy, i.e. rice, technology, etc (Background). These measures will ensure the success of U.S. goods and services that are provided in Target stores and operation

period between 2010 and 2002 from $937 million in 2002 to $2.4 billion in 2011 with the largest value items imported by the US being aluminum, diamonds, and crude oil related products. (Introduction). Increased trade and investments over the recent years ensure positive business operation and transactions of goods and services between the U.S. based Target Corporation and the new market of Dubai, UAE.

centers located in Japan, particularly Tokyo. Child Labor:

Japanese Law provides that

The government was

children shall not be exploited.

committed to children's rights

It also provides provisions to

and welfare, and expended

protect child workers. The

resources on the welfare of

Labor Standards Law states

citizen children; however,

that, â&#x20AC;&#x153;employers from

noncitizen children received

employing children until the

fewer benefits (United).

March 31 immediately

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following the child becoming

As required by U.A.E. law and

fifteen years old. March 31 is

the International Labor

the end of a school year.

Organization Minimum Age

Children are obliged to go to

Convention ratified by the

school usually until that time.

U.A.E., no person younger

Children thirteen years old or

than 15 years old will be

older, however, may be

employed to provide services in

employed if the labor is light

connection with NYU Abu

and not injurious to their health Dhabi (Statement). and welfare, and if the employer obtains permission from the local Labor Standards Administration office. Children under thirteen years old can be employed only in motion picture production and theatrical performance enterprises, upon permission of the Labor Standards Administration office. An employer cannot employ a person under eighteen years old for extended-hour or nighttime work. An employer also cannot assign a person under eighteen years old to dangerous work, such as maintenance or repair of machinery during its operation and mining (Children’s).” It should also be noted that the

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parent or guardian may not create a labor contract in order for a child under 20 years old to work; this provision is in order to prohibit a parent or guardian from forcing children to work. This parent of guardian may not receive the wages earned by the minor in place of the minor (Children’s). The Japanese law and economy protect children from less than ideal working contracts and/or conditions. This will ensure that any Target employees in Japan will not be operating under unlawful standings within the country’s child labors laws. Compensation:

According to the Japanese

Because United Arab Emirates

Labor Standards Laws:

does not have a minimum wage, there is no mandatory

“Wages must be paid in cash and in full directly to the workers; however, that payment other than in cash may be permitted in cases otherwise provided for by law or ordinance or collective agreement or in cases where a reliable method of payment of wages defined by ordinance is

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minimum rate of pay for workers in United Arab Emirates. Pay rates must be agreed upon directly with the employer through collective bargaining or other means of negotiating a fair living wage (Minimum). The government does not impose a minimum wage or


provided for; and partial

have minimum wage guidelines,

deduction from wages may be

but in practice MOL officials

permitted in cases otherwise

are required to inspect all

provided for by law or

contracts covered by minimum

ordinance or in cases where

wage, which cover about half of

there exists a written agreement

the work force, in order to

with a trade union organized by

ensure compliance with legally

a majority of the workers at the

required benefits, allowances,

workplace, where such a union

and time of payments. Officials

exists, or with a person

do not approve any labor

representing a majority of the

contracts that stipulate

workers, where no such union

substandard wages. Salaries

exists (Japan Labor).”

depended on the occupation and employer (United).

“These wages must be paid at least once-a-month at no definite date. This does not apply to bonuses or extra wages (Japan Labor).” Emergency Payments:

Compensation packages generally provided housing or housing allowances; however, low-skilled employees were often provided with substandard living conditions, including overcrowded

“In the event a worker requests

apartments or lodging in unsafe

the payment of wages to cover

and unhygienic "labor camps,"

emergency expenses for

lack of electricity, lack of

childbirth, illness, accident, or

potable water, and lack of

other emergency as set forth by

adequate cooking and bathing

ordinance, the employer shall

facilities. Some low-paid

pay accrued wages prior to the

workers did not receive these

normal date for payment (Japan benefits, even if stipulated in Labor).”

their contracts. Local newspapers detailed numerous

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Suspension:

cases of non-payment of wages to foreign workers (United).

“In the event of a suspension of business for reasons attributable to the employer, the employer shall pay an allowance equal to at least 60 percent of the worker’s average wage to each worker concerned during the period of business suspension (Japan Labor).” Minimum wages shall be in accordance with the provisions of Minimum Wages Law. According to reports, the average national rate of Japanese minimum wages in comparison to International Currency (pay based upon U.S. Dollars) is $11.00/hour. This is slightly lower than the U.S. International Currency minimum wage rate at $15.00/hour (Minimum). Employee Benefits:

Unlike many other countries in

State and workplace benefits

Asia, Japan has its own

for local employees rival those

universal healthcare system,

offered in most western

which is comprehensive and

countries. This is especially true

relatively cheap. Although it is a in the city of Dubai. State statutory requirement for

benefits include a pension,

employers to pay for annual

built-in death and disability

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health checks for staff,

cover, and healthcare. The state

healthcare is not perceived as

pension for Emirati national

an employer-sponsored benefit

workers across the UAE is a

because of the national system.

defined benefit plan with

Everyone is offered essentially

contributions from

the same base level of care, so

government, employee and

staff is, typically, unconcerned

employer. In Dubai, some

about healthcare perks

employers contribute as much

(Washington).

as 12.5% or 15% of an employee's base pay, but are not obligated to provide anything beyond that (Paterson).

Working Hours:

Employers shall not have

The standard workday is eight

employees work more than 8

hours per day, and the standard

hours a day, also no more than

workweek is six days per week;

40 hours per week. This

however, these standards were

includes rest periods which are

not strictly enforced. Domestic

one-hour per 8 hours of work.

servants and agricultural

Employers must provide at

workers were not covered by

least one rest day per week for

the labor law and were often

employees. Overtime work

obliged to work for longer

must have increased wage rate

periods. According to the MOL

over normal pay (Japan Labor).

and the labor law, employees are entitled 2 days of annual

Paid leave is required and time gone is based upon the employerâ&#x20AC;&#x2122;s method of calculation and also employee work schedules and

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leave per month after completing each of the first two 6-month periods on the job; after the first year, employees are entitled to 30 calendar days


commitments (Japan Labor).

of annual leave, in addition to national holidays (United).

The most important and recognized national holiday is New Year’s Day On January 1st. Also in terms of Labor, Japan’s Labor Day occurs on November 23rd (Japanese Holidays).

Sources: "Background Note: Japan." U.S. Department of State. U.S. Department of State, n.d. Web. 03 Aug. 2012. <http://www.state.gov/r/pa/ei/bgn/4142.htm>. "Children's Rights: Japan." Children's Rights: Japan. N.p., n.d. Web. 03 Aug. 2012. <http://www.loc.gov/law/help/childrights/japan.php>. "Global Trade Compliance." US-Japan Agreed Mutual AEO Program. N.p., n.d. Web. 03 Aug. 2012. <http://japantradecompliance.blogspot.com/2009/06/us-japan-agreed-mutual-aeo-program.html>. "Introduction." UAE Trade Office in Washington D.C. N.p., n.d. Web. 03 Aug. 2012. <http://www.uaetradeusa.org/index.php?page=uae-us-relations>. "Japan Labor Standards Law." Japan.- Labor Standards Law. N.p., n.d. Web. 03 Aug. 2012. <http://www.ilo.org/dyn/natlex/docs/WEBTEXT/27776/64846/E95JPN01.htm>. "Japan." Office of the United States Trade Representative. N.p., n.d. Web. 03 Aug. 2012. <http://www.ustr.gov/countriesregions/japan-korea-apec/japan/>. "Japanese Holidays." Japanese Holidays. N.p., n.d. Web. 03 Aug. 2012. <http://www.japan-guide.com/e/e2062.html>.

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"Minimum-Wage.org - World Minimum Wage Rates 2012." World Minimum Wage Rates 2012. N.p., n.d. Web. 03 Aug. 2012. <http://www.minimum-wage.org/minwage/international/>. Paterson, Jennifer. Employee Benefits. Sift Unity, 02 Aug. 2010. Web. 3 Aug. 2012. <http://www.employeebenefits.co.uk/item/11122/pg_dtl_art_news/292/pg_ftr_art>. "Statement of Labour Values." NYU Abu Dhabi University & College in UAE, New York University. N.p., n.d. Web. 03 Aug. 2012. <http://nyuad.nyu.edu/about/labour.values.html>. "United Arab Emirates." U.S. Department of State. U.S. Department of State, n.d. Web. 03 Aug. 2012. <http://www.state.gov/j/drl/rls/hrrpt/2005/61701.htm>. Washington, Tom. "Benefits in Japan." Employee Benefits. Sift Unity, 05 May 2009. Web. 3 Aug. 2012. <http://www.employeebenefits.co.uk/item/8810/pg_dtl_art_news/292/pg_ftr_art>.

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Corporate Social Responsibility: Japan & UAE Target’s Corporate Social Responsibility (CSR) and business ethics are main priority in opening new locations internationally. Target already participates in multiple programs domestically from stores in the US, mainly focused on money back into community schools supporting education. With the arrival of international expansion, Target has researched the benefits of CSR. According to Business Link out of the UK, the organization had many benefits to CSR that would pertain to Target’s growth in other marketplaces. “Corporate social responsibility (CSR) isn't just about doing the right thing. It means behaving responsibly, and also dealing with suppliers who do the same. It also offers direct business benefits. See the page in this guide on how to benefit from corporate social responsibility (Business).” “Building a reputation as a responsible business sets you apart. Companies often favor suppliers who demonstrate responsible policies, as this can have a positive impact on how they are perceived by customers (Business).” An example of CSR could be, “Reducing resource use, waste and emissions doesn't just help the environment - it saves you money too. It's not difficult to cut utility bills and waste disposal costs and you can bring immediate cash benefits (Business).” The company listed these benefits to Target as well:        

A good reputation makes it easier to recruit employees. Employees may stay longer, reducing the costs and disruption of recruitment and retraining. Employees are better motivated and more productive. CSR helps ensure you comply with regulatory requirements. Activities such as involvement with the local community are ideal opportunities to generate positive press coverage. Good relationships with local authorities make doing business easier. See the page in this guide on how to work with the local community. Understanding the wider impact of your business can help you develop new products and services. CSR can make you more competitive and reduces the risk of sudden damage to your reputation (and sales). Investors recognize this and are more willing to finance you.

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Specifically 1. There are two CSR measures that Target would conduct in both Japan and the UAE for ideal reputation in the country. First, would be reducing waste/emissions to ensure consumers that Target is participating in the country’s environmental regulation laws. This will also tell consumers that Target, as a business, holds the environment as high priority in all business operations, keeping environmental impacts at minimum levels. Included in that will be recycling programs, low-emission transport, energy-efficient buildings, and the availability of eco-friendly products and packaging. Second, Target will provide complimentary courses in employee education upon interest in positions. Even prospects that do not become hired will still benefit from these courses in effective and useful job skills. Target will always hire nationals that will receive substantial benefits of the wanted job title. This includes but is not limited to: working mothers, students, first-time employees, senior citizens, the disabled, etc. 2. These CSR measures would benefit the business vastly. Environmentally, there would be less impact, acceptance and support from consumer, cost reductions, and tax incentives. In terms of employee training and education, this would build a strong relationship with the market of each country. Training and job opportunities will garner support from the consumer base and allow for more expansion chances and well-trained employees to provide great service to new customer at the store location. 3. The impact of the CSR measures for Target will be ideal, upholding a positive corporate image to the consumer base is important in new business ventures. Our environmental responsibilities and job training/employee recruiting will benefit the company, customer bases, and the economies of both the US and country of choice, again adding new venues for further expansion. 4. The code of conduct that Target would be required to execute in both countries would be that of the company’s current literature on the topic. In summary, “Target Corporation is committed to conducting business lawfully and ethically. Every team member is obligated to act at all times with honesty and integrity. We expect you to bring good judgment and a sense of integrity to your business decisions. While it is not possible to list all policies and laws to be observed, or all conflicts of interest or prohibited business practices to be avoided, this Business Conduct Guide serves to detail the corporation’s expectations for

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team member conduct and helps team members make the right decisions. Team members are expected to know the corporation’s policies and comply with them (Code).” a. The full report may be viewed at: http://media.corporateir.net/media_files/irol/65/65828/BusinessConductGuide.pdf b. Upholds company values and displays those values to new customer bases, building strong relationships. Business Ethics: Japan & UAE In terms of Business Ethics, there are advantages in conducting these behaviors. According to Chron Small Business: “Business ethics offer companies a competitive advantage. Consumers learn to trust ethical brands and remain loyal to them, even during difficult periods. In 1982, Johnson & Johnson spent over $100 million dollars recalling Tylenol, its best-selling product, after someone tampered with bottles of the painkiller. The company followed its credo, a set of ethical organizational values, and the result was a boost in consumer confidence, despite the contamination scare. Society benefits from business ethics because ethical companies recognize their social responsibilities (Advantages).” Johnson & Johnson products are also offered in Target stores, their ethical standing along with ours will provide comfort in consumers knowing they can trust Target and our vendor’s decisions and actions. Specifically: 1. Two important ethics Target will uphold many. The two most important are first, honesty, “We will not say things that are false. We will never deliberately mislead. We will be as candid as possible, openly and freely sharing information, as appropriate to the relationship.” This includes in store management, corporate board members, and financial reports. Second is Fairness, “We will create and follow a process and achieve outcomes that a reasonable person would call just, evenhanded, logical, and consistent (Business Ethics).” 2. The reason Target will ensure these ethics is to uphold our moral obligation to our customers as a business, comply with national law, create a trustworthy relationship, and increase interest and acceptance to our brand stores, promoting additional opening in other cities. Expect More. Pay Less. ®


3. The impact for Target in following the business ethics are a transparent view into corporate financial statements from government and economical viewers and again promoting strong and positive relationships with our new customers. In conclusion, Target will move forward in opening a City Target ® store location in the Ginza Shopping District of Tokyo, Japan. The information above has provided the sufficient reason in completing the expansion. Target is excited to move forward in this process.

Sources: "Advantages & Disadvantages of Business Ethics." Small Business. Chron, n.d. Web. 15 Aug. 2012. <http://smallbusiness.chron.com/advantages-disadvantages-business-ethics-10414.html>. “Business Ethics: Sample Policies." Inc.com. N.p., n.d. Web. 15 Aug. 2012. <http://www.inc.com/articles/2000/10/14404.html>. "The Business Benefits of Corporate Social Responsibility." Corporate Social Responsibility. Business Link, n.d. Web. 15 Aug. 2012. <http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075408491>.

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Target Expansion