PESTLE Analysis Of Afghanistan And India

Corrupting Or Consolidating The Peace?

Through the increased globalization effect today, companies have been forced to access means of identifying more efficient ways in which they can be able to enhance their competitive positions. In the past decade, the organizational performance of many companies all around the world has been affected by globalization effect which has also led an increase in cost of resources. The vast changing culture is one of the main themes that has continued to face significant arising issues in major US companies host countries set-up. Therefore, the extent of international human resource management can be considered as a debate of integration in competitive positions and advantages. One of the main HR case consideration for host countries can include recruitment and development with a direct relation to financial expenditure costs (Boxall and Purcell, 2011).

With the recent globalization effect research, national culture can be characterized as one of the major issues in international resourcing and talent management. The effect has evidently been characterized as transferable effect where it may be hard to transfer foreign HR practice to a local management custom. According to the recent globalization changes, every multinational company should strategize in a more flexible and adaptable business environment. The major analysis done with respect to global human resource management can be researched through PESTLE (political, economic, social, technology, legal, and environment) analysis.

Despite the new political stability experience, Afghanistan has continued to improve in its power control. The rule of law and freedom of the press have been one of the significant steps that changed the entire society perception. This has also contributed to a decrease in the corruption and bureaucratic overreach in the country which is a very vital consideration in support of new investment (Berdal, 2017). According to Afghanistan’s new constitution, the principle of “free market” has been highly emphasized where the government has offered an assurance protection for enterprises and private capital investments. Also, the government has developed precise policies and rules, for taxation and trade which likewise favors the Afghanistan market environment, investments, insurances, customs, labor, banking system, etc.

Since 2002, the Afghanistan economy has continued to improve significantly. The growth of the economy has been mainly through international aid and infusion of billion-dollar investments. Also, through the ability to improve on domestic production, continuous increase in Foreign Direct Investment (FDI) has resulted in a healthy decrease of inflation in the country (Brewster, Chung, and Sparrow, 2016). As a recovering economy, the country offers significant competitive advantages to investors through the provision of ‘free and open market’. The country has a wide scale of resources that are able to sustain a large number of corporates and most importantly the availability of cheap labor services (World Bank Group, 2014).

Afghanistan is made up of various different ethnic groups which include Uzbeks, Pashtuns, Tajiks, Hazaras, and other minority groups. These different ethnic groups offer the different aspects that shape the entire cultural beliefs and social values of the country. Afghanistan can be characterized as an Islamic dominated state. The country has approximately 20.1 million populations where about 71% of the population live in rural areas, 24% live in urban areas, and about 5% comprise of the nomadic population. In the past decade, the social environment has considerably improved in terms of improving the social status of people and the standard of living of various classes (Cadle, Paul, and Turner, 2010). The education level of the entire population has improved in line with a change in customs, values, and beliefs.

Economic Environment

Technology has been emphasized as a very important part in the development of Afghanistan infrastructure and economy. The government has improved various means such as increasing the satellite interconnection range in entire Asia and the entire world at large. ICT companies have been able to improve the communication system and online services such as online banking, money transfers, e-governance, and others. Afghanistan has also emphasized on the issue of outsourcing information and research in order to create a more conducive technological environment for investors. Through this, Afghanistan offers incredible investment platform for multinational companies with a guarantee to effective communication system to the entire world (World Bank Group, 2014).

Despite the major environmental requirements like in any other country, Afghanistan has wide range number of natural resources. It has significant oil production facilities which directly eliminates a high number of costs such as high fuel and energy prices (Cadle, Paul, and Turner, 2010). The ministry of mining and developments projects has created policies and rules that establish each investor to conducive environment features that exposes the industry to more competitive advantages. Generally, the government has continued to emphasize the optimum use of the resource thus to also be able maximize its national benefit. 

India is described to have one of the strongest political stability and with the most effective policies states in Asia. Through the political culture of tolerance, India has been able to immensely attract Foreign Direct Investment making it one of the fastest growing emerging markets in the world. The government of India has continued to encourage free market with as minimum interference as possible. Like most of the third world countries, corruption in India is one of the greatest challenges which continues to weaken the economic growth (Harzing and Pinnington, 2010).

India is currently known to be the 7th largest economy in the world with a GDP worth $2.4 trillion. In past decade India has continued to decrease the corporate tax rate whereas per 2017 financial report the tax rate was estimated to be approximately 30% (Aithal, Shailashree, and Kumar, 2016).  India is one of the largest countries in the world with a large number of industries. This has been led with the decrease of stiff policies and restrictions that prohibited the growth of the free market. One of the major economic challenges of India is recurrent inflation. This has developed a constant shift in the cost of operation.

The population of India is one of the largest in the world with an estimation of about 1.2 billion people. This is described as the most diversified population consisting of multi-religious, multi-ethnic, and multi-lingual. Despite India having a large percentage of poor population, it has also gradually continued to improve its standard of living (Sridhar et al., 2016). With this, it can also be described as one of the largest consumer markets in the world with an idle strategic situation of other large markets such as China and the entire Asian market. India also offers significant available workforce that is also cheap which has become one of the major effects of globalization (Briscoe, Tarique, and Schuler, 2012).

Social Environment

In terms of technology, India is one of the most advanced countries in the world. With this, India is a host of one of the largest IT companies in the world such as Apple, Microsoft, and Facebook. The country communication has also outsourced many major companies in the world which base most of their online administrative operation in India (Khan, Alam, and Alam, 2015). The government has continued to invest a significant amount in power technology to offer sustainable energy resources that can support the fast growing economy.

Environmental challenges are one of the greatest issues facing the country. Some of these challenges include resources depletion such as forest and water, water pollution, air pollution, floods, diversion of consumer waste into rivers, and loss of biodiversity. With this harsh conditions, investors may find difficulty in operating in such an environment (Evans, 2010).

According to 2017-18 financial report, the Foreign Direct Investment (FDI) percentage has continued to grow whereas prior to latest report analysis, India FDI percentage rate has grown by 3% reaching approximately 44.85 billion, USD. FDI in India is majorly considered to be for economic development funding. The FDI analysis of Afghanistan is approximated to be $769,844 which is an increase of about 0.44036 % (Mission and Aayog, 2017). Most of the Afghanistan FDI is considered to come from remittances and international assistance. The political stability is another one of the main factors that significantly boost the approach of investment in both countries with an enormous support from the host government (Bratton and Gold, 2017).

One of the basic issues of the two countries is the cultural implication of both countries. India and Afghanistan have a significant aspect of cultural moral that significantly reflect on the PR of every organization basing its operation in the respective countries. Through the high percentage rate of Islamic population, both countries have policies and regulation that may directly or indirectly affect human resource management activities (Sridhar et al., 2016). Through the analysis, both countries have a significant number of resources that are able to offer sustainable support to the investors. Both countries have emphasized in creating favorable policies and rules that boost the open and free market (Evans, 2010). Also, the cost operation in respective countries is one of the best with a tax rate of 30% which is significantly low as compared to other emerging markets.

Despite the two countries having a vast range of competitive advantages, they also have a series of risk factors. One of the main risk factors that continue to damage the economic growth of Afghanistan is the security threat by the terrorist acts in the region (Berdal, 2017). Although in the past decade the government has been able to take control of country power, there is still a number of reported cases that prevents investors from investing. Corruption is also one of the major crisis that threatens investors in India. Despite the government increasing effort to eliminate the issue, the problem continues to escalate thus also significantly affecting the economic growth of the country. The education level in Afghanistan can be considered one of the main challenges in the redistribution of quality management (Brewster, Chung, and Sparrow, 2016). As compared to Afghanistan, the environmental condition of India does offer the required scope of quality competitive advantages with sustainable materials and/or resources.

Technology Environment

Despite India is already one of the largest host industry countries in the world, it has an enormous number of competitive advantages. This includes cheap and available workforce, stable economic growth, sustainable infrastructure, and technological advancements. The talent management is majorly characterized as one of the main pillar stones of the successful multinational management (Hill, 2008). With the availability of an educated labor force in India, the organization will have the capability of eliminating talent war and likewise build a successful quality management team. With this, the organization management cost is also significantly reduced through the minimization of costs (such as cash awards, high performance pays, bonuses, etc.) which are required in order to retain the talent (Briscoe, Tarique, and Schuler, 2012).

Apart from the high population assuring cheap and available labor, it also provides a large consumer market. Through the globalization changes and requirements, the diversification of the workforce in one the necessities consideration in almost every multinational organization (Wright and McMahan, 2011). Economists argue that dealing with a diversified workforce poses a more challenging management experience but also through the required tools in handling the situation the management has the ability to increase the organization productivity and individualized employee performance (Bratton and Gold, 2017). The low taxation rate in India of about 30% is one best and cost-effective regulations which support the free and open market. The above competitive advantages are one of main best approaches any Australian organization would likely enjoy and also be able to maximize its profit margin.

Conclusion

In summary, apart from competitive advantages such as competency and cost, the values of an organization play a vital role in the decision making process of the host countries. Some of the decision makings include the use of expats or local management. Example, with the diversified workforce in India it's essential that any multinational company should try to utilize local managers. This will evidently minimize the diversity conflicts since he or she will have the capability of identifying the cause of conflicts and much understanding of the shareholders involved. The local management can be effectively achieved through ‘Off Shoring”. Despite the far distance HR management, the organization can be able to select low-cost talent, high quality, and lastly structure the working conditions, wages rates, and productivity outline (Dowling, 2008).

Through the continuous increase in globalization, organizations of all operational levels have continued to improvise various means of effectively connecting with the stakeholders and customers from diverse languages, ethnic groups, social backgrounds, and cultures Boxall, P. and (Purcell, 2011). With this in mind, organization diversification can be characterized in many different aspects which in general result to a wide range of influences and ideas in an organization. The idea of choosing India as a host country assures also a wide range of competitive advantages which will entirely change the performance and productivity of any Australian company.

References

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