Management Essay Example | Topics and Well Written Essays - 1500 words

Management - Essay Example These factors can be both a threat and opportunity for the company. It is a threat because they are beyond control of the company, that the acronym PEST becomes an appropriate term. It becomes an opportunity when the company takes advantage of the environment and it becomes a rearranged word as STEP towards strategies in entering the market. Any company wishing to enter new market should study the macro-environment factors surrounding the country. First consideration is the political analysis that consists of: political stability, legal framework for contract enforcement, trade regulations and tariffs, favored trading partners, anti-trust laws, pricing regulations, taxations – tax rates and incentives, wage legislations, mandatory employee benefits, industry safety regulations and product labeling requirements. The political analysis done for Sainsbury showed following results: Trade restrictions. It will not be difficult for Sainsbury to establish commercial business relation s with Qatar because of its existing friendly relationship with U.K. It has an existing Free Trade Agreement that provides benefits to both contracting parties (Pratap, 2011). One of the Qatar’s policies that makes setting up of large industries possible here are the regional integration, trade liberalization and expansion of market volume, thus encouraging mass production and economies of scale. Tax policy. Benefits owing to tax incentives include the following: No income tax or social security deductions payable on wages and salaries. No taxation is payable on exports and customs duties start at 5% Foreign investors are permitted full repatriation of capital and profits overseas in foreign currency. Corporate tax on foreign companies is 10% Source: KMD Consulting Legal. According to SMD (2008), the Foreign Investment Law No. 13 of 2000 offers foreign ownership up to 100% foreign ownership in sectors of agriculture, manufacturing, health, education and tourism. In Feb. 1, 20 10, this law has been amended and now includes 100 percent ownership in businesses such as consultancy services, information technology (IT), services related to sports, culture and entertainment as well as distribution services. Minimum capitalization required for a Qatar company is 200,000 QR and contracts entered into by Sainsbury in Qatar are covered by the Qatari Civil Code. Sainsbury can be exempted from the Qatari Law that stipulates a total local equity of 51% in any commercial company because it falls into the category of distribution service engaged in the retail distribution network and this exemption is available upon request (SMD, 2008) Legal. Environment regulations. The current environmental issue that would most likely affect Sainsbury’s entrance to Qatar is its limited natural fresh water resources and its increasing dependence on large-scale desalination process. Political stability. The peace and quiet of a country is vital in determining investment. Qatar, according to Business Monitor International will most likely to remain politically stable as analysts see no threat to al-Thani’s family rule (Business Monitor, 2009) Next, we go to the economic factor. Included in this analysis are: the type of economic system in countries of operation, government intervention in the free market, comparative advantage of host country, infrastructure