Companies have many important decisions to consider before conducting business within a foreign country. Companies use a PESTLE model to analyze a country’s macro-environment, competitive forces, uncertainties and risks. A PESTLE profile includes the political and legal systems, economy, socio-culture, geographic environment, and technology of a country. This will help determine whether it is beneficial and profitable for a company to conduct business within a particular country. The PESTLE model for Australia will help businesses decide if Australia is an ideal location for their company. Political and Legal Systems:
Australia is an English speaking democratic country that derives its procedures from their written constitution. The Australian Constitution explains how their government should function and what kinds of issues laws can be passed on (Australia.gov.au, 2011). Similar to the United States, Australia’s federal government, which is led by Prime Minister Julia Gillard, delegates power between its overall government and its individual states. Australia’s House of Representatives is made up of 148 representatives, while, their Senate is made up of 12 elected senators, two from each state. Political Stability: For the last 11 years, the IMD World Competitiveness Yearbook 2010 ranked Australia as the worlds third for political stability and was ranked a 9.24, which indicates a very high level of stability (NSW Government, 2010). Companies will not be affected by political unrest. Corruption: On a scale of 0-149 (0 being none and 149 being very high) for corruption, Australia ranked an eight (World Audit, 2011). Particularly for large companies, corruption within a country is crucial when considering the negative influence of corrupt politicians and authorities. Australia will allow a company to run an ethical business model due to a low corruption rating. Significant International Disputes: In 2006, Australia released Indonesian cleric Abu Baker Bashir and this caused a “difficult” relationship to develop between Indonesia and Australia. Australia then revoked the visas of 42 Papuan asylum seekers that had been granted sanctuary (McGrath, 2006). Many people believed that Australia was trying to please Indonesia by doing this, but instead Australia was seen as contradicting its original action. Economy:
Australia’s economy shows common characteristics of a developed country. The economic structure based on GDP has a small agricultural industry that accounts for 3.8 percent of the total economy. The service sector accounts for 71.3 percent of the economy while the industrial sector accounts for 24.9 percent (refer to data table 1-1 in Appendix A). World Bank Classification: Australia is a developed country with a very high HDI and is classified as having a high-income economy with a gross national income of $12,276 or more (The World Bank Group, 2011). Australia has a high-income member grade category of 0 within the OECD risk classification system meaning that there are no minimum premium rates for transactions involving obligors as long as they do not undercut private market pricing (The World Bank Group, 2011). GDP and GDP Per Capita (Latest 5 years): GDP and GDP per capita are increasing overall, except, for a small decline during 2009. From 2006 to 2010, GDP has increased from US$ 784 billion to US$ 1,237 billion, an increase of 57.8 percent. GDP Per Capita increased by US$ 18,090; an increase of 48.1 percent. GDP per Capita is an important indicator of the relative performance and productivity of a country (refer to Table 1-2 in Appendix A). Retail Price Inflation & Unemployment Rate: Retail price inflation in Australia is fairly stable due to a decrease of 2.8 percent during 2010. This helped balance the increase of 2.3 percent in 2009. Retail price inflation remains in the low one percent’s. The rate of inflation seems to be stable...