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Pakistani Political Environment-Marketing-Assignment Solution, Exercises of Marketing

Bangalore UniversityMarketing

This course covers Marketing techniques, principle and theory. This solved assignment for Marketing course was submitted to Prof. Aiman Malhotra at Jnana Bharathi Campus of BU. It includes: International, Marketing, Sample, solution, Companies, Spring, Introduction, Ingenious, Treatment

Typology: Exercises

2011/2012

Uploaded on 08/03/2012

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SPRING 2012
International Marketing (MKT630)
Sample solution of Assignment No.01
Introduction
The political environment, in which the companies operate, either inside or outside the local boundaries,
is a serious issue and needs lots of attention and ingenious treatment from senior executives. The political
environment of a country includes government system, regulatory environment, government policies and
preferences, interference, civil war, law and order situation, political party’s preferences and manifestos
and government foreign polices etc. For the smooth business operations, the company’s senior executives
closely monitor the political climate of the host country if dealing in international businesses. No matter
how striking the economic indicators are, if the political environment of the host country is not business
friendly to foreign companies, it may interrupt the business operations. Political scanning of a host
country is considered as a macro environmental scanning and its implications are different in different
countries.
Pakistan political environment
Political unrest and frequent changes in government also result in inconsistent polices and unanticipated
swings in the foreign business policies. The Volatile political behavior of Pakistan has increased the
financial risk of foreign companies. Since Pakistan has come into being, political instability on the swings
of democracy and dictatorship has curtailed the speed of economic development and growth. Recently,
the political shakes and tug of war between political parties have worsened the situation and FDI (foreign
direct investment) has decreased by 46.6% in 2012 (Board of Investment, Pakistan). None of the foreign
investor is willing to invest in Pakistan due to its inconsistent policies and poor law and order situation.
1. Hayat Regency Lahore and political risks
According to the aforementioned political environment of Pakistan, Hayat Regency can face following
political risks in Pakistan.
1. The first and foremost political risk is upcoming elections. Current government was unable to deliver
and other political parties have not yet declared their manifestos of good governance. The political
situation is vague and creating chaos among foreign investors including Hayat Regency.
2. Absence of good governance and ineffective governmental institutions are another political risk that
Hayat has to face. Many foreign investors believe that Pakistan is a dysfunctional country where
investment is not secure and rate of return is very poor.
3. The regulatory authorities, in Pakistan, are dysfunctional due to corruption as well. Hayat has to face
many legal considerations and issues and may face more difficulties due to corruption.
4. The law and order agencies working for government are not playing their due role for creating peace
harmony in the country. Thus foreign investors and tourists are very reluctant to visit Pakistan.
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SPRING 2012

International Marketing (MKT630)

Sample solution of Assignment No.

Introduction

The political environment, in which the companies operate, either inside or outside the local boundaries, is a serious issue and needs lots of attention and ingenious treatment from senior executives. The political environment of a country includes government system, regulatory environment, government policies and preferences, interference, civil war, law and order situation, political party’s preferences and manifestos and government foreign polices etc. For the smooth business operations, the company’s senior executives closely monitor the political climate of the host country if dealing in international businesses. No matter how striking the economic indicators are, if the political environment of the host country is not business friendly to foreign companies, it may interrupt the business operations. Political scanning of a host country is considered as a macro environmental scanning and its implications are different in different countries.

Pakistan political environment

Political unrest and frequent changes in government also result in inconsistent polices and unanticipated swings in the foreign business policies. The Volatile political behavior of Pakistan has increased the financial risk of foreign companies. Since Pakistan has come into being, political instability on the swings of democracy and dictatorship has curtailed the speed of economic development and growth. Recently, the political shakes and tug of war between political parties have worsened the situation and FDI (foreign direct investment) has decreased by 46.6% in 2012 (Board of Investment, Pakistan). None of the foreign investor is willing to invest in Pakistan due to its inconsistent policies and poor law and order situation.

1. Hayat Regency Lahore and political risks

According to the aforementioned political environment of Pakistan, Hayat Regency can face following political risks in Pakistan.

  1. The first and foremost political risk is upcoming elections. Current government was unable to deliver and other political parties have not yet declared their manifestos of good governance. The political situation is vague and creating chaos among foreign investors including Hayat Regency.
  2. Absence of good governance and ineffective governmental institutions are another political risk that Hayat has to face. Many foreign investors believe that Pakistan is a dysfunctional country where investment is not secure and rate of return is very poor.
  3. The regulatory authorities, in Pakistan, are dysfunctional due to corruption as well. Hayat has to face many legal considerations and issues and may face more difficulties due to corruption.
  4. The law and order agencies working for government are not playing their due role for creating peace harmony in the country. Thus foreign investors and tourists are very reluctant to visit Pakistan.
  1. After the terrorist attack on Marriott Hotel Islamabad in September 2008, the security for hotels in Pakistan has become a serious consideration.
  2. Government inconsistent policies and bad governance have welcomed the tsunami of inflation in Pakistan. The purchasing power of people in Pakistan has been adversely affected thus the potential customers segment can be squeezed.
  3. Expropriation, confiscation and nationalization could also be considered as serious political threats but somehow the probability of such acts from the Pakistan government is negligible.
  4. Pakistan has a tradition of political interference in many foreign projects. Thus Hayat regency may face political interference from government institutions.
  5. Legislation authorities are also dysfunctional so far in Pakistan (as per the perception and international media image), thus the security of investment and legal protection is a serious consideration.
  6. The foreign relations with other part of country are always in a swing thus forecasting foreign delegations and tourists will be difficult for Pakistan.

Note: students may add many other political issues in the discussion but the arguments should be related to the political environment only.

2. Should Hayat Regency continue its project in Lahore?

If YES, the possible arguments can be as follows:

  1. The foreign delegations and officials coming to Pakistan is a big market as there is only Pearl Continental or Avari in Lahore to accommodate such a big market.
  2. Though the economic indicators are not encouraging, still people of Lahore are not spent-thrift and spend money on hoteling etc.
  3. Local government officials coming to Lahore is a big unaddressed market.
  4. The human resource in Pakistan is cheap.
  5. The hope of upcoming government with better economic policies is still alive.

If NO, the possible arguments can be as follows:

  1. All political risks mentioned in question no.01 are ample evidences that Hayat should not continue its project in Pakistan.
  2. Poor law and order situation and terrorist attacks can create serious trouble.
  3. Power crisis is a serious issue.
  4. Inflation and patrol prices have increased the cost of doing business thus rate of return can be affected.
  5. Due to inflation of basic necessities of life, the purchasing power of people in Pakistan is seriously damaged.
  6. The overall FDI has decreased by 46.6% in 2012, means foreign investors has lost their interest in Pakistan. This trend may affect Hayat regency size of investment.

Note: students may add many other political issues in the discussion.