The following research consists of the PEST analysis of Latin America and highlights the opportunities and threats that social networking organizations may face. The paper deals with the strengths and weakness of social networking organizations like Twitter and Facebook…
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This essay discusses the growth of social media market to comprise of over 215,939,400 Internet users in Latin America. The market has seen an unprecedented growth of over 1000% since 2000, and it is continuing to grow as more and more organizations set up their bases or target the region with aggressive marketing strategies. Social networking sites like Twitter, Facebook, Orkut have made enormous forays into the region as have the social blogging sites. Several countries of the region have accepted a democratic system of government that is influenced by leftist parties, but nevertheless promote free market. The following figure shows the political stability index for the countries in the region, and it indicates that Ecuador and Bolivia are the most unstable countries. The Political Stability Index captures various aspects of government including economic distress and social pressures that can lead to an unrest and hence political chaos. The above figure indicates that Bolivia has the highest risk level for political instability while Costa Rica at 3.5, has the lowest risk. For any business to prosper, it is essential that the country have a stable political system and also have a continuity in the governmental policies related to business. The Latin American countries have made progress in maintaining stability, but on an average, the risk of political instability is higher in the region when compared to European and even Asian countries. However, the local governments are several policies and frameworks that encourage business and foreign investment. (Izquierdo and Talvi, 2011). There are also efforts towards a regional integration, through Mercosur and the Andean community which enable easy trade and flow of business across the Latin America (OECD, 2010). There are also expectations of the several countries of Latin America to form a more integrated inter-governmental body that ensures free movement of people, communication and business across the local borders (OECD, 2010). However, there is are concerns about the business environment as some counties like Chile and Uruguay rates high on the Corruption Perception Index which is a measure of risk of corruption in the government and the public sector (See figure below) Fig 2: Corruption Perception Index (Source: Transparency International, 2011) The political climate nevertheless appears to be conducive for investing in the region as the governments’ appear inclined to facilitate the growth of the region. Economic Environment The Latin American countries have made substantial economic progress in the past two decades though there is still the issue of high inflation and high interest rates (McCoy, 2009). The recent global economic crisis affected several Latin American countries adversely, though the slowdown also led to a reduction in inflation. The economies have however rebounded and there is expected to be a steady growth in the coming years (see figure 3 below) Figure 3: GDP Growth for Latin America, 1999-2014 (Source: McCoy, 2009) The region also suffers from highest income disparities in the world (McCoy, 2009). The Index of Economic freedom, which covers the amount of
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“Latin America: Operational and Leadership Challenges Thesis”, n.d. https://studentshare.org/business/1391344-cross-border-cases-impact-of-social-media-networks.
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