Political and legal structures The type of government prevailing in Pakistan is federal republic and its system has

varied from parliamentary to presidential to semi-presidential. Political and legal Alliances The changing of ruling party has led to different influences in way businesses are conducted or even made to start up in a certain sector Political and legal stability Now a day’s Pakistani environment is instable due to political clashes among political parties, inside country war and drown attacks in north frontier areas. This political instability has led to uncertain environment in the country, which is a threat for any business including Haroon’s. The following image reflects all cumulative changes in a country’s business regulation as measured by the indicators such as a reduction in the time to start a business to a one-stop shop or an increase in the cost or procedures to new stock exchange rules that tighten disclosure requirements for related-party transactions.

The changes in taxation policies have led to an increase in official cost of registering the property according to the standards. Year 2010 2011 Foreign trade regulations YEAR 2010 2011 Documents to import (number) 8 8 Time to import (days) 18 18 Cost to import (US$ per container) 680 680 Procedures (number) 6 6 Time (days) 50 50 Cost (% of property value) 7. medical. Taxation policies Due to huge budget deficit and low growth of economy government has increased the taxes. ranging between 25 to 30%. and stamp duty and registration fee. The custom tariff on imported goods ranging from shoe wear to crockery to handbags has more or less remained the same. capital value tax. Different types of lifestyles.As seen by the graph.2 9.5%. residential . education. where capital value tax has doubled to 4% making it expensive to register property. There is very much unequal distribution of wealth in Pakistan. Pakistan seems to become difficult for conducting a business and if any further retail outlet is to open it would have a fair share of profit. The following table shows the change in cost only which includes the advertisement. Pakistan's national culture is having high level of power distance. Customers were charged 15 per cent sales tax on imported goods. Federal excise duty on goods imported in Pakistan also has been reduced from 21% to 19. lawyer fee and payment of town tax. this can be also witnessed through existence of different social classes in Pakistan's society. However.2 The ease of trade regulations across borders has resulted in an unvarying amount of time and cost for importing goods for the retail outlet as thus. the present government has increased the sales tax from 15 per cent to 17 per cent for customers by declaring such gift items as a luxury item.

flour crises. age distribution. and food. Trends in social factors affect the demand for a company's products and how that company operates. rules. and controls to reduce uncertainty. . There are differences in culture among the different ethnic groups in matters such as dress. The culture of Pakistan is very expected to follow a caste system that does not allow upward movement of its citizens. which has resulted in sugar crises. especially where indigenous pre-Islamic customs differ from Islamic practices. food. Social cultural factors include the cultural aspects and include health consciousness. Europe's newly published the recent edition of its Global Innovation Index 2008-2009. firstly to determine the nature of culture exists in Pakistan and secondly to examine the effects of culture dimensions developed by Hofstede on organizational performance for the case of Pakistan. especially among the affluent. Mongols and various Eurasian groups. This stems from the fact that what is now Pakistan has in the past been invaded and occupied by many different peoples. The culture of Pakistan contains short-term orientation. including White Huns. which can also be seen in the ad hoc type of policies implemented by the government of Pakistan. The government's arrangement of rental power projects is one of the examples of short-term orientations in Pakistan. who have easy access to Western products. gas crises and so on. There is low level of individualism and high level of collectivism because people are generally recognized on the basis of their social class. There is a lack of long-term orientation and planning in Pakistan. and also higher levels of uncertainty avoidance. which benchmarks the world's most innovative economies states that Pakistan has been ranked at 93 out of 130 countries of the world. population growth rate. The higher scores of power distance index and uncertainty avoidance index in figure I show that culture of Pakistan is highly rule leaning with laws. Pakistan's culture is very diverse.facilities are enjoyed by different classes in the society. The objective of this study is twofold. television. Persians. water crises. while imbalances caused by power and wealth have been encouraged to prosper within the society. This can also be verified from the INSEAD. Increasing globalization has increased the influence of Western culture in Pakistan. regulations. and religion. media. career attitudes and emphasis on safety. High level of masculinity prevails in the society. Arabs. Turks. religion and especially cast in Pakistan.

800 feet (1. Urdu was created by combining the languages of early invaders and settlers. At the same time. There is no caste system in Pakistan. Canada and Australia as well as in the Scandinavian nations. Classes and Castes. Karachi. In Swat Valley. . In the Hunza Valley. and for fascinating clothing. a number of tribal residents live in valleys. with the balance in rural areas. which is bounded on the west by Swat Valley. While Urdu and English are prevalent throughout Pakistan. Muslim conquerors fought battles and residents claim to be descendants of soldiers of Alexander the Great. Persian. where the majority of the people are Muslims but that also is home to the Kafir-Kalash (wearers of the black robe). Lahore. Saraiki. The people of Hunza Valley are Muslims and also are believed to be descendants of soldiers of Alexander the Great. and Hindko dialects. and others in Pakistan also speak English. and especially by returning or investing there. These include Chitral Valley. These emigrants and their children influence Pakistan culturally and economically. An estimated 40 million live in urban areas. often conflated with Islam. at an elevation of 3.Many Western food chains have established themselves in Pakistan. a number of other languages are spoken in different valleys and areas. which was once the cradle of Buddhism. which is the city at the edge of the Kybher Pass gateway. The people of each of these valley areas are well known for their tribal cultures. Shardu Valley is the capital of the district of Baltistan and is known as "Little Tibet" because the lifestyle there is similar to that in Tibet itself. on the north by Gilgit. In addition to the residents of the major cities of Islamabad. The official language of Pakistan is Urdu. Demography. and are found in the major cities. Balochi. a primitive pagan tribe. In NorthWest Frontier Province is Kaghan Valley. among others. especially in the United Kingdom.158 meters). which they claim is because of diet and way of life. There are high-income. A large Pakistani diaspora exists. Locale makes an important difference in the quality of life. handicrafts. but most public officials. by travelling to Pakistan. The spoken form of Urdu is the same as that of Hindi but it is written in a different script than Hindi. English is referred to as the informal official language of Pakistan. The population of Pakistan is estimated to be 135 million. people are noted for longevity. Sindhi. people. and this has manifested itself in a return to more traditional roots. and Peshawar. including Arabic. The people of Kaghan Valley are MuslimPathans as well as Kohistanis and Gujars. there is also a reactionary movement within Pakistan that wants to turn away from Western influences. United States. Linguistic Affiliation. These include the Punjaki. most of which is woven and handmade there and unique to their particular area. and Turkish. Brahvi. A large number of Pakistanis are also living in the Middle east. Pushto. and on the east by Azad Kashmir. middle-income and a large number of low-income persons throughout the country.

Textiles account for most of Pakistan's export earnings. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis. GDP growth in the 5-8% range was spurred by gains in the industrial and service sectors . as Islamabad steadily raised development spending.despite severe electricity shortfalls . which is having a significant impact on the operations of Small and Medium Sized Enterprises (SME) and it is claimed to be essential for the survival and growth of economies in general. Modern businesses are not possible without help of information technology. poverty levels decreased by 10%. Between 2001-07. ECONOMIC FACTOR: The economy of Pakistan is the 27th largest in the world (in absolute dollar terms). Haroon’s uses an inventory management software to check the items not in stock at different outlets. but Pakistan's failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand.which mainly encompasses textiles. Pakistan has a semi-industrialized economy. and reconstruction costs will strain the limited resources of the government. but during 2009-10 its current account strengthened and foreign exchange reserves stabilized . an impoverished and underdeveloped country. Similarly majority of the small businesses now have technology integrated into their functions. resulting in structural transformation of enterprises. amount of discount. Pakistan. Meeting and Greeting Information technology has very real impact in most of industries and in all aspects of economy. and reducing dependence on foreign donors. In addition. agriculture and other industries. chemicals. • Economic System of Pakistan: . however. Adoption of new technological innovations is necessary for small and medium sized businesses in order to remain competitive in business market because of the increasing competition due to globalization and reach of many foreign firms to local market who use technology for effective operations. Record floods in July-August 2010 lowered agricultural output and contributed to a jump in inflation. Dining Etiquette. Between 2004-07. healthcare. Usage of these technologies is revolutionizing the rules of business. discount offers. climbing from 7. the Pakistani rupee has depreciated since 2007 as a result of political and economic instability. Inflation remains the top concern among the public. It helps them to determine demand consumer preferences and choices. has suffered from decades of internal political disputes and low levels of foreign investment.but growth slowed in 2008-09 and unemployment rose. their prices. while businesses and enterprises continue to undergo considerable changes. and electricity production. food processing.7% in 2007 to more than 13% in 2010.largely because of lower oil prices and record remittances from workers abroad.Etiquette & Customs in Pakistan Gift Giving Etiquette. Other long term challenges include expanding investment in education.

000 a year. The economic system of Pakistan is favorable for the private ownership so Haroon’s being the sole proprietorship is feasible in this economic system. The private sector is free to develop them and start new enterprises in this sector. Some characteristics of Pakistan’s current economic system fallows: In the economy both public sector and the private sector function together." Latest figures put Pakistan's Middle Class at 35 million strong. It is a figure that correlates with research by Standard Chartered Bank which estimates that Pakistan possesses a "a middle class of 30 million people that Standard Chartered estimates now earn an average of about $10. • Monopolies are closely monitored by government to protect interests of public. • Sometimes government ration the commodities available in short supply so that they are equally distributed to all. Pakistan has a growing upper & upper middle class.1 December 2005) of the State Bank of Pakistan. Ishrat Husain. As Haroon’s offer seasonal sales on regular basis which are availed by most of the middle class. the Central Board of Revenue estimated that there were almost 2. Other industries are left under the authority and control of the private entrepreneurs. with relatively high per capita incomes. • The government adopts necessary measures to regulate and influence the private sector. so that it may function in the interests of the nation rather than exclusively in the interests of the private entrepreneurs. Ex-Governor (2 December 1999 . Poverty levels have decreased by 10% since 2001 Foreign Companies which provide for Pakistani middle classes have been very successful. In addition. some time it sets price ceiling to keep prices under control. Pakistan has a 30 million strong middle class. • Growing middle class: Measured by purchasing power.8 million in 2002 and has now grown to 17 million people as of 2010.it will get benefit from this factor also. • In public sectors all decisions are made by government or authorities appointed by government but in private sector decisions are made by owners which base in market situations although sometimes government set price ceiling or price floor to protect consumers or producers. according to Dr.Pakistan had to face many economic challenges since its creation and with changes in ruling parties and civilian and military governments economic polices had been changed many times. Employment: . In one part are those industries which are responsible for the development they are owned and managed by the state. On measures of income inequality. • Government stops exploitation of labor by enforcing labor laws. which was estimated at 6.8 million income-tax payers in the country.Moreover many of the upper class families are also included in their regular customers. Although Pakistan’s economic system had never been to any extreme end of planed economy or market economy but at some points one system had influenced the country more. the country ranks slightly better than the median. In late 2006.

The government of Pakistan has followed a liberal monetary policy from 1999 to 2000 in order to provide cheap credit to the industrial sector. and an increase in liquid reserves.98 per manhour in 2009. and the Philippines. In the past. Even though it is among the seven most populous Asian nations. and consequently hiring. supervises the operations of banks. the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years. however.The high population growth in the past few decades has ensured that a very large number of young people are now entering the labor market.9% in 2006. Pakistan has a lower population density than Bangladesh.) country comparison to the world: 151 14% (2009 est. but a growing current account deficit .It can also cause a little decrease in the purchase of their products because their major market is the upper class which have still a high concentration of money and have high purchasing power. administers the country's international reserves. The demand for credit. has not come forth from the private sector. High inflation and limited wage growth have drawn more women into the workforce to feed their families. Money Supply: The State Bank of Pakistan (SBP). In 2008. following the surge in global petrol prices inflation in Pakistan reached as high as 25. jumping to more than 9% in 2005 before easing to 7. .) note: substantial underemployment exists The unemployment rate in Pakistan can effect Haroon’s in two ways. controls the money supply and credit. India.driven by a widening trade gap as import growth outstrips export expansion . difficult.0%. The central bank is pursuing tighter monetary policy while trying to preserve growth. Unemployement rate in Pakistan: 15% (2010 est. Although domestic credit expansion was higher this year due to large borrowing by the government sector. Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.It helps in providing employess or labor force at cheap cost. Japan. Foreign exchange reserves are bolstered by steady worker remittances. Mean wages were $0. excessive red tape made firing from jobs. actual growth in money supply has remained stagnant due to low credit demand from the private sector Inflation: Inflation remains the biggest threat to the economy. In late 2006. the central bank.could draw down reserves and dampen GDP growth in the medium terms. conversion of non-resident foreign currency accounts into rupees. and acts as banker to the federal and provincial governments. in spite of cultural resistance and domestic abuse over the issue.

Inflation results in the inappropriate distribution of money. . the poor become poorer where as the rich become richer.they still have money and in a position to purchase from their outlets so it’s business will not effect in the future. As Haroon’s cater the upper or elite class.