PEST Framework for Country Risk Assessment

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Arizona State University *

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501

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Marketing

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Feb 20, 2024

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docx

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Uploaded by jin213456

PEST Framework for Country Risk Assessment Question: Discuss about the Case Study of Walmart Global Operations. Analysis of country risks enables organization such as Walmart deals with the prediction of political, macroeconomic source of change and non-market events such as social and economic causing strategic, personnel and financial loss. Before making investment decisions, country analysis helps in comparing country market. Assessment of risks can be done by using PEST framework. This framework incorporate all the risk factors associated with organization entry into other countries. Political risks, economic risks, social risks and technological risks. Political risk can be at micro level or macro level. Stability of political factors is of utmost importance for Walmart when entering in developed and developing economies. Entry decision of organization is greatly impacted by political uncertainties in country. Some of the political factors impact decision of Walmart involves government regulations and political system, secure and safety domestic environment. Mexico lacks institution and there is marginalization of population along with manipulation of populism. Corruption is another factor that poses the risk of investment decision in the country (Csipak et al. 2014). Political agreement of Mexico helps in

facilitating free movement of goods and services that leads to import export promotion. Foreign direct investment and trade regulations might have important effects that can be transmitted through vertical structure of production. Business of Walmart would get affected by some of economic factors such as change in exchange rate, interest rate, taxes, recession, demand and supply scenario. Payment to international suppliers will be affected by change in exchange rate and strategies formulated by organization is impacted by change in interest rate (Wach 2014). As understood from the characteristics of the social risk, it can originate from numerous ways. In some circumstances, Walmart might internationally or unintentionally contribute to the social or environmental problems and might enable the stakeholders to mount the difficulties by whatever means they have. Walmart might face the problem of operating in areas that are having deep social problems with stakeholder’s negative perception on misinformation or the lack of resources to the problems that prevails. Problems such as communications, chains of supply and other trading relationships might pose as a social risk for Walmart. Walmart has struggled online and has lagged behind in the market experiments by using social networking technologies that have yielded mixed success. The company faces technology risk in the areas of promoting

its merchandising in the local markets internationally. The ecological aspects of the company lags in the areas of radio-frequency identification tags under the supply chain. The technological aspects of the company has led an effect on the customers inattention to customer service at home.

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