Question 1: Discuss the role of environmental factors in determining Souplantation’s success chances in Taiwan? Economic Environment
One of the most important environmental factors the company should take into consideration is the local economic environment. The deterioration of Taiwan's economy in 2002 had been unprecedented due to political turmoil and the stalemate in cross-strait relations with mainland China, which damaged confidence in those looking to expand into the region. When Taiwan experienced a serious recession in the years 2001 and 2002, the Taiwanese government made every effort to save the economy, including their decision to join the WTO in 2002. The overall tariff had been 8.2% in Taiwan and after joining the WTO the tariff was reduced to 5.54%(over 32% reduction). There were 4491 tariff reduction projects. The tariff of agricultural products for which the average nominal tariff was 20.02% dropped to 12.9% (over 35% reduction). Taiwan is basically an island country, which heavily relies on imports in many fields. The reduction in agricultural import tariffs has helped the restaurant industry to cut costs. With the developing trade relationship through the straits, many agricultural products can enter Taiwan markets at lower prices from mainland China. Taiwan’s economic recovery had been conducive in the following years to the growth of the restaurant industry. Nevertheless, in 2005, Taiwan's economic growth rate again fell sharply. Both production and demand weakness caused by lack of economic growth caused concern of a recession (industrial competitiveness led to the decline in trade surplus and politics were a major factor). During the year 2005, Taiwan’s economy actually ran in the opposite direction to Asia's overall economic development trends. In 2005, Asian economies continued to grow throughout the region as a whole, economic growth was expected to reach 6.5%. The Taiwanese economy, however, has continued to maintain a relatively low level of growth. For Souplantation, it will be a challenge to expand business in this economic environment. Politics & Government Regulations
The political issues between the straits are also a major limiting factor concerning the development of Taiwan’s economy. Chen Yunlin, director of the Taiwan Affairs Office of the CPC Central Committee, announced in 2006 at the annual cross-strait economic and trade forum, that the mainland will be further promoting cross-strait exchanges and cooperation to benefit compatriots in Taiwan's 15 policies and measures. With this mainland government support, Taiwan's economic development will be better and has been evidenced by already improving cross-strait relations. This is additional proof for the well-known relevance of the political situation with mainland China, which is always an unsure element that has the power to influence the future economic stability. A stable political and economy environment is the basis for sound businesses. Although Taiwan is capitalist which differs greatly from the mainland China’s socialism and offers more freedom and possibilities in many fields, the small geographic size and location prevent its independency and remission from any trivial international political and economical change. For Souplantation, which is a small business and can’t afford to lose, this could be risky going to Taiwan. The Taiwan food administration bureau has also enforced new regulations and specific food sanitation standards, which emphasize the protection and preservation of the qualities and the freshness of food. With great success and experience in the US food industry, which has even higher food sanitation standards, Souplantation should be able to handle this well. Socioeconomic variables
The level of education in Taiwan has been growing in recent years. In 2000, 7.79% of the total population had completed a college education, and the percentage of people attaining college and above...
Please join StudyMode to read the full document