Harvey Norman: Evaluating Thailand & Philippines-BSD119 Report
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This report analyzes the socio-economic, political-legal, and business environments of Thailand and the Philippines to determine the more suitable market for Harvey Norman's expansion. It examines demographic variables, GDP, political risks, governance, regulatory constraints, and infrastructure standards in both countries. The analysis suggests that Thailand presents more favorable business opportunities due to its higher GDP growth rate, stable political environment, better infrastructure, and openness to foreign direct investment, despite the environmental risks in the Philippines. The report concludes with recommendations for improving infrastructure in the Philippines to attract investment and promote economic growth.
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HARVEY NORMAN
Contents
Introduction.................................................................................................................................................2
Environment................................................................................................................................................ 2
Socio-Economic Environment.................................................................................................................. 2
Political - Legal Environment................................................................................................................... 5
Business Environment............................................................................................................................. 6
Analysis........................................................................................................................................................ 7
Recommendation........................................................................................................................................8
References................................................................................................................................................... 9
Contents
Introduction.................................................................................................................................................2
Environment................................................................................................................................................ 2
Socio-Economic Environment.................................................................................................................. 2
Political - Legal Environment................................................................................................................... 5
Business Environment............................................................................................................................. 6
Analysis........................................................................................................................................................ 7
Recommendation........................................................................................................................................8
References................................................................................................................................................... 9
HARVEY NORMAN
Introduction
Harvey Norman is the largest Australian based company which deals in the products related to
furniture, computers, bedding and Consumer electrical products. Headquarter of the company is
in New South Wales, Australia. There are approximately 10,000 employees who are managing
the overall activities of the company. The CEO of the company is Katie Page and the company
mainly operates as the franchise in the market. The competitors of the company are David Jones
and Coles and the aim of the company is to boost the growth in the competitive market.
Environment
Socio-Economic Environment
Demographic variable- Demography of the country covers certain different criteria such as
population density, ethnicity, economic status, health, education level, and religious affiliations.
The population of the country has been growing at the pace of 1.52 percent. Philippines is the
12th most populated nation and according to UN`s latest estimates, the current population is
106.51 million (Trading economies, 2018). The country`s population has a diversified range of
ethnic groups. According to the population density, the business will grow due to increasing
demand of the customers. Here eighty-one percent of people are catholic Christians, 11 percent
are from Christian denomination, and approximately 6 percent of them are Muslim
(Worldpopulationreview, 2018). On the other hand, population density of Thailand is much more
than Philippines, it is around 135 person in a per square kilometer and it has increased from the
previous years. Majority of the Thailandās population is locates at Bangkok with the diversified
ethnic groups (Lucintel, 2016).
GDP- It is important for Philippines to consider that their policies has to be formed after seeing
that the economy of the country is leaded by service sector that will ultimately contribute to 56.9
Introduction
Harvey Norman is the largest Australian based company which deals in the products related to
furniture, computers, bedding and Consumer electrical products. Headquarter of the company is
in New South Wales, Australia. There are approximately 10,000 employees who are managing
the overall activities of the company. The CEO of the company is Katie Page and the company
mainly operates as the franchise in the market. The competitors of the company are David Jones
and Coles and the aim of the company is to boost the growth in the competitive market.
Environment
Socio-Economic Environment
Demographic variable- Demography of the country covers certain different criteria such as
population density, ethnicity, economic status, health, education level, and religious affiliations.
The population of the country has been growing at the pace of 1.52 percent. Philippines is the
12th most populated nation and according to UN`s latest estimates, the current population is
106.51 million (Trading economies, 2018). The country`s population has a diversified range of
ethnic groups. According to the population density, the business will grow due to increasing
demand of the customers. Here eighty-one percent of people are catholic Christians, 11 percent
are from Christian denomination, and approximately 6 percent of them are Muslim
(Worldpopulationreview, 2018). On the other hand, population density of Thailand is much more
than Philippines, it is around 135 person in a per square kilometer and it has increased from the
previous years. Majority of the Thailandās population is locates at Bangkok with the diversified
ethnic groups (Lucintel, 2016).
GDP- It is important for Philippines to consider that their policies has to be formed after seeing
that the economy of the country is leaded by service sector that will ultimately contribute to 56.9
HARVEY NORMAN
percent of GDP in 2015. As Philippines is prone to destructive natural disasters which is
ultimately reflected in the GDP of the country. Moreover, another challenge to upcoming
companies to establish in Philippines is low investment in research and development (R&D)
(Statista, 2018a). Whereas, Thailandās economy is influenced due to low rate of interest and
inflation that ultimately increases the purchasing power of the customers. Due to increasing GDP
rate, Thailand can be a more appropriate option to invest as far as GDP is concerned. From the
below GDP growing graph of Philippines, the GDP is increasing slowly and gradually.
Although, it is important to consider the pace of growth is slow and the reason is clear as the
country is highly influenced by destructive disasters (Trading economies, 2018).
Tabular and graphical representation of GDP of Philippines and Thailand
GDP of Philippines
Years GDP (in US Dollars)
2012 250.09
2013 271.84
2014 284.59
2015 292.77
2016 304.89
2017 313.68
2018 331.68
2019 354.31
2020 385.44
2021 422.59
2022 464.04
percent of GDP in 2015. As Philippines is prone to destructive natural disasters which is
ultimately reflected in the GDP of the country. Moreover, another challenge to upcoming
companies to establish in Philippines is low investment in research and development (R&D)
(Statista, 2018a). Whereas, Thailandās economy is influenced due to low rate of interest and
inflation that ultimately increases the purchasing power of the customers. Due to increasing GDP
rate, Thailand can be a more appropriate option to invest as far as GDP is concerned. From the
below GDP growing graph of Philippines, the GDP is increasing slowly and gradually.
Although, it is important to consider the pace of growth is slow and the reason is clear as the
country is highly influenced by destructive disasters (Trading economies, 2018).
Tabular and graphical representation of GDP of Philippines and Thailand
GDP of Philippines
Years GDP (in US Dollars)
2012 250.09
2013 271.84
2014 284.59
2015 292.77
2016 304.89
2017 313.68
2018 331.68
2019 354.31
2020 385.44
2021 422.59
2022 464.04
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HARVEY NORMAN
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
50
100
150
200
250
300
350
400
450
500
GDP of Philippines
(Source: By author)
GDP of Thailand
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
50
100
150
200
250
300
350
400
450
500
GDP of Philippines
(Source: By author)
GDP of Thailand
HARVEY NORMAN
Years GDP (US billion dollars)
2012 397.56
2013 420.33
2014 407.34
2015 401.37
2016 411.84
2017 455.38
2018 490.12
2019 524.25
2020 555.23
2021 586.14
2022 617.9
Years GDP (US billion dollars)
2012 397.56
2013 420.33
2014 407.34
2015 401.37
2016 411.84
2017 455.38
2018 490.12
2019 524.25
2020 555.23
2021 586.14
2022 617.9
HARVEY NORMAN
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
100
200
300
400
500
600
700
GDP of Thailand
(Source: By author)
Political - Legal Environment
Political risk- The political factors is a crucial factor that affects the stability especially in terms
of corruption and change of rule. From the last few years, Thailand`s government encourages a
huge level of public investment with an aim to fasten the economic growth. In 2010, the Prime
Minister planned to launch reconciliation plan that protects the nation`s main institution, treat
injustice and inequalities, that can ultimately enable the constructive talks and communication
among the political parties. The plan should put the motion into political parties which is
transparent, efficient, and democratic. Coalition headed by Prime minister has enhanced the
broadening and competitiveness of market accessibility for the business that remains a part of
economic policy by promoting trade and investment policies (Lucintel, 2016). On the other hand,
Philippines has a stable political environment. Although, the country provides a strong surplus
with high foreign reserves. It is important to consider that Philippines is prone to volcano and
earthquakes. While establishing the company in Philippines, a company has to a huge risk
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
100
200
300
400
500
600
700
GDP of Thailand
(Source: By author)
Political - Legal Environment
Political risk- The political factors is a crucial factor that affects the stability especially in terms
of corruption and change of rule. From the last few years, Thailand`s government encourages a
huge level of public investment with an aim to fasten the economic growth. In 2010, the Prime
Minister planned to launch reconciliation plan that protects the nation`s main institution, treat
injustice and inequalities, that can ultimately enable the constructive talks and communication
among the political parties. The plan should put the motion into political parties which is
transparent, efficient, and democratic. Coalition headed by Prime minister has enhanced the
broadening and competitiveness of market accessibility for the business that remains a part of
economic policy by promoting trade and investment policies (Lucintel, 2016). On the other hand,
Philippines has a stable political environment. Although, the country provides a strong surplus
with high foreign reserves. It is important to consider that Philippines is prone to volcano and
earthquakes. While establishing the company in Philippines, a company has to a huge risk
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HARVEY NORMAN
associated with their risk of existence especially occurrence of natural disasters such as
typhoons, earthquakes, and destructive floods (Llanto, and Manalili, 2018).
Governance- the governance system of Thailand strongly believes in engaging the free trade
agreements and other co-operative frameworks that will be able to expand the international
linkages, preventing the corruption, promoting and developing the health insurance system,
providing solutions to the threat of drugs, raising the standard of living of people by relieving
them from the higher tax imposition and increasing the wage. These government policies will
assist the country`s development (Llanto, 2015).
Business Environment
In the emerging economic community, regulatory qualities plays an critical role in stimulating
the investments and improving them.
Regulatory constraints- the environment for conducting business has improved in the last few
years. As per the business report of World Bank in 2012, it contains some measures to conduct a
business with an ease. Thailand provides an easy conduct of business by introducing one stop
shop. Moreover, according to the index of economic freedom, the country has been ranked sixty
two among 180 countries and 10th among 41 Asian countries (CariƱo, 2016). The country scores
well in fiscal freedom, monetary freedom, government spending, and labor freedom when its
regulatory norms are compared with Worldās average. Whereas, the regulatory reforms in
Philippines in relation to political framework. The country follows a presidential system and
democratic governance structure which is composed of bicameral legislature and judiciary
branch. It is reported in the regulatory system of Philippines that local government generally
impose tertiary rules and such as permits and license by the passing of local ordinance (CariƱo,
2016).
associated with their risk of existence especially occurrence of natural disasters such as
typhoons, earthquakes, and destructive floods (Llanto, and Manalili, 2018).
Governance- the governance system of Thailand strongly believes in engaging the free trade
agreements and other co-operative frameworks that will be able to expand the international
linkages, preventing the corruption, promoting and developing the health insurance system,
providing solutions to the threat of drugs, raising the standard of living of people by relieving
them from the higher tax imposition and increasing the wage. These government policies will
assist the country`s development (Llanto, 2015).
Business Environment
In the emerging economic community, regulatory qualities plays an critical role in stimulating
the investments and improving them.
Regulatory constraints- the environment for conducting business has improved in the last few
years. As per the business report of World Bank in 2012, it contains some measures to conduct a
business with an ease. Thailand provides an easy conduct of business by introducing one stop
shop. Moreover, according to the index of economic freedom, the country has been ranked sixty
two among 180 countries and 10th among 41 Asian countries (CariƱo, 2016). The country scores
well in fiscal freedom, monetary freedom, government spending, and labor freedom when its
regulatory norms are compared with Worldās average. Whereas, the regulatory reforms in
Philippines in relation to political framework. The country follows a presidential system and
democratic governance structure which is composed of bicameral legislature and judiciary
branch. It is reported in the regulatory system of Philippines that local government generally
impose tertiary rules and such as permits and license by the passing of local ordinance (CariƱo,
2016).
HARVEY NORMAN
Standards of infrastructure- Thailand has been ranked among the top 20 economies out of 183
economies. The country has grown more competitive in the need of labor market reforms that
can become a competitive advantage for a business (Philippines, 2018). On the other hand,
infrastructure in Philippines remains a risk due to high probability of natural disasters. The
economic forum reveals that the current investment demand for infrastructure is around $1
trillion that is much lower than the demanded of around $3.7 trillion. In Philippines,
infrastructure is both challenge as well as opportunity. Although, in recent years it has improved
a lot by resolving the deficit issues that can be main driver for the growth (Philippines, 2018).
Analysis
The business opportunities are more in Thailand, as far as the socio environmental factors are
considered, the population of Bangkok has been increasing because people have started moving
towards the city from the rural area. This has caused high traffic, air pollution, and poverty.
Therefore, the demand of customers will be relatively high when as compared to Philippines
(Statista, 2018a). Whereas, while viewing at the GDP`s growth rate of Thailand, it can be
interpreting from the above graph that the pace of growth is a little higher than Philippines
(Business wire, 2017). The initial GDP is much higher than Philippines. From the above
analysis, it can be stated and revealed that it will be more profitable to a company if it starts
investing in Thailand when as compared to Philippines. In regards to Thailand, the country
scores quite well in fiscal terms, government spending, regulatory norms and also the monetary
freedom. It is most important to consider while investing in a new country that whether Thailand
encourages the FDI or business establishments or not. Thailand favors foreign establishment.
Due to high environmental risk such as destructive earthquake and flood, the idea of establishing
cannot be executed because the main idea of business is to cover its fixed cost and generate
Standards of infrastructure- Thailand has been ranked among the top 20 economies out of 183
economies. The country has grown more competitive in the need of labor market reforms that
can become a competitive advantage for a business (Philippines, 2018). On the other hand,
infrastructure in Philippines remains a risk due to high probability of natural disasters. The
economic forum reveals that the current investment demand for infrastructure is around $1
trillion that is much lower than the demanded of around $3.7 trillion. In Philippines,
infrastructure is both challenge as well as opportunity. Although, in recent years it has improved
a lot by resolving the deficit issues that can be main driver for the growth (Philippines, 2018).
Analysis
The business opportunities are more in Thailand, as far as the socio environmental factors are
considered, the population of Bangkok has been increasing because people have started moving
towards the city from the rural area. This has caused high traffic, air pollution, and poverty.
Therefore, the demand of customers will be relatively high when as compared to Philippines
(Statista, 2018a). Whereas, while viewing at the GDP`s growth rate of Thailand, it can be
interpreting from the above graph that the pace of growth is a little higher than Philippines
(Business wire, 2017). The initial GDP is much higher than Philippines. From the above
analysis, it can be stated and revealed that it will be more profitable to a company if it starts
investing in Thailand when as compared to Philippines. In regards to Thailand, the country
scores quite well in fiscal terms, government spending, regulatory norms and also the monetary
freedom. It is most important to consider while investing in a new country that whether Thailand
encourages the FDI or business establishments or not. Thailand favors foreign establishment.
Due to high environmental risk such as destructive earthquake and flood, the idea of establishing
cannot be executed because the main idea of business is to cover its fixed cost and generate
HARVEY NORMAN
profits. Apart from environmental factors, Thailand`s growth rate of GDP is even higher at the
very first stage that indicates more disposable income of customers with the buying capacity. In
terms of cultural and social factors, Thailand has more diversified population with even more
population density. It can be beneficial for the company if it thinks of investing in Bangkok as
the population density is also considerable. Due to lack of infrastructure facilities in Philippines,
Thailand is again preferred for its enabled infrastructure such as roads, railways and water
reservoirs (Philippines, 2018).
Recommendation
Recommendation based on improving several factors can lead to attract the investment. When as
concerned to major strategies to develop the infrastructure in the country, it should enhance the
efficiency of transportation sector in order to increase the competitive nature of transferring the
goods from one place to another by certain measures. The government should enact national
transport policies that can create independent bodies which can regulate seaports, railways and
airports. The country should improve the port facilities that can ensure inter-island shipping with
a RORO network. Moreover, the company should promote FDI that will result in increasing
GDP and employment rates.
References
Business wire, (2017). Macroeconomic Opportunities and PESTLE Analysis of Thailand 2017 -
Research and Markets. Retrieved from:
https://www.businesswire.com/news/home/20170815005987/en/Macroeconomic-
Opportunities-PESTLE-Analysis-Thailand-2017--
profits. Apart from environmental factors, Thailand`s growth rate of GDP is even higher at the
very first stage that indicates more disposable income of customers with the buying capacity. In
terms of cultural and social factors, Thailand has more diversified population with even more
population density. It can be beneficial for the company if it thinks of investing in Bangkok as
the population density is also considerable. Due to lack of infrastructure facilities in Philippines,
Thailand is again preferred for its enabled infrastructure such as roads, railways and water
reservoirs (Philippines, 2018).
Recommendation
Recommendation based on improving several factors can lead to attract the investment. When as
concerned to major strategies to develop the infrastructure in the country, it should enhance the
efficiency of transportation sector in order to increase the competitive nature of transferring the
goods from one place to another by certain measures. The government should enact national
transport policies that can create independent bodies which can regulate seaports, railways and
airports. The country should improve the port facilities that can ensure inter-island shipping with
a RORO network. Moreover, the company should promote FDI that will result in increasing
GDP and employment rates.
References
Business wire, (2017). Macroeconomic Opportunities and PESTLE Analysis of Thailand 2017 -
Research and Markets. Retrieved from:
https://www.businesswire.com/news/home/20170815005987/en/Macroeconomic-
Opportunities-PESTLE-Analysis-Thailand-2017--
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CariƱo, L. V., (2016). Regulatory Governance in the Philippines. Retrieved from:
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.126.3227&rep=rep1&type=pdf
Llanto, G. M. (2015). Toward an Effective Regulatory Management System: Philippines.
Retrieved from:
https://dirp3.pids.gov.ph/webportal/CDN/PUBLICATIONS/pidsdps1532.pdf
Llanto, G. M. and Manalili, N. M. (2018). Regulatory issues in the Philippine food
manufacturing industry. Retrieved from:
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidspn1804.pdf
Lucintel (2016). PESTLE Analysis of the Philippines 2016. Retrieved from:
https://www.lucintel.com/press/pestle-analysis-of-the-philippines-2016.aspx
Philippines, (2018). PHILIPPINE INFRASTRUCTURE SECTOR. Retrieved from:
http://boi.gov.ph/wp-content/uploads/2018/02/Infrastructure-January-2018.pdf
Statista, (2018a). Philippines: Gross domestic product (GDP) in current prices from 2012 to
2022. Retrieved from: https://www.statista.com/statistics/578709/gross-domestic-
product-gdp-in-philippines/
Statista, (2018b). Thailand: Gross domestic product (GDP) in current prices from 2012 to 2022.
Retrieved from: https://www.statista.com/statistics/332234/gross-domestic-product-gdp-
in-thailand/
Trading economies, (2018). Philippines GDP per capita. Retrieved from:
https://tradingeconomics.com/philippines/gdp-per-capita
CariƱo, L. V., (2016). Regulatory Governance in the Philippines. Retrieved from:
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.126.3227&rep=rep1&type=pdf
Llanto, G. M. (2015). Toward an Effective Regulatory Management System: Philippines.
Retrieved from:
https://dirp3.pids.gov.ph/webportal/CDN/PUBLICATIONS/pidsdps1532.pdf
Llanto, G. M. and Manalili, N. M. (2018). Regulatory issues in the Philippine food
manufacturing industry. Retrieved from:
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidspn1804.pdf
Lucintel (2016). PESTLE Analysis of the Philippines 2016. Retrieved from:
https://www.lucintel.com/press/pestle-analysis-of-the-philippines-2016.aspx
Philippines, (2018). PHILIPPINE INFRASTRUCTURE SECTOR. Retrieved from:
http://boi.gov.ph/wp-content/uploads/2018/02/Infrastructure-January-2018.pdf
Statista, (2018a). Philippines: Gross domestic product (GDP) in current prices from 2012 to
2022. Retrieved from: https://www.statista.com/statistics/578709/gross-domestic-
product-gdp-in-philippines/
Statista, (2018b). Thailand: Gross domestic product (GDP) in current prices from 2012 to 2022.
Retrieved from: https://www.statista.com/statistics/332234/gross-domestic-product-gdp-
in-thailand/
Trading economies, (2018). Philippines GDP per capita. Retrieved from:
https://tradingeconomics.com/philippines/gdp-per-capita
HARVEY NORMAN
Worldpopulationreview, (2018). Philippines Population 2018. Retrieved from:
http://worldpopulationreview.com/countries/philippines-population/
Worldpopulationreview, (2018). Philippines Population 2018. Retrieved from:
http://worldpopulationreview.com/countries/philippines-population/
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