Business Environment

Table of Contents 1 Introduction: 3 2 Organizational structure that is most likely to be applicable to Tuffstuff Ltd 3 3 Discuss the utility, as an analytical tool, of a PEST analysis 5 3.1 Arguments for PEST analysis 5 3.2 Argument against PEST analysis: 6 3.3 Potential alternatives of PEST analysis 7 4 Prepare a business report based on your PEST analysis that this should explain the main findings of your PEST analysis 8 4.1 PEST analysis 8 4.1.1 Political 8 4.1.2 Economic environment: 9 4.1.3 Social environment; 10 4.1.4 Technological environment: 10 4.2 SWOT analysis: 11 5 Conclusion: 12 6 References 13

Introduction:
Tuffstuff is a cement manufacturing company and now it wants to enter into African market. International market is more challenging because the foreign companies are not enough aware of the host country that may sometimes causes to failure in foreign market. The Tuffstuff’s proposed market Rwanda has more attractive for the investment. It is a growing economy country with great potential. In this report, a suitable organizational structure for the Tuffstuff in Rwanda will be discussed. To obtain its goals and objectives the functional structure is considered more suitable for the Tuffstuff company. In foreign market, there are several environmental factors that should need to analyze that would be done by the PEST analysis before entering into Rwanda’s market Blair and Hitchcock, 2011).. The PEST analysis will collect and determine the factors affecting in business environment. In this report, all elements of the PEST will describe. On the other hand, SWOT analysis will also explain.
Organizational structure that is most likely to be applicable to Tuffstuff Ltd
The Tuffstuff is a cement manufacturing company which is successfully served in Europe. It is a renowned company and now it want to enter into foreign country. Its proposed market is Rwanda in Africa sub-Saharan. Every business organization needs an organizational structure to operate business perfectly in a certain market. So, before setting the business structure, it is needed to select an organizational structure which will be more fitted for the organization so that the organizational function can be done perfectly (Henson, 2009).. The activities of business organization is generally conducted on the basis of the organizational structure. There are typically two types of organizational structure and these are formal and informal. Formal structure can be divided into major three parts which are functional, divisional and matrix organizational structure (Hill, 2010). Among these the functional structure will be more fitted for the Tuffstuff Ltd. and its suitability and justification is given below:
Functional structure is most formal organizational structure in which the organization’s total functions are divided into different functional area. The functional structure of the Tuffstuff can be production, marketing, human resources accounting and so on. This organizational structure can be improved efficiency of the employees who are work for the organization. By the functional organization structure it is possible to facilitate organization’s different area in which different specialist may work over long time (Rugman and Brewer, 2011). Besides, employees of the organization will be more aware of their duties and responsibilities which will be the helpful for the organization. Since the Tuffstuff is the manufacturing company that’s why it is needed to divides its different task into different area and also needed different specialist who will have expert knowledge about a certain area or task, it would be only possible by the functional organizational structure (Rugman and Hodgetts, 2013).. For the Tuffstuff it will be more fitted there are many reasons that it gives opportunity to divide duties and responsibilities to the personnel. On the other hand, the employees and head of the different areas are responsible to provide report periodically to the CEO of the organization. It also enhance the managerial efficiency by providing fixed responsibility for that they are able to perform their duties and responsibilities accurately. Besides, it permits strong chine of command by which possible to create controlled environment in the organization. In the organization, employee development and training is most significant task and it is possible only when they follow functional structure. For all of these facility and benefits the functional structure would be more suitable for the Tuffstuff Ltd. when they will enter into Rwanda market (Wong et al., 2011). To be a successful organization there must be needed to follow organizational structure.

Figure- Functional organizational structure
Source- (Hill, C.2009)
Discuss the utility, as an analytical tool, of a PEST analysis
PEST analysis is the most important macro-environmental factors analysis that is especially most significant for the international business. PEST describes the political, economic, social and technological environment of a country which will be used in decision making and action plan (Hill, 2010). The utility of PEST analysis as an analytical tool is given by discussing each of the elements of it in below:
Arguments for PEST analysis
PEST analysis is most effective tolls for the international business. It will helps to improve organizations efficiency by providing environmental situation of the foreign country. On the other hand, it should be needed for the Tuffstuff because it recently wants to enter into Rwanda’s market. This is also need to analysis the political situation of the country before entering into market (Blair and Hitchcock, 2011). The situation of the politics can be determined by the help of PEST analysis. The Tuffstuff can also use PEST analysis to know economic conditions of the African and even Rwanda. The economic conditions of a country can influence overall business activity. This analysis is used for the different research activity that will help to identify and determine problems and also helps to solve that problems. The PEST analysis tolls are very much helpful for the Tuffstuff because it is an international business organization. It is possible to improve organizational strategic management by the analysis of the PEST. On the other hand, the management of the organization can use PEST to make proper business decision. It enable organization to explore different social factors that can affect business environment. Economy of a country can be analysed by which possible to understand the total view of the economy of the Rwanda (Wong et al., 2011). The economy of the can influence to the foreign company to enter into that country or not. Because, if there is economic rescission the company will be discouraged. When the Tuffstuff wants to enter into Africa in certain market that is Rwanda should need to analyse political, economic, social and technological environment. These factors are highly influenced on international business. That’s why the Tuffstuff used these tools to determine needed factors. Besides, it encourage the development of the strategic thinking that will be helpful to know wider view of the business environment (Wild et al., 2010). The findings of the analysis might be taken as an opportunity for the Tuffstuff.
Political situation analysis is much more important for the Tuffstuff before entering into foreign market. It can be governmental stability, foreign exchange policy, entry mode, restriction on export and import and so on that will be very significant for the foreign company. It may encourage or discourage them. The tax policy and employment policies can be determined by the PEST analysis. It also helps to use and interpret that information to recruit and select personnel for the organization (Rugman and Hodgetts, 2013). Besides, the employment policy and trade policy for the foreign company in foreign market is needed to analysis. Trade policy like different barriers and tariff barriers will always positive for the organization. Economic growth of the country can also influence on foreign business. The environmental and social regulation of the foreign country has been influenced on foreign market. In many countries government would likely to impose restriction and regulation to protect their environment. Besides, the technology of the proposed country may also impact on foreign trade decision (Rugman and Brewer, 2011). In the recent years, technology is much more important for the manufacturing company to produce a products in foreign market. Interest and inflation rate of the country may have effect on business decision and also on overall success of the organization. It is only possible by the PEST analysis. It might also help to reduce different threats and weakness of the organization and country too. This analysis is more useful for the Tuffstuff and that’s why it is used by them (Rugman and Hodgetts, 2013).
Argument against PEST analysis:
Although there are many advantage of the PEST analysis, it has also several disadvantage too. There is impossible to identify the potential threats for the Tuffstuff in rapid change the society. It is difficult to identify which information is more accurate and which one is more influential for the organization because there were a lot of information that is gathered from the PEST analysis (Henson, 2009). On the other hand, this analysis may not be sufficient for the organization because of there were many threats and new entry rivalry in the proposed market that will be harmful for the organization. Sometimes many part of the PEST analysis has been done on the basis of assumptions. Since, it can be conducted on the basis of assumption that may be turned out as false and unrealistic in the long run. The customer and buyer behaviours can’t be possible to determine by the PEST analysis but these are very important for the business organization to be successful in the business world. So, if the company depends on only on PEST analysis there were be ignored internal environmental forces (Frederiksen et al., 2012). The internal environmental forces ae also very much important for the international and domestic business organization. But, we can’t ignore impact of the PEST analysis.
Potential alternatives of PEST analysis
PEST analysis is an effective strategic tools and most essential for foreign organization before and after entering into foreign market. But, there are some potential and structured analysis tools available that is considered potential alternatives of PEST analysis (Henson, 2009). These are briefly discussed below-
SWOT analysis is the process of identifying and determining potential threats and weakness for the organization in which they include several internal factors that was absent in PEST analysis. Besides, this analysis is also conducted to determine strength and opportunity of the organization that will works as a drives of the organization (Cherunilam, 2010). On the other hand, it is also possible to analyse the external factors of the organization that should need to understand and mange properly. The SWOT analysis can be used as the development analysis from which organization gather information where they should need to improve. If any organization wants to use it as a single analysis tools, they would but for the large and international organization it would not be effective.
Porters five factors analysis can be used for the organization to analyse different external factors of the organization. It is possible to identify and determine potential and new company entry threats in a country (Chapman, 2010). The bargaining power of the suppliers and buyers can be determined by the porters five factors analysis. On the other hand, threats of substitute are also include in this analysis.

Prepare a business report based on your PEST analysis that this should explain the main findings of your PEST analysis
Basically, the PEST stands for political, economic, social and technological factors analysis. The PEST analysis is most important for the Tuffstuff before entering into Rwanda (Cherunilam, 2010). The discussion about these four elements of the PEST such as political, economic, social and technological factors regard Rwanda’s market is given below-
PEST analysis
Political
Political factors are most influential for the international business. The political factors are looks at how the government control and regulate their country’s business. Political factors can be different governmental rules and regulation that may be imposed to business activity of the foreign and domestics business. The export and import rules plays a vital role for the international business organization. Political stability and governmental stability helps to encourage and discourage to enter into foreign market (Henson, 2009). To enter into Rwanda’s market it is needed to understand the political environment. Because, political environment may causes to failure of the organization.
The Tuffstuff wants to enter into Rwanda market with cement product for which they need to know exact political situations and conditions. Rwanda follows democracy and their government has been changed by election in seven years intervals. Their governmental changing years are considered to more likely favorable to business organization (Henson, 2009). It can be considered a positive side for the Tuffstuff to enter into Rwanda’s market. There are several significant factors that should need to know and will affect in entering into foreign market and these are-
Political stability: The Rwanda is small state of the sub-Saharan Africa which is follow democracy policy. According world politics journal, the Rwanda is a more stable and favorable political situation for the business organization through which they continued their rapid growth. The government of the Rwanda imposed several rules and regulation that may not difficult by the foreign company (Henson, 2009). It is also seen that running government are more favorable for the international firms and gives chance to enter into their market with limited terms and conditions. By leveraging the entry of mode of the foreign company it improves its economic growth. So, the Tuffstuff can be entered into Rwanda’s market with little restrictions.
Trade policy: A country’s trade policy strongly affects its business organization. The trade policy is generally taken by the government and different environmental bodies. To enter into a foreign market it is much needed to know trade policy of the country so that they can operate their business according to that in foreign market (Fortune of Africa Rwanda, 2014). Similarly, the Tuffstuff also need to know the trade policy of the country. Previously, it is said the government of the Rwanda are more flexible it indicates that the trade policy of the Rwanda will be favorable. The trade policy can be tariff barriers that may obstruct the foreign company to enter into their country. In some case the Rwanda places a policy to protect and develop domestic business organization.
Taxation, foreign exchange and currency policy: The Rwanda governments has a strategic taxation system by which they can attract the foreign investors to invest in their country. Besides, tax system can also influence the national growth of the economy (Henson, 2009). Before entering into foreign market the Tuffstuff should need to analyze foreign exchange and currency policy, in some case Tuffstuff can make an agreement about these issues. In Rwanda this systems are more flexible and adaptable and Rwanda follows US dollars currency for the international transactions.
Economic environment:
To know the recent and near future economic conditions of a country it is needed to analyze environmental factors of that country. The growth rate of economy can affect to the international business decision and success in a foreign country (Fortune of Africa Rwanda, 2014). To analyze the economic environments of a country that includes such factors are economic stability, income status, purchasing power, unemployment rates, inflation rates, interest rates etc. All of these factors must be influenced on international business decision making. The Tuffstuff company need to explore economy of the Rwanda before entering into so that they would have not been faced troubles.
According to foreign policy Magazine 2013, the Rwanda was the fifth world strongest destination for the investment in where there is low level of risks. On the other hand, it has low restrictions on foreign company, favorable tax structure and standardize employment policy that attracts foreign investors. Besides, World Bank declared that the Rwanda is a second best reformer in the field of economy because they have been dramatically developed their economy after 1994. Its recent GDP is more than 8% despite of world economic downturn. It has become more strengthen of the economy (Rru.worldbank.org, 2016). From the economic history of Rwanda, it is seen that it was $416 per capita income and now it is $1784. It has been possible for them only because they facilitate and gives opportunity to the foreign investors with little terms and conditions. Rwanda has a well-structured economy and there are many of financial and commercial organization available (Frederiksen et al., 2012).
The Rwanda’s major portion of the GDP comes from agriculture and it is generally agriculture based economy. But, they give more concentration on business and industrial development. For this reason, the government of Rwanda liberal for the foreign company (Fortune of Africa Rwanda, 2014). That’s why the Tuffstuff will be entered into Rwanda more easily.
Social environment;
Social environment of a country also impact on business organization especially for the foreign manufacturing company. Since, the Tuffstuff is the cement manufacturing company and it has need to be set a production plant to produce cement, they should need to analyze and obey with Rwanda’s environmental protection issues. The Rwanda is over populated country in which more than 11 million peoples are live (Rru.worldbank.org, 2016). But these overpopulation creates opportunity for the business organization. Besides, in the age of modernization and industrialization, the building constructions and development has been increase in the result of ultimate demand of the cement product also increased (Rdb.rw, 2015). In the Africa, Rwanda has many lakes and called lakes state. Basically it geography is dominated by the mountains in the west savannah to the east. There are some hinders of social development for that the skills of the employees are low and very much dependent.
Technological environment:
Since, the Tuffstuff is the cement manufacturing company, it need to production plant and machinery for the production. Technological analysis can gives information about availability of the technology Rwanda which will be needed for the Tuffstuff. The advancement of the technology derives the business organization and overall innovations. Most of the case, to facilitate production and distribution of the Tuffstuff, technological development can speed up the growth of the business (Ifc.org, 2015). The Rwanda is station from where the electricity of the country has been distributed thereby low risk of electricity in Rwanda that is needed to operate production. In the Rwanda, the communication system has also been developed which can help in distribution of its products.
This is the overall PEST analysis of the Rwanda and it has been found the positive environments in Rwanda for the Tuffstuff.

Figure: PEST analysis
Source: Cherunilam (2010)
SWOT analysis:
SWOT analysis is an analysis of which helps to determine the strength and weakness of the environment. By using the tools of the SWOT also possible to determine threats and opportunities of the organization. The Tuffstuff can be determine it internal weaknesses which is need to be improved. The SWOT analysis helps to fulfill the lacking of the PEST analysis (Frederiksen et al, 2012).It also permits organization to access the threats and opportunities in domestic and international business. The PEST analysis is thoroughly considered external environmental factors analysis where the SWOT analysis includes both external and internal environmental factors that facilitate and effective as well. It is considered the conjunction of the PEST analysis. The Tuffstuff can’t deny the benefits and importance though it has been needed SWOT analysis.

Figure: SWOT analysis
Source: Rugman and Brewer (2011)
Conclusion:
The Tuffstuff is the cement manufacturing company which is successfully served in UK market. For the aim of expansion the business globally they proposed to enter into Rwanda sub-Saharan Africa. This place is considered as the most appropriate venture for the Tuffstuff. Because, it has growing opportunity for the foreign company and government of the Rwanda promotes their country to attract foreign investors by providing leverage terms and conditions. An organizational structure is very much important for the business organization and functional structure could be determine most applicable to the Tuffstuff explained in this report. On the other hand, it is found that the PEST analysis is use as the critical analytical tools for Tuffstuff to analyze external environmental factors of Rwanda. The overall elements of the organization PEST analysis are explained in this report. Besides the usefulness of the SWOT analysis is also described.
References
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