Business / Pest Analysis For Thailand And Sri Lanka

Pest Analysis For Thailand And Sri Lanka

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Autor:  anton  23 January 2011
Tags:  Analysis,  Thailand
Words: 3042   |   Pages: 13
Views: 1345

Introduction

As the newly appointed Vice President of International Marketing research it is my job to help seek to internationalize our business operations. The Chief Executive has identified Thailand and Sri Lanka as high-potential countries that we can do business with. It is now my job to look at public domain resources that will provide us with information about the exporting marketing and international sourcing of these countries and then analyze if these countries are a good choice for our U.S. based company to do business with.

P.E.S.T Analysis – Part One

1. U.N. Comtrade Database http://comtrade.un.org/db/

The database is able to tell us the amount of trade in dollars between any trading nations. Import and exports of any commodity is available which helps us determine the trading patterns between the US and either Thailand or Sri Lanka.

2. CIA World Factsbook https://www.cia.gov/library/publications/the-world-factbook/

The CIA World Factsbook provides us with information that is useful for determining if a country is a suitable to do business with. It gives details about the country’s economy which includes factors such as growth rate and purchasing power.

3. Nation Master http://www.nationmaster.com/index.php

Nation Master allows us to compare countries to each other to help us decide which potential country would be best for us. The website not only gives information about the economy but also about the imports, exports, and the products the countries produce. Nation Master uses many other sources to obtain its information which makes it very reliable.

4. 2007 National Trade Estimate Report on Foreign Trade Barriers

http://www.ustr.gov/Document_Library/Reports_Publications/2007/2007_NTE_Report/Section_Index.html

This website gives us information on trade agreements that were made between the United States and other countries which benefits us tremendously. It tells that Thailand is the United States’ 20th largest trading partner which is very good. National Trade Estimate also provides information relating to expansion of market access of American goods and international commodity agreements.

5. International Trade Centre http://www.intracen.org/welcome.htm

The International Trade Centre provides information based on a country’s export and import performance. We are able to compare the products that are traded. Being a surf and skate brand many products are necessary such as parts for our boards and fabric for our clothing. This website allows us to compare the trade flow of each of these products.

6. TradeStats Express – State Export Data http://tse.export.gov/SEDChart.aspx?UniqueURL=wobwtnrglwlttg55b2kao33z-2008-2-20-17-55-37

TradeStats Express allows us to see export relationships between US states and countries. We are able to analyze from the information given to us if we have a good standing relationship with either Sri Lanka or Thailand. The website provides us with the products and commodities we are exporting to the countries.

7. Trade Port http://www.tradeport.org/index.html

Trade Port provides many resources that can be helpful in our market research. Resources such as rules of trade and country profiles allow us to decide which country is best for us to trade with. It focuses on not only with the United States in general but specifically California where our business is located.

8. U.S. Census Bureau http://www.census.gov/foreign-trade/balance/c5420.html#2007

The U.S. Census Bureau provides us with charts for the available years that the U.S. did trade with Sri Lanka. We are able to compare exports, imports, and trade balance in U.S. dollars of each year and determine the growth patterns in each category.

9. Thailand’s Department of Export Promotion http://www.thaitrade.com/go/home

This website provides information relating to trading with Thailand. It offers product profiles and export procedures which is essential in determining if they are a good country to do business with. Knowing the products they specialize in along with the process of exporting which includes tariffs, laws and regulations, and fees is very useful.

10. Sri Lanka Business Portal – Trade Information http://www.srilankabusiness.com/tradeguide/index.htm

The Sri Lanka Business Portal provides information pertaining to trade. It gives us information such as import and export procedures, restricted imports and exports, and tariffs and taxes. Another useful resource is the potential markets Sri Lanka has, the United States being at the top.

11. EconomyWatch http://www.economywatch.com/

This website contains information about both Thailand and Sri Lanka’s economy. It allows us to compare the factors of each economy which include growth rate, life expectancy, and levels of imports and exports.

12. Economist.com http://www.economist.com/countries

Economist.com is a website that provides us with information about a country’s economy. It gives us more information about the structure of the country’s economy, politics, and basic information. It also provides us with an economic and political forecast for the upcoming years which can be very useful.

Part Two

Country One - Thailand

Political –

Political Stability: Officially known as the “Kingdom of Thailand,” Thailand is a constitutional monarchy. Although the head of state is the King, he is given little direct power but is a symbol of identity and unity. Environmental Regulation and Protection: The rise of environmental protection programs for Thailand was brought about due to the Promotion and Enhancement of Environmental Quality Act of 1975. Protection programs were made according to the current environmental issues occurring in Thailand. Its main issues include water pollution due to organic and factory wastes, air pollutions from vehicles, deforestation, erosion, and the nation’s wildlife that is being threatened by illegal hunting. Taxation: Thailand’s corporate taxation is set at a maximum rate of 30%, where its value-added tax comes in at 7%. International Trade: When it comes to international trade, Thailand’s export procedure can vary among the products being exported. Its major exports include textiles, footwear, fishery products, rice, jewelry, automobiles, rubber, and computers. Its major imports include capital and intermediate goods, raw materials, fuels, and consumer goods. Employment Laws: Written employment agreements are highly suggested in Thailand’s labor force. By law, employees are entitled to thirteen holidays per year, six vacation days after serving for one year, and an annual sick leave of thirty days with full pay. Aside from salary, the benefits are considered assessable income to the employee. Corruption: The main type of corruption that happens in Thailand is between business and politics. Bribery among businesses and officials is a common act that is done to get a desired service or contract.

Economic –

Economic Growth: Thailand’s overall economy has been nothing but improving since the 1997-1998 Asian Financial Crisis. In 2003, the economy grew by 6.9% and dropped .8% in 2004 but still showed improvement. To maintain its growth Thailand has established many trade agreements to increase exports. When it comes to the textile and apparel industry, Thailand’s economic performance and growth is doing well. Its main exports and imports always include textiles. Exchange Rates: The current exchange rate, although it changes frequently, is 1 US Dollar = 31.83422 Thai Baht and 1 Thai Baht = 0.03141 US Dollar. The effect a country’s exchange rate has on the demand by overseas customers such as the United States is it makes it higher. Having products imported into the United States from where the dollar has more power allows us to import more. Transportation: The Thailand transportation system comes in all forms. Metro, highways, waterways, airports, ports and harbors, and tuk tuks, which are three-wheeled taxis, are all forms of transportation that are used. Geographic Location: Being located in Southeastern Asia, bordering the Andaman Sea and the Gulf of Thailand, it makes trade by sea accessible. Although being located so far from the United States does make trade more expensive and time – consuming. Financial System: Thailand’s financial system is controlled by the Ministry of Finance and the Bank of Thailand. Their operations include supervising banks, finance firms, and housing loan officials. Thailand’s finance system also includes a stock and bond market. Policy towards Unemployment: Social Security Programs do cover the unemployed in Thailand and do come a few unemployment benefits. Six months before one claims unemployment, they receive contributions. Although, they must be registered with the Government Employment Service office and must be able to accept any job that is offered. The cause for one’s unemployment cannot be due to dishonest or criminal acts. If one is involuntarily unemployed then their benefit is 50% of the average wage of the best three months in the nine month period before unemployment. If voluntarily unemployed then it is 30%. Inflation: For Thailand, the inflation has slowly been going up since 2003. According to CIA World FactBook, its biggest percent change occurred from 2003 to 2004 with a change of 200%. In the years of 2006 to 2007 a 13.33% increase had occurred. This effects the costs and selling price by making them go up and causing Thailand to charge more for exporting goods.

Social –

Income Distribution: According to the CIA World FactBook, Thailand as Gini Index rank of 42 meaning that its income distribution is near to equal. Demographics: Thailand’s population is around 65,068,149 with an age structure of 0 to 14 years old at 21.6%, 15 to 64 years at 70.1%, and 65 years and over at 8.2%. When looking at the population in terms of gender a sex ratio can be considered of the total population: 0.98 male(s)/female. Education: The average years of schooling for adults are 6.5 years with a total school life expectancy of 10.8 years. With a population of over 65 million, 92.6% of it has the ability to read. Fashion: When it comes to Thai fashion it is all about the detail. Thai fashion mixes together traditional garments with modern trends but always focuses on detail, whether it be beading or embroidery. In the fashion industry Thailand is a country to look out for with new designers coming out and fashion and trade shows frequently going on. Attitudes towards Work and Leisure: Work and leisure are two different world in developing countries such as Thailand. Work is necessary to keep their economy growing, whereas leisure is not very popular among the Thai population.

Technological –

Internet: Thailand is the home of 973,941 Internet hosts and 13.416 million Internet users. Broadband Internet is available in available in all the major cities but the majority of Internet users in Thailand rely on dial-up connection. Energy: Thailand’s total energy production is 124.6 billion kWh with a total of 117.7 billion kWh in consumption. Technological Focus: Technology is the second largest investment in the Thai economy. The main exports in the technology field for Thailand are computers, printers, electronic parts, TVs, and stereo equipment.

Country Two – Sri Lanka

Political –

Political Stability: Officially known as the “Democratic Socialist Republic of Sri Lanka,” Sri Lanka goes by executive presidency based on the French model. The president is the head of state with executive powers and is elected for a period of six years. Environmental Regulation and Protection: A National Environment Policy (NEP) is now being established in Sri Lanka to maintain and improve the natural resources and living environment of Sri Lanka. Its current environmental issues include wildlife populations being threatened by poachers and urbanization, coastal degradation caused by mining and pollution, and the nation’s freshwater being polluted by waste and sewage run-offs. Taxation: Sri Lanka’s corporate taxation ranges from 20% to 35% and its personal income tax rate is 35%. International Trade: When it comes to foreign trade Sri Lanka’s main export trading partners include the United States, UK, India, Belgium, and Germany specializing in exporting textiles, tea and spices, diamonds, rubber, and fish. In terms of importing, Sri Lanka does most of its business with India, Singapore, China, Hong Kong, Japan and Malaysia. The major products being imported are minerals, textile fabrics, petroleum, machinery, and transportation. Corruption: When compared to other Southeast Asian countries the level of corruption in Sri Lanka is not very high. Some examples of the types of corruption going on are the giving of gifts to acquire licenses to the point where they are expected and also the act of bribery is common among businesses and officials.

Economic –

Economic Growth: Sri Lanka’s economy has grown by focusing more on market-oriented policies, export-oriented trade, and encouragement of foreign investment. Its new economy also wants to reduce the amount of poverty by using its investments in areas that are more in need. Sri Lanka’s overall economic growth is slowly becoming better seeing a 7% growth in 2006 but a drop of 1% in 2007. Textile and apparel are two of the major sectors when in comes to importing and exporting. Exchange Rates: The current exchange rate, although it changes frequently, is 1 US Dollar = 107.994 Sri Lanka Rupees and 1 Sri Lanka Rupee = 0.009260 US Dollars. The effect a country’s exchange rate has on the demand by overseas customers such as the United States is it makes it higher. Having products imported into the United States from where the dollar has more power allows us to import more. Transportation: The major forms of transportation that are used in Sri Lanka are highways, airports, and Colombo which is one of the world’s greatest artificial seaports. Geographic Location: Being located in Southern Asia and being its own island in the Indian Ocean does make transport by sea accessible as well. Just like Thailand, since it is located so far away from the United States trade can be expensive and take longer. Financial System: Sri Lanka’s financial system is operated by the Central Bank of Sri Lanka. The central bank is then in charge of smaller institutions which include licensed commercial banks, licensed specialized banks, registered finance companies, specialized leasing companies, primary dealers, and employee funds. Policy towards Unemployment: Unemployment insurance is trying to be introduced to developing countries such as Sri Lanka. This program would include insurance, severance pay, and unemployment insurance savings accounts. Inflation: According to the CIA World FactBook, from the years of 2003 to 2004 Sri Lanka’s inflation rate went down from 9.6% to 6.3% resulting in a -34.38% change. It continued to drop into 2005 but had a 100% change going into 2006 and slowly went up 4.31% in 2007. In the years where inflation rates dropped, the cost of good and selling prices also dropped.

Social –

Income Distribution: According to the CIA World FactBook, Sri Lanka has a Gini Index rank of 50 which means that its income distribution is equal. Demographics: Sri Lanka’s population is a growing number around 20,926,315 with its age structure being 0 to 14 years old at 24.3%, 15 to 64 years old at 67.9%, and 65 and older at 7.8%. Considering gender distribution it can be expressed through the sex ratio of the total population: 0.971 male(s)/female. Education: The average years of schooling for adults in Sri Lanka is 6.9 years with 90.7% of its population being literate. Fashion: In relation to the fashion industry, Sri Lanka is one of the main exporters of garments in the world today. Although when it comes to fashion and trends, Sri Lankan designers are starting to team up with Indian designers to create a trend that is unique to their culture. The sari is one of the trends that we are all familiar with which is a few yards of unstitched cloth that can be wrapped around the body in various ways. Attitude towards Work and Leisure: Sri Lanka’s attitude in similar to that of Thailand’s in the sense that they are both developing countries that need work to help maintain their economy and also help it expand.

Technological –

Internet: Sri Lanka contains 6,198 Internet hosts and 428,000 Internet users. The country relies on broadband connection. ASDSL was introduced to Sri Lanka in 2003 and is available in the Greater Colombo area. Energy: In Sri Lanka the total production of energy is 8.411 billion kWh and a total consumption of 7.072 billion kWh. Government Spending: Sri Lanka’s high budget deficit and high government spending only leads to a higher inflation rate. The volume of money is being expanded just to reduce the budget deficit in Sri Lanka.

TABLE 1: SCOURCING ATTRACTIVENESS MATRIX

Thailand Sri Lanka

Key variables 1-5 Scoring 1-5 Scoring

Political Corruption 1 2

Political stability 3 4

Taxation 4 4

International trade regulation 4 3

Consumer protection 4 2

Employment law 5 3

Competition regulation 3 3

ATTACTIVENESS Sub-total 24 21

Economic Avg GDP/GNI Growth % 5 2

Growth fluctuation 4 3

Monetary policy 3 3

Exchange rates 4 4

Inflation 2 1

Development of Financial system/infrastructure 5 3

Development of Transportation system/ infrastructure 5 5

National geographic location 3 3

ATTACTIVENESS Sub-total 31 24

Social Income distribution 2 4

Demographics 3 3

Education 4 4

Labor / social mobility 3 3

Lifestyle changes 3 3

Attitudes to work and leisure 5 5

Fashions and fads 5 3

ATTACTIVENESS Sub-total 25 25

Technology Government spending on research 3 1

Government and industry focus on technological effort 5 3

Speed of technology transfer 3 3

Rates of technological obsolescence 3 3

Impact of changes in Information technology 3 3

Internet 4 5

ATTACTIVENESS Sub-total 21 18

OVERALL ATTACTIVENESS TOTAL 101 88

Interpretation of Table 1.

When it comes to doing business with other countries analyzing their strengths and weaknesses in different fields in very useful in determining which one is the best. Taking our two high potential countries of Thailand and Sri Lanka, there are fields where one did better than the other. For example, each country’s income distribution was completely different, one being unequal and the other being close to equal. A country with an equal distribution is more appealing to do business with than the other. Another field that can help in making our decision would be their focus on technology. Thailand’s focus was far greater than that of Sri Lanka. Having good technological advancements can only better business. Factors that did make our decision hard to make were ones that received the same score of attractiveness. Taxation is very important when it comes to trade and both countries scored the same. Another field was transportation, in which both scored very high due to many options of transportation that is available. Overall, Table 1.1 allowed us to compare the important factors needed in making the decision for which country is best to do business with.

Conclusions of your analysis

After analyzing the political, economical, social, and technological aspects of each country our company has decided to go forth and do business with Thailand. Thailand overall attractiveness was very high and scored well in all the major categories. Already being one of the United States’ top trading partner, Thailand is the best choice for our company.



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