International Business Strategic Management - Case Study Example

International Business and Strategic Management Assignment International Business Strategic Management Assignment BBVA is a Spanishretail banking institution, which focuses on the provision of quality services and products in accordance with the demands and expectations of the target markets in various nations across the world. The purpose of this case study report is to identify a potentially attractive target market for BBVA retail banking’s future international expansion strategy. The report incorporates an assessment of the macro-environmental factors (PESTEL analysis) of five critical nations: Denmark, Ecuador, Pakistan, Panama and South Africa. Detailed PESTEL Analysis Denmark (4/5) (Attractive) Political Analysis The country experiences political stability that is essential in permitting international investments with reference to global expansion. The Danish political system focuses on increasing international security and stability, which will be essential in handling the demands and expectations of the international investors. Economic Analysis Denmark has a population of 5.6 million with a GDP of $211.9 billion per annum. In addition, the region has approximately $37,900 income per capita with an inflation rate of 0.8 percent. Similarly, the nation has an unemployment rate of 7.1 percent and the FDI inflow of $2.1 billion (Denmark, 2015). Socio-Cultural Analysis Denmark is one of the global nations with low-context culture, which is essential in determination of the consumer behaviour. For instance, in Denmark, rules are important while knowledge is publicly accessible. In addition, message is delivered best verbally in comparison to non-verbal attribute. Technology Analysis Technology continues to shape operations and transactions by business entities. In the banking industry in Denmark, technology plays a critical role in the automation of the operations. For instance, banking industry provides online and mobile banking and the private investment in accordance with the needs of the target audiences. Environmental Analysis Denmark focuses on the promotion of environmental protection mechanisms and strategies in the midst of global warming or climate change. This makes it essential for the internal and international investors to focus on the adoption of environmental CSR programs and strategies for protection and conservation of the environment. Legal Analysis Denmark legal system focuses on the illustration of critical regulations and rules for the opening of retail banking. It is the obligation of the internal and international investors to adopt and comply with such regulations. South Africa (4/5) Political Analysis Prior to 2015, South Africa had one of the most stable political systems in the world. In addition, the political policies and regulations provide the perfect platform for the growth and development of the nations under the influence of internal and international investment. Economic Analysis The population of the nation is approximately 53 million with the GDP of $596.5 billion and a growth rate of 1.9 percent and the $11,259 as the income per capita. In addition, the nation has unemployment rate of 25.3 percent, inflation of 5.8 percent, and FDI inflow of $8.2 billion (South Africa, 2015). Socio-Cultural Analysis South African associates with high-context culture in relation to strong sense of tradition and history. In this context, very little undergoes transmission through verbal interaction. Technology Analysis South Africa provides mobile and online banking systems and private investment under the influence of technological advancements. Environmental Analysis South Africa seeks to implement appropriate environmental practices and policies in production and distribution of products and services in accordance with the demands of the consumers. Legal Analysis There are clear requirements and guidelines for investment, which internal and international practitioners must adhere to or comply with in the course of expansion. Panama (4/5) Political Analysis Panama depends on political stability, which has been essential in the promotion of the economic growth and development. Economic Analysis Panama has a population of 3.7 million with a GDP of $62 billion, growth rate of 8 percent, and $ 16,658 income per capita. Furthermore, the unemployment rate of the nation is 4 percent with a similar inflation rate and $4.7 billion as the FDI inflow (Panama, 2015). Socio-Cultural Analysis In the case of Panama, rules are important while knowledge is publicly accessible. In addition, message transmission is more by verbal in comparison to non-verbal. Technology Analysis Panama provides mobile and online banking systems as well as private investment under the influence of technological advancements. Environmental Analysis Panama focuses on minimisation of the influence of global warming, the opportunity to implement appropriate environmental practices. Legal Analysis Panama has clear requirements, guidelines for investment, which internal and international practitioners must adhere to or comply with in the course of expansion. Ecuador (4/5) Political Analysis In the recent years, Ecuador has become on the most stable nations in the global context, thus elimination of the political unrests and civil coups. Economic Analysis Ecuador has a population of 15.8 million with the GDP of $159 billion, 4.2 percent growth rate and $10,080 income per capita. Moreover, the nation has an inflation rate of 2.7 percent, 4.5 percent unemployment rate and $702.8 million as the FDI inflow (Ecuador, 2015). Socio-Cultural Analysis In the case of Ecuador, consumer behaviour associates with traditions and historical perception of the target audiences. Technological Analysis Like in the other four nations, Ecuador provides mobile and online banking systems including private investment under the influence of technological advancements. Environmental Analysis Ecuador is sensitive to the issue of global warming, thus implementation of quality approaches towards protection of the environment. Legal Analysis Ecuador has clear legal regulations, guidelines for investment, which internal and international practitioners must adhere to or comply with in the course of expansion. Pakistan (1/5) (Avoid at all cost!) Political Analysis Pakistan has unstable political systems because of recurrent unrests and coups. In addition, ineffective political policies indicate that a majority of the population lives in poverty. There are unethical business environment promoted by corruption among the country’s political leaders. It is essential to note that Pakistan’s political situation is volatile for business success because of the constant internal war, Taliban insurgency, U.S military counter-insurgency operations, bombing and various killings. These conditions are inappropriate for the growth and development of business entities including global expansion or investment by BBVA. Economic Analysis Pakistan has a population of 182.6 million with the GDP of $575 billion, 3.6 percent growth rate and $3,149 per capita income. Similarly, the nation has unemployment rate of 5.2 percent, inflation rate of 7.4 percent and $1.3 billion as the FDI inflow (Pakistan, 2015). Socio-Cultural Analysis The Pakistanis have a culture that is deeply rooted in a strong sense of tradition and history. That may have undesirable implications and influence on business operations in the country. In essence, it is unsuitable for consideration as a market during global expansion or investment by the BBVA. Technology Analysis Pakistan also provides mobile and online banking systems as well as private investment because of technological advancements. Environmental Analysis Pakistan focuses on the adoption and implementation of various environmental policies or regulations to conserve the environment. Legal Analysis Pakistan does not have clear requirements or guidelines for investment, which internal and international practitioners must adhere to or comply with in the course of expansion. There are serious concerns of improper legal regulation of businesses besides corruption that discourage entrepreneurship. Bibliography The Heritage Foundation 2015, Denmark: 2015 Index of Economic Freedom. Retrieved from http://www.heritage.org/index/country/denmark The Heritage Foundation 2015, Ecuador: 2015 Index of Economic Freedom. Retrieved from http://www.heritage.org/index/country/ecuador The Heritage Foundation 2015, Pakistan: 2015 Index of Economic Freedom. Retrieved from http://www.heritage.org/index/country/pakistan The Heritage Foundation 2015, Panama: 2015 Index of Economic Freedom. Retrieved from http://www.heritage.org/index/country/panama The Heritage Foundation 2015, South Africa: 2015 Index of Economic Freedom. Retrieved from http://www.heritage.org/index/country/southafrica World Bank 2014, Doing Business 2015: Going Beyond Efficiency. Washington, DC: World Bank Group. DOI: 10.1596/978-1-4648-0351-2. License: Creative Commons Attribution CC BY 3.0 IGO. Appendix Task 1: Background Analysis Rationale In the course of executing the report and PESTEL analysis, the study will focus on the usage of various rationales as depicted in the table. Factor Rationale Political From a political perspective, the report will seek to determine whether the nation of interest is stable because of the presence of any revolutions. Economic From an economic perspective, the study will seek to evaluate the economic stability of the nation under the influence of the growth of population per capital income, economic future (inflation rates, interest rates, level of investment and exchange rates for the nations outside the EU. Socio-Cultural From a socio-cultural perspective, the report focuses on the illustration of the consumer behaviour and mortgage trends within the nations of interest. Technology From a technological perspective, the report evaluates whether the organisations within the nation use online banking including private banking facilities, services in accordance with the demands of consumers in the banking industry. Legal From a legal perspective, the report seeks to address the policy of the government in relation to retail banking, appropriate entry mechanism with reference to joint venture, strategic alliance, sub-branch. In addition, the report seeks to evaluate what most foreign banks do in the case of international expansion prior to the evaluation of the regulations of the banking investment. Environmental From an environmental perspective, the report focuses on the sensitivity of the region or nation of interest towards protection and conservation of the environment in the midst of global warming. Nation Rationale Denmark The nation provides lucrative market access, most flexible labour market, and highly qualified and motivated talent, which might be of great interest for various entities seeking expansion in the global sphere. In addition, Denmark is one of the fast growing entities in the European context, which might attract potential investors seeking to maximise profit levels while reducing costs of operations. South Africa South Africa is one of the leading economies in the global contexts, thus the need for the report for the potential investors to determine whether to invest in the region. In addition, the nation provides an intriguing context, which generates the urge to evaluate the macro-environmental conditions and factors. These attributes are vital in attracting investors such as BBVA seeking to expand in the international or global sphere. Panama The case of Panama will shed light on how easy or difficult it is for the international and internal investors to transact business activities while complying with the relevant regulations and conditions. This is through evaluation of the changes and regulations such as protection of the minority investors, taxation systems, and labour market regulation. Pakistan Pakistan faces eminent challenges to business because of threats emanating from the constant insecurity experienced in the country. There are cases of deterioration in business and labour freedom in Pakistan. Serious unethical business practices such as corruption that hinders business in the country. Furthermore, there are inefficient agencies to regulate businesses in the country. There is limited accessed to bank credit among the country’s population, a fact that hinders business and entrepreneurship. That further slows innovation and rate of economic growth in the country. There is a serious lack of accountability and transparency among business entities in Pakistan. The country, therefore, does not ideal for the expansion of the BBVA in its global transactions. Ecuador In the recent years, Ecuador has been one of the potential investment platforms for the business entities seeking to achieve their goals and targets in relation to maximisation of globalisation. This makes the nation an intriguing element in the course of evaluating potential investment locations for the BBVA in its future international or global expansion. Read More