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An Analysis of Legal Factor, Research Paper Example

Pages: 2

Words: 613

Research Paper

Growth and development can be considered to be the fundamental factors in business. These elements are vital in the case of a company managing to stay ahead of their competition and even growing their target market. In this case Peet’s coffee is seeking to expand its operations as it seeks to develop into a multinational. With the competition being Starbucks, it is vital for the company to expand to ideally compete with the well established company. It is vital for the company to invest in the ideal country that will ensure that the company can generate a high level of revenue.

In the case of Venezuela, the major stumbling block is the strained relationship between the United States and Venezuela. Hugo Chaves moved to nationalize various companies and the state to own 60% of all companies. This does not tie well with foreign companies. He also sort to change the  time zone,  setting it back by half an hour. (Pendergrast pg 14)

The legalities of the country have meant that the American based companies or any companies that are based in the United States cannot establish with a view to make a profit due to its socialist leanings. There has been further regulatory restrictions based on new requirement by foreign companies that are designed to stop foreign penetration of foreign goods. An example of this is the  sanitary and phytosanitary (SPS) which is used to restrict importation of agricultural goods.  It is on this basis that the country will not be ideal for Peet’s Coffee to expand its operations due to the hostile business environment.

In the case of South Africa, a key factor in the country is its stability and the general growth of the economy is always on the ascendency, which the ideal business environment for the company to establish its operations. The regulations are not demanding however there is the requirement of having a black partner under the black empowerment program. Which requires a 51% majority shareholding by a black south African. This in the companies view is reverse discrimination and a hindrance to the shareholders profit margins.

Australia is a fairly isolated country and continent. Even though it may be isolated, it is close to markets in both China and Japan, and it can serve as a catapult into these markets. The country has minimal legal elements that the company must adhere to and thus business establishment is easy in the country. (Pendergrast pg 56)The bilateral Australia-U.S. Free Trade Agreement (AUSFTA) allows for easy access of the company  into the country and a launch pad for China and south east Asia. The regulations in the country a.re also fairly simple and easy to follow and they are not restrictive on the business operations.

Establishing stores in Indonesia will not be ideal, which is due to the fact that the country is mainly a tea drinking country and has an underdeveloped economy that will not be favorable of the company. The country is a middle income country combine that with the work USAID  is doing in terms of pro farmer regulations, it is in line to improve its income from coffee production and sales. This is a good entry point for the company. The language barrier may prove to be a problem for the country and the general underdeveloped nature of the country may prove to affect the company operations in terms of equipment and even the maintenance of products.( Pendergrast pg 23)

In conclusion, the most ideal country will be Australia due to the ideological and cultural similarities as well as an easy entry point to the wider south East Asia market. Seeing as it is the largest and fastest growing market n the world.

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