Kenya is a developing country in East Africa, and its economy is growing at an alarming rate, thus a promising and quick return on investment for the investors. Unlike some of the African countries, its political climate is relatively good and had even undergone a smooth transition in its political governance, allowing investors to continue with their business activities. The favorable business climate has made it possible for the Kenyan based companies, more so in the telecommunication industry to advance and take a global market. For instance, the mobile money transfer services M-Pesa has been effective, and several Kenyan banks have now gone outside the country, covering the whole of East Africa. Such banks include Kenya Commercial Bank and Equity. Because of the promising rate of development and a healthy business climate, Wal-Mart Informatics, a company that deals with electronics, can effectively venture into the Kenyan market and become successful. Apart from these factors, Kenya poses one of the fastest growing populations in Africa, with the majority being youths who value being updated with modern technology. This report will, therefore, be focused on the external environmental factors in Kenya that can directly influence the success or failure of a new company, Wal-Mart Informatics, with the target audience being potential investors and business students.
Wal-Mart Informatics is a hypothetical company that deals with the production of mobile phones and television sets, based in the U.S. The company is willing to invest in the Kenyan market because of the promising market base and the statistical analysis which shows that the countrys economy is relatively stable as compared to its neighbors in East Africa. For instance, some of the successful multinational companies that have benefited from the east African country include Samsung, Nokia, and Huawei. These companies have become successful because the Kenyan government fosters development and the citizens are pro-technological innovations. Most middle-class earners and youths in Kenya consider being defined by class based on the technological products they possess. This means that the IT companies in Kenya should be innovative and introduce new products regularly for them to remain competitive. In this case, Wal-Mart Informatics can effectively venture into the Kenyan market because it possesses these attributes. These same attributes have made the company remain competitive in the U.S. market.
This is a strategic tool or a process that can be used to identify the internal and external elements that can affect the performance of an organization, either positively or negatively. Analyzing these factors will enable one determine the level of influence that they have on a particular industry and what should be done for startup and established companies to become successful (Healy, & Palepu, 2012). Therefore, after the analysis, the findings are used in decision-making, thus mitigating the possibility of investing in projects considered less viable. The management has a role to play in linking the organizational business strategies with the external environment, a tactic that can be used to reduce the level of rivalry from its key competitors (Fleisher, & Bensoussan, 2015). The management of Wal-Mart Informatics should be aware of the main external environmental factors for the company to become successful in the emerging Kenyan market. Additionally, it is the responsibility of the management and staff to ensure that they have been updated with the current developments in the information technology industry, and this poses a step towards the new companys success. The information technology sector faces constant changes because of its innovativeness, meaning that Wal-Mart Informatics should remain focused and ensure that they are the leading technological firm in Kenya, an organization known for the innovation and introduction of quality new products before other firms.
Kenyas technological market has been facing a lot of changes because of the existence of many multinational companies and their innovativeness, thus resulting in the production of new technological products. Even if some of the external environmental factors are far much beyond the control of the organizational management, the Kenyan government has strived to offer investors a conducive environment for business activities (Carraro, & Leveque, 2013). Any organization, irrespective of its location and level of development, has the responsibility of analyzing its external environment as these factors are beyond management control. Being acclimatized with these factors will make it possible for the management to devise strategies that will enable them to remain within the provisions of the law, thus ensuring success and sustainability. One of the best environmental analysis tools that the company can use is PESTEL. The tool enables the management to foresee the future and the current position in the competitive market. The PESTEL factors influence success or failure of the organization either positively or negatively. PESTEL stands for
P-The current political factors affecting the organization
S-These are the social factors
T-Represents the technological factors
However, in these report, the paper will be focused on the political, economic, social, and technological factors that can affect the hypothetical company, Wal-Mart Informatics.
Politics play a significant role in determining the effectiveness and the success rate in the business world. This means that any organization should analyze the political factors that exist in a particular country before making the decision to invest. All firms have the obligation to follow the existing business law and even cope up with any change in such laws are prone to changes to comply with the ever-changing business climate globally. This is because the political environment affects business activities in various ways including the addition of risk factors, and thus if the management cannot swiftly respond, the firm will fail (Scherer, & Palazzo, 2011). If the firm is not prepared to deal with the national and regional politics in the country, the possibility of success will be mitigated because the existing companies already understand the political dynamics. For instance, during the post-election violence in Kenya, many firms lost their investments, and this posed one of the major political effects of business. Nevertheless, the country has now undergone a lot of transformations including constitutional changes to accommodate a variety of issues that can facilitate peaceful coexistence. These can be depicted by the smooth transition in governance from one president to another and the holding of peaceful by-elections. Some of the government policy changes that can directly affect Wal-Mart Informatics include the social, economic, and legal factors.
An example of a political variable that can affect multinational companies such as Wal-Mart Informatics is the changes in tax rates for the foreign companies. The government can decide to enact a different (higher) tax rate for foreign firms as a way of protecting the locals. This means that the management should be prepared for these changes or otherwise, they will become less competitive and even their eventual closure. Therefore, the management should be updated and be able to respond to such political changes. In Kenya, the most important thing to note is that the government has not set specific regulations for the carrying out of technological businesses apart from the global environmental protection laws. it should be pointed out that the technological industry can be the leading in environmental pollution if its waste products are not disposed of correctly. Given that Wal-Mart Informatics can swiftly respond to these regulations, it is possible for it to remain competitive in the Kenyan market.
The Kenyan government fosters innovation and technological advancement, and this has made it have policies in training and development, but this will affect the firm positively. It is the policy of the government to include some Kenyan professionals in the research and development so long as such activities are carried out within its jurisdiction as a way of protecting its locals and offering them a job opportunity (Martin, & Swank, 2012). The possibility of a political risk in Kenya is minimal given that the constitutional changes consider the minority groups and women, enabling them to feel recognized and thus empowered to conduct their business activities. Additionally, other political risks such as post-election violence may not happen shortly because of the hope and confidence gave to the Kenyan judicial system.
There is a global advancement in technology and Wal-Mart Informatics being based on this industry; it is necessary for it to foster the spirit of innovativeness. The strategy can be effected bay carrying out environmental analysis on a continuous basis, as this will allow the management to determine the level and rate of innovativeness from their rival companies in the Kenyan market. The technological, environmental assessment will enable the management to determine the needs and expectations of the customers meaning that the company can use this strategy in determining the rate at which obsolescence takes place in the East African region, innovations, and the rate at which advances in technology takes place. Kenya is a developing country, its road and rail transport network is efficient, and this has even made it possible to export perishable products (Chittithaworn, Islam, Keawchana, & Yusuf, 2011). Such products should be transported by road or rail from the farms to the airports, thus making it necessary for the government to invest heavily in infrastructure. Additionally, the country borders the Indian Ocean and has one major port, the Mombasa port, and two the main international airports. All these factors facilitate the rate at which business activities will be carried out by the company (Wal-Mart Informatics)
The good transport network will make it possible for the firm to transport its products within the country. However, if such road and rail network were not efficient, then the there will be the possibility of damages for the imported products. The shipping route and two international airports (Jomo Kenyatta international airport in Nairobi, and the Moi International Airport in Mombasa) can be relied upon for importation of the companys products. The innovative technological levels in Kenya is relatively high ad this can be explained by the Kenyan-based mobile money transfer services such as M-Pesa and Airtel. Additionally, the Mombasa port can also be used because of the availability of the rail network linking the country with its landlocked neighbor, Uganda. The Kenyan government is focused on having an environment free from pollution and has put measures in place to regulate business activities, thus leading to the production of technological products that does not pollute the environment above the standard limits. Due to that, the government has provided a conducive environment for the manufacture of goods that does not pollute the environment, for instance, incentives and tax cuts (Escobar-Rodriguez, & Monge-Lozano, 2012). In Kenya, there are several internet service providers and their competition has led to efficiency and reliability, enabling organizations to rely on the high-speed internet available. Wal-Mart Informatics can take this opportunity to communicate efficiently and in real-time with its main office in the U.S. with the only requirement being understanding the time...
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