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PEST Analysis

Every country has its own domestic market atmosphere, where they operate in the specific systems. In order to operate effectively and efficiently in new international markets, companies face number of opportunities and threats, therefore it is necessary to analyze the new market environment carefully to avoid potential risks and barriers. One of the common methods available to evaluate the external environment is PEST (Political, Economic, Social and Technological) analysis.

1.1      Political Environment
Political system can be evaluated in two associated measurements, which are collectivism and individualism. Taiwan is moving towards democratic system but seven decades of communism governance still has an effect on both people and organizations. There are four major parties in Taiwan which are Democratic Progressive Party, Kuomintang, People First Party and Taiwan Solidarity Union. It is also crucial to consider macro and micro political risks, which possibly affect the firms in a country in unusual occasions such as war or unexpected changes of government (Dörrenbächer andGeppert 2011). In these situations governments may impound the belongings of the corporations without any compensation According to AMB Country Risk Report, Taiwan has strong ties with Hong Kong and Mainland China the country is considered as low political risk country which creates great potential for business trades and investors. Taiwan Today website announced that Council of Labor Affairs endorsed that foreign labours can work up to 12 years as compared to three years in 2011. This will also generate more confidence in foreign employees and help to boost work performance, less time to train foreign workers, less conflicts and lower employee turnover. Ernst & Young has published in the report that Ministry of Finance in Taiwan has been trying to reduce the taxation policies in the country by reducing corporate income tax to 17 percent and income tax to 20 percent....
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