Protection to the Business Environment of Venezuela - Essay Example

? Venezuela Introduction Venezuela is a nation belonging to South America. The country is located on the boundaries of Atlantic as well as the Caribbean coast of the northern part of South American region. Talking in a little elaborate manner about the nation’s international borders, it can be said that Colombia forms the west border while Guyana the eastern one. The country of Brazil forms the southern international boundary for this nation, whose official name is Bolivarian Republic of Venezuela (Conley 6). It has to be said that the native masses of the region mostly belong to the Hispanic culture which is prominent in the regions and nations of South America. However, talking in regards to culture of the region, it is highly relevant to mention the fact that Venezuela presents a mix of various other cultures which comprises of European, African, Caribbean, Indian as well as North American (Crooker and Gritzner 10). A majority of the masses communicate in the Spanish language. While talking on the lines of the religion of the masses, it has to be said that a large majority of the people are members of the Roman Catholic Church. The major cities of the country of Venezuela are Caracas and Maracaibo and as of the year 2002, the population count stood at over 24,000,000. It has to be said that the country’s main products of agricultural nature are highly diversified in nature and comprise of rice, corn, vegetables, coffee and even dairy and meat products. The manufacturing outputs of the country comprises of textile, food based products. It also comprises of aluminium, steel and automobiles. The currency of the region is Bolivar whose valuation with regards to the US currency stands at around .14 USD for 1 Bolivar. Analysis It has to be said that for in-depth analysis of the risk as well as business attractiveness presented by the country of Venezuela, the analysis should be done while trying to analyze the political, economic, social and technological environment of the nation. Political While analyzing the political environment of the country of Venezuela, immediate focus of any researcher often shifts to the fact that the nation is often plagued with various kinds of political unrest and disturbances for a long period of time. Since the last couple of decades, the world has witnessed a pretty nasty picture emerging from the political theatre of the region (Nichols and Morse 78-79). The political scenario turned quite hostile towards America, when the late Venezuelan president Hugo Chavez arrived in power since the year 1999. A staunch opponent of tactics and strategies implemented by the United States in regards to managing the South American nations, it can be said that the nation of Venezuela created a hostile environment in regards to political co operation between the two countries at the international level (US Dept. Of State, “US Relations with Venezuela”). Also while analyzing the upcoming political future for the nation, it has to be said that the passing away of the elected national president presents a high level of political instability as of the current times as well as the immediate future (Duddy, “Political Unrest in Venezuela”). Thus it can be analyzed that the scenario emerging from the political side of the country is quite vulnerable and instable in nature. Economic Venezuela is a country which is high on oil deposits. Hence, the country is dependent on its oil reserves, which contributes to 95% of the nation’s foreign exchange earnings. The GDP of the nation as of the year 2012 has been estimated at around 402.1 billion USD and is growing at the rate of 5.7%. It has to be said as a result of increase in spending by the government along with enhanced access to domestic credit, there was a tremendous rise of consumption which resulted in the arrival of high inflation level in the economy of the nation. Talking on a summary note, it has to be said that the economic environment of Venezuela is loaded with crisis arising from the arena of housing needs, food and electricity needs as well as challenges coming from high inflation (CIA, “The World Factbook”). It is also highly relevant to mention that the political mismatching between the US and Venezuela shares a spill over impact in regards to the economic prospects that can emerge between the two nations. Hence, it can be assumed that the current economic scenario does not promote a healthy business opportunity for US based business organizations looking forward to enter this particular South American arena. Social It has to be said the social environment of the nation is a result of mix economic growths as well as unstable political scenarios. It is highly relevant to mention the fact that the high amount of foreign earning generated by the country’s rich and extensive oil reserves should be better investment in regards to paving the way for social welfare and development of the nation (Boudon 534). Technological Talking in regards to technological aspect of the country, it can be assumed that since the nation is rich in oil deposits, hence most of the technological investments by the country will be mostly on the lines of this particular sector. Recommendations It can be said that the US based companies that are already operating in this South American nation faces a lot of issues that emerges from the factors of high government scrutiny of finances as well as the improper government security provided to the private business sector. Also it has to be said that a significant amount of challenges emerge from the country’s high inflation level (Grainger, “The challenges of doing business in Venezuela”). Talking on the lines of providing appropriate and effective recommendations to the challenges faced by the US based organizations that are doing business in Venezuela in the recent times, it has to be said that the recommendations has to take into effect the factor of macroeconomic issues. It can be said that it is very important for Venezuela to develop a stable political leadership as of the current scenario. Having a stable political leadership will play a key role in boosting the investor confidence in the nation and will help the country to attract significant amount of foreign investments. It can be said that the recommendations for overcoming the business challenges is multi tiered and is highly political in nature. With the passing away of the current president Hugo Chavez, there can be a significant opportunity of ending of hostile political relationship between Venezuela and the US. As a recommended first step, it is advisable to the nation as well as to the US leadership to focus on building a harmonious political relationship between the two countries. After accomplishment of a harmonious political relationship, the US should try to provide stability to this particular South American nation by helping it to design a significant and highly effective economic system for Venezuela with significant control measures. With significant control measures of the economy in effect, the economy of Venezuela is sure to enter into a period of low inflation rate. The next recommended step on the part of both the countries is to focus on entering into an economic and business relationship by the development of mutually beneficial trade agreements. This will help to provide protection to the business environment of Venezuela by the local government. The final step will be to focus on increasing the business opportunities of the region by significantly making the nation high prosperous for significant business environments. Works Cited Conley, Kate A. Venezuela. USA: ABDO Publishing Company. 2004. Print. Nichols, Elizabeth Gackstetter and Morse, Kimberly. J. Venezuela. USA: ABC –CLIO LLC. 2010. Print. Boudon, Lawrence. Handbook of Latin American Studies, Vol. 61: Social Sciences. Austin: University of Texas. 2006. Print. Crooker, Richard A. and Gritzner, Charles F. Venezuela. New York: Infobase Publishing. 2006. Print. US Dept. Of State. US Relations with Venezuela. 17 Jan. 2013. Web. 15 Mar. 2013. Grainger, Sarah. The challenges of doing business in Venezuela. 28 Oct. 2011. Web. 15 Mar. 2013.< http://www.bbc.co.uk/news/world-us-canada-15486080> Duddy, Patrick D. Political Unrest in Venezuela. N.d. Web. 15 Mar. 2013. CIA. The World Factbook. 5 Feb. 2013. Web. 15 Mar. 2013. Read More