PESTEL and SWOT Analysis for Turkey for Use by Rip Curl - Case Study Example

PESTEL ANALYSIS FOR TURKEY Name Course Date Executive Summary This report presents the PESTEL and SWOT analysis for Turkey for use by Rip Curl. The report section introduces the report giving an overview of what is there in. The next section then presents an evaluation of PESTEL of Turkey in each sub-section making an analysis. The next section then presents the SWOT analysis of Rip Curl in readiness for the market. The next section then concludes the report and a recommendation for the company is also given. The last section of the report then presents the various works that were consulted during its compilation. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 2.0 Political Environment 4 2.1 Government Stability 4 2.2 Government Relations 5 2.3 Analysis 5 3.0 Legal Environment 5 3.1 Business Laws 5 3.2 Labor Laws 6 3.3 Analysis 6 4.0 Economic Environment 6 4.1 Currency Exchange Rate ($) 6 4.2 Economic Trends/ Forecasts 7 4.3 Analysis 7 5.0 Social-Cultural Environments 7 5.1 Hofstede’s Cultural Dimensions 7 5.2 Analysis 8 6.0 Technological Environment 8 6.1 Technological Infrastructure 8 6.2 Communication Networks 9 6.3 Analysis 9 7.0 SWOT Analysis 10 8.0 Conclusion 10 9.0 Recommendations 11 10.0 References 12 Introduction Rip Curl is an Australian designer, manufacturer, and retailer of sportswear and associated products based in Victoria. Some of the products of the company include snow boats, skateboards, surfing watches with GPS, travel bags, pants and all sorts of clothing.1 Turkey has a rich historical and cultural background. Rip Curl would like to make and expansion to Turkey.2 The aim of this report is to conduct a PESTEL evaluation of the country as well as a SWOT analysis, so as to aid the company in strategizing its move. 2.0 Political Environment 2.1 Government Stability The government system is the republican parliamentary system.3 The prime minister of Turkey is the head of government. The executive power is left on the government while legislative power is vested on both Unicameral Grand National Assembly of Turkey and the government. The judiciary is autonomous from the executive and the legislature.4 The constitution being used in the country was adopted on 7th November, 1982. However, it has undergone some amendments. The AKP party has been in power from 2002 under different presidents. The current election is scheduled in 10th June, 2015. This and the peaceful elections demonstrate the country conducive to invest in.5 2.2 Government Relations The Turkish government has good relations with other countries including USA. For example, the country imports goods from Australia and so does Australia. The Government of Turkey has structures and policies in place that encourage bilateral trade and investment in the country.6 The country has bilateral Framework for Strategic Commercial and Economic Cooperation that encourages strategic economic cooperation with other countries. The country is also looking forward to being integrated into the European Union.7 2.3 Analysis The above conducive political environment will make it possible for Rip Curl to export some of the raw materials that are not available in Turkey without many restrictions. Additionally, the company will be able to benefit from the relations Turkey has in Australia especially when outsourcing for raw materials not present in the country. 3.0 Legal Environment 3.1 Business Laws Turkey’s legal environment is very favorable and business friendly. Anyone is liable to investing in Turkey regardless of their nationality and residence. UNCTAD has ranked Turkey 15th in terms of the attractiveness for foreign direct investments this is because of the booming economy. The country has 36% of all the companies being foreign. The tax regime of the country takes. Corruption in Turkey is a very intolerable vice and is fought by the government at all costs. The laws as seen previously enable foreign direct investments. Just like in Australia, the Turkish business law systems are favorable for investments.8 3.2 Labor Laws The suffrage in Turkey just like in Australia and the rest of the world is 18 years.9 The workdays are stipulated by law to be Monday to Friday totaling to forty five hours a week and nine hours a day. The employers are required by law to pay the employee’s overtime and relaxation costs that are applicable. The night shifts begin at 8 pm and end at 6 am.10 3.3 Analysis The overall legal environment of Turkey is an opportunity for Rip Curl. The company shall benefit from the strong young and thus innovative workforce drawn from Turkey. The company will not face hurdles except the few usual regulations when importing labor from Australia.11 4.0 Economic Environment 4.1 Currency Exchange Rate ($) The currency of Turkey is called Lira. The exchange rate of the currency is very stable and shifts favorably compared to other currencies.12 4.2 Economic Trends/ Forecasts The economy of Turkey is stable after the recovery from the financial crisis that hit the whole world. The economy is forecasted to grow and stabilize as time progresses compared to its neighbors. This is enabling for business.13 4.3 Analysis The economical environment is very favorable for Rip Curl is assured of profitability after few years of investment. 5.0 Social-Cultural Environments 5.1 Hofstede’s Cultural Dimensions Hofstede’s Cultural Dimensions Australia Turkey Implications Collectivism Vs Individualism Relatively individualistic due to high degree of self-respect and autonomy. Career interests are more important than the good of the organization. The population is young and oriented to collectivism. The good of the group or organization comes before that of an individual. The gap should be narrowed. It is good for business however. Power Distance Scores low in power distance. Hierarchy is established for convenience. Employee-management consultations are common. Communication is direct, informal and participative. There is high power respect. This is due to the dependence, hierarchical. Superiors are inaccessible. Managers rely on the bosses and rules and employees do as they are told. The company has to balance between the differences. Uncertainty Avoidance Uncertainty acceptance The people are stimulated to change respective to thriving opportunities. Uncertainty avoidance The people do not like ambiguity. There is need of laws and rules. The learning curve between the companies for the culture will be high. Time Orientation Normative culture and respect for tradition Intermediate so no dominant culture preference Good for the business to thrive in Turkey. There must be learning. Quality Vs Quantity of life of Femininity Vs Masculinity Masculine society Australians are proud of their success in life. Conflicts are solved at individual levels and the goal is to win. High score on feminine scale side. Softer aspects of culture. Leisure time is important. Workplace conflicts are avoided.14 Combine the two for efficiency. 5.2 Analysis There is more that the company needs to do. Either leverage on the cultural advantage or integrate them with the mother country’s so as to thrive well. 6.0 Technological Environment 6.1 Technological Infrastructure Turkey’s telecommunications sector has seen significant changes in the last two decades. The country’s energy infrastructure is rated 5.54 out of ten compared to that of its neighbors. There are also plans to boost energy through the establishment of more power stations. The use of internet and its access from the country is amazing. 6.2 Communication Networks Turkey is a dynamic market that is well equipped with an upgraded network infrastructure. The communication network is rated 7.72 out of ten making it suitable to pass information within the country through voice and over the internet.15 The national road network of turkey is integrated with the European infrastructure. Turkey has well established and maintained road systems, airports, and highways.16 Turkey has rail systems in place and meets the requirements for the shipment of goods with the efficient, high performance and reliable transport system as well as its strategic location.17 6.3 Analysis Good communication systems as well as technological infrastructure are prerequisites of contemporary business environments. Rip Curl will be able to leverage on the use of the communication networks for all its logistics. Additionally, with the online presence of the company, it is assured of reaching its customers online. 7.0 SWOT Analysis Strengths Strong online presence Strong Brand Awareness globally Many products with good pricing Excellent customer service. Strong marketing strategies and campaign Weaknesses High debt to equity ratio Low returns Inadequate human resource Dependence on strong brand awareness Dependence on Australian market.18 Opportunities Good Australian government relations with Turkey thus favorable laws on imports. Favorable business laws and taxation encouraging foreign direct investments. Good cultural orientation in turkey. Favorable labor laws thus import of labor.19 Favorable currency exchange rate and stable currency ensuring forecasting of the returns. Advanced communication systems to take care of all the logistics. Security and stability of the government. Strategic Acquisitions. Threats The difference in social cultural dimension between the two countries. Global financial crisis thus law returns. Complex judicial processes when solving disputes. Rising Costs of Raw materials. Slow customer spending. Competition. 8.0 Conclusion The Company should try its hand in Turkey. First off, the legal environment as can be seen is very favorable allowing for foreign investments. Secondly, the economy of Australia is very stable and the economy has been forecasted to grow to become the most stable in the region. The other factors are also favorable except for the few negatives on the country that are likely to be offered solutions if well analyzed. 9.0 Recommendations First off, all the weaknesses that have been identified should be offered solutions that would see a balance between the brands in terms of returns. The company should conduct a market based research in Turkey so as to know how to strategically leverage on the strengths and opportunities. Lastly, the company should consider doing a competitor analysis and learning how to make a balance between the cultural differences in the two countries. This could be done through diversification of the workforce to maybe bring a hybrid of sociocultural practices. 10.0 References Belal, Kayumi. PESTEL Analysis for Turkey. New York: GRIN Verlag, 2014. CIA. “The World Factbook.” Accessed April 18, 2015. https://www.cia.gov/library/publications/the-world-factbook/geos/tu.html Country Reports. “ Turkey Facts, Culture, Recipes, Language, Government, Eating, Geography, Maps, History, Weather, News, Economy, Family, Fashion, Events - CountryReports.” Accessed April 18, 2015. http://www.countryreports.org/country/Turkey.htm Ihsan, Yuksel. “Developing a Multi-Criteria Decision Making Model for PESTEL Analysis.” International Journal of Business and Management, 7 (2012), 52-66. Ihsan, Yuksel., Abdulkadir, Civan. and Ertugrul, Gundogan. The Impact of Economic and Political Factors on the 2010 Turkish Referendum. Eurasian Journal of Business and Economics, 4 (2011), 69-80. Invest.gov. “Infrastructure and Logistics - Invest in Turkey.” Accessed April 18, 2015. http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/InfrastructureAndLogistics.aspx Jedrzej, George and Kamel, Mellahi. Global Strategic Management. Oxford University Press: Oxford, 2015. Karaca, F. C. “Overtime and Overtime Wage in Turkish Labor Code (TLC), Turkey.” Accessed April 18, 2015. http://www.admdlaw.com/overtime-and-overtime-wage-in-turkish-labor-code-tlc/#.VTIs3PDrZkg Koca, C. G. “Hofstede’s Five Dimensions of Culture and Turkey | Çiğdem Gizem Koca.” Accessed April 18, 2015. http://www.cigdemgizemkoca.com/2014/07/hofstedes-five-dimensions-of-culture-and-turkey/ Rip Curl. “Rip Curl North America | Ultimate Surfing Co. | The Ultimate Surfing Company.” Accessed April 18, 2015. http://www.ripcurl.com/surfingco.html Read More