Pestel Analysis Of Om In Turkey Economics Essay
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Om is a company that manufactures mobile phones. It is actually based in Spain.And has decided to expand their business by operating in a wider range of countries.Therefore this company has decided to hire an experienced consultant which has knowledge about mobile manufacturing companies dealing within new markets.The consultant which the company has hired has proposed Turkey as a strong contender.
This report includes an analysis in depth of the mobile market in Turkey,which will be done with the Pest Analysis,Porters five forces analysis,and a Swot analysis. Identifying the key issues that this firm will have to face in the desired market and also will suggest how to consolidate their economic activity in this region.
The company manufactures phones of different ranges,ones which have basic functions such as calling and for texting,to medium range phones which have camera function and Bluetooth technology,and mp3 player function.The next level is smartphones which features apart from the previous features has Wifi technology,which makes accessible any content of either entertainment or to check mails in the small screen.
According to the BBC(2009)Turkey is a republic country which currently is ruled by a president which has a muslim political background and was chosen by the parliament.Despite all the controversies that has risen due to this fact president Abdullah Gul has been supporting the integration of Turkey within the European Union.
Turkey is constantly adopting measures in order to be eligible to be part of the European Union.
According to the IMF(2009)Turkey is the sixteeth largest economy in the World, the sixth cement producer,2nd flat grass producer and the sixth clothing exporter in the World.Therefore this is one of the reasons why Turkey is considered as an emerging country.
The country's economy has experienced a rapid development,it has been affected by the period of global economic recession.According to CIA(2009) Turkey has been hit by this global phenomenon but has not suffered a considerable decline because the Government had implemented numerous reforms which affected the banking sector ,as in the past the country was affected by its own financial crisis in 2001.The predictions for the year 2010 show that the demand for Turkish product will experience a decline as the global economic slowdown continues. On the other hand according to CIA(2009) GDP real Growth Rate of Turkey has fallen down by -5.6%.In contrast with previous years this means the growth has reduced,it is explained by the same global phenomenon.
Agriculture in Turkey employs 30% of the working population,which explains the importance of this sector as it has been the forte of Turkey over past decades.Textile and clothing industry is very important as Turkey is one of the players also employs approximately 30% of the working population.
The Role of the state has been very important as they have a major presence in transport,communication,banking and basic industry.Other industries such as automotive and electronics industry play a more important role regarding as part of the total exportation done by the country. There are constant economic reforms as well judicial as the country is a prospective EU member will imply a boost in Foreign Direct Investment.
Telecomunication market has experimented a considerable growth with the support of the government and the rising demand for telecom services needs in the country.There is a high growth potential as currently the level of penetration in the market is lower than the Western European market.
Turkey has a population of 76,805,524 according to CIA(2009).According to the Turkish Statistical Institute(2009).9,799,745 live in the East Thrace,which falls under the Europe.The East Thrace includes the historic centre of Istanbul, among other regions.Turkey is a muslim country and the main languages are Turkish and Kurdish.
It is a popular choice of destination for vacations.Due to the variety of which is offered to the tourist.
The capital of Turkey is Ankara though the most important city in the country is Istanbul because it is the financial capital,and historically an important city in the Bizantine Empire,before it was called Constantinopla.
The standard of living is inherent with the purchasing power of the earnings.Prices in comparation with the western countries are much lower.Salaries are in a rising tendency,which can explain life expectancy of the total population is of 71.96 years, classified in 124thposition in the World.
There is a multicultural background within the Country which makes a fusion of the Western and European ways of living.
According to the Eurostat(2009),the national minimum wage in Turkey is of 319 euros in 2009,which is higher than eight countries which are part of the European Union,such as, Bulgaria â‚¬123, Romania â‚¬153, Latvia â‚¬ 254, Lithuania â‚¬232, Slovakia â‚¬296, Estonia â‚¬278, Poland â‚¬281, Hungary â‚¬270 and the Czech Republic â‚¬306.
Turkey has got the top class infrastructure which enhances the communications.There are 65,824,000 registered cell phones in the country 65,824,000 registered cell phones in the country,and as of 2008, there were 24,483,000 internet users in Turkey according to the CIA Worldfact(2009).Which explains the rising implementation of these means of communications. The internet and broadband market is experiencing rapid growth in the number of subscribers,as the tariffs are being standardized following the tariffs of the Western Europe countries.However, the internet penetration will improve with the development of infrastructure.
The car industry and the shipmaking industry are experiencing a sharp increase in production and their importance has grown up globally.
Turkey has a gas pipeline as an alternative to Russia to supply Europe.It´s name is Nabucco Pipeline which goes from Erzurum, and passes through Bulgaria, Romania, Hungary To Baumgarten an der March, Austria.
New emerging technologies are gaining progressively more importance for example the Apple Iphone which has been a rising phenomenon throughout the World,which uses 3G technology therefore this technology is being developed further more.On the other hand IPTV which is viewing over the Internet with usage of Broadband has been approved by the media, the Radio and Television Supreme Council (RTÜK) according to IPNEWS(2010).
New and highly developed technological infrastructure in transportation, telecommunications
Well-developed and low-cost sea transport facilities
Railway transport advantage to Central and Eastern Europe
Well established transportation routes and direct delivery mechanism to most of the EU countries
An important energy terminal and corridor in Europe connecting the East and West
As an energy transit country, Turkey currently has the capacity to transport 121 million tons of oil to the world markets per annum. Once the ongoing projects are completed, the annual transit capacity will increase to 221 million tons of oil and 43 billion m³ of natural gas.
In order to enter the Turkish market there should be taken into consideration important issues such as Business environment, the risks.
There are some aspects which make the investment in Turkey more attractive such as:
Taxation plays a vital role when it comes to attractiveness. There has been a reduction from 30% to 20% regarding for the larger firms. Whereas for an individual varies from 15% to 35%.
There are industries which have tax benefits and incentives such as Technology Development Zones,Free Zones and Industrial zones.Which can be translated into a complete or either partial exemption from Corporate Income Tax, and there is an economic help on social security share as well as when it comes to choose the land where to set allocate the business. As all countries Turkey has a incentive system based in order to incentivate some particular regions which need some investment done over there in order to develop that particular area. And a regulation to promote Investment in Research and Development in order to develop the implementation of new technologies in the country.
Exchange Rate Regime
One of major benefits to invest in Turkey there is a protection of the currency legislation which assures the transfer of benefits, fees, dividends without any cost of charge and is unrestricted.
Employment in Turkey
As mentioned earlier Turkey has got a large population, which is translated into a considerable part of the population to be actively working which are well educated and motivated,an aspect which makes it cost-effective labor force and the fourth largest in comparation to the EU countries.
Dealing with the EU through the Customs Union since 1996, and there are more treaties with many other countries.
Doing an investment in Turkey, where there is a liberal and reformist investment atmosphere, it has got conditions which makes them highly competitive, where there is an equal treatment to all investors. The private sector is dynamic and mature, and there is a considerable number of international firms established in the country.
How to do business in Turkey
Research the market
Turkey is a market that is changing rapidly. You should make sure you research it carefully, using reliable and up- to- date sources. Your best first source of information should be UKTI. We provide a fully integrated advisory service, delivering the latest business intelligence through a network of Trade and Investment Teams in Turkey.
Understand the routes to market for your product or service
Finding a local partner can make your life easier in all overseas markets. However, it's particularly important in Turkey as the country is developing rapidly and regulations can be complicated and can change quickly. The UKTI Team can help you find partners and distributors in Turkey.
Test the market
Turkey has continued to witness rapid growth in its telecommunication market over the recent past, buoyed by the rapid economic development, government support and growing demand for telecom services in the country. Considering the ongoing developments in the sector, the outlook for the Turkish telecommunication market seems bright, says our updated research report "Turkey Telecom Sector Forecast to 2012".
The report provides an extensive research and thorough analysis of the telecommunication market and its various segments, with focus on recent developments and future outlook. After examining each segment in context of recent developments, we have found that although mobile phone penetration in the country is on the verge of saturation, there is still high growth potential as the current penetration rate is far below the Western Europe levels. However, our research predicts slow growth in the mobile subscriber base for 2009 and anticipates the industry to start recovering from 2010 onwards. Analysis of the factors which will continue to spur the mobile market growth in the forecast period has been extensively covered in the report.
Apart from mobile industry, our research has identified that the internet and broadband market is also witnessing rapid increase in the number of subscribers. It has been found that broadband internet penetration rate in the country still remains far below the EU standard due to very high access charges. However, the internet penetration will improve with the development of infrastructure. We anticipate that the internet subscriptions will grow at a CAGR of more than 20% during 2009-2013 and ADSL will continue to dominate the internet subscriber base till the end of 2013. Besides, increasing access to high-speed internet services will also help the IPTV market to flourish in the country during the forecast period.
"Turkey Telecom Sector Forecast to 2012" gives an insight into the current market trends and substantiates data with unbiased and rational analysis. The report provides industry forecast for various telecom segments based on feasible telecom industry environment in Turkey. These include: Fixed-line subscribers and penetration, Mobile subscribers and penetration, Internet subscribers and penetration, Broadband subscribers and penetration. The report also provides thorough analysis of current and potential outlook of emerging technologies, such as 3G, IPTV and WiMAX
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