Scenario Analysis - Mgt489 - Section-9 - Group-01

 

 

 

SCENARIO ANALYSIS  Business Project Name:  Name: 

"Dhakai Hijab".

1. Where are you going to go? In which country we will do the international expansion, we took decision based on Location proximity and Cultural proximity:   Location proximity: Almost all the Muslim country where women are wearing hijab as their daily clothing are located closely. Hence, for ensuring the significant demand, we want to expand in such country (such Saudi Arabia, Iran, Afghanistan, Pashtun) where Muslim women are wearing hijab by law.  Among of these we decided decided to expand expand in Iran. Iran. Though, Iran is located located far from the host country country but it has a significant market size and higher demand accessibility than other others.  

Cultural proximity:(Hofstede’s proximity:(Hofstede’s theory of cultural distance): distance): Bangladesh and Iran are

approximately following similar culture. As both country is following non-egalitarianism, Uncertainty aversion, Collectivism, high cultural context and believe in employee relationship and their opportunities. Country Name

Size of target

Buying power of

market

target market

Competition

Approximate

Saudi Arabia

Large

High

High

Low

Iran

Large

Medium

High

High

 Afghanistan

Medium

Low

Moderate

Low

Pashtun

Small

low

Moderate

Low

 

2. How are you tracking the next 2 years? By following value chain analysis and KSF framework we are going to track the external and internal environment factors. However, 1.  We will try to identify What is likely to be their impact over time—in the short, medium, and long term. 2.  Based on the analyzed data we will identify what type of impact are they likely to have—positive or negative? 3.  After that, we will also analysis, what is the importance of each factor? How significantly would its implications affect our business if they did (or didn’t) become a reality? 4.  Finally, we will rate the impact and likelihood of each ea ch factor and take action to either leverage potential opportunities or mitigate potential threats. 3. How do you plan to achieve success by then? After doing the scenario analysis, we will utilize the information in a range of different scenarios, and that information will guide us in strategic decision-making. By understanding the business position better in terms of external factors we will achieve success by fitting our strategies into the broader environment. Overall, our success will be achieved by more decisive and knowledgeable decisions under the umbrella of scenario analysis. For the local market we plan to achieve success through insiderization. For local success 

We would gather local market knowledge.

 

Consider local sensitivity.   Give customized products for the target customers.  

Follow cultural aspects in terms of product design and a nd service.

 

4. Complete scenario analysis based on the previous 3 items.   Scenario Analysis:  

Timeline: 2024-Auguest (2 years).  years). 

 

Planning scope: International expansion.

Pestle Analysis: Political Environment Analysis: Election and political movement: (Instable.) ( Instable.) On 3 August 2021, new president was elected and the ruling party will exist till 3 August 2025. According to the world bank, the political instability weak as the latest rating is -1.67(Political stability index (-2.5 weak; 2.5 strong)). Future Impact: By 2024 this rating may goes higher as the former president was on power almost 9 years hence, political imbalance may be seen from 2024 as the next election will be held on mid-2025. Corporate tax rate: (Very risky.)  risky.)  Customs taxes are typically around 30% of the Cost, Insurance and Freight (CIF) value of the goods. Foreign company also need nee d to pay other taxes like Income tax, Islamic taxes, Real estate taxes, Capital gain tax, Indirect taxes. Future Impact:  Impact:  In the next 2 years, the tax percentage may may higher if international mar market ket may face any difficulties like Russia and Ukraine Ukraine war. As the new government take the power

so in the upcoming years, the tax percentage may higher under new ruling party’s rule. Internationall Relationship:  Internationa Relationship:  (Negative.) (Negative.)   Other nations have expressed their displeasure with Iran's determination on developing nuclear bombs and weapons. However, Terrorist groups frequently benefit from Iran, and Iran openly supports terrorism and even provides resources to it. Future Impact:  Impact:  In the upcoming years, years, Iran may face more difficulties fr from om other nation if the situation continues. Hence, the foreign brands will also face difficulties and international

relationship will affect the Iran’s business operation in their country also. Corruption Rate:  Rate:  ( Negative.)  Negative.)  Iran constantly ranks in the top third of nations with the greatest perceptions of corruption. Hence, the crime rate is also higher due to the higher corruption rate and it directly affects the foreign business operation.

 

Future Impact:  Impact:  It is expected that; corruption rate will be higher iin n the upcoming years. Economic environment analysis: Economic growth: (positive) (positive)  Iran’s economy has grown by 1.5 percent in fisc al year 20202021. In2019 to 2020, Iran's GDP growth rate was 6.78 percent in 2019 and climbed to1.66 percent in 2020, a rise of 8.45 percent. The economic growth rate expected to be higher as IRAN remains one of the Middle East top countries when it comes to the growth potential. Future Impact:  Impact:  It is expected that, Iran’s economy will increase slowly due to the decadelong stagnation such as oil price cyclicality, and the COVID-19 pandemic. Inflation rate:(high.) rate:(high.)   The Statistical Center of Iran (SCI) revealed that Iran's inflation rate hit about 50% in March-April 2021. Future Impact:  Impact:  as the Inflation has always been high in Iran, hence, it has been considerably considerably worse in recent years. Purchasing power of buyer: (Moderate) (Moderate)   The COVID-19 epidemic has had a significant impact on jobs and income in variety of labor-intensive industries. The unemployment rate fell to 9.4% as a result of the labor market's discouragement (World Bank 2021). Future Impact: If Iran can utilize its young generation power, it is expected that, the unemployment rate will have declined in the future years and the purchasing power of buyer will increase. ` Socio-Cultural Environment: Population growth rate: (negative.) (negative.)  the sustainable population growth rate of Iran was at 0.95 percent in 2019, but it has now dropped to 0.73 percent in 2020. Future Impact:  Impact:  due to the Socioeconomic factor: decreased fertility rate the pace of population growth is expected to lower in the coming years. Crime rate:(High) rate:(High)   In Iran, the level of crime is moderate, but in the last three years the number of crimes has risen to high levels. On top of that, corruption is more than 70 percent high.

 

Future Impact: as the corruption rate usually higher in Iran, hence, in the upcoming years the crime rate will increase in upcoming two years. Consumer lifestyle: (Positive) Iran’s consumer lifestyle has changed a lot since the ease of sanction. The Iranian people do not appear to be affiliated with the Arab world. Besides, consumers now expect shops to fill shelves with high-quality foreign brands since restrictions are expected to be eased (Market Research 2016). Future Impact: as the women in Iran, wearing hijab by law, hence, following the Western fashion culture may not affect the potential Hijab market. Technological Environment Analysis: Global Innovation Index:(positive) Index:(positive) From From   2015 to 2019, Iran's Global Innovation Index rose 45 steps from 106 to 61, 61, indicating continual development. Future Impact: as the government is taking initiative in terms of continual development, the pace of Global Innovation will have increased in the upcoming two two years. Over the last five years, the growth of accelerators and innovation centers has resulted in a surge of startups and knowledge-based businesses b usinesses (Tehran Times2021b). Technological Law: (Positive) (Positive)   In 2007, the Vice-Presidency of Science and Technology drafted comprehensive law to encourage small and medium-sized businesses to innovate. Future Impact: As the Lawmakers in Iran have proposed a law aimed at technology, in the coming years, Iran may come up with more laws in terms of technology. Technological development budget: (sustainable) (sustainable)   On March 2,2022, the Iranian Parliament received amounts for less than 1% of the GROSS domestic product, was disregarded as in past years (Tehran Times 2021c). Future Impact: Technological Impact: Technological development budget may sustainable in the upcoming two years, as the ruling government gave emphasis on it.

 

 Pestle Analysis for Iran’s External Environment in a nutshell: Key Drivers

Most likely scenarios

Impact on demand

Political  

Election and political movement   Corporate tax rate Economic  

Economic growth rate   Inflation rate   Purchasing power of buyer Sociocultural

 

  Very risky

High strike, unstable situation

Low Demand

  High growth rate

Low Demand

  High

  Low power

 

Moderate Demand Population growth rate  Negative   Crime rate  High   Consumer lifestyle  Wearing hijab We didn’t entry the environmental environmental and technological factors as these environment is not affecting our business operation actively.

   

Bibliography OVERVIEW’,  viewed 17 State Government 2017, ‘STATE SPONSORS OF TERROR OVERVIEW’,  August2021,  https://2009-2017.state.gov/documents/organization/65476.pdf   August2021,

Azadi, P 2020, ‘The Structure of Corruption in Iran’, Stanford Iran 2040 Project, Stanford University, viewed 16 August 2021, .

Azadi, P 2020, ‘The Structure of Corruption in Iran’, Stanford Iran 2040 Project , Stanford University, viewed 16 August 2021, https://stanford.app.box.com/s/vzsjsnp53couuw6nxtljru0qxrpb8ezf .  The Iran Primer 2021, IMF: Iran’s Economy Grew in 2020, 2020 , viewed 16 August 2021,