A comparison of business transaction strategies of financial institutions in Nigeria, Japan and Thailand,

Executive Summary
In an ever more volatile international economy, strategic managers are faced with increasing pressure to control every aspect of the value chain including business transactions costs. The researcher identifies the inner connectedness of the international economies and theorises that by examining and comparing the financial institutions of three nations she should be better able to predict transaction costs based on the level of development of a host country and may also be able to recommend procedures for reducing those costs. The research plans a three-month Delphi study accompanied by a comparative literature review to identify factors in transactions costs in Japan, Thailand and Nigeria. The researcher intends to create a recommended course of action to help firms control costs in various types of economies.

Introduction
Over the last two years, a worldwide economic crisis has made it abundantly clear that the financial institutions are inextricably linked to one another. What impacts the banks and financial institutions of one country almost without question affects the banks and financial institutions of other countries. Yet at the same time, evidence suggests that the business strategies of banks and financial institutions are the world are still profoundly different, result in very different business transactions. This research will focus on the business transactions of financial institutions in three countries – Japan, Nigeria and Thailand – providing a comparison of the types of strategies most often used in these countries and perhaps an explanation of the choices these financial institutions make.
Background to the study
Beginning in the second half of 2008, hedge funds and mortgage lenders around the world began to collapse based primarily on the so-called junk mortgages, high risk loans made to people with unstable credit histories, that failed when property values around the world began to plummet and the high-interest adjustable rate mortgages began to have balloon payments coming due. In October, 2008, Bank of England deputy governor Charlie Bean warned that the trouble was just beginning, calling it ‘the largest financial crisis of its kind in human history,’ (Fleming, 2008). World leaders debated whether the economic crisis was simply a cyclical recession or the beginning of something more sinister, like the Great Depression that hit worldwide immediately prior to World War II.
In the United Kingdom, financial experts pointed to a great deal of worst since 1929 factors:
• Britain's economic output slid 0.5 per cent - more than twice the decline expected by the City;
• Markets tumbled around the world, with leading UK shares losing almost £50billion;
• Sterling had its worst-ever week against the dollar since 1971 and hit a record low against the euro;
• The oil cartel Opec cut production, a move likely to increase petrol prices up to 5p a litre;
• Experts warned that hedge funds are facing disaster, with billions likely to be wiped off savings and pension funds;
• Hundreds of jobs were axed in the insurance, cosmetics, haulage and textile industries (Fleming, 2008).

While the U.K.’s economic downturn at the end of the first decade of the 21st century appeared tied to the world economy and international finance that is not true of the countries this paper profiles. In Japan, the economic troubles began 20 years ago and have yet to fully recover. “It was in the late 1980s that Japan’s economy overheated due to falling stock and real estate prices, a phase called the Japanese asset price bubble. However, the situation turned bad in 1989, with the crashing of the Tokyo Stock Exchange. Even in the 1990s the country’s economic growth remained slow. During that period there was only a 1.5% rise in the GDP annually. Moreover, in the 2000s, Japan’s GDP rose at 0.8% annually. The economy rose at an average of 2.1% a year from 2003 to 07, and shrank by 1.2% in 2008 and by 5.0% in 2009,” (Economy Watch, “Japan”, 2010).
In Nigeria, political corruption and an unstable series of military dictators have left the once agrarian economy dependent specifically on its production of oil and the related industries. While the International Monetary Fund has played a major role in attempting to stabilize the economy of this important African nation, their efforts were largely unsuccessful until late in the last decade when the government of Nigeria finally seemed to stabilize enough to begin accepting IMF recommendations and revising the economy. “Since 2008 the government has begun showing the political will to implement the market-oriented reforms urged by the IMF, such as to modernize the banking system, to curb inflation by blocking excessive wage demands, and to resolve regional disputes over the distribution of earnings from the oil industry. In 2003, the government began deregulating fuel prices, announced the privatization of the country's four oil refineries, and instituted the National Economic Empowerment Development Strategy, a domestically designed and run program modeled on the IMF's Poverty Reduction and Growth Facility for fiscal and monetary management,” (CIA Factbook “Nigeria”, 2010).
That dependence on the IMF is particularly troubling as many of the largest contributors to the IMF, including the United States, the United Kingdom and Japan are experiencing serious economic difficulties of their own. Likewise, the paper will discuss the issue of financial transactions in Thailand. Unlike the other two countries it is being compared to, Thailand has a generally pro-investment business climate and business transactions have traditionally been considered safe in Thailand, but the last decade has brought political instability to the Asian nation as well as recession, in part because the Thai economy is based largely on exports and the export market shrank considerable with the world economy. “Investor and consumer confidence eroded, and Thailand's international image was damaged. Thai exports - mostly machinery and electronic components, agricultural commodities, and jewelry - continued to drive the economy, accounting for as much as three-quarters of GDP. The global financial crisis of 2008-09 severely cut Thailand's exports, however, with most sectors experiencing double-digit drops. In 2009, the economy contracted about 3.5%,” (CIA Factbook, “Thailand”, 2010).
Consequently, the review of business transaction strategies of Thailand, Japan and Nigeria can contribute to a broader understanding of international economics. “Since the
diversity of firm strategies around the world can arise as the result of many possible forces
internal or external to the organization, this question engenders a wide variety of disparate
answers from economists (Nelson, 1991) and sociologists (Carroll, 1993). Thus far, strategy
researchers have primarily focused on industry conditions (Porter, 1980) and firm resources
(Barney, 1991) as drivers of firm differences, leading to competition- and resource-based
perspectives, respectively,” (Peng, 2001). The underlying point then is that financial strategies are an integral part of strategic management and should have a significant impact on a firm’s decision-making processes, including where to do business and how to obtain financing. Because of the increasing globalization of the world economy, firms cannot afford to ignore the any factor which may impact the bottom line. Considering the financial transaction strategies of a nation’s financial institutions should therefore be a part of any value chain management.
The evidence of the interconnectedness of the world’s economies is clear. “Foreign Secretary David Miliband said today that European and Asian nations have agreed to work more closely together to deal with the global economic crisis. The 43-nation Asia-Europe Meeting called for new international regulation and a stronger role for the International Monetary Fund in helping nations facing serious crises,” (Fleming, 2008). A review of the business transactions policies of these three nations will provide valuable information for firms intending to do business in any of these three nations as well as possibly providing firms with alternative ideas for business transaction policies in their own countries. Learning what works and what needs improvement may create substantial improvements to the financial management segment of strategic management and value chain management.
Rationale and significance
With these demonstrations of the interconnectedness of international economies, the importance of an understanding of the differences in how each country handles its financial transactions becomes increasingly important to investors worldwide. In politically unstable environments like Nigeria and Thailand, investors will need to know how well their investments are protected by the rule of law and by historical precedence. Japanese investors will need to if the current economic conditions are likely to impact the future of business financial transactions in that arena as Japan slips from its positions as the largest Asian economy. What is clear is that international business transactions have a substantial impact on the international economy and therefore understanding three from very diverse cultures may lead to a better understanding of world economics.
This particular study will focus on evaluating and comparing the business transaction policies of major financial institutions in three countries. Japan was chosen as it represents an established and perhaps declining economy that currently ranks among the world’s strongest. Nigeria is in many ways a developing nation economy, reliant primarily on the nation’s natural resources and Thailand falls somewhere in between as nation heavily reliant on agriculture. The researcher recognizes that the three very different economic conditions may influence the manner in which financial transactions take place and believes that this diversity can lend credibility to the findings of the study. Furthermore, there is increasing evidence in the study of strategic management that a more complete understanding of the financial aspects of strategic management is necessary:’
“A number of scholars suggested that in addition to industry and firm level
conditions, a firm also needs to take into account wider influences from sources such as the state and society when crafting and implementing its strategies (DiMaggio and Powell, 1991; Oliver, 1997). These influences are broadly considered as institutional frameworks (North, 1990; Scott, 1995). When applied to strategy research, this new perspective, consequently, can be called an institution-based view of business strategy (Peng, 2000a, 2002; Peng and
Heath, 1996). Since no firm can be immune from institutional frameworks in which it is embedded, there is hardly any dispute that institutions matter. In order to make further theoretical progress, researchers must “tackle the harder and more interesting issues of how they matter, under what circumstances, to what extent, and in what ways” (Powell, 1996:297).” (Peng, 2001).

To echo Peng’s conclusions, the researcher believes that the institutional framework of business transactions in each of these nations may play a significant role in the relative safety and profitability of investing there.
The study will survey research materials regarding traditional financial institutions’ business transactions in each of these nations and then will attempt to determine what factors – legal, social, political, or other – most impacts the means by which business is conducted. The research plans a two-fold attack on the research for this project, beginning with an extensive literature review and compilation of previous studies regarding these nations’ financial institutions independently as well as any previous research addressing one or more the nations comparatively. The second portion of the research will involve establishing a descriptive study using the Delphi study method. During the Delphi study, the experts will be asked to look at several things which might impact the business transaction of a nation including balance of payments, trade deficits, current accounts, and more. These issues are often associated with investment banking, but can be vital to strategic management.
The investment selection process is a part of investment banking which is a division of banking that encompassing business entities, this deals with the creation of capital for the other companies. Investment banking also acts as underwriters for companies, issuing securities and advising companies on the placement of stock. Mutual funds can offer an inexpensive way to diversified, also address the issue of risk reduction through international diversification. It's important to know the correlations between the returns of the nation markets are important to the process of the investment in the market. Most companies consider the "opportunity costs" as costs of the project or investment. If you use something that could be used for something else, the cost to replace the use of the something else must be included in your capital budgeting analysis.
Companies have to consider alternative uses of capital and resources as costs to the capital budgeting project or investment. The strategic plan may also identify external factors and achievement of the long term goals. It is a plan of mapping out the long term goals that they might have overlooked and the unforeseen environmental analysis. The economic effects on the strategic plan are important and must not be overlooked. Every organization should monitor the economic and biological factors have a great deal to do with the long term and short term goals of the company.
Current Accounts
Current accounts are the net flow, in and out, of the current transactions, including goods, services, interest payments and transfer payments between countries. Goods that are tracked through the balance of trade would be items such as cars, electronic equipment, and general household items. The balance of trade represents one key aspect of how current accounts are comprised. Another aspect within the balance of trade includes service related activities. Services include tourism as well as other non-consumer related goods such as banking and consulting activities that are purchased. Along with the balance of trade, the other important factor that makes up the current accounts includes factor income. Factor income is where investors earn income from their investment holdings from foreign countries. The final component that makes up the current account is referred to as transfer payments or what is considered as gifts, grants, and aid between one country and another. For a business to decide on where to establish a manufacturing operation, it is important to consider the current account aspect of a particular country to identify a more advantageous economic climate to operate within.
Capital Accounts
Capital account is an account that tracks the movement of funds for investments and loans into and out of a country. These investments would include direct foreign, portfolio, and other capital investments. Direct foreign investments would include fixed assets in foreign countries that would be utilized to support business. . Portfolio investments make up long-term financial assets, stocks and bonds, among countries that do not impact the transfer of control. For example, if an individual investor purchased a bond of a foreign company such as from Fiat this would be considered a portfolio investment. Much like the long term investments of securities, short term securities are also considered a component of capital accounts. This would be securities such as money market funds, etc...
Balance of Payments
Balance of payments combines the current account and capital account transactions. The balance of payments tracks all the transactions that are made between consumers, businesses, and the government. The balance of payments will identify how much is actually being spent by a given countries consumers on imported goods and services as well as the exporting of goods and services to other countries. Balance of payments is fundamentally an indicator of the economic and even the political stability of a nation. This information is useful in helping to establish the viability of expansion in one particular country versus another. All of these factors may play a role in business transactions within a country, so each will be addressed by the expert team members of the Delphi study.

Aims and Objectives
Ultimately the researcher’s goal is to provide firms considering international investment with additional information that may be useful in acquiring and affording financing for those investment activities. The researcher believes that financial costs may play a huge role in the overall success of an organization and therefore providing additional information to managers regarding transactions costs in a particular location may result in better international economic opportunities as well as improved profitability for the individual firm.
Hypothesis or research Questions
More economically advantaged countries (in this case Japan) have higher business transaction costs than developing nations and therefore more barriers to entry. The researcher hopes to identify those barriers and perhaps make a recommendation regarding ways that firms can overcome those barriers.
Methodology and Timeline
The research anticipates that she will conduct two forms of research simultaneously in an effort to reduce the overall timeline of the study. The research will begin immediately with a literature review attempting to identify previous scholarly researching regarding transaction costs in Nigeria, Japan and Thailand. Additionally, the research will identify existing literature comparing any of these nations’ financial and economic policies. At the same time, via internet research, the researcher intends to identify executives at major financial institutions within each of the nations who would be willing to participate in a Delphi study regarding the barriers to access created by the transactions costs.
There will be no exclusion criteria for the study, with all individuals that accept the solicitation for participation in the study accepted as a study member. Solicitation for participation in the Delphi study will occur by the internet. The researcher expects the Delphi panel will consist of 15 to 20 industry experts qualified to address the research questions posed by the study.
To begin this Delphi study, steps will be adapted from the methodology used in studies by Morrow-Howell, Burnette and Chen (2003) and Ogden, Petersen, Carter and Monczka (2005). These steps are: 1) form the panel; 2) develop the first round questionnaire; 3) test the questionnaire for accuracy; 4) transmit the first questionnaire to the panelists; 5) analyze the first round responses; 6) prepare the second round questionnaire; 7) transmit the second round questionnaire to the panelists; 8) analyze the second round responses; 8) repeat steps 6 – 8 until the responses meet the criteria of consensus as determined by the researcher; 9) and prepare a report as a conclusion. The researcher will develop the content of the initial questionnaire based on the information provided from a review of relevant literature that includes the findings of previous researchers of employee retention in the hospitality industry. The researcher will develop questionnaires for the subsequent rounds of the study based on the responses of the panel experts
The researcher will use a series of open-ended questions developed by the researcher provided to the panel experts in three to four rounds. In each round, the experts will provide responses to the questions (Loo, 2000). At the end of each round the researcher will consolidate and summarize the responses to the questions, and present the answers back to the panel members for further input and comment. If necessary, the researcher will create and distribute a new set of questions for each round.. There is no limit to the number of rounds taking place in a Delphi study. The study concludes when consensus is achieved among the study participants. The researcher determines whether consensus is achieved. Delphi studies commonly achieve a consensus by the fourth or fifth round. The researcher will collect information to limit the possibility that communications among the panel members will influence the consensus decision (Brown, 1968; Cline & Development, 2007). The researcher assumes anonymity between participants. One person’s input does not in any way influence another’s. Panelists will be selected and considered experts.
The underlying assumption of the study is the Delphi method will be effective in producing information from a panel of experts useful for answering the research questions. The Delphi method has been used for qualitative research and is accepted as an effective research methodology (Linstone & Turoff, 2002; Scapolo & Miles, 2006). Another assumption in the study is the participants will adhere to the confidentiality and anonymity agreement that is an inherent part of the methodology. Because the data collection will occur through the internet, there is also an assumption the expert members of the panel will be the individuals providing the responses to the questionnaires in the rounds associated with the Delphi study. There is also an assumption the responses are not provided by an individual whom is not a part of the expert panel of the study.
A significant limitation of this study will be the potential for researcher bias, which is inherent in the Delphi method. Researcher bias occurs when the questions posed to study participants and the analysis of the data is influenced by the opinions and pre-existing beliefs of the researcher (socialresearchmethods.com, 2008). When using the Delphi method, researcher bias can manifest itself in the content of the initial questionnaire distributed to the panelists which directs the responses and the questionnaires prepared for the subsequent rounds. Researcher bias can also occur in the determination that consensus among the experts regarding the research questions has been reached. The researcher will adopt a strategy to lessen the influence of researcher bias on the findings. This strategy is to review the initial questionnaire with an independent expert that is not a member of the panel before initial dissemination of the questionnaire. Additionally, researcher bias may occur in the summation of answers as they are reflected in subsequent rounds of questioning. There is also a potential for researcher bias in the very nature of the study as its emphasis is determined by the preconceived ideas of the researcher.
Additional limitations of the study involve the behavior of the expert panelists, which is beyond the control of the researcher. The panelists may not respond truthfully or accurately to the questionnaires. In addition, some panelists may not respond to the initial or subsequent rounds of questionnaires. The researcher will use a strategy for non-respondents in which follow up communications will encourage the participant to provide answers to the questionnaires. Because the research is being conducted completely via the internet, there are potential limitations there as well. A person could easily fail to respond to messages sent via email or could quit using an email address altogether. In addition as alluded to earlier, there is a potential for the person responding to the questionnaire to be someone other than its intended recipient.
The proposed study will use the Delphi study method as the foundation for the research design. The Delphi study is a method for facilitating and structuring group communications about a complex problem, with an iterative process used to establish consensus about a future direction or response to the complex problem (Golembriewski, 2000). The Delphi study poses a qualitative question to experts in a field. Experts are considered to be individuals uniquely qualified by their knowledge, experience or status among their peers to answer specific questions about the IT industry, its future and the risks and benefits of virtualization. In the Delphi study procedure, each expert provides an answer to the question independently without direct contact with the others. The researcher then analyzes the information and provides the analyzed information to the experts for further comment (Linstone & Turoff, 2002). The process of posing questions, providing information and analyzing the data continues through four to five iterations until consensus is achieved by the group of experts (Loo, 2000). Because the experts are anonymous and do not directly interact with each other, they do not have to be in the same geographic location to conduct the Delphi study. The experts communicate with the researcher by mail or email regarding the specific problem under investigation (Brown, 1968; Cline & Development, 2007).
The sample size for the Delphi study is between 15 and 20 panelists, which is the number of panelists recommended for inclusion in a Delphi study (Golembrieski, 2000). The number of panelists is intended to be large enough to provide a diversity of perspectives, while small enough to achieve consensus on the questions posed to the panel. Purposive sampling will be used to select the individuals from the study population for the expert panel. Only one expert panelist from each firm will be selected. Following the acceptance of the invitation to participate in the study, other individuals meeting the inclusion criteria employed by the same firm, an affiliate or a subsidiary will be excluded from the study. Because of the time it takes to reach consensus in each round of the study, the research anticipates this section of the study may take a minimum of eight weeks.


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