Innovation Economic and Environmental †Free Samples to Students

Question: Discuss about the Innovation Economic and Environmental. Answer: Introduction This assignment has been executed with a motive to analyze the suitability of the international market for the entry of a company. This assignment will discuss the analysis of the different aspects of the business environment of Indonesia so as to analyze the impact of these aspects on the entry of Tesco in the Indonesian market. This analysis will help in evaluating the suitability of the environment of Indonesia for Tesco. Different opportunities will be available to Tesco along with the threats which create an impact on the performance of Tesco. Tesco is a public limited company which is operating in the retail industry. Tesco is operating supermarkets, hypermarkets and superstores all around the globe. It was founded by Jack Cohen in the year 1919. Headquarter of Tesco is located in Welwyn Garden City, Hertfordshire, England. According to the profitability of the companies, Tesco stands at the third position in the retail sector. It is operating all around the globe with a motive to provide quality products to its customers. According to the data collected in 2017, it has 6553 stores in 12 countries. It has a strong employee base of more than 476000 employees which is contributing towards the growth and success of the business (Tesco, 2017). It is focusing on meeting its responsibility towards the society. Tesco is planning to expand the area of operation in Indonesia so as to enhance the coverage area. It is analyzing different aspects of the Indonesian market so as to analyze the suitability of the market for Tesco. Analysis of the socio-economic, political-legal and business environment in Indonesia The Indonesian economy is considered as largest economy of the Southeast Asia. The economy of Indonesia is considered an emerging which is full of opportunities for the businesses. It has faced a financial crisis in past and has dealt with this financial crisis in an effective manner. The economy of the Indonesia is based on the three sectors which include agriculture, manufacturing and service industry. These sectors attract the businesses towards the economy of Indonesia. Majority of the population of Indonesia is young which can form a strong employee base for the new businesses or companies planning to expand their business operations in the Indonesian market (Hasenheit, et. al., 2016). Diverse natural resources are available in the Indonesian market which can be used by the businesses for enhancing their performance. The potential risk in the Indonesian market is low which encourages investment in the Indonesia. It has been estimated that there will be a rise in the economic gro wth from 5 % to 7 % in the next five years. It has been estimated that there is a medium risk investment opportunity available in the market of Indonesia. A mixed economy is followed in Indonesia as both government and private sector are contributing towards the development of the economy (Anderson, 2015). A political transformation has taken place in the Indonesian economy. Civil law system is followed in Indonesia. The political structure of Indonesia has been strengthening due to the vibrant democracy of the country. The tax rate has been amended by the government and it has been fixed at 25 % flat. Negative investment list has been issued in the year 2014 which aimed at enhancing the FDI and DDI in Indonesia. There are few political issues which are creating an impact on the business environment of Indonesia (Kuncoro, 2012). One of these issues is the high-level corruption in the country which has affected the political environment. The government of Indonesia has formulated financial and monetary policies for dealing with the adverse situations arising in the country. The government of Indonesia is focusing on the issue of economic packages with a motive to deregulate the different sectors of the Indonesian economy. Different permits are required by the businesses for operating wi thin Indonesia (Porter, 2009). The business environment must be suitable for conducting business as factors of business environment create a huge impact on the performance and operations of the business. The government of Indonesia is placing its focus on enhancing the quality of the business environment so as to make it suitable for the new entrants in the market. The focus of government of Indonesia has been shifted towards the economic development and changing the structure of the economy. 13 reform packages have been released by the government of Indonesia for enhancing the business environment of the country. Indonesia has faced various pull and push forces and has cope with these forces effectively by attaining stability (Ibrahim Primiana, 2015). Corruption in Indonesia is affecting the performance of the companies operating in Indonesia. The infrastructure of Indonesia is lacking in utilizing the full potential due to the insufficient quality and quantity of infrastructure. The economy of Indonesia is boom ing which help the companies in gaining will advantage of the market. Another crucial concern for the companies planning to expand the area of operation in Indonesia is natural disasters which affect the human resource and infrastructure (Wahyuni, 2008). The analysis is done in the environment of Indonesia for analyzing its suitability for Tesco. Resources are available in an adequate quantity which will help in conducting the operations of the business in an effective manner. Human resource is available as the majority of the population is of young people. There is low risk present in the Indonesian market related to the investment. This will encourage the companies to invest in the Indonesian market. GDP of the Indonesian market is increasing and it is expected that there will an increase of 5 to 7 % in the economic growth of Indonesia which will attract investors towards the Indonesian economy. Government is providing support to the companies by increasing the participation of private sector in the economy. A fixed tax rate has been decided by the government of Indonesia which has provided a better opportunity to companies to enter the Indonesian market. There are few issues which are creating an impact on the business environment of Indonesia. These issues include corruption, the impact of natural disasters, lack of policies and rules and regulations, lack of developed infrastructure and ethical and religious violence (Ibrahim Primiana, 2015). Thus, from the analysis of the Indonesian market, it can be stated that Tesco can enter Indonesia market. The business environment of Indonesia is suitable for the expansion of operations of Tesco. There are various opportunities available in the market of Indonesia. Opportunities and threats to Tesco in the environment of Indonesia Various opportunities and threats are available in the market of Indonesia which can affect the performance of Tesco in the market of Indonesia. Opportunities available in the environment of Indonesia for Tesco are listed below: Indonesia is located in Southeast Asia and its location attracts the companies towards it. Tesco can enter the Indonesian market and this will help in covering the large area (Iberglobal, 2015). The economy of Indonesia is at a booming stage. There is a high growth rate in the economy of Indonesia which provides opportunities for the growth of the business. Anti-corruption strategies have been implemented by the government of Indonesia. This help Tesco is performing operations without any adverse impact on its performance due to corruption (IGS, 2011). There are few threats which Tesco needs to consider while entering Indonesian market and these threats include: Increasing corruption can increase the cost of the business. Natural disasters can affect the operations of the business. The infrastructure of Indonesia lacks the quality and quantity which can affect the performance of Tesco in Indonesian market (Iberglobal, 2015). Conclusion With the change in the business environment and increasing role of globalization, there has been a rise in the number of companies trading across the border. Tesco is planning to expand the area of operation by entering the Indonesian market. Analysis has been done on the different aspects or factors of the economy of Indonesia. On the basis of this analysis, it can be stated that Tesco can enter into the Indonesian market as various opportunities are available in the Indonesian market. Recommendation Few recommendations have been provided with a motive to support the decision of Tesco for entering into the Indonesian market. These recommendations are listed below: Selection of the location for the business must be done properly so as to ensure that the natural disasters are not creating an impact on the functioning of Tesco. Healthy relations need to be developed with the population of Indonesia as domestic firms are creating influence on the population. Threats need to be analyzed and strategies need to be adopted for dealing with the threats and gaining the advantage of the opportunities available in the market of Indonesia. References Anderson, I. (2015). Political Economy Analysis Country Report on Indonesia: A Summary Of The Political Economy Factors That Are Shaping. Research Gate. Geiger, T. (2011). The Indonesia Competitiveness Report 2011. World Economic Forum. Hasenheit, M., Gerdes, H., Kiresiewa, Z. Beekman, V. (2016). Summary report on the social, economic and environmental impacts of the bioeconomy. BioStep. Iberglobal. (2015). Doing Business in Indonesia. Iberglobal. Ibrahim, R. Primiana, I. (2015). Influence Business Environment On The Organization Performance. International Journal Of Scientific Technology Research, 4, 4. IGS. (2011). Issues And Opportunities Of Doing Business In Indonesia. ISG. Kuncoro, A. (2012). Globalization and Innovation in Indonesia: Evidence from Micro-Data on Medium and Large Manufacturing Establishments. ERIA Discussion Paper Series. Porter, M. E. (2009). Improving Indonesias Competitiveness. Harvard Business School. Tesco. (2017). About Us. Tesco. Accessed on: 28th August 2017. Retrieved from: https://www.tescoplc.com/about-us/ Trading Economics. (2017). Indonesia GDP Annual Growth Rate. Trading Economics. Accessed on: 28th August 2017. Retrieved from: https://tradingeconomics.com/indonesia/gdp-growth-annual Trading Economics. (2017). Indonesia Unemployment Rate. Trading Economics. Accessed on: 28th August 2017. Retrieved from: https://tradingeconomics.com/indonesia/unemployment-rate Wahyuni, S. (2008). A Review of Indonesias Competitiveness and its Investment Climate. National University of Singapore.