Introduction
Environmental analysis is an important process when establishing a business, especially in a foreign country. The process involve gathering and evaluating information that would help in making decision about a new venture and building a solid plan for the business that include prospects for growth and investment. The analysis entails consideration of a number of factors. In this paper the following will be discussed: political risks, legal environment, economic analysis, cultural analysis and demand estimation.
Political Risks
According to Kobrin (1979) political risk is most often conceived in terms of the host government interference with business operation. In simple terms, a political risk refers to the possibility that political decisions or events in a country will influence the business climate such that business loose money or fail to reach to their expectation.
The viability of the restaurant will depend, in a large part, on the stability of the host government as well as the strength of the host country’s political system. Kobrin (1978) noted that political instability and direct foreign investment have a negative relationship. In addition, the attitude of the government towards foreign investments is a factor to consider in establishing the restaurant. Expropriation and nationalist in most cases have negative result for foreign investment. Moreover, discriminatory taxation, limits to foreign employment, and lack of patent protection has crucial effect on foreign business. In addition, international relations of the host country, in particular Australia and the United States, will have an influence on the operation of the restaurant.
Legal Environment
Legal environment refers to the legal requirements that the restaurant will have to fulfill. In this regard, the registration and licensing process will determine the time taken to acquire a license for operating the restaurant in Australia. Besides the licensing requirement, other legal requirement might include taxation and patenting.
Economic Analysis
The core purpose of a business is to make profit. Therefore, it is important to explore general economic conditions that would affect the restaurant performance. The typical issues that are in consideration include growth rate of the gross national product; rate of inflation; and exchange rates. These factors will determine the cost of establishing and operating the restaurant. In addition, factors such as availability and affordability of raw food items will dictate the operation cost of the restaurant. The restaurant could be viewed as a competition to other players in the industry or an opportunity to the population. However, the competition aspect presents some other requirement in capital expenditure expenses.
Cultural analysis
In considering the cultural aspect, one critical point to note is the cultural acceptability of the investment by Australian population. That is, it is of essence to establish the traditions, beliefs, values and religion of the Australian people before deciding on the services that the restaurant will offer.
Demand estimation
In demand estimation, some factors that are in consideration include the price of the service and food items, competitors and their offer price for similar items, the population’s tastes and preferences in regard to the restaurant’s services.
Market Segment and position the service
Market Segmentation entails identification and breaking up of the entire market into categories of potential customers with similar needs, characteristics or motivation that are expected to have homogenous purchase behavior. In Australia, the general market segment is the entire population of sixty one million people. The market segment is further divide geographically into geographical regions which are almost similar to the political boundaries of the country. Moreover, the population is divided into age, gender, income occupation. There is a higher ratio of the employed to the unemployed where the employed represents a third of the population. Moreover, the persons between the age of 16 and 25 represent the largest number of the population. The market segment is further characterized by a higher number of female citizens. Male population represents only 35% of the whole population.
The Australian population is diverse in regards to values, attitudes, social class and lifestyle. The rich and the wealthy represent the highest spender in per capita. However, it represents also the smallest percentage of the population. The market segment is largely not opposed to foreign investment and the government encourages foreign investment in all types of industries. The buying behavior of the Australian population is dependent largely on income.
To position the first step will include identifying a specific attribute that would distinguish the restaurant from competitors. In this regard, the restaurant would aim at the middle income earners. It would create an image as a restaurant of all Australian irrespective of class, race, region, or origin.
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