The Analysis of the Macro Environment Factors of France - Essay Example

Executive Summary The analysis of the macro environment factors of France highlights the fact that the economy of the country has been quite stable over the years. The policies of investing in the country also have been quite attractive and substantial in drawing the attention of the major multinationals to invest in the country. The government has incorporated policies which facilitate the investors of other countries and in turn have provided more rigidity in the economy of the country. The endowment factor also signifies that investment in the wine sector would be much more profitable for investors looking to expand in the country. However, the oversaturation in the market provides some obstacles and the option of joint venture and partnership appears to be the most profitable in expansion in the wine industry. France Macro environment in France: France has been a major power in the European Union. Over the last 500 years, the country has flourished in various sectors like economy and culture. The political influence of the country also has been significant in the European Union. France has been one of the most developed countries and it is the world fifth largest economy as measured under the GDP and the ninth largest in terms of the purchasing power parity of the country. People in France enjoy high standard of living with good level of education throughout the country. The country has also a strong democratic foundation and the government is unitary semi presidential. In terms of economy France is the member of G8 group of nations. France is the origin country of the 39 biggest organizations in the world. The country has a mixed economy with a major number of the private enterprises and also a considerable number of state and government organizations. The government of the country has considerable influence over the key segments of the economy which includes the infrastructure sector, agricultural sector and all the sectors operating in the country. According to the figures of World Trade Organization, in 2009 France became the world’s sixth largest exporter and the fourth largest importer of the manufacturing goods. The overall economic strength of the country can also be accounted from the fact that in 2008 France emerged out to become the largest receiver of foreign direct investment among the various OECD countries. French organizations also invested significantly towards the economy which further empowered the overall economic condition of the country. In matters of economy, the financial service, banks and the insurance sectors are an important part in the economy of the country. The economy of the country is largely dependent on the agriculture and a high percentage of the economy is engaged in agriculture. As result of it France has become the largest exporter of agricultural products in Europe. France also accounts for the lowest of the unemployment rate among the developed countries in the world and the unemployment rate also decreased considerably over the last few years. The decrease in unemployment rate also contributes significantly towards the overall growth of economy making it a stable country in times of depression. Though in 2008 France was also victim of economic downturn, it quickly managed to recapture the market. GDP and growth rate in France: The overall economic growth in France has been steady over the years because of the careful planning in the economy of the country which has been done in a more centralized fashion in comparison to the other countries of Western Europe. In the third quarter of 2011, the GDP of the country expanded by 0.48 percent in comparison to the previous quarter. The GDP of the country reached the maximum in 1978 accounting for 1.6 percent in June and the lowest was accounted in the time of recession in 2008, with -1.6 percent. In matters of investing in France, the country provides better opportunities for the investor as the policies are much more flexible to invest in the country. In 2009 France was listed among the top countries where the majority of the foreign direct investment had taken place. The cause of the increased amount of foreign direct investment in the country can be accounted to the fact that the government undertook the policies which have improved the investment throughout the country. Some of the policies incorporated are the elimination of the local tax on business activities , the introduction of tax free overtime system, favorable policies for the investment in infrastructure and the promotion of centers of excellence which allowed the organization in same line of operation to work side by side. Understanding of the culture within a country can be crucial for setting up the operation in a country as cross cultural difference can be a significant barrier in the overall productivity of the organization and the people based in France are highly conscious about their own set of culture and the multinational investing in the country should try to adopt themselves accordingly. Factor endowment: An analysis of the factor endowment in France highlights the fact that France specializes in products like wine and spirit. The main reasons which proved to be favorable behind the growth of the industry lie in the fact that the overall climate favored the growth of raw material required for producing wine in large quantities. As the primary product of wine is grape and the agriculture in France flourishes considerably so the production facility of wine is benefitted in the country. France accounts for the largest area of planted vine yard in the world. The engagement of a considerable portion of labor of France in the agriculture sector also makes the availability of labor in a cheap rate which further promotes the cost. The overall cost for the production of wine in the region accounts to almost four euro per lire of wine. The country also supports investment in the wine industry. However, the saturation in the market of wine in France is a matter of big concern. In France almost every family has opened up their business in this sector and the common option for the investors is to acquire an already operating business. Summary: The study of the macro environment factor on France suggests that opening of new business in this part of the world can reap sufficient benefit for the organization considering the fact that the economy of the country is stable and the policies for starting a new business in the country are much more flexible .The analysis of the factor endowment of France also reveals the fact that investing in the wine industry of the country is a favorable option considering the availability of the raw material and the labor. However, the presence of too many organizations in the industry may provide sufficient barrier in the market during the initial period. However, the benefit of investing in this segment of the industry also lies in the fact that the initial investment is not too high and the demand of the wine in this part of the world is always high. Conclusion: In matters of expansion of a wine business in France, the most profitable way would involve entering a partnership with any of the local organization which has developed considerable amount of market share. The entry strategy will reduce the risk of gaining market share and the organization would not have to worry about ways to attract the customers towards their product. As the market of France is oversaturated, so an inherent risk lies in opening of a new set up as various issues are to be dealt with. The strategy of entering an alliance with an already existing organization also provides the opportunity to wind up the business activities if desirable profit is not reached. References Cultural Awareness Training France, communicaid”, accessed February 6, 2012, http://www.communicaid.com/cross-cultural-training/cultural-awareness-training-france.php France GDP Growth Rate, tradingeconomics, accessed February 6, 2012, http://www.tradingeconomics.com/france/gdp-growth France Sees Surge in Foreign Investments, New York Times, 2011, accessed February 6, 2012, http://dealbook.nytimes.com/2011/03/28/france-sees-surge-in-foreign-investments/ Frederking, Johannes Comparative Cost Advantage and Factor Endowment, Munchen: GRIN Verlag, 2011 Gruda et al., Wine Industry - France and Australia: A Comparative Analysis Munchen: GRIN Verlag, 2011 WORLD TRADE 2010, WTO, accessed February 6, 2012: http://www.wto.org/english/news_e/pres11_e/pr628_e.htm Read More