PESTEL Analysis of Rwanda - Case Study Example

1. PESTEL analysis of Rwanda Political The country has been able to maintain its political stability [BBC151]. In terms of the political structure of the country, Rwanda is a Presidential State, where the President of the country is regarded as the head of the Government and representative of the State. Similar to the UK and USA based parliamentary systems, there are two houses or chambers in the Parliament [The1517] The division of power among the democratically elected leader as well as the legislative designations devised is a positive sign towards the democracy and political stability of the country [The1517]. Economic There are many economic reforms being taken that ensure that the overall business environment becomes more conducive. Because of these measures, Rwanda’s economy is being counted among those which have registered maximum improvement since the year 2005 [Rwa151] and it grew at a rate of 9% between 2001 and 2014 [BBC151]. However, Rwanda is still an Agriculture driven economy and therefore, it is still counted among the low income countries, with high levels of poverty. In order to tackle this issue, Rwanda government is working in association with the World Bank to increase the country’s per capita GDP from $ 644 in the year 2012 to $ 1000 [The1517] . This clearly shows that the country is on the path of growth and development. Social Rwanda is taking multiple efforts to improve the social context of the country as well. For example, as per the World Bank data, Rwanda was able to complete all of the Millennium Development Goals (MDG) which were assigned to it, by the year 2015 itself[The171]. The living standards in the country has shown strong improvement with an improvement in the statistics related to education and health. Technological The government are taking many measures to ensure that Rwanda gets technologically advanced. One of these factors is the creation of the National Information and Communication 5 year plans that have been targeting the improvement of the technology sector in the country since the year 2000[Mas11]. This plan has already focussed on building up of the IT infrastructure, like laying of the fibre cables, etc. so that in the coming years, the software and services can be deployed. Environmental There are significant environmental challenges that Rwanda is facing, due to the increasing population and the increasing resource requirements due to the developmental activities. Issues like deforestation, decreasing fertility of the soil, extreme impacts of climate change, etc. has really impacted the environmental situation of the country[Uni171]. Legal Even though Rwanda has the basic infrastructure for implementing the rule of law, it does not have the absolute rule of law implemented till now. However, it is one of the major pillars for development that has been identified by the Government in the Rwanda vision 2020 document[Hii12]. 2. Incentives to enter the Rwandan Special Economic Zone The government of Rwanda is using SEZ as tool for the economic development of the country. These SEZs address a large number of major concern that the country faces, for example, high class infrastructure, land which is commercial in nature, and access to the markets and other transport related facilities. In addition to these benefits, the Government has also providing additional incentives for the business players. Some of these incentives to enter the Rwandan SEZ are as follows: The government or the builders designated for the areas take the responsibility for maintaining the infrastructure, therefore, the companies have access to high class infrastructure services, without having to worry about the maintenance of the property[min10]. There are a number of Regulatory reliefs that are provided to the companies through a One Stop Centre[min10]. Taxation relief is also provided to the companies operating from the SEZ. All the companies are taxed at a flat rate of 15 percent[min10]. 3. Foreign investment in Rwanda The Government of Rwanda is taking many initiatives to promote the development of the private sector and also so that it is able to attract foreign investments. According to the report published by the Foreign Private Capital Census shows that the inwards foreign investment in the country actually has a positive trend and they have increased by almost 78 % and it has increased from US$ 257.6 million in year 2013 to US$ 458.7 million in 2014[Nat151]. 4. ARTS' motivation to enter Rwanda The economic rise of Rwanda is consistently fascinating the investors. As per the data of World Bank, now it become faster, easier, as well as less expensive to operate business in Rwanda in comparison to that of most African nations[Mas11]. The ease of doing business ranking of Rwanda is also increasing which reveals that the country has implemented laws and regulations that are favourable to start and operate in the country[Mas11]. This is one of the motivations for ARTS to enter Rwandan market. In addition, the research studies show a consistent growth in the technological innovation, which means a huge prospect for the company to enter Rwandan market[Cla161]. Moreover, the Rwandan market still have very low technological brands, and the president calls for further investment in the technological sector[new15]. This further indicates that the companies in technological factors will be provided with additional benefits to invest in the country. Hence, all these factors show that Rwanda is a market with numerous opportunities for ARTS. 5. Five Forces analysis for ARTS Degree of Rivalry – Low As Rwanda is a developing country, and there are plenty of business opportunities that are present in the country. The number of business players are still in the developing, because of which the degree of rivalry as of now is not very intense. Threat of New Entrants – High As already stated above, the government is taking a large number of initiatives to ensure that more number of local as well as international businesses are being set up in the country in order to ensure that more jobs are created and Rwanda is being converted into a knowledge driven economy[The144]. The government is also providing many incentives for the businesses as well. Therefore, the threat of new entrants is quite high. Threat of Substitutes – Low For the computer manufacturing industry, while there are many competitors present, there are not any substitutes are present for the sector. Therefore, the threat of substitutes is termed as low. Bargaining Power of Customers- High The switching costs for the customers for the computers and laptop sector is very low. In addition to that, there are many established computer companies, like Dell and Microsoft, whose products are already available in the country, which have a much better brand value. Therefore, the bargaining power of the customers is high Bargaining Power of suppliers- Medium As the manufacturing sector of Rwanda is still in the early development stages, neither ARTS nor its suppliers have a large enough presence to exercise a significant bargaining power over each other. They both are kind of dependent on each other for the business related activities and there are not a large number of competing suppliers or manufacturers to choose from. References BBC151: , (BBC, 2015), The1517: , (The World Bank, 2015), Rwa151: , (Rwanda Development Board, 2015), The171: , (The World Bank, 2017), Mas11: , (Tafirenyika, 2011), Uni171: , (United Nations Rwanda, n.d.), Hii12: , (HiiL, 2012), min10: , (minicom.gov.rw, 2010), Nat151: , (National Bank of Rwanda, 2015), Cla161: , (Gatete, 2016), new15: , (newsghana.com.gh, 2015), The144: , (The News Time, 2014), Read More