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ANALYSING THE INTERNATIONAL BUSINESS ENVIRONMENT

Topic: Pest analysis -Portugal
Submitted to: Mr. Prabu Doss
Submitted by: Hitesh Goyal












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Contents
1.Introduction 3
2.Objectives 3
3.Country overview 3
4.Political factors 3
4.1.Political stability 3
4.2.Foreign relations 3
4.3.Political Risks 3
4.4.Business tax system 4
4.6.Employment laws 4
4.7.Environmental law 4
4.8.Intellectual property protection 4
4.9.Trading 4
5.Economic factors 5
5.1.Policy on economy 5
5.2.Economic growth 5
6.Socio culture factors 5
7.Technological factors 5
8.Finding and analysis 6
9.Interpretation of results 6
10.Conclusion 6
11.References 7

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Pest analysis - Portugal
1.Introduction:
The purpose of this assignment focuses on Portugals external environment that analysis
political, economical, social and technology factors.
2.Objectives:
y To learn Portugals external environment
y And how it supports and influences in a business
3.Country overview:
Country located in Europe and sharing border with Spain.
1974 Through military, democratises reformed and African colonys independence.
1986 Jointed with EU and NATO member (Portugal - The World face book, 2009).
4.Political factors:
4.1.Political stability:
Republic of Portugals government body consist, Prime minister and cabinets are nominated
by the president. President Anibal Cavaco Silva and Prime minister Jose Socrates. For
instance, Stable government has the legislative assembly 121 out of 230 deputies and the
assembly responsible for legislative, political and fiscal (Portugal Country Profile, 2008).
4.2.Foreign relations:
Country has the long term relations with EU and Africa for trading, political, military etc. It
increases relationship with Portuguese Speaking Countries Communities and Economic
Community of African States (ECOWAS). For example, country interacts in Asia with
SAARC and strategic collaborations with India and China (Foreign policy , n.d).
4.3.Political Risks:
Organizations such as COSEC, International Finance Corporation (IFC) and Multilateral
Investment Guarantee Agency (MIGA) are assisting to the political risks like government
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decisions, confiscation, expropriation, bank transfers, national disasters etc (Portugal
Business Community, n.d).
4.4.Business tax system:
Tax system has various categories. For example, Corporation tax consist income or gains,
costs or loss (Law 3G/2000 of 29/12). Personal Income tax states tax returns and payment
(Decree Law 442-A/88 of 30
th
Nov). VAT illustrate exemptions, intra community trade
provisions (Decree Law 394 B/84 of 26/12). For instance VAT rate reduced 5%, intermediate
12%, general 20% (Portugal Tax System, 2008).
4.6.Employment laws:
Contract system has temporary and non-temporary, trail period. For instance, it states
minimum age for contract 16 and compulsory retirement at 70. Working hours, holidays,
special hours etc are as per the International Labour Code. Rescission formality states such as
Processo disciplinar for labour court and Justa causa for Labour Inspectors Committee
(LIC) (Portugal Labour System, 2008).
4.7.Environmental law:
Portuguese Environmental Agency states Decree Laws. For instance, Municipal Noise
Reduction Plan (MNRP) has noise limit such areas in housing occupancy, hospitals, schools,
and religious buildings (Inter Noise , 2007).
4.8.Intellectual property protection:
According to WIPO, No 45/85 of Sep 17, 1985 states the copy right and related codes
(Portugal, n.d).
4.9.Trading:
Since Jan 1st, 1995 member with WTO and the majorly trades with European Union. Exibit 1
states that in 2006 export 77.2% and import 75.5% with European Union. Besides it
increases relationship with NAFTA, NATO, IMF, World Bank etc.
In 2007, countrys merchandise trade (US$ million) export 51521 & import 78329 and
commercial services trade (US$ million) export 22906 & import 13686 (Portugal , 2009).

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5.Economic factors:
5.1.Policy on economy:
In 1999 disclose with European Economic and Monetary Union (EMU). In 2002, restrictive
policy has implemented in the various public sector, public spending, and Value Added Tax
(VAT). 2006 economy grew 1.3% compare with previous year (Portugal Country Profile,
2008).
5.2.Economic growth:
FDI - Exhibit 2 states FDI investment increases from 22,973 million (2006) to 23.803
million.
Exchange rates - on 27 May, 2009 1 euro = Rs 66.2660 (Exchange Rates, 2009).
GDP exhibit 3 states in 2007 it increasing 1.9% and according it estimated 2.0% in 2008
and 2.3% in 2009.
Inflation exhibit 4 shows, in 2006 3% and it forecasted 2.5% in 2007-08, 2% in 2009
Capital market for instance, in may 2008, Energy de Portugal invested euro 1.8 billion IPO
in the equity capital markets (Portugal Capital Markets, n.d).
6.Socio culture factors:
Population estimated 10,704, 924 (Portugal - Face Book, 2009).
Education 15-24 (2007) literacy rate 100% male and female (Portugal Statistics, n.d).
Culture - the country has Roman based culture, cave painting, Conimbriga town, Diana
temple. It has enriched influence with Italy and France (Culture, 2009).
Customs national dress at festival and weddings, traditional garments are red and green
stocking cap, black states mourning in villages (Customs, 2009).
7.Technological factors:
Technology change & advantage for instance, Intel and Portugal schools jointly started
school laptop program which is initially designed 50000 laps (Intel and Portugal in school
deal , 2008).
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Communication telephone, television, high speed and broad band facilities.
Transportation Airport (65), railways (2,876 km), road ways (82,900 km).
8.Finding and analysis:
Political factors are stating the stable government and international standard business codes.
For instance, to start a business avoids numerous risks because it has next four year stable
government.
Economic factors are illustrating the policy and growth of the country. For example, inflation
rate has reduced to 2% in 2009. It states the low inflation and consumer price index.
Socio cultures states people are basically Roman based culture. For example, traditional
garments red and green. It assists to a business or firm to understand and motivate employees
at festival seasons.
Technological factors are represents IT growth and communications. For instance, Intel has
developed its technology.
9.Interpretation of results:
10.Conclusion:
To analyse the countrys current affairs with pest analysis, we have observed that it is one of
the grown country and export business has an opportunity.
Finally, we have learned that how to analyze the external environment, before entering an
international country for a business.




11.References:
Culture. (2009, May 28). Retrieved 05 28, 2009, from Portugal Live Net:
http://www.portugal-live.net/UK/essential/culture.html
Customs. (2009, May 28). Retrieved May 28, 2009, from Portugal Live Net:
http://www.portugal-live.net/UK/essential/culture-customs.html
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Exchange Rates. (2009, 05 27). Retrieved 05 28, 2009, from Bank of Potugal:
http://www.bportugal.pt/default_e.htm
Foreign policy . (n.d). Retrieved 05 27, 2009, from Ministry of Foreign Affairs:
http://www.mne.gov.pt/mne/en/infopolitica/polexternas/
Intel and Portugal in school deal . (2008, July 30). Retrieved 05 28, 2009, from BBC News:
http://news.bbc.co.uk/2/hi/technology/7533057.stm
Inter Noise . (2007). Retrieved 05 27, 2009, from http://paginas.fe.up.pt/~carvalho/in07.pdf
Portugal . (2009, Apr). Retrieved 05 27, 2009, from World Trade Organization:
http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Countr
y=PT
Portugal - Face Book. (2009, May 14). Retrieved 05 28, 2009, from CIA:
https://www.cia.gov/library/publications/the-world-factbook/geos/po.html
Portugal - The World face book. (2009, May 14). Retrieved 05 26, 2009, from Central
Intelligence Agency: https://www.cia.gov/library/publications/the-world-
factbook/geos/po.html
Portugal Business Community. (n.d). Retrieved 05 27, 2009, from World Bank:
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/WBEUROPEEXTN/
PORTUGALEXTN/0,,contentMDK:20139933~pagePK:1497618~piPK:217854~theS
itePK:309718,00.html
Portugal Capital Markets. (n.d). Retrieved 05 28, 2009 , from International Financial Law
Review: http://www.iflr1000.com/PracticeArea/507/Capital-markets.html
Portugal Country Profile. (2008, Jan). Retrieved 05 26, 2009, from Portugal Global :
http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=40f8af
38-6235-49bd-9a48-a78a80a176a0
Portugal Labour System. (2008, May). Retrieved 05 27, 2009, from Portugal Global:
http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=3d1560
c0-55f5-47f0-ad19-d7549c5ab7d8
Portugal. (n.d). Retrieved 05 27, 2009, from WIPO:
http://www.wipo.int/clea/en/text_pdf.jsp?lang=EN&id=3525
Portugal Statistics. (n.d). Retrieved 05 28, 2009, from UNICEF:
http://www.unicef.org/infobycountry/portugal_statistics.html#56
Portugal Tax System. (2008, July). Retrieved 05 27, 2009, from Portugal Global:
http://www.portugalglobal.pt/EN/Biblioteca/Pages/Detalhe.aspx?documentId=41d2ba
1a-4088-4ef4-89fb-248d5fe15518

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Exhibit 1:
Countrys international trade in 2006:


Source: (Portugal Country Profile, 2008)
Exhibit 2:
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Source: (Portugal Country Profile, 2008)
Exhibit 3:

Source: (Portugal Country Profile, 2008)


Exhibit 4:
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Source: (Portugal Country Profile, 2008)