Country evaluation

Contents
Introduction......................................................................................................................................3

Business environment audit relevant to international expansion....................................................4

Recommendations on likely sectors/niche which are potential targets for incoming international
firms.................................................................................................................................................8

Conclusion.....................................................................................................................................10
Introduction
PESTEL analysis is a very good tool to analyze the various aspects of a country or industry.
Through this tool we get know about several factors which are important in the context of the
business. Because this tool analyzes the country or industry at the macro level and gets the actual
scenario of the country and industry. In this report we have applied the PESTEL in the context of
Colombia to see the various aspects of that country which may affect the business there. Through
this report we will be able to know that whether this country is perfect for international
expansion of business and which sectors are quite to start the business with.
Business environment audit relevant to international expansion
Colombia is one of the countries which is situate at the north of south America. This country is
quite big in its size and the number of populations there is almost 5 crores. Their language is
Spanish and their currency is Peso. There are lot of business organizations in this country and
there are many renowned international business organizations as well in this country. Through
PESTEL analysis we will be able to find out the various macro factors of this country which are
quite robust enough to affect a new international business expansion in this country.
Political
The political situation in Colombia is quite tricky because of the existence of various guerilla
groups. These groups are quite violent in their nature and so far, they have done so many
damages to this country (Andonova, and Zuleta, 2017). These groups are the main reason why
the stability in Colombia has been disrupted for several times. During election time, this groups
become more active. There are times when national election of this country had to be postponed
because of their violent activities. Several contestants of the election were also killed by them
which shows how dangerous this groups are for political stabilities. But the current government
has talked with the guerrilla groups to negotiate with them so that country gets the political
stability and becomes business friendly.
Now political stability is very important for any kind of business organization. Because if there is
no political stability company will not be able to run their business properly or increase their
sales. During political instability people of that country will have the fear to come out of their
house in order to avoid any kind of problems. Then business organizations will not get customers
and they will face loss in their business. In case of international expansion, it is mandatory for
any kind of business organization to assess these factors while preparing the expansion plan and
take proper decision (Schiffer, and Weder, 2018). Otherwise it will be a huge problem for the
whole organization. Since, the government is getting more serious about the guerilla groups
chances are high that political stability will be stablished by the government very soon and
international organizations can enter into this huge market without any type of tension.
Economic
Economic factors of a country encompass a lot of things such as GDP, inflation rate, interest
rate, job creation etc. The government of Colombia has several initiatives to increase the
employment of their country. That’s why they have made an agreement with the USA and it will
create overall lac job in Colombia. In this way this will affect the GDP of the country and the
overall GDP of the country will be increased (Batra, Kaufmann, and Stone, 2017). Bu there are
some other issues as well which are not ion the favor of the business environment. In the recent
years they are suffering from the trade deficit which is not a good situation for them. Suffering
from trade deficit means that their economy is endangered and it might create a huge problem for
them in th4e future. That’s why they need to take actions now or they will be huge consequences
in their economy which will affect the whole business world. The inflation rate there is around
4% which is quite normal. But government needs to focus on the inflation rate very carefully
because any kind of escalation in this rate will jeopardize the economy of the whole nation
(Varner, 2019).
When an international company plans to enter into this country the above things must eb
considered before the entrance. Because economic factors are quite significant for any kind of
business organization. It helps to assess the ongoing economic situation int hat country. But since
the inflation rate is quite normal it will not be bad for any company to make international
expansion in this country.
Sociological
Sociological factor is related to the demography of the country and the factors which are needed
to be considered here are age, sex, religion, education, spending power and willingness of the
people, income etc. In this country, the age of almost 70% population is higher than 15 years and
the rest 30% is under 15 years (Chavis, Klapper, and Love, 2019). This proves that the customer
base of this country is huge. Any kind of company by providing good quality products to this
vast customer base will be able to earn a good fortune easily. But the wealth distribution in
Colombia is not satisfactory. Because 45% of the wealth of the nation is controlled by the 3% of
the population which shows that the wealth distribution system is quite discriminatory. There are
lot of people who lives under the poverty line and the percentage is almost 35% which is why it
would be hard enough for any business organization to strive for success in this country. There
are some other problems related to this factor as well. In rural areas poverty is more intense than
urban areas. That’s why people who are living in rural areas are suffering from so many
problems (Montenegro, 2017).
Because of the inequality between the wealth distribution across country and the huge poverty
affected areas, the business organizations are getting less advantage which is for sure. That’s
why it is needed for the companies who are planning to enter into this new market must assess
the all the sociological factors which may affect their business. On the other hand, poverty
affected country like this has less spending power which means business will not get the proper
outcome that they want.
Technological
Technological is important for all the countries all over the world in the 21st century. Internet is
one of the big factors under this segment because many business organizations fully on the
internet only. The internet users of Colombia are rising very sharply. The government is trying
their best to remove the barriers to the internet and they are being very successful. They have
successfully made an arrangement where people from rural areas can access the internet now
(Pastrana, and Sriramesh, 2018). It’s a groundbreaking success for the current government which
is why the overall internet subscribers of the country is increasing. Also, the broadband users of
this country are rising at a constant pace which is incredible. Due to the technological
advancement, many companies of the country are incorporating the advanced technology in their
facilities in order to increase the productivity and the quality of the products. In this way, they
have successfully incorporated some of the machineries which are capable enough to produce
huge number of products within few hours. Also, due to the increased emphasis on the education,
fresh graduates are recruited in different renowned companies in Colombia and they are bringing
process innovation in those companies which is good news for the country.
Multinational companies can enter into this country with the hope that they will be able to use
the advanced technology and become successful like local companies. Also, the rate of internet
users has increased which means its an opportunity for the new companies to explore this market
and they can easily start online business and transaction which will be quite beneficial for them.
Technological factors are in favor of companies in this case (Guarnizo, and Díaz, 2019).
Environmental
Environmental factors encompass different aspect of a country’s environment which is needed to
consider while involving in a business in that country. They have started to roll out different
projects and one of them is biodiversity-friendly agricultural practices which is a big project of
this country. For this have got funds from global organizations across the world. The fund will be
used in the palm cropping which means that business which are directly and directly connected
with the palm will be benefitted from this project. But they have several problems of their own.
In Colombia, the emission of carbon di oxide is increasing at a fast pace which is an alarming
thing for the whole country. The reason behind this situation is the excessive number of factories
and transportations. Also, there is huge lacking of safe drinking water in Colombia which is why
people there are not getting the proper safe water to drink. That’s why they are forced to drink
the unsafe water and hence they are suffering from various types of disease. Various
international environmental organizations are claiming that big factories are quite responsible for
this situation (Escandón Barbosa, González-Campo, and Murillo Vargas, 2017). These factories
pollute air, water and sound which is why the environment of Colombia is at stake. For a new
organization which is planning to expand their business in this country, they need to remind that
the environmental laws in Colombia is getting strict day by day because of several pollutions that
is affecting the whole country. That’s why it is mandatory for all types of business organizations
to comply with the regulatory authorities of Colombia so that they do no harm to the
environment of that country and contribute through their business.
Legal
Legal aspect is a very crucial thing for every business organization. That’s why every time a
business organization tends to expand their business in a new region, they asses the legal factors
of that region first. In Colombia, laws are quite strict for business organizations. Because this is
the only way government can control all the organizations which are doing business in their
country. Employee safety laws, tax laws, labor laws etc. are quite strict in this country. Every
organization in Colombia needs to establish the employee safety law inside of their organization
for the betterment of their employees. Because in this way employee will feel safe, they will eb
able to continue their work inside the organization. Inspection teams of government assess the
employee safety measurement in each organization and rate them. Every companies need to
comply with the tax laws properly (Fuerst, 2018). They need to pay their taxes to the government
every year and the files properly about the tax status. Failure in paying the tax will cause the
termination of the business which is not an expected thing any kind of organization. Labor laws
are also strict there. All the organization must pay the remuneration to their employees timely.
Otherwise if employees start protest for the remuneration then it will be a huge problem for the
company.
International companies who want to expand their business in the Colombia need to understand
the legal aspect of this country. They should have the mentality of complying with all the laws of
the country. Since the corruption rate of Colombia is very low it will not be a problem for them
to run their business and hence, they will get an extra advantage. So, every business organization
which are planning to expand their business in this territory need to understand the paramount
importance of legal factors of Colombia.

Recommendations on likely sectors/niche which are potential targets

for incoming international firms.
In Colombia there are several sectors which are getting popular day by day. These sectors have
the potential to become a huge industry and the companies will be benefitted. Bogota is the
capital of Colombia and these sectors are based on this city. These likely sector5s are potential
targets of the incoming international firms (Rettberg, 2019).
Mining: Mining is one of the most popular sectors in Colombia because the country is filled up
with various natural resources such as coal gold and emeralds. Even the drop-in price has
affected the mining business recently but the situation is becoming like old time again. For
international companies this is one of the biggest opportunities to involve in this business to
expand their business portfolio as well as to increase their revenue. Also, the government of
Colombia is also facilitating the companies who are investing in this business.
Cannabis: This is a very good product which is getting popular day by day at the international
market. The demand of this product is also increasing all around the world. The reason is this is
used for medical and scientific purposes. Different types of medicines are made from this
product which is why various organizations are investing heavily to cultivate it. Health ministry
of Colombia is also providing license to the companies who are interested to do this business in
this country. The medical products from this crop is demanded in all other countries that’s why
there is a huge chance of exporting it.
Cosmetics: This industry is booming so fats in Colombia. The cosmetics market size of
Colombia is 1.3 billion which is a very lucrative niche to join. International companies should
invest in this huge sector to start earning profit. Because of the recent surge in the income of
middle-class people, the demand of the cosmetics has increase by a huge number. Beside ladies’
cosmetics item, men are also getting interested in the cosmetics items of their own (Bucheli,
2018). The consumption is increasing day by day it will continue for next three years for sure.
The demand of skincare products is quite high which is high many companies are focusing on
the skincare products. Also, people there are also interest in the international cosmetics brand
which are popular all over the world. That’s why, it’s a big opportunity for the companies to
enter this sector right now.
Technology: Technology is the next big thing in Colombia. Because most of the IT services in
Latin America is provide by Colombia which is why this sector is growing at a fast pace as well
(Aguilera, 2019). There are so many tech-startups in Colombia that require fund. International
companies can invest in this companies and earn a huge amount of money. Alternatively, they
can expand their business in this new country and start providing services to the people while
competing with the local IT companies. Because of technological advancement, online
marketplace is getting formed and it is expected that by the year 2023, this sector will be so
profitable that it will bring huge money for the country.
Coffee: Colombia is quite famous for the coffee beans. They manufacture several types of coffee
beans. It is very clear that the demand of coffee is growing all over the world like Colombia. So,
this is great opportunity for international companies to tap in this sector to get the most benefit
out of it. Because of the production of the coffee beans the raw materials cost is very low in
Colombia which is why it is a profitable sector to expand their business. So, international
companies should plan their expansion strategy and enter in this sector (Varela Villegas, 2017).
Conclusion
Colombia is great country for doing business. But there are several barriers which are related ot
macro environment of the business. Governement is trying their level bets to remove these
barriers so that the situation can be business friendly. International companies should evaluate
the niche of this country and plan accordingly so that they can enter here and do business.
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