Fundamental of Management
Business Report
Trimester 2, 2017
Student Name: Tran Thanh Bao Tran
Student ID: 18957097
Class 1
Lecturer’s Name: Donald Lee
Executive summaryThe following report will explore how the French external environment can impact the expansion of Strawberry Pops company into France. The French external environment includes five components which are political, socio-cultural, economic, legal and technological environment (PESTL). Furthermore, the report also conducts the SWOT analysis which stands for Strengths, Weaknesses, Opportunities and Threats of Strawberry Pops. Based on the conduct, it is indicated that the opportunities greatly exceed the threats. Therefore, this report also provides a set of recommendations for Strawberry Pops to expand their operations into France.
Table of Contents
TOC o “1-3” h z u Executive summary PAGEREF _Toc490614494 h 21.0 Introduction PAGEREF _Toc490614495 h 42.0Political Environment PAGEREF _Toc490614496 h 52.1Government stability PAGEREF _Toc490614497 h 52.2Government relations PAGEREF _Toc490614498 h 62.3Analysis PAGEREF _Toc490614499 h 63.0Legal Environment PAGEREF _Toc490614500 h 63.1Business laws PAGEREF _Toc490614501 h 63.2Labor laws PAGEREF _Toc490614502 h 63.3Analysis PAGEREF _Toc490614503 h 74.0Economic Environment PAGEREF _Toc490614504 h 74.1Currency exchange rate ($) PAGEREF _Toc490614505 h 74.2Economic trends/forecasts PAGEREF _Toc490614506 h 74.3Analysis PAGEREF _Toc490614507 h 75.0Socio-cultural Environment PAGEREF _Toc490614508 h 75.1Hofstede’s Cultural Dimensions PAGEREF _Toc490614509 h 75.2Analysis PAGEREF _Toc490614510 h 86.0Technological Environment PAGEREF _Toc490614511 h 96.1Technological infrastructure PAGEREF _Toc490614512 h 96.2Communication networks PAGEREF _Toc490614513 h 96.3Analysis PAGEREF _Toc490614514 h 97.0 SWOT Analysis PAGEREF _Toc490614515 h 98.0 Conclusion PAGEREF _Toc490614516 h 109.0 Recommendation: PAGEREF _Toc490614517 h 11Reference List PAGEREF _Toc490614518 h 12
1.0 IntroductionStrawberry Pops is an Australian confectionery company. The Victoria Head Office is a prestigious company, which always provides the excellent confectionery commodities for customers, was established 18 years ago. In order to become a multinational company, the Strawberry Pops business desires to expand their operations into France. Since it is a confectionery company, Strawberry Pops requires incredible raw materials such as fresh fruits, high quality flour and sugar in France. Along this business report, will also discuss how the French political, economic, socio-cultural, technological and legal environment (PESTL) can affect the expansion of Strawberry Pops. Besides, this report will also give a set of recommendations for Strawberry Pops on whether it should invest or not. The proposed expansion strategy is to assign some Australian employees to France, due to their lack of overseas working experience.
2.0Political Environment2.1Government stabilityFrom the beginning, the French politics has not been stable even though France’s election occurs every five years and has two rounds (Samuel 2017). However, a protest had taken place in France owning to the gay marriage when Francois Holland was the 5th president. Moreover, a considerable political scandal has appeared which influences on the waning global (Rohr 2013). This shows that the French politics can be stable because of the democratic election; however, it can also be unstable due to the protest and political scandals.
2.2Government relationsSince 2012, France and Australia have had a long-standing relationship within the Western association and close cooperation in South Pacific. There are around 350 largest French companies located in Australia. This can be estimated by 80,000 French employees working and living in Australia (Joint statement of enhanced strategic partnership between Australia and France 2017). This can indicate that there is a positive and friendly relationship between France and Australia.
2.3AnalysisAs can be seen, the government stability can be both stable and unstable, as well as France and Australia has a longstanding relationship. To conclude, there may be an opportunity for the Australian companies to set up a new business in France as the opportunity highly outweighs the threats.
3.0Legal Environment3.1Business lawsAccording to the Transparency International 2015, French corruption placed 23rd out of 168 nations on the global list (Jacobs 2017). This can be considered that the corruption in France is quite high. However, French government finally obeyed the “Proposed Law Regarding Transparency, the Fight Against Corruption and the Modernization of Economic Life”, can be also known as “Loi Sapin II”. The Loi Sapin II provides some appropriate changes which help France to eliminate the bribery (Davis, M. Levine and Gunka 2016). Presently, this can exhibit that the business law in France is stable for operating a new business.
3.2Labor lawsFollowing the report of Fair Work Commission, the minimum wages in Australia is $AU17.70 per hour. On the other hand, in France, the minimum wage is $AU14.98 per hour for employees (Minimum wage… 2016). That French salary consists of bonuses, base wage and fringe benefits related to productivity. As can be seen, all the information have been provided that the minimum wages in both Australia and France are quite similar.
3.3AnalysisIt can be demonstrated that the French business law is extremely positive. In addition, the labor law between Australia and France are quite the same. In conclusion, this can indicate that the legal environment will be an opportunity for Australian companies to expand their business into France. Thus, the legal environment has a potential for international businesses to invest and gain high profit.
4.0Economic Environment4.1Currency exchange rate ($)One Australian dollar equals to 0.67047 Euro on August 10 2017, this can illustrate that the Australian currency is stronger than French currency (The Money Converter 2017). Consequently, this is an opportunity for Australian businesses to invest in France with reasonable price. This is an extremely good advantage for investment between Australian and France that there are not countries have the same situation.
4.2Economic trends/forecastsIn 2014, as the consequence of the financial crisis from 2007 to 2008, the GDP in France grew slowly. This circumstance leads to an economic recession; therefore, the unemployment rate in France had increased higher than in the past and a considerable investment issues had occurred (Sapir 2014, 168). Nevertheless, the French government has imposed high taxes on people and spent that on the investment of development projects. By imposing taxes on people, the public expenditure can achieve 56% of GDP in 2015 (Outline of the French Economy 2015). Hence, this exhibits that the French economic environment has a good opportunity for foreign companies to invest.
4.3AnalysisConsidering these two segmentations of French economic environment which are currency exchange rate and economic trends can be well demonstrated that the economic position in France is favorable to start a new business.
5.0Socio-cultural Environment5.1Hofstede’s Cultural DimensionsHofstede’s Cultural Dimensions Home Country Host Country Implications
Collectivism Vs Individualism Individualism Individualism In both Australia and France, the employees are likely to work independently.
Power Distance Low Fairly high In France, employees’ attitude to managers must be formal. In contrast, Australian employees’ performance can be friendly and informal.
Uncertainty avoidance Intermediate High While French employees tend to obey law and regulation, Australian employees do not.
Time orientation Low High French employees have higher long term orientation than Australian employees.
Quality Vs Quantity of life OR Femininity vs Masculinity High Masculinity Low Masculinity France can be considered as the Feminine culture.
(The Hofstede Centre 2017)
5.2AnalysisConsidering all the aspects of the socio-cultural environment, it is well exhibited that the Hofstede’s Cultural Segmentation between France and Australia are completely different. Because of the dissimilarity, the threats have exceeded the opportunities. Hence, there will be the threats for Australian companies to expand the business into France.
6.0Technological Environment6.1Technological infrastructureAccording to the World Economic Forum, France is in the top 11 countries which has the best infrastructure worldwide (Holodny 2015). Thanks to the modern infrastructure including a superb motorway system, high speed rail network and ocean port facilities, most of the international businesses decide to invest in France (Gregson 2010). Therefore, it is useful and convenient for the Australian companies to operate a business in France.
6.2Communication networksThe communication networks include internet and phones in France ranked 11th in the world (The World Factbook 2017). France is also known as the land of WiFi which affects the innovation of the company (Houzet 2007, 5). Following this information can demonstrate that the communication networks in France are forceful to operate a business.
6.3AnalysisAs can be seen from the given information, the infrastructure and communication networks are both incredible; therefore, the technology in France can be stated as the opportunity for Australian companies. Since France has an excellent technological environment, it will be a possibility for the companies to improve the quality of products.
7.0 SWOT AnalysisStrengths Strawberry Pops company has:
Delicious sweets such as macaroons and cakes
Reasonable prices for customers
Modern manufacturing system
Good brand position
Weaknesses Strawberry Pops company has:
Lack of overseas working experience
Lack of innovation in cakes’ design
Poor marketing
Opportunities France Country:
Political environment
Positive relationship between France and Australia
Economic environment
Australian currency is strong
France is an economic boom
Technological environment
Excellent infrastructure
High quality in communication network
Legal environment
Obey legislation and laws in order to eliminate the corruption
Threats France Country:
Political environment
Unstable government due to gay marriage protest
Sociocultural environment
High degree of difference between Australia and France
8.0 ConclusionIn conclusion, it is suggested that the confectionery Strawberry Pops company should expand its operations into France for the time being because there are a lot of companies in worldwide have successfully invested in France and earned high profits. Moreover, one important reason should be stated as the opportunities totally exceed the threats which based on the analysis of PESTL.
9.0 RecommendationSo as to expand the Australian companies into France, these are some suggestions that the Strawberry Pops should follow:
Strawberry Pops should expand their operations because of the economic boom in France.
Have a short training program for French employees to get more working experiences.
Improve the marketing campaign to attract more customers.
Have an appropriate strategy to overcome all the weaknesses.
Reference ListConvert Australian Dollar to Euro. The Money Converter. 2017. Accessed August 11, https://themoneyconverter.com/AUD/EUR.aspxCountry Comparison. 2017. Geert Hofstede. Accessed August 16, https://geert-hofstede.com/australia.htmlDavis, Frederick, Andrew M. Levine and Charlotte Gunka. 2016. “France’s New Anti-Corruption Framework: Potential Impact for Businesses in a Multijurisdictional World.” Program on Corporate Compliance and Enforcement. https://wp.nyu.edu/compliance_enforcement/2016/12/07/frances-new-anti-corruption-framework-potential-impact-for-businesses-in-a-multijurisdictional-world/Gregson, Jonathan. 2010. “French Infrastructure Takes Some Beating.” The Wall Street Journal. http://online.wsj.com/ad/article/france-infrastructureHolodny, Elena. 2015. “The 11 Countries with the Best Infrastructure around the World.” Business Insider. http://www.businessinsider.sg/wef-countries-best-infrastructure-world-2015-9/?r=US;IR=THouzet, Sophie. 2007. “The Diffusion of ICT in France: Infrastructure, Services, and Uses.” GeoJournal 68(1): 5-17. doi:10.1007/s10708-007-9049-0
Jacobs, Frank. 2017. “A Map of Corruption in France.” Big Think. http://bigthink.com/strange-maps/a-map-of-corruption-in-franceJoint Statement of Enhanced Strategic Partnership between Australia and France (3 March 2017). 2017. France Diplomatie. http://www.diplomatie.gouv.fr/en/country-files/australia/events/article/joint-statement-of-enhanced-strategic-partnership-between-australia-and-franceMinimum Wage: How does Australia Compare to Other Countries. 2016. http://www.abc.net.au/news/2016-05-31/minimum-wage-how-does-australia-compare/7461794Outline of the French Economy. 2017. Accessed August 11, http://about-france.com/geo/french-economy.htmRohr, Mathieu von. 2013. “The Economic and Political Decline of France.” Spiegel Online. http://www.spiegel.de/international/europe/economic-decline-in-france-the-failed-leadership-of-hollande-a-903732.htmlSamuel, Henry. 2017. “How Does the French Political System Work and What Are the Main Parites?.” The Telegraph. http://www.telegraph.co.uk/news/0/does-french-political-system-work-main-parties/Sapir, J. 2014. “The French Economy in 2014: From Short-term Crisis to Structural Crisista.” Studies on Russian Economic Development 50(2): 168-177. doi:10.1134/S1075700715020112
The World Factlook. 2017. Central Intelligence Agency. Accessed August 11, https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html
