ENVIRONMENT ANALYSES
3. Global/Regional economic environment
Purpose of analysis: The economic environment consists of economic factors that affect consumer purchasing power and spending pattern. The economic environment can offer both opportunities and threats.
No company can avoid the influence of fluctuations in the global economy. And when you're in a developing market, the understanding of the economy is essential. Some elements of the economic environment (The divide between rich and poor purchasing power differences in social class, the market area, the stage of the economic cycle, the volatility of prices of some items such as gasoline, oil, gold) directly affect the purchasing power and consumer tastes, which determines the
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Besides, the legal system will help to protect the general business environment for enterprises and consumers: avoid unfair competition, protecting consumers against fraud avoided by businesses. Moreover, the political stability of the market: the main island, strikes, protests, the strength of civil society, press freedom, corruption ... also affected the operations of the business. Thus, the need to learn, master and concerned about the impact of political and legal environment to business operations of the enterprise is essential..
Effects of policies: * The policies and the decisions of the government have the ability to affect the operation of a business or organization, such as Louis Vuitton. The containment policy can stimulate business in each country affected. For example in the UK: According to UK government budget 2010 which showed below net tax rises of £6.255billiosn with spending cuts of £8.855billions until the end of 2011. After that, the net tax rise of £8.23billions and spending cuts of £31.9 billion in 2015. The spending cuts have long-term influence on customer's buying behavior and impact negatively on the luxury brand. Besides, tariffs, transport costs, import and export regulations directly affect the cost of products sold in each country.
Particularly, in Vietnam, luxury goods like clothes, bags, accessories of well-known brand name are levied at high taxes and
Political: this inturns the legislation and government rules of the country that may influence and pose as a threat to the business,
Therefore, the imposition of tariffs by the governments of any of the engaged countries would affect the company’s price for their product.
(3) Political and legal environment, factors related to policy and law that influence company’s operation.
With the instability of the political and economic climates, future trade policies may negatively impact the industry. Potential barriers to trade could result in an increase in costs for department stores. Typically, this increase will be passed on to the consumer in the form of higher prices for the same products.
The economic environment plays a large role in marketing according to Kerin, Hartley & Rudelius, (2011). The economic environment force is the income, expenditures and resources that affect the cost of running a business and household, according to Kerin, Hartley & Rudelius, (2011). The impact this has on the Hersey Company is keeping prices affordable and production costs down.
Laws affect how citizens live and work within businesses there are Laws and regulations that all businesses have to follow so each citizen gets treated equally and there are laws to protect them. To protect businesses and to protect all citizens involved in a business there are certain laws that have been put into place, without these laws businesses will not succeed this is why politics is so important to business, this essay will define Democracy and explain the relevance to business, different types of democracy with the definition and a country, state or town that’s government use the type of political ideology and also how it affected society in the past compared to the present.
In both developed and underdeveloped economies, there is a need to put regulations which ensure that profits are not abnormally earned at the expense of the innocent clients. It is therefore the mandate of the territorial authorities to put in place measures that introduce checks and balances in all trades. The respective companies or business must also follow the same suit lest they find themselves in the crossroads of law. However,
The development of the business environment has determined companies to develop innovative strategies in order to create competitive advantage. Some of them have identified the potential of developing markets in Asia, Africa, and Europe, and have expanded their business to such areas. These countries provide a large pool of cheap skilled workforce that can help these companies reduce their production costs, which leads to reduced prices intended to increase the number of customers. The economic development of these countries provides customers with increased incomes that can purchase companies' products and services.
Legal factors are taking one of important segment for the cruise industry. The cruise industry has been strictly monitored for many types of law violations, such as human resource department, the consumer, violations of health and safety. If any cruise company is caught, having broken any of these laws, heavy fines or criminal penalties can follow from it. Legal occurrences can damage the political and government relations. Therefore Legal factors play an important role to the industry of a cruise.
Economic and the currency: first of all, every business is trying to avoid risk, therefor, the economic status of a foreign country is what the company looking for, they want the low unemployment rate, inflation rate and stable economic environment. Furthermore, the currency difference will change the product price strategy.
Japan has a relatively stable political and legal environment which reduces the risks associated with entering the foreign market. The political system is a democratic system, with a Westminster form of government similar to Australia, which is favourable for western cultures when conducting international business. The legal environment on the other hand, is built on the foundations of the European Civil Law system with an English-American influence. Therefore Australian businesses must understand the differences when conducting business to ensure the
There are two main categories of the legal systems which is common law and civil law. There are around 80 countries which recognize the common law system. The civil law system applies to about 150 countries. The primary importance in a common law country is case law. Civil law countries have predominate codified statutes. A fundamental factor of international business is the legal system. The market attractiveness of a country can be affected by variances in legal systems. Daily business practices are regulated by the laws of that particular country. Policies are defined, as well as the rights and obligations within a business transaction. The legal framework for business to be conducted is defined by the country’s government. There will be differences in laws country to country. Sound business decisions can be made by acquiring knowledge about the common and civil laws of different countries. Contract and contract law regulate several business transactions. The jurisdiction process of a common law system is expensive. The common law system has a greater flexibility. Contract disputes are interpreted by judges in comparison to the civil law system. The property rights of most countries are not enforced by local authorities. Although most of these countries have laws established to protect the property rights of investors. There are two ways in which property rights can be violated. Violations can occur through private action or by public
Political environment is significant to do business in other countries. There are different factors of political environment. These factors can influence the government decision making and other activities. For foreign investors every country set some rules and regulations. Investor need to maintain these rules and regulation to do business on certain country. Political factors can influence the government to change these regulations. So investors need to know the regulations and get the proper knowledge about political environment.
Economic factors the main impact every product and service is inflation. When there is inflation it has a ripple effect on all products and services. As a result companies incur an increase in their cost of production, and that leads to an increase in retail and wholesale prices. This can decrease the consumer buying
THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's