PESTLE Analysis for Turkey

Introduction

The report will consist of different aspect of factors to consider for moving the plant into Turkey. The area which will be covered will be the PESTLE analysis along side with the Porter’s Diamond and also an analysis on the cultural factors.

PESTLE Analysis for Turkey

Political

One of the current political strengths in Turkey is that their government have policies on liberalisation. Turkey is supporters of liberal trade and investment policies which allow open trade between different countries in the EU. Turkey forged a custom union agreement in 1996 to allow many Turkish firms to get bigger and more successful in the global economy. Exports have been rising on average at a rate of 10% every year and this will allow the fashion industry to flourish with the exports produced in the Turkish plant.

One of the current political challenges in Turkey is the series of violent terrorist attacks that have happened in the country due to Islamic extremist, Kurdish radicals, Turkish militants that may have link with Al-Qaeda. This is a disadvantage for bringing the plant to Turkey as it may be targeted by these terrorist.

Economy

One of the current economic strengths in Turkey is that there is a high flow of foreign investment coming from abroad. The investment plays apart in Turkey’s speedy expansion and this has been driving the country’s economic growth. In Turkey there is a privatisation program planned to start from 2008 that will allow the sale of major bridges, highways, electricity grids and a share in the partly commercial bank. The money generated from foreign investment will be used for expanding the infrastructure of the country; this will be an advantage for bringing the plant into Turkey as the Turkish economy will be in growth and to bring the plant here will only benefit the company and the fashion industry.

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One of the current economic challenges in Turkey is the current account deficit for Turkey. The declining current account has been was delayed the economic stability. The import market has seen a quick rise as an outcome of increased global commodity prices and a sturdy Turkish lira. Turkey is even more vulnerable during times of global financial doubt. This will be a disadvantage for bringing in the plant into Turkey as it the company may need to relocate if there is a financial crisis which may happen with Turkey.

Social System

One of the social system strengths in Turkey is that they have growing proportion of young population as they have more than half the population being aged below 30. This will allow Turkey to increase their employment rate by getting the most out of the young labour force. This is an advantage for the plant being brought into Turkey as shows there is a healthy supply of young population willing to work so the company could create jobs for these people.

One of the social system challenges in Turkey is that they have a high level of unemployment. Turkey unemployment level rose by 38,000 in that year to 2.3 million in 2007 but then in 2008 it rose again by 737,000 from the previous year so this shows that there was a substantial increase from the previous year. This is a disadvantage to bring in plant into Turkey due to the high level of unemployment as they may not be skilled workers in the pool of unemployed people. There is another side to this where it can become an advantage by hiring these unemployed and training them to work sufficiently for the company.

Technological

One of the technological strength’s in Turkey is the significant development in the ICT sector. During 2001-2007, Turkey’s ICT sector expanded so rapidly it expanded by double-digits so that shows that it was a very successful growth. In 2007, Turkey’s ICT market reached $24 billion and in the previous year it reached $21 billion so this shows that in a space of one year the market grew by $3 billion which is a very substantial amount of money. The reason for this sharp increase is due to the Turkish telecommunications sector as they have been privatised by the government. This is an advantage for the plant being brought into Turkey as this will attract more foreign investment project as well as creating more jobs for the people of Turkey.

One of the current technological challenges in Turkey is the low expenditure cost on the research and development. Turkey’s research and development cost in 2006 was around 0.6% which is below the average of the European countries which are at an average of 2.3%.This is an disadvantage for bringing in the plant into Turkey as there is not that much investment being put into the Turkish research and development, they will need investment from both the private and public sector because the country will need to have a healthily amount of investment in order to grow into a country which is in the EU. In the future is the research and development cost are still low then this will erode and stop the competitiveness of different industries in Turkey which will be bad for the long run.

Legal

One of the legal strength’s in Turkeys is the comprehensive legal structure they have. The judicial system is made up of general courts which deal with domestic cases, heavy penal courts which deal with more serious case, military courts which will deal with the military cases and the Constitutional Court which is the highest level of courts that will deal with many different cases which is essential in the Turkish government such as war crimes. This is an advantage for the plant being brought into Turkey as this shows that the Turkish government are strict on the law and will enforce the law if need be, it will allow the company to have a fair trial if any form of disruption were to come up such as trade union issues that would cause the company any serious problems.

Another legal advantage in Turkey would be the robust framework for the business entities, as the company who are looking to invest into Turkey will not need to go through a very long and lengthy business registration process as there is a freedom to start, operate and close a business by the Turkish regulatory environment. so for example in Turkey, it will take on average 6 day to starting up a business compared to 43 days in the other world countries which is a much longer time and could be beneficial for the type of market the company is involved with. As the fashion industry clothe range change very often and will need to be able to adapt quickly if the plant is being brought over to Turkey.

One of the current legal challenges in Turkey is the judicial inefficiencies as there are some delays in the Turkish judicial system which can cause some serious issues. There are also judges who are politically biased and this has affected legal outcome. This is a disadvantage for bringing in the plant into Turkey as there may be a decision made against the company if ever in a legal battle as the judges may not have an unbiased view of the case but in fact have a biased view according to the political situation at the time.

Environmental

One of the environmental strength’s in Turkeys is the prosperous biodiversity they have. Turkey has a very affluent natural resource base and has ranked ninth on biodiversity in the European countries. Examples of the type of biodiversity they have are not only a range of wild species but important domestic species such as wheat, lentils, chickpeas, pears, apple, chestnut and pistachios. The biodiversity has a very great potential for the development for Turkey and this is an advantage for the plant being brought into Turkey as this will materials such as cotton to be grown in Turkey and used in the plant so the material will be home grown and will have a cheaper price and there will be more jobs created for the company involved in cotton picking.

One of the current environmental challenges in Turkey is the high pollution levels and the global warming being caused from the pollution levels. The water treatment facilities, wastewater treatment equipment and solid waste management in Turkey needs urgent attention as there is high level of environmental pollution as the is an increase in chemical and detergent overflow and this rises in the air and can cause severe illness to people who inhale especially in urban areas. The air pollution has increased over the past since 1990s and is the air pollution is quite severe in the capital of Turkey, Ankara and other city such as Istanbul. Smog in these cities is due to the increasing number use of cars. Also there is a lot of industrial air pollution from power plants and facilities used by the fertilizer, cement and sugar industries which don’t have the flirtation equipment needed to filter out the pollution. Turkey loses out on approximately one billion tons of topsoil annually and this has an increasingly level of environmental pollution and that could harm the people and economy of Turkey.

The air pollution is a disadvantage for bringing in the plant into Turkey as there many form of pollution in Turkey which are harmful and could affect the environmental value our company holds and the ‘green’ credential which many of our customers may consider before doing business with our company. Also the disadvantage is that the contribution to global warming where there are so many efforts to reduce the green house gas but Turkish government should invest into becoming green so that it could become a cleaner environment also it may need to cut down on the pollution level as they are in the EU and will have to meet the pollution level they have planned to cut to.

PESTLE linked to Porter’s Diamond

Turkey’s political strength that links to the Porter’s diamond would be how the Turkish government are creating new legislation to help the industry and different companies to grow and foreign investment to improve and make it better for Turkey as a national advantage.

Turkey’s economical strength that links to the Porter’s diamond would be how they are making the market more demanding by stimulating foreign investment to make them more competitive for different industries and companies so it will benefit Turkey as a national advantage.

Turkey’s social strength that links to the Porter’s diamond would be how the Turkish have a growing proportion of young population which the Turkish government can use to create new job by encouraging and training them up to have new skills and qualified to work in different sectors and this will be a national advantage for having a very skilful workforce.

Turkey’s technological strength that links to the Porter’s diamond would be how the Turkish government are improving the ICT sector so not only is it modern but its structure would benefit Turkey and support different industries to enable them to achieve their optimum so that will be a national advantage that benefit Turkey.

Turkey’s legal strength that links to the Porter’s diamond would be how they have created a strict system for the courts which is there to keep companies and people within the law that Turkey have set out to help them grow so that would be a national advantage.

Turkey’s environmental strength that links to the Porter’s diamond would be how they have a good biodiversity and have a rich resource to different material used for various industries and the Turkish government are trying to maintain this biodiversity and creating job in the process so that it can supply to different countries and for Turkey this will be a national advantage.

Cultural issues to be considered

There are cultural issues that need to be considered before bringing the plant over to Turkey. There three main issues in Turkey would be religion, location and gender equality.

Turkey’s main religion is Islam and it is heavily influenced in the many aspect of Turkish life and it plays a major part of the Turkish people lives. The faith has many restriction and many special occasions where to celebrate the faith. Where the company will need to consider if they clothing being manufactured will be able to look good for most of the Turkish population taste and the dress sense as the faith has many restriction on the type of clothing worn and will not support inappropriate clothing for the people Turkey. Especially in the female section there are many restrictions what to cover up and where, but in recent year the restriction have been very flexible as the country is becoming more modern and more western.

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The location where the plant will be positioned will need to be thought over as there may have repercussion as there may be houses, schools and mosque nearby so this will create a bad environment because if the plant was to be made near houses then the community may be very unhappy with the disruption of they everyday live with a plant being made near them. Also the location will need to be considered in terms of pollution so if there was any pollution then it needs to be well away from people.

Gender equality will need to be considered as the males tend to get paid more than the female as they feel that they do more. It is serious issue within the Turkish government but it relate to the Turkish culture on how the males are the dominate species so the company may need to consider this could be a chance to break the gender barrier and provide same wages for the female as the males.

Conclusion

In conclusion, the company should seriously consider moving the plant into Turkey as it is still an emerging country that has flaws but has many advantages and over time the flaws will be sorted out and benefit the company in the long run.

References

Books

International Business, Environments and Operations, Pearson International Edition, Daniels, Radebaugh, Sullivan

Online PDF

Datamonitor Turkey PESTLE Analysis

Websites

https://www.cia.gov/library/publications/the-world-factbook/geos/tu.html

http://www.datamonitor.com/store/Product/turkey?productid=074DD3A8-BC2C-40A9-9672-3793A75DEBA0