Turkey's Economy Situation - Assignment Example

Turkey PESTEL Analysis al affiliation Discussion Turkey is one of the investments destinations that investors intending to invest in foreign markets are targeting. However, a rational investor should undertake an intensive observation of the market environment in determining whether to invest in the market. Accordingly, PESTEL analysis has the potential of reflecting the viability of venturing in Turkish market. The political aspect of PESTEL analysis is one of the elements that an investor should consider in determining the Turkish market (Sanchez & Heene, 2010).

Turkey like majority of Arabic countries faces political instability due to undemocratic election of the top leadership. The country has been experiencing volatile protests due to human right abuses by the administration. The frequent political protests experienced in Turkey have the potential of hurting business operation of a foreign investor due to the risk of suffering destructions from the protesting population. Foreign investors unaware of the political protests are likely to be caught up in the demonstrations that are likely to cause destruction of their properties.

In addition, the negative attitude that a significant number of Islamic religious congregates towards western countries has the potential of posing a danger to a foreign investor from the western country starting a business in Turkey. Indeed, the current influx of Islamic war in Syria that neighbors Turkey poses a major risk to western immigrants in the country through undue destructions and killings. In addition, the risk of nationalization of foreign investment properties is high in Turkish market.

This is derived from the motivation of the extremists in the Arab countries in taking over the government and repelling non-Muslim individuals in their territories. The high population of the Muslim community in Turkey and position in the Arabic region indicates that the potential of Muslim extremist in posing danger to the country towards foreign individuals is high. Accordingly, the takeover of foreign investors’ properties by local administration has the potential of causing major losses due to loss of capital invested (Rao, Rao, & Sivaramakrishna, 2009).

Thus, the political environment of Turkey has the potential of posing investment risk to a foreign investor. However, the Turkish political environment provides an essential opportunity for foreign countries venturing to the Middle East. Turkey has a relatively stable and democratic political environment compared to other Arabic countries in Middle East. Furthermore, Turkey experienced little spring revolution that affected majority of Middle East countries adversely recently. Accordingly, Turkey offers an exceptional environment for a foreign investor intending to target the lucrative Middle East market.

Economic factor is another PESTEL element that a rational investor should consider in entering the Turkish market. Accordingly, one of the economic elements that should be considered in entering the Turkish market is the inflation trend. Inflation is vital in considering an investment destination since it influences the cost of capital and ability of the local consumers in consuming the goods and services supplied by businesses (Basu, 2010). The inflation rate in Turkey for the last three years has been slowing down as reflected in the chart below that implies that consumers burden of buying commodities in the country has been easing.

In addition, the cost of accessing capital in the country is lower since the premium cost of capital caused by inflation is slowing down. Source (Trading-Economics.com, 2015). The lowering inflation rate of Turkish economy implies that consumers in the market can consume more of the goods and services available in the market. Thus, investing in the market has potential of generating high sales revenue since changing price levels do not highly burden the consumers in the market. In addition, an investor can access capital of extending or opening new projects from the market that is vital to maximizing the wealth of an investor.

The gross domestic production (GDP) is another economic aspect that demonstrates the viability of starting a business in Turkey. Gross domestic production is vital in targeting a foreign destination for an investor since it determines the potential of the market in generating new opportunities for a given business (Sanchez & Heene, 2010). Accordingly, the chart below demonstrates the gross domestic production of the Turkish market for the last three years. Source (Trading-Economics.com, 2015).

The chart above depicts that the gross domestic production of Turkey in the last three financial years has relatively improved. The expansion of the Turkish economy means that the wealth of the population has been enhanced. Indeed, a growing GDP of a country indicates that the wealth of the citizens is expanding that is essential in enhancing their ability afford various commodities provided in the market (Rao, Rao, & Sivaramakrishna, 2009). Accordingly, the GDP trend of Turkey demonstrates that the market has an extended opportunity for a foreign investor since the population has an improved ability to buy the goods and services supplied in the market.

This is vital in enabling a business in generating adequate sales revenue in offsetting the operational cost and capital invested. The per capita income of a country is another essential economic factor in analyzing the viability of a given country since it determines the ability of the local consumers in buying the goods and services supplied. Per capita income implies the average earnings that a population of a given country earns. Consequently, the per capita income of Turkey market is demonstrated in the table below.

Source (World-Bank.com, 2014). The per capita income chart reflected above demonstrates that the earnings of the Turkish population has been rising over last years over that of average world population. This implies that the purchasing power of the Turkish population has been expanding at a higher rate compared to that of the world population. The increasing purchasing power of the Turkish population as demonstrated by the per capita income growth implies that consumers of the market have the potential of buying majority of the services or goods provided by a foreign business organization (Sanchez & Heene, 2010).

In addition, the ability of the local consumers in servicing their financial obligations when they fall due. Accordingly, the Istanbul market provides an excellent opportunity for a foreign market in maximizing its wealth generation due to high opportunity of selling its wares to the domestic consumers. The employment rate is another economic factor that a foreign investor should consider in considering to enter the Istanbul market in Turkey. This is because the employment rate of a given market demonstrates the extent of the targeted consumers in consuming the goods or services supplied due to their income generation.

An economy with a high employment rate has an extended opportunity of enabling a foreign business organization in generating high sales revenue compared to a a country with low employment rate since more consumers can afford the goods and services supplied (Basu, 2010). Accordingly, the employment rate trend of the Turkish economy for the previous years is as reflected in the chart below. Source (Trading-Economics.com, 2015). The employment trend of the Turkish economy reflected in the table above depicts the increasing unemployment for the last one year.

An increasing unemployment rate is a given market implies that the purchasing power of the consumers in the market is been deprived (Basu, 2010). This is because the local consumers ability to generate income from employment opportunities to consume goods and services supplied is declining. Accordingly, the rising unemployment rate of Turkey, as reflected in the chart above, implies that the purchasing power of the local community is decreasing. Thus, a business starting in Istanbul has the potential of experiencing decreasing sales revenue generation to declining ability of the consumers in buying the goods and services provided.

Owing to the political and economic analysis undertaken for the Turkish market, it is viable for a foreign business intending to venture the Middle East market to start in Turkey. The political stability of Turkey compared to that of other countries in the region depicts that it has potential of enabling a foreign country to thrive the regional market. In addition, the economic trend of the country over the previous years demonstrate that the country has the potential of enabling a foreign market to generate high-income levels in the future.

Consequently, it is viable for an investor to start a business in Turkey. References Basu, R. (2010). Implementing Six Sigma and Lean. New York: Routledge. Rao, C. A., Rao, B. P., & Sivaramakrishna, K. (2009). Strategic management and business policy: Texts and cases. New Delhi, India: Excel. Sanchez, R., & Heene, A. (2010). Enhancing competences for competitive advantage. Bingley, UK: Emerald Group. Trading-Economics.com. (2015). Turkey GDP Growth Rate. Retrieved March 2015, from http://www.

tradingeconomics.com/turkey/gdp-growth Trading-Economics.com. (2015). Turkey Inflation Rate. Retrieved March 6, 2015, from http://www.tradingeconomics.com/turkey/inflation-cpi Trading-Economics.com. (2015). Turkey Unemployment Rate. Retrieved March 2015, from http://www.tradingeconomics.com/turkey/unemployment-rate World-Bank.com. (2014). GDP per capita (current US$). Retrieved 2015, from http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries/1W-TR?display=graph