Pest Analysis of Venezuela

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PEST ANALYSIS OF VENEZUELA ISABEL ESCOBAR INTERNATIONAL BUSINESS ENVIRONMENT FLORIDA OCTOBER 6 2014 PEST ANALYSIS OF VENEZUELA In today’s globalized economy, competing has gotten more challenging and going abroad is one of the decisions managers will have to face. Understanding the international environment is extremely imperative to succeed in the business world. This paper will analyze the political, economic, socio-cultural, and technological environment of Venezuela, which will give companies, and overview of the macro-environmental factors of the country. The PEST analysis will be the tool to evaluate the countries performance and potential. POLITICAL: The Bolivarian Republic of Venezuela is located in the northern cone of South America (see Exhibit 1), with an approximate population of 29 million. As many Latin American countries, it has a collectivist orientation where the most important is the welfare of the society rather than the individual one. Its political ideology is shown as democratic, but the behavior perceived since the former president Hugo Chavez was elected in 1998, is a totalitarian ideology with a secular orientation. Sign of it are expressed with the one party control of the government for 16 years, little tolerance for the opposition, and media banning.[i] According to the Freedom House, Venezuela is considered a partly free country, with limited political rights, weak rule of law, censorship, and corruption.[ii] Political risk has been a major concern to national and multinational companies in Venezuela. With Hugo Chavez Frias presidential election in 1998 and its commitment with the elimination of capitalism, the rule of law has weakened (see Exhibit 2). Expropriation of companies and private property started to be

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