International relations are rapidly changing and growing in such a way that even the market economy is dragged into this fast-paced world and more importantly, the domestic and internal affairs of states are greatly influenced. In the same sense, the business world is affected by this constantly transforming world considering that it does not function on its own or in a vacuum. The eventualities happening around the sector also influences the undertakings and decisions between and among the businessmen and women. This idea is called the business environment.
Business environment, according to Vadim Kotelnikov, is a set of “political, economic, social and technological (PEST) forces” which are usually beyond the control of the business sector but have great implications that are both advantageous and disadvantageous to the business community (Kotelnikov, 2008). With the use of the four determining factors – political, economic, social, and technological – of the business environment, and an analysis of each one of them, the landscape of the whole status and condition of the business environment is somehow perceived.
Moreover, considering the varying circumstances faced by the different elements of the business environment as not merely influenced by domestic affairs, the business sector also has to cope up with what’s going on in the international arena or externally. This then leaves the business community in a very difficult and challenging position wherein its stakeholders and players need to surpass and overcome both the circumstances locally and globally while pursuing and assuring the development of their endeavors.
These internal and external conditions could be analyzed in the form of the Strengths, Weaknesses, Opportunities and Threats or the SWOT analysis (Kotelnikov, 2008). This framework looks both at the internal (strengths and weaknesses) and the external (opportunities and threats) circumstances in the business world. Being well aware that states and its business sector is greatly influenced by the changing business environment, it is essential to assess the capacity of these states in overcoming and facing the challenges before them.
Developing countries, for instance, find it difficult to follow the trends of the international community because of some unavoidable circumstances. For the purpose of this study, the business environment of the Republic of the Philippines will be looked at, as part of the developing countries. The Republic of the Philippines The Philippines is a small state with fragmented group of islands. It is located in the Southeast region of Asia between two large water formations known as the Philippine Sea and the South China Sea (Central Intelligence Agency, 2008).
Although geographically small and distant from Western countries, the Philippines is simultaneously conducting diplomatic relations with various states. Because of this international affiliation added to the country’s domestic affairs, it is observable that the Philippines’ business environment have been and will continually be greatly affected. Politically speaking, the Philippines have a very diverse and interesting governmental undertakings.
The country have different political parties and pressure groups that affects the decision-making processes in the country with their different stakes and political power. Moreover, many Filipinos are outraged and downright discontented with how the state actors govern its people. Actually, the country was considered as the most corrupt country in Asia (Conde, 2007). It is also observed that issues such as nepotism and political dynasty are also present in the political structure of the Philippines.
In accordance to that, the Philippines’ political activity encompasses both its bilateral and multilateral relations. Its bilateral relations with the US, European Union and Japan, for example, is increasingly strengthened which is highly favorable for the said developing country. Moreover, with its multilateral relations, for instance through the Association of Southeast Asian Nations (ASEAN), the country is gradually addressing domestic problems like human rights and its concerns on some Overseas Filipino Workers (OFWs) and their security abroad (Arroyo, 2007).
On the other hand, the Philippine economy is observed to be growing in a faster pace as compared to earlier years which enables the country to develop and further enhance its economic endeavor. Although the prices of many goods including oil continues to rise, the Philippine economy is still standing strong owing a big bulk of its finances from the revenue provided by its OFWs (Arroyo, 2007). Aside from that, the Philippines is also one of those countries experiencing great benefits from Business Process Outsourcing or BPO.
With the emerging presence of call centers, web development, and transcription jobs, many Filipinos are alleviated from unemployment and the country’s economy is highly empowered. It was actually recorded that BPOs in the Philippines enabled the country to experience an annual growth excess of 30 percent (BPO Philippines, 2008). In the same manner, the country’s foreign economic relations is seen to be developing and is continually strengthened.
The Japan-Philippine Economic Partnership Agreement or JPEPA, for example, enables the Philippines to send more OFWs to Japan to provide their services and skills in the latter, which will greatly benefit the Philippines (del Rosario, 2008). Aside from the economic activities of the country that affects the business environment, social implications are also reflected. Domestically speaking, the country’s diverse political pressure groups and social movements enable its people to be socially aware and active.
Through this social involvement, the Filipinos are empowered to practice their rights and freedom accorded by its democratic country. In the same manner, this social activism spilled-over in the country’s foreign affairs wherein aside from the Philippines’ involvement in various international governmental organizations, many non-state actors are also simultaneously participating in other international non-governmental organizations like Greenpeace International, which is advocating for environmental sustainability and peace (Greenpeace, n. d. ).
Lastly, for the technological innovations the Philippines is experiencing both domestically and internationally, it is observable that the country is enhancing its technological undertakings through the growing call center offices and even through its information technology programs. Moreover, the country is continually affliating with other states to coordinate in producing technologically advanced materials. SWOT Analysis In all those circumstances, it is perceived that strengths, weaknesses, opportunities and threats emerge in the condition of the business environment.
Analyzing these SWOT will show how the Philippines is responding to this diverse environment and how the country perceives each one of them. The increase in the revenue stated earlier from the OFWs is a good indicator that the business sector is continually growing. Through these finances, the country’s developmental agendas are given priority and its economic endeavors enhanced. In line with that, being well aware that OFWs are in demand abroad, state actors may provide more training programs to develop the skills of its labor force and strengthen their abilities.
Moreover, through its BPOs, the country is gradually addressing its unemployment problem and giving its people venues to participate in the workforce and contribute, not just to their own growth, but also to the country as a whole (BPO Philippines, 2008). In addition to that, through the technological innovations accorded to the country, the Philippines is able to provide its people with a chance to learn more and follow the trend of modern technology.
This will not directly influence the economy of the Philippines but its long-term effect is observably beneficial for the country since the Filipino’s skills and abilities will be further developed. On the contrary, the Philippines’ business environment is not all encouraging and uplifting. The political bickerings and the continuous corruption in many governmental institutions are highly criticized by the Filipino masses attesting that it destabilizes not just the country’s political growth but even its socio-cultural and economic activities.
The political bickerings among the diverse political parties is hampering the government to focus on development programs and tends to divert their attention towards addressing the egocentrism of some officials. Aside from that, the issue on terrorism is also weakening the Philippine society. Although the use of the word “terrorism” is highly debatable, the Philippines is experiencing internal conflict and violence especially in its Southern region. Some Muslim extremists were reported to be staging violence and threatening the people killing many civilians and increasing national security problem.
This issue weakens both state and non-state actors to promote development programs for the people in the South because tension and conflict continues to escalate in the said area (Anti-Defamation League, 2004). These problems greatly affects the country’s domestic affairs and its policy-making processes. Looking at the country’s international undertakings, its business environment also provides opportunities and advantages. The external implications of the internal strength of the Philippines’ business environment is very much related.
Because of the observed technological ventures, flexibility, and openness of the Filipino people, foreign firms and foreign investors are encouraged to explore the Philippines’ business sector and even its other institutions. Foreigners find it beneficial and a strategic move to partake in the Philippine businesses because of the country’s large laborforce and learning skills. Also, through the training programs provided by the government to its people, Filipinos become highly competitive in the international market offering their services as part of the mobilized capital.
Furthermore, the social movements established by the Filipinos could also serve as an opportunity to affiliate with international organizations and make the country’s advocacy and social activism known across the world. However, the involvement of the Philippines in the international arena and its continuous bilateral and multilateral agreements poses some serious threat in the country’s business environment. With the trade relations of the Philippines, its partner also gives its terms and conditions to pursue the deal.
For the JPEPA, Japan’s condition, as a response to the Philippines’ assertion of better Filipino opportunities in the country, is to transfer its toxic waste in the Philippines (del Rosario, 2008). This is a great threat to the country’s environment since toxic waste poses health risks to the people. Aside from that, the increasing number of foreign businesses and foreign goods in the country may cripple the Philippines’ local production and goods.
Since the benefits are greater in working for foreign firms, may local businesses may be disregarded in the same manner as their products ignored since people would rather patronize foreign goods. Conclusion and Recommendations From the SWOT analysis of the Philippines’ business environment and the circumstances around it, it is observable that the country really needs a lot of improvement and programs to better enhance their positive characteristics and transform the negative ones.
For the strong points of the Philippines’ business environment, more venues and programs for training and skills development should be pursued by the government with the support of non-state actors. Moreover, policy-makers should assure that the OFWs are secured in their work area and that they receive their benefits. Also, a continuous flexibility, openness, and willingness to cooperate with other states should be pursued while taking note of the country’s national interest at the same time.
In the same sense, the civil society should assert the enhancement of a government oversight committee to monitor government spending and assure that the taxes paid by the people are used for developmental projects and not for the personal interests of government officials. Lastly, the government should strike a balance between collaborating with foreigners and enhancing local industries so that the country’s primary products will not be disregarded but continuously developed.
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