Introduction
France is one of the developed economies in Europe. This country is one of the most attractive markets in the world. Officially known as French Republic, this country is located in West Europe, but has overseas territories. It is the largest country in West Europe, and is considered to have the second biggest economic zone in the world.
France has been one of the world’s leading powers economically, politically, culturally and even in military. This country was one of the leading colonial powers between 18th and 20th century. The economy of this country is very strong, considered as the second largest in Europe, and fifth largest in the world. It is the ninth largest economy based on the purchasing power of its populace. According to the report by Kurtz (94), this country is the wealthiest nation in the entire Europe in cumulative household wealth.
The living standard in the country is comparatively high, with good education and health facilities. According to Shovlin (67), the French are known for their love for flashy goods, especially those that show status. These are some of the factors that make this country an interesting business environment. This study is focused on understanding cultural, political, economic and legal aspects of doing business in France.
External Business Environment of France
Cultural, political, economic and legal aspects of a business make up the external environment of a business. External business environment is very important because it will always determine success or failure of a business. A firm cannot survive in a business environment that is hostile.
According to Kurtz (12), external business environment always dictates growth and development of a business. In order to understand business environment of France, a PESTEL analysis will be important. This economic analysis tool will help us understand France as a business region, and its viability in supporting growth and development of firms.
PESTEL Analysis of the French Business Environment
Environmental scanning can be done using PESTEL Analysis. This involves the analysis of political, economic, social, technological, environmental, and legal environments.
Political Aspects
France is one of the leading democracies in the world. This country became a republic in 1792, after being Kingdom of France since 843. The country is headed by the president as the head of State, and a prime minister who is responsible for running cabinet affairs. Politically, France has a very stable government.
The country has experienced a long period of political stability that has made it conducive for business. It has a very stable government that is supportive of business operations. According to Schaffer (29), the political environment of France has been very supportive of business operations. This scholar says that the political class has created a clear distinction between politics and business environments.
The transitions from one regime to another have been very peaceful, and none has ever had a serious negative effect on the business fraternity for almost the last five decades. Lack of political stability would mean that various businesses are not in a position to conduct business normally. Some firms may even be forced out of the market with huge losses in case the instability is accompanied by looting and arson. The government has also developed goodwill in helping develop the private sector.
The government has liberalized the economy, a fact that has allowed other firms to enter into this market from other countries globally. In order to encourage entrepreneurship in the country, the government has developed a number of incentives, including reduced taxation, or tax grace periods for the entrepreneurs. The government has also created a good environment for foreign investors by removing bottlenecks, especially during the registrations process.
Economic Aspects
As was stated above, France has the second largest economy in Europe on the basis of Gross Domestic Product. Although the GDP is always very important when analyzing the attractiveness of a country in sustaining a business, the most important factor is always the wealth held by individual citizen.
This country is the wealthiest nation in Europe in average house hold wealth. This means that its citizens are the strongest, in terms of purchasing power. This makes the country a very attractive market for firms interested in venturing into it. The report by Fortin (94) also shows that this country is ranked ninth in purchasing power parity by GDP. This means that wealth of the nation is not held by a few clicks of individuals.
This increases the purchasing power of the country. The French are considered to be one of the highest spenders. The French do appreciate the need to spend, but they also spend a good part of their income. It is important though, to appreciate the fact that this country has also been experiencing economic recession that has been affecting the world from time to time. The country was affected by the 2008/2009 that hit the United States and European economies.
Firms in this country were faced with economic recession that hit various countries in the world. This had serious negative effects on the firms’ revenues as many customers would consider some of the products as non-basic. When the economy of a country is on a decline, the purchasing power is reduced, and this reduces the viability of various businesses.
They will be forced to cut down their operation levels, as the market will have a reduced capacity to sustain them. During such times, weak firms are always faced out of the market. The government has however, worked very hard to ensure that the economy of this country is maintained at a stable rate. The French government came up with various policies immediately the 2008/2009 economic recession was ended. The government has endeavored to ensure that the economy of the country do not experience difficulties it faced.
The Socio-Cultural Environment
It is not possible to analyze the cultural environment without looking at the political environment of the country. France has one of the richest socio-cultural environments in the world. Kurtz (39) says that France has a very rich cultural heritage that makes it stand out among many other countries. The socio-cultural environment of this country is diversified. This is because this country has people from all over the world.
There are those countries that cherish equality, and women have equal economic strength just as men. In such countries, the firm does not segment the market based on sex, but age. France is one such country. The country has been known for its ideals and declarations of rights of man. This strange socio-cultural belief of the French was seen even during the colonization period. They embraced assimilation as their policy.
In this policy, the government of France and the society in general accepted the colonized people who accepted to transform themselves into Frenchmen to become French citizens with equal rights as other French citizens. It is one of the few western countries where discrimination on the basis of race was at its lowest even when such powerful states such as the United States discriminated against some of its citizens.
On the basis of religion, this country has several believers who are from different religions. The leading religion is Christianity. However, there are Muslims, Jews, Hindus, and Pagans among other religions. All these religions have been co-existing peacefully and without any form of friction.
However, each group has its own beliefs that make them unique in the market. For instance, the Muslims do not eat pork. Although their population is not very high in this country, they have an impact in the market. A business unit must therefore, be careful when segmenting the market.
According to Hardwick (112), there is a unique character that makes the French market different from others. The French generally love leisure. They also like attractive products that symbolize love for life and for others. This is the reason why it is one of the leading markets for flowers. The country is also the most sensitive when it comes to issues about colors. They have cultural beliefs about some specific colors.
Each color has a specific attachment, and is therefore, suitable for different occasions. A firm must take a keen consideration when choosing colors for its products. This society is also very careful about diction. Every word has a special meaning. As a marketer, one would need to be very careful with the choice of word used during the promotional campaigns. Any wrong usage of word may cost a firm its market share.
The technological environment in this country is very dynamic. Technology inventions and innovations, especially in the field of communication have been the main challenge and strength of various firms at the same time.
While these firms is left with nightmares of trying to guess what their competitors in the market are going to come up with overnight, some have used this technology to emerge as the leaders in the market. Technological changes are so unpredictable and firms are struggling to come terms with these changes. The dynamism of technology in this sector has forced some firms out of the market.
Legal Aspects
According to Campbell (96), no firm can operate in an industry that has no clear laws and regulations to help in general governance. Laws and regulations are always enacted to help define the relationship between a firm and the government, a firm and the public, and a firm and other firms.
This law should be clear on various operational issues in order to ensure that operations of one firm do not affect that of another firm. Some governments always enact laws that may discourage growth of one industry, while impeding the growth of another country. Other laws may also be enacted to discourage foreign firms from investing in the country. The government of France has enacted laws that liberalize the economy.
The laws have encouraged growth of the private sector through public-private partnership. Legally, most firms have not faced major challenges. The laws that govern trade in France have been very favorable to most firms. However, some firms have faced serious litigation cases for failure to follow some of the industry rules and regulations. Of importance to note is that this country is largely a Christian state.
Most of the laws of this land are based on the morals and beliefs of Christianity. For this reason therefore, there are some businesses practices that are not allowed in this country. Failure to follow the industry and national laws and regulation may not only lead to serious fines imposed by the government on the firm, but even a total closure of the firm.
The government has clearly defined how firms should relate amongst themselves. Such issues as advertisements are closely regulated, with various agencies keenly monitoring content of the adverts.
This is specifically so due to two main reasons. The first reason is to ensure that an advert for company A does not have a direct negative effect on products for company B. This is to create a healthy competitive environment where firms have respect for one another. Another reason for this regulation is because of viewers of the adverts who are below the age of majority.
There is a standard language that should be used when advertising in order to ensure that children’s mind do not get polluted with contents meant for adults. The law is also strict on advertisement of alcohol and cigarettes. Advertisements of such products as cigarettes must be followed with warnings to the users about their health. The country has illegalized trade in hard drugs such as cocaine, heroin among other hard drugs.
There are some environmental concerns that have legal implications. France is one of the developed nations in Europe. There are environmental agencies that have come out strongly to defend nature. Firms operating in this country should be aware of the laws that are enacted to protect the environment. Contravening these laws may result in litigation against the firm. This can cause serious financial consequences.
Conclusion
France is one of the developed nations in the world. It is one of the leading economies in Europe. Business environment of this country is unique. In order to have a comprehensive analysis of this market, PESTEL analysis is very vital. Politically, this country has had a long period of stability.
Different regimes come to power and leave, but with a lot of peace. The nation has had a long period of peace, without any serious civil strife that could affect business units adversely. Economically, this country has one of the largest economies in the world. The purchasing power of the French is very high because the wealth of the nation is not held by a single individual, but spread among many. This means that most of the citizens of this country have the capacity to make purchase of their desired products.
The socio-cultural background of this country is diversified. The country is home to various people from different cultures and religious beliefs. They have co-existed peacefully, but with each practicing beliefs that they believe in. This rich culture has seen this firm rated as the highest visited country by tourists in the world. The country has legal systems that help ensure that there is sanity in the business environment.
Works Cited
Campbell, Dennis. Legal Aspects of Doing Business in Europe. Salzburg: Yorkville Law Publishers, 2007. Print.
Fortin, Yvonne. Contracting in the New Public Management: From Economics to Law and Citizenship. Amsterdam: IOS Press, 2000. Print.
Hardwick, Julie. Family Business: Litigation and the Political Economies of Daily Life in Early Modern France. Oxford: Oxford University Press, 2009. Print.
Kurtz, David. Contemporary Business. Hoboken: Wiley, 2011. Print.
Schaffer, Richard. International Business Law and Its Environment. Mason: South-Western Cengage Learning, 2009. Print.
Shovlin, John. The Political Economy of Virtue: Luxury, Patriotism, and the Origins of the French Revolution. Ithaca: Cornell University Press, 2007. Print.