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Pest (political)

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  • 1. Elements of International Business
    PEST (Political, Economic, Social & Technological) Analysis
    1
  • 2. 2
    PEST FORCES & BUSINESS :
  • 3. The political system play a vital part of country’s business environment, and in navigating different markets. A firm must understand the coverage & diverge, where, when & how to adjust business practices, operating procedures and strategies to meet the challenges posed by the local environment is a key to success in International business.
    3
  • 4. A firm looking to operate in foreign countries must heed of 3 points:
    • Discard belief that the firm can directly transfer to foreign environment
    • 5. Need to accept the different political & legal system
    • 6. Acknowledge the opportunities & threats
    4
  • 7. The goal of the political system is to integrate the elements of a society. It includes the complete set of institutions, political organizations & interest groups, as well as the relationship among institutions and the political norms & rules that govern their activities. This system is effective when it’s supported by a legitimate consensus of people who live under it.
    Political System
    5
  • 8. Political factors implies how & to what degree the Govt. intervene the economy which influence the organization in many ways by creating the advantages & opportunities in the form of Tax Policies, Labor laws & Trade Restrictions and conversely they may also place obligations & duties on organization.
    Political Factors
    6
  • 9. Individualism Vs Collectivism
    Individualism refers to the primacy of the rights & role of the individual. E.g. Individualistic orientation of the US (Rule of law).
    Collective refers the primacy of the rights & role of the community. E.g. formal & informal relationships within the business community of Japanese & Chinese.
    7
  • 10. 2. Political Ideology:
    It is the system of ideas that expresses the goals, theories, and aims of a sociopolitical program. E.g the liberal principles of the Democratic party & the conservative doctrine of the Republican party.
    Democratic system involves wide participation by citizen in the decision making process in the forms of parliamentary, liberal, multiparty, representative & social democracy.
    8
  • 11. Totalitarianism system restricts decision making to a few individuals. Unquestioning support for the official state & opposition to activities that run counter to the goals of the state. e.g One Child Policy in China prohibits a family from having more than a child otherwise subject to steep penalty of $1300.
    Totalitarianism are of Authoritarianism (North Korea), fascism (Italy), Secular (Vietnam, Singapore & China) & Theocratic (Taliban Party in Afghanistan)
    9
  • 12.
    • E.g. The coalition of Conservative along with Liberal Democrats in England formed the Liberal-Conservative Govt. PM Mr. David Cameron & Dy. PM Nick Clegg. which will bring Economic Reform to India by reducing & eventually eliminating the country’s unprecedented & unsustainable fiscal deficit.
    • 13. British Govt. decided to work on a long-term view on enterprise, markets, fiscal responsibility & building a green economy.
    10
  • 14. 11
    e.g. China, the second largest economy after U.S with 60% global growth, what drive others to go for China?
    • Market potential (poor looking at brighter economy)
    • 15. Market performance (US & Britain realized in 19th took 50 years, whereas China in 9 yrs)
    • 16. Infrastructure (Spent trillion of dollars in airports, dams, seaport, power plant)
    • 17. Resource (Cheap manpower as 1/3rd of Mexico, 1/25th of US. )
    • 18. Strategic positioning (Global strategies)
  • 12
    China Govt. keen to know-
    • Who you are?
    • 19. What you want to do?
    • 20. How much you intend to invest?
    • 21. Need to file an application to the concerned Govt. authority to determine the path & pace.
    • 22. Seek permission from MOFTEC (Ministry of Foreign Trade & Economic Corporation) to see whether it encourages the capital formation, promotes, exports, create jobs or transfer tech.
    • 23. More depend or terrain on bureaucratic system than legal statutes whereas the westerners are accustomed with “RULE OF LAW”
    • 24. No formal legal System (No Comprehensive Bankruptcy Law protect business)