1 Macro-environmental analysis (PESTE-analysis) A company which wants to enter into a new market must first understand the target market’s business environment and how to create and retain customers by providing better value than the competition. As the environment changes, businesses must adapt in order to maintain strategic fit between their capabilities and the marketplace. When we are analyzing the macro environment of a company we usually use the PESTE analysis to help us to clear our goal, identify all the factors which are affecting our company directly or indirectly.
Such us political factors, economic factors, social factors, technological factors, environmental factors and legal factors. Political factors. Political factors can influence marketing decisions by determining the rules by which business can be conducted. The relationship between government and business organizations can have major implications not only for the respective parties, but also other companies (Jobber 2004: 146) When we are talking about political factors we have to take in mind the trading policies.
Finland’s general trade policy emphasized dismantling barriers to trade and investment and participation in an open world economy. The key challenges include customs duties and nontariff barriers to trade and trade distorting measures that are still prevalent in many markets. Finnish Competition Authority is an organization to protect sound and effective economic competition and to increase economic efficiency in both private and public-sector activity. Membership in the EU has changed the operating environment of Finland’s trade policy, and the EU’s negotiating power has significantly strengthened Finland’s trade policy position.
In this case because our company is going to import the goods from Slovakia and Austria that makes it quite easier because both countries are EU members. Trade in goods and services is a key component of the negotiations carried out in the World Trade Organization (WTO). The liberalization of trade in goods and services is one of Finland’s trade policy objectives. Trade is important with exports accounting for over one third of GDP in recent years. Trade policy is managed by the European Union, where Finland has traditionally been among the free trade supporters. The export rate in Finland in 2011 was $85. billion and in 2010 it was $69. 4 billion. There was a significant change in only one year time. Furthermore, the Finnish government also helps entrepreneurs in the start up grant as a discretionary support intended to secure one’s live condition during the business start-up phase, and if it is a private enterprise, the government also offers supporting fees monthly and considered as the applicant’s personal taxable income. Government also reduces the amount of starting money for limited companies from 8000 Euros to 2500 Euros. Finnvera can provide financing for enterprises in almost every sector.
An Investments and Working Capital Loan is intended for newly established and existing enterprises to finance investments in buildings, machinery and equipment and to provide working capital needed because of growth. Finland’s economic policy has been to keep a high standard of living during the last decades. In order to improve employment and enhance the efficiency of the economy, Government encourages foreign investment in Finland which the present attitude towards foreign investment is liberal and since 1993 (KPMG, 2005). Foreigners are permitted to own real estates as well as shares in Finnish companies.
Furthermore, strong growth in economy with the special geographic location serve both the domestic and surrounding markets, including the vest potential in Russia and the Baltic countries and other Eastern European countries. Finland also has other programs to attract foreign investors. Finland has a well developed infrastructure which includes quick and efficient access to Russian and Eastern European markets because Finnish foreign trade can effect to the economy areas of Eastern Europe, thereby investment in Finland can also enlarge the brand awareness of the Eastern European market.
English is very common in Finland besides Finnish and Swedish, hence, business communication is not a problem. Every great developed scientific and technological infrastructure represents the whole society has a strong financial system to support the economical organization. Finland is a peaceful country also the equality is one of the business cultures. 100 percent foreign ownership is recognized in most sectors and there is no discrimination against foreign companies in favor of local companies as well as between benefits granted to foreign investors and those granted to local investors.
More-over, Finnish government also offers the investment grants to foreign investors based on different enterprises situation such as the size of companies, financial situation, and development area as well as the payroll for the project in small companies to support in various grants. According to the Finnish tax system rules, small and medium sized foreign companies can be granted tax benefits for the development areas and the benefit is restricted to qualifying industries. In recent years, foreign trade and services have grown strongly in Finland. Consumption and consumer confidence has increased steadily in these years.
Finnish consumers enjoy spending time in shopping because steady growth in economy affects growing private purchasing power. Strong market demand required high standard new products into this growing market. Our product is exactly what the Finnish market needs. With all positive economic figures and the government strong supports, Finland has a great business environment for foreign investment in various industries in future. The trade in goods between the two countries for import and export, goods can move freely without customs duties across the borders from one EU country to another and also need to be declared to Customs.
However, VAT (Value-added taxation) is needed on Community trading between enterprises. Trade in goods between VAT- paying enterprises within the EU internal market area is based on the destination country principle which is making a Community acquisition is li-able to pay VAT. Finland’s VAT system came in to effect on 1 June 1994. The standard VAT rate is 22%. However; two reduced rates (8% and 17%) and a zero rate are also used. The zero rates allow tax-exempt sales, and the seller is entitled to a full refund for the input VAT paid. The VAT rate is always stated as a proportion of the price before tax (www, finance, 2009) .
Economic factors. The analysis of economical environment can let companies know the financial situation of the target country in order to forecast the potential market demand, the buying power and the foreign investment situation in the target market. Finland has a highly industrialized, largely free-market economy with per capita. The GDP real growth rate was 2. 7 percent in 2011. The inflation rate in Finland was last reported at 2. 9 percent in March of 2012. From 2001 until 2010, the average inflation rate in Finland was 1. 52 percent reaching an historical high of 4. 0 percent in August of 2008 and a record low of -1. 50 percent in October of 2009. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well-known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.
According to Statistics Finlands Labour Force Survey, the number of unemployed persons in February was 204,000, which was 17,000 lower than one year ago. The unemployment rate was 7. 7 per cent, having been 8. per cent in February of the year before. There were 32,000 more employed persons than in February of the previous year. On the other hand, there are a lot of opportunities of Finnish economy to be benefited into the globalization such as the opening international trade policy and foreign direct investment, a number of higher education populations and a strong innovation record. Moreover, with the progress of high technology, industry, energy and environment, Finnish economy is keeping growing gradually (www, OECD, Finland Economic Outlook, 2008). Social Factors
The population in developed economies is expected to be stable or shrinking. A major demographic change that will continue to affect the demand for product services is the rising proportion of people over the age of 45 in the EU, and the decline in the younger age group. Moreover, within Europe, cultural differences have implications for the way in which business is conducted which need to be recognized when interacting with European customers (Jobber 2004: 138,141). Furthermore, understanding of the social and cultural factors is also the way to know the customer needs for companies.
If companies know more the consum-ers life standard and their characteristics, it is more convenient to make decisions on the customizing products. Finns pay high taxes but get a lot in return for their money. Finland has for along time has one of the lowest infant mortality rates in the world. Nordic countries are famous on the welfare system in the world. Social factors mainly refer to demographic factors, which comprise factors like population growth rate, cultural aspects and age distribution. The population In Finland is around 5,262,930 people. About 60 percent live in towns and cities, with one million living in Helsinki.
In Arctic Lapland, on the other hand, there are only 2 people to every square kilometer. At the end of 2006 by the demographics statistics from the CIA World Fact book The percentage of the total population, at each age level is 0-14 years: 16% (male 429,450/female 414,570) 15-64 years: 66. 1% (male 1,759,059/female 1,719,173) 65 years and over: 17. 8% (male 385,671/female 551,327) (2011 est. ) This is a big advantage for our company. A report has shown that the 18 to 34-year-old consumer groups are very technology savvy and they are very likely to use and adapt this Technology Based Self Service (TBSS) in their daily lives.
However, it is hard for the customers to get familiar to all kinds of technologies, since the technology change so fast. Different hotels might use different versions of the technologies or different kind of technologies. Also, some people do not travel often enough to get familiar with the technology. Managers and employees from the service providing companies might work with those self service technologies almost every day, but some travelers might only travel once or twice a year. Thus, it could be hard for them to learn or adapt the technologies in a fast pace. Customers’ adaptability becomes a crucial factor.
Recently, in hospitality industry, hoteliers use self service technology replacing traditional labors. Buyers now a day are more familiar with this kind of service and are holding more open minded to this kind of service. TBSS is a popular trend in the industry now, it create a high tech and fashion image for the company. Today, some people have become more open-minded toward the TBSS as they get more familiar to these kinds of service. Customers’ perceiving risk toward the self service technology has decreased, as the security system and privacy law improves. For some people, TBSS is a more preferable option than THTS.
Comparing interpersonal service with TBSS, TBSS’ relatively advantages in usage, involvement confidence, speed, time and location flexibility, and price are the largest satisfaction factors from consumers’ perspective. An interaction between an employee and a customer can win or lose the customers’ lifetime loyalty; regardless the employees’ position Since human is an unpredictable element, there might be some issues that are unforeseeable and could cost the company’s business It is obvious that more and more people will encounter TBSS, and more positions or duties will be taken over by the self service technologies.
Technological factors Technological factors are referred to influences that have an impact on how an organization operates that are related to the equipment used within the organization’s environment. Due to increased reliance on equipment, technological factors currently exert a considerably more important effect on the success of a business than they did only a hundred and fifty years ago. Our company is Technology Based Self Service TBSS is a form of service that delivers by the customers to themselves through an interaction with technological systems or devices (Beatson, Coote, ; Rudd, 2006).
Although sometime customers might still consult employees for the use of the self service systems or devices, self service technology has helped to reduce the amount of employees used in the hospitality industry. There are many reasons lead to the popularity of the TBSS. According to Meuter, Ostrom, Roundtree, and Bitner (2000), among those people who prefers TBSS, 30 percent of people like about its speed of the service, which is also the most notable reason people choice TBSS. Then comes to the job it done which is 21 percent.
Consumers want and expect the employees to do their job however, for some reasons they fail to perform its job occasionally due to the time constraint, inferior training, and so on, which might disappoint the customers. Thus, perform its job become the second important reason people choose to use TBSS. The third incident is that it is easiness to use 16 percent, solve the instance need 11 percent, time flexibility 8 percent, location flexibility 6 percent , cost effective 6 percent, and avoiding service personal also has 3 percent (Meuter et al. 2000). In the long run, it can help hoteliers to save more labor cost, including employee salaries, training, benefits, etc. It also avoids the service inconsistent and litigation due to human mistake. In summary, the strengths of TBSS include, but not limited to its speed of service, service done, easiness to use, instance solution, time flexibility, location flexibility, cost effective, and service personal avoidance, as well as its sense of control.
According to Oyedele and Simpson (2007), people have a high need for control and individual achievement. TBSS put control in consumers’ hands rather the employees. The opportunity of this kind of service is unlimited, as the technology getting advanced Ecological factors Finland?s environmental legislation defines minimum standards of environmental responsibility, which apply to all businesses operating in Finland. The operators are obliged to be aware of their legal responsibilities, and organize their activities accordingly.
The Environmental Protection Act (86/2000) obliges all businesses operating in Finland to be sufficiently aware of the environmental impacts and risks of their activities – and of opportunities to reduce these impacts and risks. Environmental impact assessments (EIA) must be conducted wherever activities listed in Section 6 of Finland?s EIA Decree (268/1999) are practiced. The following principles are applied wherever activities are associated with pollution risks. Harmful environmental impacts are prevented beforehand.
Where this is not possible, such impacts should be minimized (Prevention and minimization of harmful impacts principle). All activities should also otherwise be conducted with due diligence and care so as to prevent pollution and limit harmful impacts, according to the potential risks (Precautionary and due diligence principle). Best available techniques (BAT) are applied (BAT principle). Purposeful and cost-effective combinations of measures must be adopted to prevent pollution, such as safe working practices and suitable choices of fuels and raw materials (Best environmental practices principle).
The most important tools for impact prevention and supervision are environmental permits and registration systems. Finland?s environmental authorities also monitor the state of the environment, respond to reports about possible pollution incidents, and deal with infringements as necessary. Regional environment centers may also press charges wherever industrial or business activities lead to illegal pollution. All businesses that conduct activities associated with the risk of pollution are obliged to obtain environmental permits under the Environmental Protection Act..
Businesses whose activities are subject to environmental permits are also generally obliged to take out compulsory environmental damage insurance. The most important environmental taxes in Finland include energy taxes, fuel taxes and motor vehicle taxes. Environmental charges are imposed to help cover the costs of environmental protection work. The most important such charges include oil pollution prevention charges, oil waste charges, and the fees paid for environmental permits. When establishing our business we will have to take into account all these legislations.