Breadtalk Enters Into Turkeys Market Economics Essay
The change of government political environment in Turkey affects the business environment through the legislation and different regulations. Turkey has successfully carried out the structural reforms after the severe economic recession in 1999 – 2001. The reforms include market liberalizing to promote foreign investment, prevarication, agricultural reform, strengthen the banking system and fiscal discipline, monetary tightening policies to reduce inflation and a floating currency rates.
Turkish government is creating new legislation to help the industry and different companies to grow and foreign investment to improve and make it better for Turkey as a national advantage. With the advantages of free trade and investment policy, many economists said that while the money withdrawn from the major economies, investors are pouring money into Turkey-fastest growing economy in Europe. This will create the favorable condition for Breadth activity in Turkey market. Because, Breadth will be support of government and feel safety when doing business here. . 1. 2 Corruption Corruption is one of the major factors that affect investment environment and hampers the investment attraction. In Turkish political system the existence of corruption as a pervasive, entrenched, and enduring problem has long been an “open secret”. These positive trends are reflected by the World
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However, despite these positive developments, other indicators suggest that the country remains confronted to challenges of rampant corruption, and weak enforcement of anti-corruption leslies. Turkey performs below average in Transparency Internationals 2011 Corruption Perceptions Index, with a score of 4,2 on a O (highly corrupt) to 10 (highly clean) scale, indicating relatively high levels of public sector corruption (Transparency International, 2011). Turkeys Extent of corruption shows potential risks if Breadth entry into this market.
Breadth can encounter excessive bureaucracy, a slow Judicial system, weaknesses in corporate governance, unpredictable decisions made at the local government level, and frequent changes in the legal and regulatory environment. As such, even Breadth Enters Into Turkeys Market Economics Essay By Jennet Turkey may still find their efforts thwarted. Fortunately, Turkish politicians have been vocal about fighting corruption in recent years. In February 2010, Turkey adopted a national anti-corruption strategy 2010-2014 2. . 3 Terrorism The Republic of Turkey is one of the many countries that have been struggling with terrorism for decades. The risk of loss due to acts of political violence remains a prominent worry for investors as well as foreign firms. In Turkey the current political challenges is the series of violent terrorist attacks that have happened in the country u to Islamic extremist, Kurdish radicals, Turkish militants that may have link with AH-Qaeda. This is a disadvantage for host country and investor _ Breadth.
An understanding of terrorism will help Breadth has been prepared to limit risks. 2. 1. 4 Relationship between Singapore and Turkey Relationship between Singapore and Turkey has been continuing unabated despite negative effects of the global economic crisis. Total trade volume between Turkey and Singapore has maintained a steady level of 1 billion SAID. As of 2010, exports to Singapore reached 567. 9 million USED, whereas our imports were at the level of 341. Million USED. At present, there are 49 Singapore companies operating in Turkey. Relationship between Singapore and Turkey, 2011) In 2012, Turkish Deputy Prime Minister All Abacas visited Singapore where he met with Singapore President Tony Tan, Deputy Prime Minister Thurman Augmentations, Minister of Foreign Affairs K. Shamanism and Minister for Trade and Industry Limb Hang Kiang Cilia Eng, 2012). The two leaders agreed to further deepen bilateral cooperation across different sectors including trade, investments and finance. So Turkey and Singapore is now enjoying warm relation. That is a costive factor for Breadth who intend to go into Turkey market.
To look back on political panorama of Turkey we can conclude that Turkey is one of the investors with the ratio between the risk and the most profitable in the world. In addition, the intervention of Turkey in Syria, the delay to Join the European Union and the country’s corruption was also disturbing. 2. 2 Economic Turkey’s economic is risen from the financial crisis in 2000-2001, which became the fastest growing economy among the countries in the Organization for economic co- operation and development (COED), the second fastest of the 620 group to grow 9% n 2010 and 8. Percent in 2011 (CANON, 2011). Turkey became a destination for investors. The market size and market share of Breadth may be affected by so recession, inflation, income and unemployment rate to finding opportunity for Breadth in Turkey. 2. 2. 1 GAP growth rate and GAP per capital:UserslinchpinsDesktop undermine_ex. Jpg:UserslinchpinsDesktopundermine_ex. Jpg Graph 2: GAP – per capita (APP) (SIS$) Graph 3: GAP – real growth rate Source: CIA World Fastback, 2011 The Turkish economy has shown remarkable performance with its steady growth over the last nine years.
The structural reforms, hastened by Turkey’s EX. Accession process, have paved the way for comprehensive changes in a number of areas. The economy grew with an average annual real GAP growth rate of 5. 2 percent over the past nine years between 2002 and 2011 (CIA World Fastback, 2011). Together with stable economic growth, GAP per capita in Turkey increased steadily rising from about USED 7,000 in 2000 to USED 17,000 in 2011 (CIA world Fastback, 2011). This means that the index has more than doubled in nine years.
Significant improvements in such a short period of time have registered Turkey on the world economic scale as n exceptional emerging economy, the 17th largest economy in the world and the 5th largest economy when compared with the EX. Countries, according to GAP figures in 2011 (MIFF World Economic Outlook, 2012). While many economies have been unable to recover from the recent global financial recession, the Turkish economy expanded by 9. 2 percent in 2010, and 8. 5 percent in 2011, thus standing out as the fastest growing economy in Europe, and one of the fastest growing economies in the world.
Moreover, according to the COED, Turkey is expected to be the fastest growing economy of the COED members during 2011-2017, with an annual average growth ate of 6. 7 percent (COED Economic Outlook No: 86, 2011). Clearly, the economic scenario of Turkey is somewhat optimistic and bright for the future if Breadth entry into Turkey. 2. 2. 2 Recession Many experts have said that is clearly facing a major crisis in the world economy, the Turkish economy is showing extraordinary performance. In commentary in The Wall Street, Turkey’s economic performance was compared to that of the Asian Tigers (Teen, 2011).
Turkey’s unemployment rate has decreased strongly. In other words, the Turkish economy has created Jobs for the idle labor force by increasing industrial labor. Graph 4: Unemployment rate (%) shown a tendency towards stability and will cease to be a problem when the growth rate declines. In addition, it should be noted that although the deficit is currently rising, the rate of the country’s total amount of debt as compared to gross domestic product (GAP) has declined. So even though the CAD has increased, external savings have played a role to clear the debts.
Furthermore, exports grew significantly despite rising currency exchange rates. We can show that the global recession will have a limited impact on Turkey economy. However, the analysis of the advantages and stagnated is necessary if Breadth penetrated the market when the global economy is difficult. Disadvantages during recession time Advantages during recession time – Reduced profits due to escalating cost and declining income. – The unpredictable behavior of customers also affects the sales revenue. – The competition becomes fiercer. The worse is the bankruptcy and new company like Breadth is not an exception. – Recession also includes the stock markets and property markets to fall dramatically. Breadth can invest when price of stock and property are low and wait until the economy goes back to the boom cycle and then the investments will be worth quite a lot more. – A lot of support from the government if Breadth penetrated at this time. – A part of the company can be creating for people. Table 1 : Disadvantages and Advantages during recession time in Turkey 2. 2. Inflation The inflation rate is also crucial for marketers to look deeper that could influence the sales volume of products and bring in profits. In the past nine years, Turkey has experienced remarkable disinflation (from an average of 70. 4% in the period of 1993-2002 to single-digit rates) as well as a marked cline in the volatility of inflation. Turkey’s inflation rate, measured by the consumer price index, declined from an average of 70. 4% in the period of 1993-2002 to 6. 4% at the end of 2010, the lowest reading in over four decades. During the course of 2011 , 2011. CIA World Fastback, 2011)http://www. Hazing. Org. Try/en/economy/ informational . GIF Although, their inflation rates have decreased in Turkey but tend to rise up again. The main causes leading to a strong increase of inflation is due to the rising price of energy, commodities and food. This will affect the I-J operations of Breadth in Turkey. For the case of Breadth, the leaders should consider some disadvantages below: High inflation will affect purchasing power of customers. Buyers are afraid of the price increases. Since then, the company’s profit will be affected.
High inflation also affects the disposable incomes of different group of people. As the price of goods keeps increasing, the living expenditure also rises. As a result, Buyers will conservative in spending and corporate profits decreased significantly. High inflation lead to management costs such as raw material costs, marketing costs and employees’ salary also escalate. High inflation will discourage the investment from international companies like Breadth. Because the Government must have the policy to cope with inflation and the willingness of government to attract foreign investment.
To look back on economical panorama of Turkey we can conclude that a sound macroeconomic strategy in combination with prudent fiscal policies and major structural reforms in effect since 2002 has integrated the Turkish economy into the globalizes world, become the 17th largest economy in the world and the 5th largest economy when compared with the EX. Countries (MIFF World Economic Outlook, 2012). And when Breadth is setting objectives and strategy for the future in Turkey market, economic growth is a positive factor to consider. . 3 social Analysis social and cultural aspects of Turkey will give Breadth a wider view on choosing the right products, the appropriate advertisements and marketing approaches. 2. 3. 1 Population Turkey’s social strength that the Turkish have a growing proportion of young population which the Turkish government can use to create new Job by encouraging and training them up to have new skills and qualified to work in different sectors and his will be a national advantage for having a very skill-full workforce.
Turkey was linchpinsDesktopundermine_ex Jpg Graph 6: Age structure in Turkey Graph 7: Population growth in Turkey Source: CIA World Fastback, 2012 More than half of its population is under the age 25. The country’s population has grown from 65. 7 million in 2000 to over 79. 6 million in 2012. Over 2012-2020, Turkey’s population is projected to expand by 8. 3% , according to mid-year statistics, overtaking Germany to become the most populated nation in Western Europe (Turkey’s Population Young and Rapidly Expanding, 2012).
There are obvious opportunities for Breadth when the company entry into Turkey such as: With a market size more than 78 million people, Turkey becomes a very potential market for many global companies. And with Breadth, their main market in Turkey will should be Istanbul area. With its young population, food and beverage consumption and production are both increasing in Turkey Population growth rate will create a dynamic consumer market and a potential market for Breadth to penetrate. The young population offers a responsive workforce. 2. 3. Culture Cultural differences may be the most important problem to developing globally accepted marketing strategies (H. Lee, et al. , 2007). So, learning about cultural of life and food influence how the business strategy of Breadth in Turkey. The Turkish culture is very rich. It is influenced by the ancient history of Anatolia, the Mediterranean, the Middle East, the Caucasus, Eastern Europe, and Aegean culture. Today, this heritage also determines the cultural life of Turkey. The culture of tolerance for all religions and languages living together in peace, spread from Istanbul to Anatolia.
This tradition of tolerance is one of the most important inheritances that Turkey can share with the world. In Business Culture, Turkish business culture is built on trust and familiarity; it is important to take the time to establish personal relationships with your Turkish contacts in order to succeed in business there. Since most Turks are devout Muslims, meetings should be scheduled around the five daily Islamic prayer times. Be sure to arrive on time, as Turks place high importance on punctuality. Business is often discussed over restaurant dinners in Turkey. Eat (lamb and beef primarily); borer, kebab, and dolman dishes; and a sourdough bread eaten with almost every meal. Borer is a pastry made of many thin layers of cough interspersed with cheese, spinach, and/or ground meat. Kebab is the common word for meat roasted in pieces or slices on a skewer or as meatballs on a grill. Dolman is the generic name for dishes made of vegetables (tomatoes and peppers) and leaves (grape, cabbage, and eggplant) that are stuffed with or wrapped around rice or bulge pilaf. The Turkey has habit of eating bread. Both bread and water are considered holy. Bread is a source of energy.
It is the most inexpensive source of calories needed by the human body. This would be advantageous for Breadth however it also means that the market has a lot of competitors. Turkish beverages include tea, coffee, Aryan (buttermilk), bozo (a fermented bulge drink taken in the winter), and rake (an aniseed-flavored brandy usually mixed with water). Carbonated drinks have become popular with young people, and beer gardens in major cities have become hangouts for men. The major food taboo in Turkey is pork, which is forbidden to Muslims. Cultural analysis gives an overview of social Turkey.
Thereby, Breadth has to consider this for their marketing plan in Turkey: A highly effective way of expanding a business of Breadth in Turkey is through television commercials and newspaper, word of mouth The company should be aware of Islamic traditions and sensitivities With the turkey, meat and bread make an inseparable combination. Because Breadth should make products that fit and avoid combined with pork. If Breadth open system restaurants chain in Turkey is a potential because people have a habit of going to a restaurant on the weekends and business is often discussed over restaurant dinners. . 3. 3 Consumption Patterns The food industry and beverage of Turkey has received a steady growth in recent years, with the Turkish consumers becoming more demanding, driven by the multitude of choices provided by the mass grocery retail. Besides, Turkey has become one of the largest markets for its goods baked with bread – a key element of the Turkish diet – leading to leading to some of the highest rates of per capita consumption in the world. It provides opportunities for profitable investment Breadth.
Turkey has traditional eating habits that remain stable in the majority of the consumption presents an increase and at the same time, demand for different bread varieties, such as high-fiber and specialty artisan breads offer an opportunity for this high profit market. 2. 4 Technological Technological progress has contributed to the economic development of the country ND has an important factor in their competition. In the future as well, scientific and technological progress is expected to follow the destination provided by economic policies and competitive strategies.
Turkey has well-developed infrastructure throughout much of the country that is capable of supporting significant development. Turkey has made many reforms to its infrastructure sector. Besides, the development of the internet is also seen as an effective factor in the business environment of Breadth. The number of Internet users has been rising rapidly in Turkey and standing at 1 5th place around the world, according to CIA, the World Fastback (2011) Graph 8: Internet users in Turkey:UserslinchpinsDesktopundermine_execs.
Jpg The development of the Internet in the social life of the Turkey will support Breadth greatly: Internet will become a tool to promote the brand, and an introduction to the business. This will help save advertising costs. Breadth can take this as a distribution channel in the form of online business with customers buying large quantities 2. 5 Environmental One of the environmental strength’s in Turkeys is the prosperous biodiversity they have. Turkey has a very affluent natural resource base and has ranked ninth on biodiversity in the European countries.
Examples of the type of biodiversity they have are not only a range of wild species but important domestic species such as wheat, lentils, chickpeas, pears, apple, chestnut and pistachios. The biodiversity has a very great potential for the development for Turkey and this is an advantage for Breadth because it will provide abundant and cheap raw materials. However, challenges of the current environmental in Turkey are the high pollution levels and need protect. 2. 5. Pollution degradation. Graph 9: 2010 Pollution Indexes in Turkey Source: http://www. Clashers. Mom, 2010 The chart shows that the level of pollution of Turkey is alarming. Most of the air pollution is caused by household heating, traffic, industrial sites, the discharge of pollutants by neighboring countries has contaminated the Black Sea… So, today government of Turkey has many activities to protect the environment as environmental Pollution Fines. Breadth should know the environment situation of Turkey to not be infringed. In addition, the company should also be the same with he government to protect environment to build brand image with the consumers. . 5. 2 Environmental protection Environment protection is very critical right now in Turkey. Business has to strictly follow the rule that imposed by host country government. However, there are also some other motives for Breadth when entering Turkey to environment protection such as: Breadth will also carry out some program for going green in their Turkey stores such as reduce paper using, switch off the light, limited plastic bags and encourage the staff to use public transportation.
This brings beautiful images for Breadth in he minds of employees, customers and government. Environment protection achieve comparative advantage terms of cost saving, offering more benefits to consumers and being friendly with the environment. Breadth could take advantage of environment protection campaign and attend some environmental awards of the government to keep in touch with them. This will help company dealing with governmental issues.
Environment protection as a way of branding to make Breadth familiar and deep in mind of customers 2. 6 Legal 2. 6. 1 Law The legal strength’s in Turkeys is the comprehensive legal structure they have. The tactical system is made up of general courts which deal with domestic cases, heavy penal courts which deal with more serious case, military courts which will deal with that will deal with many different cases which is essential in the Turkish government such as war crimes.
This is an advantage for Breadth as this shows that the Turkish government are strict on the law and will enforce the law if need be, it will allow the company to have a fair trial. Another legal advantage in Turkey would be the robust framework for the business entities, as the company who are looking to invest into Turkey will not need to go wrought a very long and lengthy business registration process as there is a freedom to start, operate and close a business by the Turkish regulatory environment. O for example in Turkey, it will take on average 6 day to starting up a business compared to 43 days in the other world countries which is a much longer time and could be beneficial for the type of market the company is involved with. This is advantage for Breadth when company entry into Turkey because Breadth will not lose many time. Breadth is food and beverages company because the company pay attention to the Food Safety regulation.
The HACK quality assurance system was introduced in 1995 in Turkey and since 2008 according to the Regulation on Inspection and Control of Food Safety and Quality all food manufacturers must apply HACK as compulsory (Food quality assurance schemes in Turkey, 2011). To protect customers and increase the prestige of the brand, Breadth should be combined with organization and obey the law. 2. 6. 2 Tax One of reasons that Breadth should invest in Turkey is low taxes and incentives: Corporate Income Tax reduced from 30 percent to 20 percent Individual Income Tax varies from 15 percent to 35 percent
Tax benefits and incentives in Technology Development Zones, Industrial Zones and Free Zones could include total or partial exemption from Corporate Income Tax, up to 80 percent grant on employer’s social security share, as well as land allocation. New R&D and Innovation Support Law Region and sector-based incentive system 3. Conclusion Analyzing PESTLE for the business environment of Turkey gives Breadth a wider and deeper view on Turkey to come up with the decision to enter Turkey market. Turkey can best withstand before the global financial crisis. In addition, Turkey