MKT515 Assgnt 2

Analysis of a Business Environment

MKT515 Global Marketing Management

10/29/2017

Analysis of A Business Environment

Z-Tech is a technology company headquartered in Sacramento, California in the United States. The company designs develop and sell consumer electronics, computer software, and online services. The consumer electronics include smartphones, smartwatches, personal computers, and digital media player. The software products include mobile operation system, the personal computer's operating system. The online services include Z-Tech mobile store. The company operates in the Technology industry. The technology industry is one of the most growing and the most competitive industry.

Currently, the company is planning to extend its operation abroad in an attempt to reach more customers and to get access to more economic production resources (Brahm, 2011). Moving the country to the international level is necessary to realize its primary goals. The company is planning to extend its production firms across the borders of the United States.

The United States' environment is good for the business, considering the political stability of the country. However, it might not be the best in terms of other factors. For instance, the cost of production in the country is relatively higher compared to most developing country (Brahm, 2011). Also, the technology industry in the United States is very stiff and in most cases favors larger companies such as Apple and Microsoft that have developed a stronger financial and customer base. Such conditions make it necessary for Z-Tech electronics to expand to other countries to reach more customers and to attain more favorable production conditions that will enable higher sales and profit margins.

In an attempt to identify the best country to venture into the business, this paper analyzes the conditions of the countries in terms of the easy to do business. The analysis will help the stakeholders to make the right decision regarding identifying the best environment for business.

The rankings used in this assignment is based on two aggregate measures: the ease of doing business and the distance to frontier score. The ease of doing business is based on the comparison of economies with one another. The distance to frontier score is based on a benchmark of economies with respect to regulatory best practices ("Economic Rankings," 2017). This aspect shows the absolute distance the best performance of indicators of doing business.

Higher-Ranking Country implies that the country has a higher ease of doing business. A higher ease of doing business means that the country provides a business environment with favorable regulatory that can enable businesses to achieve their primary goals, making profit, easily. On the other hand, a Lower-Ranking Country indicates that the country provides a business environment that is less efficient for operation compared to the other countries ("Economic Rankings," 2017). This paper compares China, a higher-ranking company, and South Sudan, a lower-ranking country.

China is a country located in East Asia. The country is considered to have the best emerging market for the consumer electronics. The company is ranked fourth, in terms of the ease to do business, by the World Bank. The country has been escalating in the world ranking of the countries with a stronger economy. The company is experiencing a political stability that makes it easier for the investors to trust it with the business. The country has the highest population compared to any other country - 7,550,262,101.

China is ranked 3rd in terms of the ease to start a business in the country. This ranking implies that the countries regulations applying to starting a new business are favorable to the investors. For example, the factors that the investors must meet to acquire the license to start operating a business in the country are among the easiest to attain. The country does not have tough regulations that are made to scare the foreign investors (Brahm, 2011). The country is ranked fifth in the category of dealing with the construction permits. This ranking implies that it is much easier to set up a premise in the country compared to most of the countries in the world ranked below it.

China is ranked 3rd in terms of the ease of getting electricity. Power is one of the major factors that affect the operation of the business. By being ranked 5th, it implies that getting electric, the source of power, in the country is much easier. The country is ranked at position 61 in terms of the ease to register property ("Economic Rankings," 2017). This ranking is an implication that it is relatively easier to register a business in China. China is at the 20th position in the ranking in terms of the ease to get credit. Sometime a business may require credit from other financial institutions to boost their liquidity. This ranking shows that China provides a financial environment that makes it easier for business to acquire credit.

The country is at the 3rd position in terms of paying taxes. This ranking implies that the country’s regulations regarding taxes is tight. The country is also ranked 3rd in terms of protecting the smaller businesses. This ranking implies that the country’s business regulations tend to favor the smaller businesses as a way of protecting them from the economic suppression by the giant companies ("Economic Rankings," 2017). China is ranked 42nd in the category of trading across the borders. The statistics imply that it is relatively easier to raw materials and products while operating in China. The country is ranked 28th in resolving insolvency implying that there is an effective measure of handling the cases of debt default.

China's Free Trade Agreements, FTA is one of the factors that make the country more attractive for operating a business. China has FTA with Swaziland, Hong Kong, and Macau. The China’s FTA with Hong Kong “Closer Economic Partnership Agreement” (CEPA) provides numerous benefits to the foreign investors who would like to set up local companies in China ("Economic Rankings," 2017). CEPA reduces withholding and dividends taxes on money being repatriated from the mainland. Macau PTA also offers similar benefits, especially in the financial sectors.

South Sudan is a country located in the East Africa. The country is one of the youngest provided that it got its independence in 2011. The country is ranked 186th in terms of the ease of doing business. Unlike China, South Sudan has been lagging behind most countries in the world in terms of economic stability ("Economic Rankings," 2017). The political instability in the country has hindered its economic development since attaining its independence. The country has a population of 12,575,714.

South Sudan is ranked at position 181 in terms of ease of starting a business in the region. This ranking is an implication that it is less favorable to start a business in South Sudan compared to most countries. The country is ranked 178th in terms of the ease of getting the construction permit. This statistic implies that it is difficult to set up a facility in the country. The country is ranked at position 188 in terms of the ease of getting electricity implies that the country is experiencing a shortage in power ("Economic Rankings," 2017). It is difficult to get power for businesses in the country. In terms of registering property, the country is ranked position 181 implying that the channel followed to register property is less effective compared to most countries.

The country is ranked at position 139 in terms of getting credit, an implication that it is relatively difficult to acquire credit from the financial institutions in the country. The country is ranked 162nd in terms of protecting the minority investors. This statistic is an implication that the country policies does little in protecting the small business from the dominance of the large businesses. The country is ranked at position 177 in terms of paying taxes implying that the tax regulations are not efficient enough to ensure that corporates appropriately pays taxes. The company is ranked at position 188 in terms of ease to trade across the border ("Economic Rankings," 2017). This ranking means that trading across the borders of the country is less effective.

In terms of enforcing contracts, the country is ranked at position 73. This ranking means that the country has an effective system that ensures that the terms of contracts are effectively adhered to. The country is also ranked at position 169 in terms of resolving insolvency implying that the country has no effective system of dealing with the cases of bad debts ("Economic Rankings," 2017).

South Sudan has a trade agreement with the United States, Trade and Investment Framework Agreement (TIFA). The agreement creates a platform that expands bilateral and investment ties between South Sudan and the United States (Berhanu, 2011). The country also under AGOA that enables it to export eligible products to the United States. The country has a free and quota-free access for products into the European Union ("Economic Rankings," 2017). These trade unions are likely to help a business that is located in South Sudan since they enable the business to outsource products and production resources.

The primary risk associated with the higher ranking country is related to registering property. According to the ranking, it is a little difficult get a property registered. This ranking implies that there is a possibility that the business might fail to be registered. The country’s low ranking, in terms of trading across the borders, may also hinder the business activity.

South Sudan’s ranking based on various discussed aspects implies that the country possesses a lot of risk to the foreign investment (Berhanu, 2011). The statistics rank the country at position 185 in terms of the ease of doing business. The statistics imply that a business may fail to pick up in the country due to the unfavorable political environment that affects businesses ("Economic Rankings," 2017). The rankings also indicate that trading across the South Sudan borders is very ineffective. The political instability in South Sudan also proves a great risk to businesses operating from the country.

China’s rankings prove a lot of strength to operate a business in the country. The political stability in the country implies that the environment in China is safe to set up a business. The country also has many trade agreements such as CEPA that enable that eases the trade between the country and other countries (Brahm,2011). The country is also ranked high in terms of protecting the minority companies in the country. This is a competitive advantage to the small businesses.

From the above comparative analysis, China is a better choice for expanding the business. The country provides a better political, economic, and cultural environment that can better support a business like Z-Tech.

Reference:

Berhanu, D. G. (2011). Institutions and investment in Sudan: Socio-economic and institutional

foundations of reconstruction and development. Münster: LIT.

Brahm, L. (2011). Doing Business in China: The Sun Tzu Way. New York: Tuttle Pub.

Briefing, C. (2014). Understanding China’s Free Trade Agreements. Retrieved from

http://www.china-briefing.com/news/2014/02/10/understanding-chinas-free-trade-

agreements.html

Central Intelligence Agency (2017). The World Fact Book. Retrieved from

https://www.cia.gov/library/publications/the-world-factbook/

The World Bank (2017). Economic Rankings. Doing Business: Measuring Business Regulations.

Retrieved from http://www.doingbusiness.org/rankings