Analysis the external business environment Essay

Analysis the external backup surroundings - Essay ExampleOne of the bases that the flight path business is considering in Asia to avoid the high costs and the geographic isolation that Australia faces is China (The China Post, 2011). Before fashioning the move, it would be necessary to evaluate the external environmental factors that could affect the fundamental laws decision. Markets, competition and airline regulation in China would be equally important to be considered. 2. External factors affecting the organization External factors are those that are external to the organization and over which the organization has no control alone still is influenced by it. In this analysis only two such factors would be considered the macroeconomic environment and the markets, competition, and regulation in the airline industry in China. A countrys institutional environment affects the boundary choice for an organization because this reflects the extent to which a firm can participate i n the business environment. According to Brouthers and Hennart (2007) five types of risks influence the decision - product, government policy, macroeconomic, materials, and competition. 2.1 The macroeconomic environment Macroeconomics deals with the preservation as a whole and the factors that it encompasses include the economic output, unemploy, inflation, savings and investments (Investopedia, 2011). These are the key indicators of economic performance and are about monitored by the governments, business and consumers. 2.1.1 frugal output The Peoples Republic of China (PRC) is one of the quickest growing economies in the humanness. According to a government report its annual output should be US$ 3,000 per person by 2010 which is 3 ? times of the level that it was ten years ago (China Digital Times, 2008). By 2010 China has surpassed Japan on the list of k at a timeledge domains largest economies and stood at the second position behind(predicate) only the United States (Poli tics Daily, 2010). The PRC has low vulnerability to external shocks and this has helped it to maintain macroeconomic stability. The PRC has a large internal market, large foreign exchange reserves, low dependence on high technology and has high consumer and investor confidence (ADB, 2005). Macroeconomic stability is essential to attract private investment and create pro-poor markets. Economic growth in China has been consistent under different leaderships. Inflation and unemployment are low when the commie Party is in power (Feng, 2010). The Party embraces economic performance as its top priority. According to internationalistic Monetary Fund (IMF) Beijing will take just five years to become the worlds largest economy (China Economic Net, 2011). The PRC attracts the highest FDI in the region and has been the second largest recipient of the FDI in the world (ADB, 2005). However, there are concerns that the government controlled market system in China prohibits the development of th e Chinese economy (Sheng, 2011). Because of its liberalization reforms and investment in infrastructure China has been able to attract considerable FDI. China is now implementing a socialist market economy where the government carries out marketization management of the economy. 2.1.2 Unemployment The International Labor shaping (ILO) defines unemployed work oners as those who are currently not working but are willing to work (IndexMundi, 2011). The unemployment rate stands at 4.1 percent in China which is a matter of concern. However, this data is only for the urban areas and if the migrants are included the figure could go up to 9 percent. Besides substantial unemployment and under employment exists in the rural areas as well. Moreover, higher