ANALYSING THE INTERNATIONAL BUSINESS ENVIRONMENT

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Pest analysis -Portugal Mr. Prabu Doss Hitesh Goyal

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Contents 1.Introduction 2.Objectives 3.Country overview 4.Political factors 4.1.Political stability 4.2.Foreign relations 4.3.Political Risks 4.4.Business tax system 4.6.Employment laws 4.7.Environmental law 4.8.Intellectual property protection 4.9.Trading 5.Economic factors 5.1.Policy on economy 5.2.Economic growth 6.Socio ± culture factors 7.Technological factors 8.Finding and analysis 9.Interpretation of results 10.Conclusion 11.References 3 3 3 3 3 3 3 4 4 4 4 4 5 5 5 5 5 6 6 6 7

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Pest analysis - Portugal 1.Introduction: The purpose of this assignment focuses on Portugal¶s external environment that analysis political, economical, social and technology factors. 2.Objectives:
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To learn Portugal¶s external environment And how it supports and influences in a business

3.Country overview: Country located in Europe and sharing border with Spain. 1974 ± Through military, democratises reformed and African colony¶s independence. 1986 ± Jointed with EU and NATO member (Portugal - The World face book, 2009). 4.Political factors: 4.1.Political stability: Republic of Portugal¶s government body consist, Prime minister and cabinets are nominated by the president. President ± Anibal Cavaco Silva and Prime minister ± Jose Socrates. For instance, Stable government has the legislative assembly 121 out of 230 deputies and the assembly responsible for legislative, political and fiscal (Portugal Country Profile, 2008). 4.2.Foreign relations: Country has the long term relations with EU and Africa for trading, political, military etc. It increases relationship with Portuguese Speaking Countries Communities and Economic Community of African States (ECOWAS). For example, country interacts in Asia with SAARC and strategic collaborations with India and China (Foreign policy , n.d). 4.3.Political Risks: Organizations such as COSEC, International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) are assisting to the political risks like government

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decisions, confiscation, expropriation, bank transfers, national disasters etc (Portugal Business Community, n.d). 4.4.Business tax system: Tax system has various categories. For example, Corporation tax consist income or gains, costs or loss (Law 3G/2000 of 29/12). Personal Income tax states tax returns and payment (Decree Law 442-A/88 of 30 th Nov). VAT illustrate exemptions, intra community trade provisions (Decree Law 394 B/84 of 26/12). For instance VAT rate reduced 5%, intermediate 12%, general 20% (Portugal Tax System, 2008). 4.6.Employment laws: Contract system has temporary and non-temporary, trail period. For instance, it states minimum age for contract 16 and compulsory retirement at 70. Working hours, holidays, special hours etc are as per the International Labour Code. Rescission formality states such as µProcesso disciplinar¶ for labour court and µJusta causa¶ for Labour Inspectors Committee (LIC) (Portugal Labour System, 2008). 4.7.Environmental law: Portuguese Environmental Agency states Decree Laws. For instance, Municipal Noise Reduction Plan (MNRP) has noise limit such areas in housing occupancy, hospitals, schools, and religious buildings (Inter Noise , 2007). 4.8.Intellectual property protection: According to WIPO, No 45/85 of Sep 17, 1985 states the copy right and related codes (Portugal, n.d). 4.9.Trading: Since Jan 1st, 1995 member with WTO and the majorly trades with European Union. Exibit 1 states that in 2006 export ± 77.2% and import ± 75.5% with European Union. Besides it increases relationship with NAFTA, NATO, IMF, World Bank etc. In 2007, country¶s merchandise trade (US$ million) export ± 51521 & import ± 78329 and commercial services trade (US$ million) export ± 22906 & import ± 13686 (Portugal , 2009).

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5.Economic factors: 5.1.Policy on economy: In 1999 disclose with European Economic and Monetary Union (EMU). In 2002, restrictive policy has implemented in the various public sector, public spending, and Value Added Tax (VAT). 2006 economy grew 1.3% compare with previous year (Portugal Country Profile, 2008). 5.2.Economic growth: FDI - Exhibit 2 states FDI investment increases from ¼ 22,973 million (2006) to ¼ 23.803 million. Exchange rates - on 27 May, 2009 1 euro = Rs 66.2660 (Exchange Rates, 2009). GDP ± exhibit 3 states in 2007 it increasing 1.9% and according it estimated 2.0% in 2008 and 2.3% in 2009. Inflation ±exhibit 4 shows, in 2006 3% and it forecasted 2.5% in 2007-08, 2% in 2009 Capital market ± for instance, in may 2008, Energy de Portugal invested euro 1.8 billion IPO in the equity capital markets (Portugal Capital Markets, n.d). 6.Socio ± culture factors: Population estimated ± 10,704, 924 (Portugal - Face Book, 2009). Education ± 15-24 (2007) literacy rate 100% male and female (Portugal Statistics, n.d). Culture - the country has Roman based culture, cave painting, Conimbriga town, Diana temple. It has enriched influence with Italy and France (Culture, 2009). Customs ± national dress at festival and weddings, traditional garments are red and green stocking cap, black states mourning in villages (Customs, 2009). 7.Technological factors: Technology change & advantage ± for instance, Intel and Portugal schools jointly started school laptop program which is initially designed 50000 laps (Intel and Portugal in school deal , 2008).
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Communication ± telephone, television, high speed and broad band facilities. Transportation ± Airport (65), railways (2,876 km), road ways (82,900 km). 8.Finding and analysis: Political factors are stating the stable government and international standard business codes. For instance, to start a business avoids numerous risks because it has next four year stable government. Economic factors are illustrating the policy and growth of the country. For example, inflation rate has reduced to 2% in 2009. It states the low inflation and consumer price index. Socio cultures states people are basically Roman based culture. For example, traditional garments red and green. It assists to a business or firm to understand and motivate employees at festival seasons. Technological factors are represents IT growth and communications. For instance, Intel has developed its technology. 9.Interpretation of results: 10.Conclusion: To analyse the country¶s current affairs with pest analysis, we have observed that it is one of the grown country and export business has an opportunity. Finally, we have learned that how to analyze the external environment, before entering an international country for a business.

11.References: Culture. (2009, May 28). Retrieved 05 28, 2009, from Portugal Live Net: http://www.portugal-live.net/UK/essential/culture.html Customs. (2009, May 28). Retrieved May 28, 2009, from Portugal Live Net: http://www.portugal-live.net/UK/essential/culture-customs.html

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Exchange Rates. (2009, 05 27). Retrieved 05 28, 2009, from Bank of Potugal: http://www.bportugal.pt/default_e.htm Foreign policy . (n.d). Retrieved 05 27, 2009, from Ministry of Foreign Affairs: http://www.mne.gov.pt/mne/en/infopolitica/polexternas/ Intel and Portugal in school deal . (2008, July 30). Retrieved 05 28, 2009, from BBC News: http://news.bbc.co.uk/2/hi/technology/7533057.stm Inter Noise . (2007). Retrieved 05 27, 2009, from http://paginas.fe.up.pt/~carvalho/in07.pdf Portugal . (2009, Apr). Retrieved 05 27, 2009, from World Trade Organization: http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Countr y=PT Portugal - Face Book. (2009, May 14). Retrieved 05 28, 2009, from CIA: https://www.cia.gov/library/publications/the-world-factbook/geos/po.html Portugal - The World face book. (2009, May 14). Retrieved 05 26, 2009, from Central Intelligence Agency: https://www.cia.gov/library/publications/the-worldfactbook/geos/po.html Portugal Business Community. (n.d). Retrieved 05 27, 2009, from World Bank: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/WBEUROPEEXTN/ PORTUGALEXTN/0,,contentMDK:20139933~pagePK:1497618~piPK:217854~theS itePK:309718,00.html Portugal Capital Markets. (n.d). Retrieved 05 28, 2009 , from International Financial Law Review: http://www.iflr1000.com/PracticeArea/507/Capital-markets.html Portugal Country Profile. (2008, Jan). Retrieved 05 26, 2009, from Portugal Global : http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=40f8af 38-6235-49bd-9a48-a78a80a176a0 Portugal Labour System. (2008, May). Retrieved 05 27, 2009, from Portugal Global: http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=3d1560 c0-55f5-47f0-ad19-d7549c5ab7d8 Portugal. (n.d). Retrieved 05 27, 2009, from WIPO: http://www.wipo.int/clea/en/text_pdf.jsp?lang=EN&id=3525 Portugal Statistics. (n.d). Retrieved 05 28, 2009, from UNICEF: http://www.unicef.org/infobycountry/portugal_statistics.html#56 Portugal Tax System. (2008, July). Retrieved 05 27, 2009, from Portugal Global: http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=41d2ba 1a-4088-4ef4-89fb-248d5fe15518

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Exhibit 1: Country¶s international trade in 2006:

Source: (Portugal Country Profile, 2008) Exhibit 2:

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Source: (Portugal Country Profile, 2008) Exhibit 3:

Source: (Portugal Country Profile, 2008)

Exhibit 4:
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Source: (Portugal Country Profile, 2008)

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