International Business Environment
International Business Environment
This report covers almost all the related areas which are beneficial for the major decision to be taken by the CEO of my company, in order to expand the business in Indonesia. It also covers the history of Indonesia and have focused on all the important area which can have a great impact on our business. In this report, the basic life-style, geography, culture, and other major points of Indonesia have also been mentioned. The main focus is on the economy of Indonesia, which is one of the best in the world. It is the largest country in terms of population after China, America, and India.
This point is really important as the population is more and therefore the work force of Indonesia is also very skilled. The system of politics and economy is also mentioned in this report, as this plays a major role in making any big decision. The legal and regulatory environment is also considered and I have also covered the Socio-cultural environment of Indonesia. The consumer attitudes and behaviors, and the work force values are also mentioned. Consumer behaviors are relatively friendly as people are ready to try out the new change in the market. The social responsibilities and ethnic responsibilities are also highlighted.
These were important to highlight as starting out with a business in other country of different religion and people is not an easy task. Therefore the Company has to consider all the pros and cons of the trading country. In the end, the conclusion narrates the basic importance in doing business in Indonesia and I have also given few recommendations to the CEO, so that the Australian Company will consider doing business with Indonesia, which will be in the great interest of both the countries Introduction The formal name of Indonesia is the Republic of Indonesia, and is located in South-East Asia.
Spread across a chain of thousands of islands between Asia and Australia, it is the country with one of the largest Muslim population. The capital city is Jakarta. Indonesia comprises of around 230 million people. Across its many islands, the country consists of distinct ethnic, linguistic, and religious groups. Indonesia was proclaimed on August 17, 1945 from the Netherlands. The state language of Indonesia is Indonesian but ethnically it is highly diverse with more than 300 regional languages. (Sneddon, J. Neil, 2006). The religion followed by the people of Indonesia is Islam.
The people range from rural hunter gatherers to modern urban elite. Indonesia is richly gifted with natural resources, yet poverty remains a major problem in contemporary Indonesia. There are two evident seasons in Indonesia the dry season which starts from June and continues till October, and the rain season which starts from November and ends in March. Both of these seasons are hot. The climate is humid and tropical, and is moderate in highlands. It also comprises of nearly seventeen thousand islands that stretches over five thousand miles along the equator.
The life expectancy of males is 69 years and that of the females is 73 years. The official currency of Indonesia is Rupiah (Rp). The currency is issued and controlled by The Bank of Indonesia. The national motto of Indonesia is Unity in Diversity, the term which strikes deep into the heart of this beautiful, dynamic, and attractive Southeast Asian country. It is one of the few places in the world which offers such cultural variety and geographical complexity. Population The land of Thousand Islands is known for its unique culture and majestic beauty.
The cultural zeal is reflected in its population which counts to around 230 million people. Indonesia is the world’s fourth largest population in the world after China, United States of America and India. Indonesia is predominantly a Muslim dominated state and 88% of the total population is Muslims. There are Protestants living here with around 5% share in the total population followed up by the Roman Catholics 3%, Hindus 2%, Buddhist 1%, and there are also scarcely populated ethnic tribes. (Charles E. Farhadin,2005). Geography Indonesia is the largest archipelago in the world. It has five major islands and around 30 small groups.
Indonesia has total of around 17500 out of which only 6000 are populated. (C. Joshua, 2006). The islands are between two important oceans the Pacific and the Indian Ocean, and it bridges Asia and Australia. The total lands are 1826440 sq. km, and the water area is 93000 sq. km. The five main islands are Sumatra, Java, Kalimantan, Sulawesi, and Irian Jaya. The island Sumatra is the most fertile and densely populated among all. The islands Sulawesi and Irian Jaya are a part of the world’s biggest island i. e. New Guinea. Indonesia also comprises of mountains ranging between 3000 and 3800 above sea-level.
These mountains can be found on the islands of Sumatra, Java, Sulawesi, and Bali. The highest mountain is Mandala Top in the Jaya Wijaya mountain range of Irian Jaya. Economy: The economy of Indonesia is strong and the government plays a major role. The economy is mainly based on the agriculture and oil. (Peter M. Lewis, 2007). Approximately 90% of the total population is engaged in agriculture. There are about 139 state owned enterprises, and the government has the right to administer price on several basic goods such as fuel, rice. Indonesia has become self-sufficient in rice and exports rice to many parts of the world.
Indonesia is a country which faced the global financial crisis very smoothly mainly due to its heavy reliance on domestic consumption as the main source of economic growth. Currently the GDP of Indonesia is $514 billion or 0. 83% of the world economy, according to the World Bank. Per capita GDP is around %4000 (IMF, 2009). The trading system of Indonesia is same as that of all the Muslim countries. Indonesia is heavily dependent on the trade activities. It exports rice, oil and other commodities. It imports food stuffs and beverages, raw materials for industrial use, consumer goods. And transport equipments.
It is also the member of W. T. O, World Bank, I. M. F, and ASEAN (The Association of Southeast Asian Nations). The major trading partners are Japan, China, United States, Australia, Germany, and Korea. Indonesia has an economic competitiveness in the production of rice as compared to other exporters of rice. In 2010 the government is facing the ongoing challenges of improving the insufficient infrastructure of Indonesia in order to remove all the hurdles and impediments to the economic growth. It is also considering the major changes in the climate due to global-warming, as climate can hit the agriculture badly.
Political System: The political system of Indonesia is a set of presidential representative democratic republic. (Elizabeth Martin- : Gender and Nation in New Democracy. Routledge, 2005). The power of the Indonesia is in the hands on the national government. The President of Indonesia is both the head of the state and the head of the government and also the head of the other multi-party system (A. McIntyre, 2005). The president is also the commander in chief of Indonesian armed forces, and is responsible for foreign relations, domestic governance, and policy-making.
Indonesia is a democratic state and therefore the President and the Vice-president are chosen by the vote of the general population for a period of five years. The judiciary is independent of the executive and legislature (Ross. H. McLeod and Andrew Macintyre, 2007). There are 33 provinces of Indonesia and each of these provinces has its own governor and a political legislature. The main political parties of Indonesia are the Crescent Moon and Star Party (PBB), the Democratic Party, and the Functional Group Party also known as Golkar. Mr.
Susilo Bambang Yudhoyono was the former army general of Indonesia and he became the president in 2004. He was re-elected in the general elections of 2009, and is the current President of Indonesia. The current Vice-President is Mr. Boediono. (C. Sebastian, 2006). Legal and Regulatory Environment: There is legal right of Indonesia in all the fields such as industrial, raw-materials, bank and etc. Indonesia is a member of World Intellectual Property Organization. There are proper rules and regulatory system in the telecommunication and private sectors. (T. Lindsey, 2008).
Indonesia also has a law for patents. It also has a trademark law, which provides protection for well-known marks. There are also laws related to the copyrights, IT usages and software developments. ( Vedi R. Hadiz and Daniel Dhakidae, 2005). Socio-Cultural Environment: Indonesia is rich in arts and culture which reflect the early migrants with western thoughts brought up by the Portuguese. The art and culture of Indonesia is greatly influenced by religion. The famous dramas and dances are influenced by the Hindu mythology. Indonesia is really good in handicrafts work.
The people are more into art and therefore they usually show their artistic nature on canvas, woods, stones and clays. Indonesia promotes skilled and semi-skilled workforce. (James H. W, 2004). Twenty-five percent of Indonesia’s GDP comprises of the coastal and marine industries. Tourism has the highest number of workforce involved. (R. Dahuri ans I. M. Dutton, 2005). The people working in such areas are given proper rights and they perform their duties under the rules and regulations. (Mary Zurbechan, 2005) The consumer attitudes and behavior plays an important role for any nation.
In Indonesia the people perceive different things differently. In other words we can say that the consumer attitude is friendly as the people are ready to accept the change and are also not hesitated to try out something new in the market. Availability of Resources Resources are important for every nation. Indonesia is blessed with almost all the resources such as natural, financial, and human resources etc. Indonesia is rich in the production of raw materials and completes its requirement if needed by the exporting it. Indonesia is also capable of maintaining financial resources and is a member of IMF.
Ethnic and Social Responsibility In Indonesia there is an ethnic and social responsibility present in almost all the fields. The government keeps a strict check on all the sectors and therefore all the major corporations and organizations pay more attention to promote and deliver social responsibility. In Indonesia there is a problem of Chinese racial discrimination. The government is trying its very best to eliminate this racial issue as Indonesia is a country which respects all the people of different religions and nations. (Joseph Chinyong Lion, 2005). Conclusion:
In short, we can say that Indonesia is a nation which is highly urbanized and is moving toward more development. The people are friendly and are ready to accept the changes in the businesses in order to flourish more in the coming years. Indonesia is doing great in trade and also its economy is towards the growth. It also has good relations with almost all the nations. The other good thing about Indonesia is its political and legal environment, as it is stable. Australia is one of the neighboring countries of Indonesia and therefore, Australia should come forward and helps the Indonesians to grow.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 26 September 2016
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