Business Environment Analysis of Belgium - Rio Pinto Company - Case Study Example

Business Environment Analysis Report of Belgium Name: Instructor: Course: Date: Business Environment Analysis Report of Belgium Summary of Report This report which addresses Rio Pinto CEO has captured serious concerns that should be looked into by the company. Rio Pinto has done well in the past, with a good track record of profits where in the year ended 31st December, the company reported US$14.32Bn profit. The report is well detailed with information about the business environment that the company is exposed to. It has further outlined the opportunities that are presented by the country, so as the company can maximize on them. It has also outlined the threats that the company may be faced, this is so that the company can know how to minimize risks. Introduction This report is prepared for the CEO of Rio Pinto company, and presents information with regard to the business environment in Belgium. Belgium is one of the countries where Rio Pinto has directly invested particularly with regard to the sale of diamonds that are mined in Australia. The report is detailed, and it carries credible information that is important for the CEO particularly with regard to making key strategic decisions with regard to expanding this market. It is also important for the purposes of minimizing the risks that Rio Pinto is faced with as it conducts its business in Belgium. The utility of this report is much emphasized through its findings after conducting a research on the business trends in the country, the opportunities that Rio Pinto has in the country, as well as the threats that the company is faced with. All these are very important when it comes to coming up with a marketing strategy that would boost the growth of the company. The paper has been presented logically, flowing from the introduction, through the business environment the company is faced with, the opportunities in the country, as well as the threats. The report comes to an end with a few recommendations (Hughes & Kapoor, 2010). Overview of Belgium Belgium, otherwise known as the Kingdom of Belgium is a federal state found in Western Europe. It is one of the powerful countries in Europe, and also is identified as a key founding member of the European Union. The country hosts the headquarters of the European Union as well as other global organizations. It is fairly a big country with 30,528 sq. kilometers. The country has a population of about 11 million people. The two largest regions in this country are the Flanders (Dutch speaking region found in the northern part), and the Wallonia (a southern region has mainly French-speaking inhabitants) (Rio Tinto Limited, 2008). Business Description The company has been involved in business with many countries through joint venture and directs foreign investments, in a bid to expand its international markets, boost its customer base, and maximize its profits both in the short and long term basis. One of the areas that contribute significantly to its profits is the sale of diamond. Most of the mined products are exported to be processed in other countries. One of the countries where the company has heavily invested in is Belgium. For instance, majority of the diamonds that is mined from Australia (Argyle mine) are sorted, as well as sold in Antwerp, Belgium. I. Political, Economy, and Environmental Issues Political Belgium is one of the countries with a good political system that supports business in the country. The politics of Belgium are subjective to the structure of the federal, parliamentary, as well as the representative governance. The country also is influenced by the constitutional monarchy where the Head of State acts as the King, and the Prime minister works as the head of Government. This has led to a smooth functioning of the state organs, and thus has promoted business in the country. In Belgium, executive power is bestowed to the President, with the Federal legislative power being shared between the Senate, and the Chambers of Representatives. The Federal make up has captured the cultural communities and the territorial regions in the country. The political system has been accommodative to the business to develop, the peaceful atmosphere has also made many global organizations to be located in its cities, and this has promoted increased business activities (Ridgeway, 2004). Regulatory/Legal Trade in the country is regulated by the laws in the country, as well as other organs that are present. This has boosted investor confidence, and large companies including Rio Pinto have taken the market by storm. The country has established a legal framework and laws for the purposes of running businesses. Foreign investments have been welcome. The countries active judiciary, which is based on civil law, with a background of the Napoleonic code has made reduced business risks. There are legislative business acts that provide for guidelines under which foreign investments are able to be conducted. This has promoted investor confidence through giving room for ways by which legal business disputes may be resolved. The country also hosts the World Diamond Council (WDC), whose core objective is to promote the development of diamond industry through instituting regulatory systems that guides the trade of diamonds. This is important in with regard to prevention of conflicts in the trade of diamonds, as well as boosts the management of resources in the diamond industry through the provision of financial, technical, and financial support for this business. This has been very instrumental for Rio Pinto, which is among the top three companies that deal with the mining and sale of diamond. It has provided a set of regulation that has made the business to grow and be effective in the country, and across the boards. Most of the diamonds that are produced in Australia land first in Belgium (Bellis, 2003). II. Economic: Socio-economic environment: Belgium Economic The economy of Belgium is doing relatively well with a smooth trend of progress with regard to its GDP. More than 50% of the population are economically able, and thus are potential customers of the products. The sale of products such as Diamond has been high due to the good economic standards. The economy is made up of 10 million people, with a high urbanization rate which is rated at 97.3%. This high level of urbanization boosts businesses in the country. The country also is good for business for Rio Pinto because of its stability in terms of the GDP, for this indicates minimal risks of economic downfall. Among the countries in Europe, the country has an above average GDP of 243 billion Euro per inhabitant (Paul, 2010). Cultural & Social The country has people of diverse cultural background; through the main factions are the French-speaking communities, and the Dutch Speaking communities. The high rates of urbanization have created a society that is accommodative for business. The main cities have clustered population that provides a constant labor force that provides stable markets for Rio Pinto Company. Most of the diamond products of the Argyle Mine, in Australia are processed in Belgium by the use of the state-of –art technology. The economy boosts business through the market oriented policy that are market oriented, thus boost business. The good infrastructure promotes flow-on businesses. III. Business Environment Issues Belgium has a fairer business opportunity for businesses. i. Opportunities Rio Pinto has an opportunity to maximize the expanded population in the cities, through increasing the number of sales offices that it established so as to reach to an increased market for its products, particularly the diamond products. This would promote business through increasing the access of customers to assorted rough diamonds. The low scores in youth employment among the youth in Belgium is an opportunity for Rio Pinto to grab, and employ people in the new stores, and sales offices, as well as in the other processes involved in diamond making. The rate is estimated to be at 22.4% against the OECD average of 16.7%. Third, the good scores of the economy during the economic crisis is an opportunity for the company to increase its investments. This is because of the reduced risks of the trading in the country. Brussels, as a de facto European capital is an opportunity for the company, to invest due to the high exposure the city has on the international front. The capital has many institutions, and this means that the company has an expanded market by which it can sell its products (McIntosh, 2001). ii. Emerging threats for the business in this country The emerging threats that the company should watch out as they carry their business includes; Increased fraud 34% of the companies surveyed in 2010 claimed to have had an effect of losses from fraud. Embezzlement of company funds has remained to be the top reason of the fraud cases in the country. Debt Level The country accumulated public debt which is at 99% as at 2009, this point out the need for the company to watch the movements. Conclusion All in all, Belgium has remained to be stable market for Rio Pinto. The country’s trade and political stability makes it to be a stable business destination. The high number of its 11 million populations, made up of economically able individuals, gives the company good prospects of making good business in the long run. The countries strategic position in Europe, alongside it hosting serious organizations makes it a stable country to invest in. Rio Pinto may expand its market in this country. References Bellis, V. (2003). Business law guide to Belgium. New York: Kluwer Law International. Hughes, R. & Kapoor, J. (2010). Foundations of Business. London: Cengage Learning. McIntosh, M. (2001). Rio Tinto: Global Companies in the Twentieth Century. London: Routledge. Paul, J. (2010). Bussiness Environment. Canberra: Tata McGraw-Hill Education. Rio Tinto Limited. (2008). Rio Tinto: more than a decade of social investment: the Rio Tinto Aboriginal Fund. Canberra: Rio Tinto. Ridgeway, J. (2004). It's all for sale: the control of global resources. New York: Duke University Press. Read More