Pest Analysis -Portugal

ANALYSING THE INTERNATIONAL BUSINESS ENVIRONMENT

Topic: Pest analysis -Portugal

Submitted to: Mr. Prabu Doss

Submitted by: Hitesh Goyal

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Contents

1.Introduction 3

2.Objectives 3

3.Country overview 3

4.Political factors 3

4.1.Political stability 3

4.2.Foreign relations 3

4.3.Political Risks 3

4.4.Business tax system 4

4.6.Employment laws 4

4.7.Environmental law 4

4.8.Intellectual property protection 4

4.9.Trading 4

5.Economic factors 5

5.1.Policy on economy 5

5.2.Economic growth 5

6.Socio – culture factors 5

7.Technological factors 5

8.Finding and analysis 6

9.Interpretation of results 6

10.Conclusion 6

11.References 7

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Pest analysis - Portugal

1.Introduction:

The purpose of this assignment focuses on Portugal’s external environment that analysis

political, economical, social and technology factors.

2.Objectives:

To learn Portugal’s external environment

And how it supports and influences in a business

3.Country overview:

Country located in Europe and sharing border with Spain.

1974 – Through military, democratises reformed and African colony’s independence.

1986 – Jointed with EU and NATO member (Portugal - The World face book, 2009).

4.Political factors:

4.1.Political stability:

Republic of Portugal’s government body consist, Prime minister and cabinets are nominated

by the president. President – Anibal Cavaco Silva and Prime minister – Jose Socrates. For

instance, Stable government has the legislative assembly 121 out of 230 deputies and the

assembly responsible for legislative, political and fiscal (Portugal Country Profile, 2008).

4.2.Foreign relations:

Country has the long term relations with EU and Africa for trading, political, military etc. It

increases relationship with Portuguese Speaking Countries Communities and Economic

Community of African States (ECOWAS). For example, country interacts in Asia with

SAARC and strategic collaborations with India and China (Foreign policy , n.d).

4.3.Political Risks:

Organizations such as COSEC, International Finance Corporation (IFC) and Multilateral

Investment Guarantee Agency (MIGA) are assisting to the political risks like government

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decisions, confiscation, expropriation, bank transfers, national disasters etc (Portugal

Business Community, n.d).

4.4.Business tax system:

Tax system has various categories. For example, Corporation tax consist income or gains,

costs or loss (Law 3G/2000 of 29/12). Personal Income tax states tax returns and payment

(Decree Law 442-A/88 of 30th Nov). VAT illustrate exemptions, intra community trade

provisions (Decree Law 394 B/84 of 26/12). For instance VAT rate reduced 5%, intermediate

12%, general 20% (Portugal Tax System, 2008).

4.6.Employment laws:

Contract system has temporary and non-temporary, trail period. For instance, it states

minimum age for contract 16 and compulsory retirement at 70. Working hours, holidays,

special hours etc are as per the International Labour Code. Rescission formality states such as

‘Processo disciplinar’ for labour court and ‘Justa causa’ for Labour Inspectors Committee

(LIC) (Portugal Labour System, 2008).

4.7.Environmental law:

Portuguese Environmental Agency states Decree Laws. For instance, Municipal Noise

Reduction Plan (MNRP) has noise limit such areas in housing occupancy, hospitals, schools,

and religious buildings (Inter Noise , 2007).

4.8.Intellectual property protection:

According to WIPO, No 45/85 of Sep 17, 1985 states the copy right and related codes

(Portugal, n.d).

4.9.Trading:

Since Jan 1st, 1995 member with WTO and the majorly trades with European Union. Exibit 1

states that in 2006 export – 77.2% and import – 75.5% with European Union. Besides it

increases relationship with NAFTA, NATO, IMF, World Bank etc.

In 2007, country’s merchandise trade (US$ million) export – 51521 & import – 78329 and

commercial services trade (US$ million) export – 22906 & import – 13686 (Portugal , 2009).

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5.Economic factors:

5.1.Policy on economy:

In 1999 disclose with European Economic and Monetary Union (EMU). In 2002, restrictive

policy has implemented in the various public sector, public spending, and Value Added Tax

(VAT). 2006 economy grew 1.3% compare with previous year (Portugal Country Profile,

2008).

5.2.Economic growth:

FDI - Exhibit 2 states FDI investment increases from € 22,973 million (2006) to € 23.803

million.

Exchange rates - on 27 May, 2009 1 euro = Rs 66.2660 (Exchange Rates, 2009).

GDP – exhibit 3 states in 2007 it increasing 1.9% and according it estimated 2.0% in 2008

and 2.3% in 2009.

Inflation –exhibit 4 shows, in 2006 3% and it forecasted 2.5% in 2007-08, 2% in 2009

Capital market – for instance, in may 2008, Energy de Portugal invested euro 1.8 billion IPO

in the equity capital markets (Portugal Capital Markets, n.d).

6.Socio – culture factors:

Population estimated – 10,704, 924 (Portugal - Face Book, 2009).

Education – 15-24 (2007) literacy rate 100% male and female (Portugal Statistics, n.d).

Culture - the country has Roman based culture, cave painting, Conimbriga town, Diana

temple. It has enriched influence with Italy and France (Culture, 2009).

Customs – national dress at festival and weddings, traditional garments are red and green

stocking cap, black states mourning in villages (Customs, 2009).

7.Technological factors:

Technology change & advantage – for instance, Intel and Portugal schools jointly started

school laptop program which is initially designed 50000 laps (Intel and Portugal in school

deal , 2008).

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Communication – telephone, television, high speed and broad band facilities.

Transportation – Airport (65), railways (2,876 km), road ways (82,900 km).

8.Finding and analysis:

Political factors are stating the stable government and international standard business codes.

For instance, to start a business avoids numerous risks because it has next four year stable

government.

Economic factors are illustrating the policy and growth of the country. For example, inflation

rate has reduced to 2% in 2009. It states the low inflation and consumer price index.

Socio cultures states people are basically Roman based culture. For example, traditional

garments red and green. It assists to a business or firm to understand and motivate employees

at festival seasons.

Technological factors are represents IT growth and communications. For instance, Intel has

developed its technology.

9.Interpretation of results:

10.Conclusion:

To analyse the country’s current affairs with pest analysis, we have observed that it is one of

the grown country and export business has an opportunity.

Finally, we have learned that how to analyze the external environment, before entering an

international country for a business.

11.References:

Culture. (2009, May 28). Retrieved 05 28, 2009, from Portugal Live Net: http://www.portugal-live.net/UK/essential/culture.html

Customs. (2009, May 28). Retrieved May 28, 2009, from Portugal Live Net: http://www.portugal-live.net/UK/essential/culture-customs.html

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Exchange Rates. (2009, 05 27). Retrieved 05 28, 2009, from Bank of Potugal: http://www.bportugal.pt/default_e.htm

Foreign policy . (n.d). Retrieved 05 27, 2009, from Ministry of Foreign Affairs: http://www.mne.gov.pt/mne/en/infopolitica/polexternas/

Intel and Portugal in school deal . (2008, July 30). Retrieved 05 28, 2009, from BBC News: http://news.bbc.co.uk/2/hi/technology/7533057.stm

Inter Noise . (2007). Retrieved 05 27, 2009, from http://paginas.fe.up.pt/~carvalho/in07.pdf

Portugal . (2009, Apr). Retrieved 05 27, 2009, from World Trade Organization: http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=PT

Portugal - Face Book. (2009, May 14). Retrieved 05 28, 2009, from CIA: https://www.cia.gov/library/publications/the-world-factbook/geos/po.html

Portugal - The World face book. (2009, May 14). Retrieved 05 26, 2009, from Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-factbook/geos/po.html

Portugal Business Community. (n.d). Retrieved 05 27, 2009, from World Bank: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/WBEUROPEEXTN/PORTUGALEXTN/0,,contentMDK:20139933~pagePK:1497618~piPK:217854~theSitePK:309718,00.html

Portugal Capital Markets. (n.d). Retrieved 05 28, 2009 , from International Financial Law Review: http://www.iflr1000.com/PracticeArea/507/Capital-markets.html

Portugal Country Profile. (2008, Jan). Retrieved 05 26, 2009, from Portugal Global : http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=40f8af38-6235-49bd-9a48-a78a80a176a0

Portugal Labour System. (2008, May). Retrieved 05 27, 2009, from Portugal Global: http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=3d1560c0-55f5-47f0-ad19-d7549c5ab7d8

Portugal. (n.d). Retrieved 05 27, 2009, from WIPO: http://www.wipo.int/clea/en/text_pdf.jsp?lang=EN&id=3525

Portugal Statistics. (n.d). Retrieved 05 28, 2009, from UNICEF: http://www.unicef.org/infobycountry/portugal_statistics.html#56

Portugal Tax System. (2008, July). Retrieved 05 27, 2009, from Portugal Global: http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=41d2ba1a-4088-4ef4-89fb-248d5fe15518

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Exhibit 1:

Country’s international trade in 2006:

Source: (Portugal Country Profile, 2008)

Exhibit 2:

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Exhibit 3:


Exhibit 4:

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Pest Analysis -Portugal