multinational environment in srilanka

Submitted by:
Niraj Kharel
Submitted to:
Dr. Sushil Raj Sharma
Bus 590: Business Strategy
January 28, 2015Multinational environment in Sri Lanka Multinational companies are those companies who operate their business in more than one country. Their ownership, management and control are spread in several countries. The parent company controls the operations of the host country or subsidiary. There are various factors a parent company most consider and properly analyze before moving and operating in a foreign market.
Sri Lanka Introduction
With a population of 20.7 billion and 7.2% growth rate Sri Lanka recently has become a place where investors want to put their money in. The country has witnessed a huge political change recently with the end of 26 year long civil war in 2009. Since then there has been no terrorist attacks which is the result of Government victory over Tamil forces. Sri Lanka is now focusing in long term strategic and development of a favorable trading environment. No one wants to invest in a country with severe political risk and uncertainty and with an end of civil war foreign investment has grown rapidly in the country.
Multinational environment in Sri Lanka
Political environment:
With the end of civil war and governments free market economic policy has attracted many investors. The present president of Sri Lanka is Mahinda Rajapaksa and at present there is no any credible opposition. The political fear can be the Tamil tigers again reviving for a conflict. To attract the investors from India and China the Sri Lankan government has leveraged its external relations and strategic geopolitical locations. On the other hand the government’s failure to meet European Union demands regarding Human Rights led to the EU’s decision to withdraw the county’s preferential tariffs system.
Economical environment:
Sri Lanka is one of the fastest growing economies of the world. The country’s economy has seen a high annual growth at 6.4% over the course of 2003 to 2012 at is still increasing. Its growth is now more than 7%. End of the civil war was the main reason behind the growth because after the war the manufacturing and service industries flourished and also the FDI came into play. Sri Lanka is building its strategy to offer relatively better infrastructure facilities to foreign investors compared to most of its regional partners. Sri Lanka stands at 69th position in the ranking of 189 economies on the ease of trading across border.
Socio-cultural factor:
With the increase in tourism sector Sri Lankans got an opportunity to learn variety of languages, including European languages such as French, German, Italian, and Spanish, as well as Japanese and Chinese. Korean language is also taught on the island because many citizens aspire to work in Korea for part of their careers. With its unique mixture of linguistic skills and professional qualifications, Sri Lanka offers investors the opportunity to deliver high-end finance, accounting, legal, and other services in multiple languages. The increasingly productive and healthy workforces who have good basic skills have played a vital role in helping the country to approach a middle-income status. It has a 4.1% unemployment which is again good when we compare it with the regional standard.
Technological factor:
Sri Lanka has a significant knowledge service industry. There are more than 60,000 people working in IT related job. There are several renowned international firms such as HSBC, IFS, Motorola, HP subsidiary MphasiS, RR Donnelley, and WNS who have established R&D, IT, and BPO centers in Sri Lanka. Also, Sri Lanka-based firms provide advanced services to companies like blue-chip global clients, including Google, Lenovo, Microsoft, Nokia, JPMorgan, the London Stock Exchange, Santander Bank, and Emirates Airlines. The country has various software development centers, large-scale call centers, and transaction processing centers. Furthermore, Sri Lanka has made starting a business more easily by computerizing and expediting the process of obtaining a registration number for the Employees Provident Fund and Employees Trust Fund.
The country has also reduced the time taken in export of goods by implementing the ASYCUDA World electronic data interchange system. It has also introduced an electronic payment system for port services. Telecommunication is one of the fastest growing industries in Sri Lanka which has around 2million internet users.
Legal factor:
There are several mixes of laws in Sri Lanka. Sri Lanka has made its legal system together with a common framework, laws as diverse in their origin as those of Rome and England, Holland and South Africa, Arabia, South India and old Ceylon. The country’s legal system is mainly influenced by English common law and Roman-Dutch owing to its colonial history. Recently Sri Lankan government have bought various laws such as the introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle which are examples of relatively recent laws that affect an organization’s actions.
Environmental factor:
Sri Lanka has different temperatures in different places. The country is mostly a tropical region. Recently with the increased number of development projects the country’s stress lies on deforestation, pollution, filling the marshy lands and finding of unauthorized buildings.
Sri Lankans environmental concerns lies further more on deforestation; wildlife populations threatened by poaching and urbanization; soil erosion; coastal degradation from mining activities and increased pollution; freshwater resources being polluted by industrial waste and sewage runoff; waste disposal; and air pollution in Colombo and other cities due to emissions from motor vehicles and factories and other industrial establishments.
Conclusion
Sri Lanka in recent days has shown a great promise to the investors. The country has built a favorable environment for business operations through a flexible trading system with low tariffs, with a stable political system, with an increasing growth rate and with a concern for environmental issues.

Reference
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(n.d.). Retrieved from http://www.scribd.com/doc/92328838/PESTEL-Analysis-of-Sri-Lanka#scribd
(n.d.). Retrieved from http://www.srilankanwaterfalls.net/about/issues.htm
(n.d.). Retrieved from http://www.thesundayleader.lk/2012/07/08/environmental-protection-and-sustainable-development-in-sri-lanka/