Country Analysis Australia

Country Analysis Australia

                                              Florida International University

Juan Calle

Master International Business 2016

International Business Seminar

Spring 2016

Dr. Sumit Kundu

Professor of International Business

Academic Director – MIB program

Introduction

Global business is growing every day for corporations as well as countries. It’s extremely important that we understand the business environment of the country where potential investments could take place. This research paper will conduct a PESTL Analysis for Australia.

                                                             Summary

Australia ranks as the 6th largest country in the world with approximately 5% of the world’s landmass. Out of this great land mass according, to the Australian government, 20% is consider to be dessert land, but at the same time, Australia is one of the few countries in the world to be completely surrounded by water. It is located in Oceania with maritime authority in the Pacific, southern, and Indian Ocean. It has a population of 24,168,051 according to the United Nations, with its main cities being Sydney, Melbourne, Brisbane and Adelaide. Despite being the 6th largest country in the world, its population only accounts for 0.33% of people on earth.  About 80% of the Australia population speaks English, making it the official language. The remaining 20% speak a mix between aborigine, Italian, and Mandarin. The official currency is the Australian dollar, which is currently being traded at a rate of one US dollar per $1.41 Australian dollars. Australia’s GDP of 1,240.8 UD (billions) is among the top 15 GDPs in the world. Its main industries are Financial Services, Mining, Construction and Manufacturing.  (ABS, 2015) (AG, 2015)

Political Environment

Over the past 10 years, Australia has maintained a healthy political environment with a mixture between the US and British political systems. It is considered to be a Constitutional Monarchy. Australia’s two sets of government are State and Federal. Parliament is also present and consists of two houses of Representatives and a Senate. For the past 10 years, the government has focused on creating treaties generating 19 free trade agreements. With the biggest treaty being the APEC (Asia Pacific economic cooperation), which primarily focuses on facilitating economic growth and prosperity in the region, by eliminating all trade boarder restrictions. (Daft, 2015). With the taxation over the past 10 years, the government has been able to maintain its corporate tax rate at 30%. On the other hand, personal income taxes are substantially high at 45% and one of the main reasons for this is the government subsidizes most of the health care system and education of its nationals. (AG, 2015). Political Issues, as far as any issues that could come across, there are not that many, as they are one of the top 10 countries with the lowest corruption index. But its does have one issue that most of the world countries face now-a-days. That issue is terrorism, as the mail bombings proved back in 2000-2003. (Transparency agency, 2015)

Economical Environment

Australia enjoys one of the strongest economies in the world with open markets, low tread barriers, and few limits on FDI. It has been able to go almost 25 years with out an economical crisis. With a GDP of 1.1 trillion and a 2.7% 5 year compound growth, Australians are able to enjoy a 46,433 GDP per capita positioning them as the #5 county in the world. Unemployment is at a low rate of 6% and inflation has been at a 2.5% ,giving Australians a strong acquisition power. However, one of the economical indicators that have been struggling over the past years is the FDI. In comparison to the rest of world decreasing in the rankings, countries like United Kingdom, Japan, Mexico and France have surpassed Australia, but nonetheless it continues to rank among the top 10. It’s primary investment comes from the mining (38.4%) and service industry (38.8%) for a overall FDI of 528 billion. ( Heritage, 2015), (ABS, 2015) (ABC,200-2015)

Socio-cultural Environment

         With an aboriginal heritage, most of Australians live in the urban cities rather than the country, or as they say “outback”. The locations of its principal cities are most along the costal line making them laid back and prompt to outdoor activities. The government subsidizes the health care system for all its citizens and permanent residents, promoting a healthy population (Griffith, 2014). Education is very important, as the government has both public and private education systems across all levels of education. In addition to this, Australia is ranked among the top 10 most educated countries in the world with and average speeding of 16,000 per students in tertiary education that comes among the highest rated in the OECD in 2012. Australia provides a well-educated work force, with more than 50% of it being women (Thomas C, 2014). Last, but not least, when we compare Australia in the Hofstede model to the world’s super powers, U.S and China, we see that there vast similarities to the U.S. Australians are very independent they have a low power of distance, a low long term orientation and a high indulgence. This is completely the opposite across these categories to China optimally making Australia very similar to the U.S culture. (Greet-hofstede, 2015)

Technological Environment

Over all, Australia has been able to adopt and create various technologies and it is consider to be well developed with its technology. But as the boom in previous years for mining comes to an end, the government has turned into developing the countries technological aspect specific to innovation, investing one billion dollars in the next 4 years. Australia has not been known generally for developing new technologies that could be adapted for a business framework; however, one area that has great achievement is the technological development for the environment protection. Due to the great amount of natural resources and geographical conditions, Australia has developed great technologies to help the ecosystems as well as the study of them. One of the biggest projects that Australia has started is the pollution control and lowering the levels of it in China (AG, 2015).