External environmental factors include sociocultural, Legal, Economic, Political, and Technology. The micro environment on the other hand comprises the industry and market.
Religion, education, ethnicity, education and language, age group, family, cross cultural differences.
In 1978, the Chinese government introduced a birth control policy of one child per family. (Newsweek 2014) This in the long run will reduce both sales and labor availability for Companies especially foreign brands like nespresso.
The business culture in china is based on strong family ties and cultural network. (Guanxi connection) (Huang, 1987 (business in china 2007).
Guanxi is a Chinese business practice of favoring a family and close friends prior to doing business. This could be unfavorable to foreign businesses like nespresso and other western companies.
Foreign trade laws, land ownership laws, patent and trademark laws, piracy laws, lobbying laws. According to reports, foreign firms cannot and do not acquire land as all land remains the property of the Chinese government. However the lease system provides foreign firms and corporation access to land for about a period of 50years after which the lease can be renewed. There was a case of McDonalds in Beijing who were forced out of their property by the government during the contract period (China unique, 2013). This spells an unstable working environment for nespresso.
Economic factors include, Unemployment rate, exchange rate, inflation, interest rate, consumer discretionary income, labor cost.
Unemployment: According to the ministry of human resources and social security of the PRC, there has been a significant decrease in unemployment rate in China from 4.10 in the last quarter of 2013 to 4 percent in the second quarter of 2013 (Trading economics, 2014). This will increase salaries and wages due to scarcity of labor as only few of the