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INTERNATIONAL BUSINESS

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ContentsIntroduction of current business in Malaysia: .............................................................................................. 3

Introduction of the chosen country: ............................................................................................................. 4

PESTLE analysis ............................................................................................................................................. 5

Political-legal factors ................................................................................................................................. 5

Rules of law ........................................................................................................................................... 5

Regulations efficiency ........................................................................................................................... 5

Trade policy ........................................................................................................................................... 5

Taxation system .................................................................................................................................... 5

Economic factor ........................................................................................................................................ 6

GDP ....................................................................................................................................................... 6

Inflation rate ......................................................................................................................................... 6

Unemployment ..................................................................................................................................... 7

Labor cost .............................................................................................................................................. 7

Balance of Payments Account in Hong Kong ........................................................................................ 7

Social-Cultural environmental factors ................................................................................................... 7

Language ............................................................................................................................................... 8

Food ...................................................................................................................................................... 8

Religion.................................................................................................................................................. 8

Technological ............................................................................................................................................ 8

Mode of Entry: ............................................................................................................................................ 10

Recommendation:....................................................................................................................................... 11

Conclusion: .................................................................................................................................................. 12


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Executive summary:

The following part will discuss and analyze the environment of the country that I have choose,

which it Hong Kong, in which investors from another country can invest. A good external

analysis will be carried out in order to observe the political, legal, economical, technological,

social and legal situation of the country. And then I discussed about the mode of entry and

mentioned the risks, costs and benefits. At last I give some recommendation in order to make the

decision making for opening international business.

As a marketing manager for Hadramawt restaurant I am going to make the PESTLE analysis in

order to give some recommendation in terms of operating a business in Hong Kong.


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Introduction of current business in Malaysia:

Hadramawt restaurant is an Arabic and Malay food, considered to be one of the most successful

restaurants in Malaysia due to the variety of food that the restaurant offers

between the Arabic and Malay dishes. Hadramawt Restaurant is conveniently

located in the heart of Kuala Lumpur, in the area of Bukit Bintang and the

Pavilion. Adequate vehicle parking space is available behind the Chulan Square

building. The restaurant has worker from Arabic countries and Malay worker.

Hadramawt (M) Sdn Bhd (Restaurant & Catering) provides customers from all races andbackground to enjoy casual dining in our exclusive restaurant. Appreciate the enjoyable kindness

service we are known for, all in a relaxing environment. Indulge in our huge variety of Arabic

and Malay dishes that you won't find elsewhere in Malaysia.

Our menu offerings consist of many traditional of

traditional Malay and Middle Eastern food, drinks

and desserts. The choices consists Appetizers, BBQ,

and Arabic Food, so there is a dish to suit everyone.

Our prices are amazingly affordable considering the

gourmet Middle Eastern cuisine that we serve, and

the prime location that we are in.

Our restaurant ambiance is very much influenced mixed by Arabic and Malay concept, with

designed and carved wooden motifs, colorful lights, carpets and images that resembles the

original Hadramawt town. The restaurant comfortably accommodates 100 customers and is ready

for either private dining, functions, or simply hanging out. To accommodate diners, we have free

Wi-Fi and a spacious open area for smoking shisha.


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Introduction of the chosen country:

Hong Kong was born of the "opium war" (1839-1842) fought between the United Kingdom and

China. As an impact of this war, Hong Kong was ceded to the British. In

1860 the British Obtained ownership of Kowloon on the Chinese

mainland, and in 1898 they were granted a 99-year rental on an area of the

mainland known as the New Territories. The rental expired on July 1,

1997.On that time China again assumed political control of Hong Kong

and developed it a unique administrative region (SAR). As an SAR, Hong

Kong enjoys a fair level of autonomy. It has own legislature, economic freedom, free-port

position, and an individual taxation system. Hong Kong will enjoy these rights until 2047.

However, China has made it clear that it will encourage its own political will on Hong Kong.

Capital city: Hong Kong

Surface area: 1,092 sq km

Population: 7.1 million

Official language(s): Chinese, English

Head of State: President HE Mr Hu Jintao

Head of Government: Chief Executive The Hon

Donald Tsang Yam-kuen


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PESTLE analysis

Political-legal factors

Rules of law

The effectiveness of the legal system promotes respect for the rules of law. The constitutional

framework provided by the Basic Law, the protection of private property rights and freedom of

exchange. The judiciary is independent of influence from the executive. Additional

institutionalized by effective anti-corruption measures, promotes government integrity.

Regulations efficiency

The regulatory environment is highly supportive of business efficiency such as restaurants and

other legal business intension. Business freedom and labor freedom is high. With no minimum

capital required, launching a business takes only three days. The impact of installing a statutory

minimum wage has been relatively subdued, also the labor productivity far exceeding the low

minimum wage rate enforced in 2011. Monetary stability is well maintained, although

inflationary pressures have increased. The government controls all land.

Trade policy

Hong Kong is a free port which thrives on free trade. Its open door policy has enabled it tobecome one of the world's biggest trading economies and an international financial and

commercial center serving the Asia-Pacific region and the Mainland of China. Furthermore, the

free trade policy means Hong Kong sustains no barriers on trade. Hence, Hong Kong does not

charge tariff on exportation or importation of goods. Export and import licensing is also kept to a

minimum.

Taxation system

One of the most preferred destinations for foreign owned companies, entrepreneurs and investors

for several decades now, Hong Kongs taxation policies only adds to the attractiveness of the city

for foreigners. While the corporate tax rate in the city has a maximum limit of only 16.5 per cent

one of the lowest in Asiacompanies do not have to pay tax on foreign-source income, even if

remitted to Hong Kong. Apart from corporate and individual income taxes, there are no other

taxes in Hong Kong.


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Economic factorIn 2012 Hong Kong was report to be the worlds most developed financial market by the World

Economic Forum, an independent international

organization and being named worlds freest economy in

the 2012 Index and got 89.9 score. However, in its annual

Doing Business report, the World Bank declared Hong

Kong the easiest country to start a company and the first

easiest do to business.

GDP (2010) $ 224.1 billion (at the current market prices)

GDP real growth rate (2010) 6.8%

Per Capita GDP (2010) $ 31.709 billion (at the current market prices)

Natural resources: Deep water harbor

Industry, Textiles, clothing, electronics, plastics, watches, clocks.

Trade (2010) Exports- $ 388.6 billion: clothing, electronics, plastics, watches, clocks and other

goods

GDP

The Gross Domestic Product (GDP) in Hong Kong expanded 0.3 percent in the fourth quarter of

2011 over the earlier quarter. Traditionally, from 1990 until 2011, Hong Kong's standard

quarterly GDP Growth was 1.02 percent reaching a chronological high of 6.30 percent in

September of 2003 and a record low of -3.60 percent in March of 2009.

Inflation rate

Hong Kong's inflation rate increased to its highest level in almost three years, fuelled by soaring

housing costs and food prices. The city's consumer price index grew up 5.6% in June from a year

ago, the highest rate since July 2008, and beyond 5.2% in May. Besides that, inflation visibly up,


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Language

Hong Kong is a place that is well known for the combination culture of West and East. The

authorized languages in Hong Kong are Chinese and English. Though, the mother tongue for the

majority of its people is Chinese but because of the long tradition of English education method

and its cultural introduction, lots of locals can speak very well in English as well.

Food

Hong Kong Culinary Capital of Asia, which can offer a variety of specialties - local or from

abroad. Since Hong Kong is influenced by two cultures, the local cuisine is also characterized by

a combination of Eastern and Western flavors and tastes. In addition, the local population

diversity of the ethnic composition is different, so you can savor not only from different parts of

China, but also from around the world.

Religion

Hong Kong has a multicultural population with Chinese, Muslims, Christians, Jews, and Hindus,

each with their own set of beliefs and philosophy.

Technological

Hong Kong's industries in certainty do extremely well at certain technological areas like

innovation, application commercialization and industrial engineering, which are backed by a

technology cluster, composed of local as well as foreign enterprises in the territory. According to


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the case studies on Hong Kong's electronic components, information, electronics manufacturing

service and communications technologies (ICT) and environmental protection sectors, Hong

Kong Trade Development Council (TDC) organizes this Forum to assess Hong Kong's position

as a platform for technology cooperation, while classifying elements that are encouraging to

technology cooperation between foreign/Chinese mainland enterprises and Hong Kong

organizations. One of the quick growing and important markets for Hong Kong companies on

environmental technologies and related services is Mainland China. It is predictable that as much

as RMB1375 billion will be invested for environment protection in the Mainlands Eleventh

Five-year Plan (2006-2010). Nowadays, Hong Kong's citizens use octopus card, its not a credit

card, and it more like a bus pass. Behold Hong Kongs octopus card! In Hong Kong, 90% of all

traveling is done by mass transit: 7 million daily riders have access to an octopus card, used by

95% of Hong Kongs population, which is accepted as currency not only for the various forms of

mass transit but also at parking meters, convenience stores, and fast-food restaurants. Hong Kong

is widely regarded as having the best blueprint of a successful mass transit system.

Possible Risks:

In fact, the strength of China has strengthened Hong Kong's economy in multiple ways. However

in Hong Kong domestic economic risks remain.

IBTimes journal said the growth of income and wealth inequality may cause to social tensions.

Moreover, they noted that the entire economy of Hong Kong "hinges largely on the asset

management market and is dominated by easy monetary conditions. If capital ever flows out of

Hong Kong to other regions, its economy could tank in the near-term.

Hong Kong's economic view is generally positive, given its proximity to China and role as a

regional financial powerhouse. However, its economic openness leaves it vulnerable to the risk

of economic downturns and financial crises.

For now, there is no risk to do business in Hong Kong, but according to the Li Hao from

IBTimes journal (2011) could be economic risks which can effect to the business.


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Mode of Entry:

A mode of entry into a global market is the channel that organization employs to gain entry to a

new global market.

Hong Kong is the culinary capital of Asia, housing a large choice of restaurants which offer

dishes from all over the world. Eating out is the country's

activity. Hence, the Hong Kong Food and Drinks market is

efficient, with a strong market for the restaurant business.

There are numerous method of entry that can be used to get

into the market, based on the nature and the objective of

business. Many kinds of business require licenses to operate

in Hong Kong, as well as functions offering food, drinks or

cigarettes, suppliers, telecommunications, retailers, and some

other types of companies. (PBTG, 2011) therefore, to open a

restaurant business in Hong Kong need to obtain license.

There are some licensing requirements which must be adhered to in order to set up a Hadramawt

restaurant establishment in Hong Kong. To open a branch of Hadramawt restaurant where food

and drinks are provided, need to obtain a 'General Restaurant License' from the Food and

Environmental Hygiene Department (FEHD). Moreover, to sell alcohol then an alcohol license is

needed from the alcohol Licensing Board. (Guide Me HK, 2011).


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Recommendation:

As a marketing manager of Hadramawt restaurant, I would like to recommend for investors to set

up business in Hong Kong in the restaurant industry. There are a number of reasons why I

choose Hong Kong and why it must be restaurant industry.

Firstly, why Hong Kong is best place for doing business, because is one of the world's most open

and highly effective economical techniques. In 2010 Truly Hong Kong's actual economical

quantity of growth improved to 6.8%. The most interesting part for foreign organizations

integrated in Hong Kong is the fact that foreign sourced income is definitely tax free. Hong

Kong, a supporter of free-market policies and low corporate taxes as well as the entry to the

world's most populous nation, is the best place to do business, according to data composed by

Bloomberg. (Simon K., 2012).

Restaurant is a more appropriate business for Hong Kong, as I mentioned previously, people like

to eat delicious dishes and tourists can spend a significant amount of money to eat well in

awesome restaurant. Hong Kong is identified as the 'Culinary Capital of Asia'. In 2005, Hong

Kong's visitors spent US $ 1.25 billion in restaurants, worth 17% of Hong Kong's HRI business.

Hong Kong has around 11,000 restaurants. Chinese restaurants dominate the Hong Kongrestaurant sector, accounting for 45% of the industry (USDA, 2005c).

Finally, in Hadramawt restaurant must be two dishes such as Malay and Arab. Hog Kong

population is considered as a mix population, a lot of Asian people are living there and most of

them like Middle East and Malay food. So, easy to open two cuisines in one restaurant, it will be

more profitable, and will attract more customers.


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The references:

Hong Kong introduction by (CIA, 2013) online form [https://www.cia.gov/library/publications/the-

world-factbook/geos/hk.html]accessed: 5/14/2013

Religion in Hong Kong by (InterNations worldwide, 2013) online for:

[http://www.internations.org/hong-kong-expats/guide/15908-culture-shopping-

recreation/religion-in-hong-kong-15922]accessed: 5/13/2013

Pest analysis by (study mode, 2013) online from: [http://www.studymode.com/subjects/pest-

analysis-hong-kong-page1.html]accessed: 5/14/2013

Pest Analysis Hong Kong Ocean Park Tourism Essay by (UK Essay, 2010) online from:

http://www.ukessays.com/essays/tourism/pest-analysis-hong-kong-ocean-park-tourism-

essay.phpaccessed: 5/13/2013

PEST Analysis by (The Hong Kong Times, 2011) online from:

[http://sites.cdnis.edu.hk/students/100106/2011/03/31/pest-analysis/]accessed: 5/13/2013

Entry Modes into Foreign Markets by (Sabine Amend, 2009) online from:

[http://manzanosbusinessblog.blogspot.com/2009/02/entry-modes-in-forein-markets.html]

accessed: 5/12/2013

Market Entry Guide Hong Kong by (Luxembourg for Business, 2010) online from:

[http://www.luxembourgforbusiness.lu/market-entry-guide-hong-kong]accessed: 5/15/2013

International Business Review, (December 2011) Easy Zealand a business-Friendly place,

International Business Review, page- 115.
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Ricky Griffin and Michael Pustay, (2010), International Business, 6th edition, Pearson

Education, Inc., publishing as Prentice Hall. Pages: 62-63

Daniels D., Radebaugh Lee., etc. (2009) International Business Environments and Operations,

12thEdition, Pearson Education, Inc., publishing as Prentice Hall. Page 800.

United States Department of Agriculture (USDA) Foreign Agricultural Service (2006b) Hong

Kong Market Development Reports Exporter Guide 2006, GAIN Report HK6025.

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