This report focuses on the macro environment analysis of the target country for the overseas expansion of a chosen organization. The country selected for the organization ‘New Relic’ is ‘Netherlands’. The report will focus on the analysis of why an overseas expansion is required by New Relic along with the analysis of all the macro environment factors present in the Netherlands. The analysis of these macro environment factors in the Netherlands allows the management of the organization to determine the feasibility of expanding into the country and to be ready to tackle various issues or risks, if they decide to expand into the country. New Relic is an information technology organization providing various solutions based on big data and data science. The organization was founded in the United States and has expanded into a number of countries in Europe along with Australia. The organization can increase its development potential by expanding into the Netherlands, which provides similar conditions as other European countries and allows the organization to have bigger customer base due to the expansion of its reach to the customers. The new development center along with the employees with different background, expertise and insights in the Netherlands will allow New Relic to have better performance of its products and services sold to the customers (Knight, 2015).
New Relic is an information technology organization founded in the year of 2008 in the United States. New Relic has been providing various data science and big data solutions to its customers since 2008. Gradually the organization has expanded into various European countries along with Australia. In June, 2015, the organization opened its European development center in Barcelona. Some of the products of New Relic are Application Performance Monitoring (APM), Synthetics, Infrastructure, Browser, Mobile, Insights and the integration with AWS. The major aim of all of its products is the monitoring of the corresponding platform and software of the customers in order to allow the customers to achieve better performance (Cavusgil, 2015). The organization has already expanded into various European countries to attract the customers present in the corresponding market. Its expansion into the Netherlands will allow the organization to have more development capabilities along with more access to the European customers. The expansion into the Netherlands will also allow the organization to leverage the talent and expertise present in the local IT professionals. This in turn provides a good value proposition to the management of the organization to expand into the Netherlands (Knight, 2015).
Netherlands is a country located in Western Europe and has three island territories in the Caribbean. Based on the lasts estimates from the United Nations, the population of the Netherlands is 17,021,720 as of April 16, 2017. The country has a total land area of 33,717 square kilometers with a population density of 505 per square kilometers, which can be considered to be a medium to high. The citizens of the Netherlands with the ages from 25 to 54 are close to 40% of the total population, which is the ideal age range to be an IT professional. Out of the 40% of the total population of the citizens between the age 25 and 54, the male and female ration is close to 1:1. So the male and female count of the citizens between the age 25 and 54 are close to equal, which in turn will allow the organization to maintain the gender equality in its workplace. According to the latest estimates, close to 91% of the total population is urban population, which in turn allows the organization to have skilled employees and knowledgeable customers in the corresponding societies. Most of the total population of the Netherlands is from the Dutch ethnic background (Brush, 2015). This in turn allows the organization to focus more on this ethnic group for the organizational policies and strategies. The most used language in the Netherlands is Dutch along while a significant part of the population in the Netherlands also speaks English. The total education expenditure of the country is 5.6% of its GDP, which allows the organization to have well educated potential employees in the corresponding societies (Groen, 2015).
As per the 2017 index of economic freedom (https://www.heritage.org/index/country/netherlands) the Netherlands ranks at 15 in the list of the countries with economic freedom. The Netherlands is the sixth-largest economy in the European Union, which makes it a big player in the European transportation hub. The economy of the Netherlands is quite stable due to the high trade surplus in the European transportation hub, stable industrial relations and moderate unemployment rate in the country. The regulatory efficiency of the government in the Netherlands also allows various industries to be benefited from the strong economy of the country. These efficient regulations ensure that the economy of the country is strong and stable enough to ensure adequate business freedom for New Relic (Brandenburg, 2015).
The GDP of the Netherlands is 753 billion dollars with a current growth of 2%. This in turn allows New Relic to introduce its business into a stable economy with a good GDP and GDP growth rate. As per the latest estimates, the GDP per capita is $44,400 which in turn allows the economy to be quite stable and strong for the business of New Relic to be a success (Bomers, 2013).
The latest estimates show that the current inflation rate is at 0.2%, which in turn allows New Relic to have low initial investments to expand its business into the Netherlands. This in turn allows the organization to set up the business processes with a low cost, which in turn allows the organization to have the potential of a high return due to the strong and stable economy of the country. The low inflation rate also ensures that the operational costs of the business processes won’t increase a lot after the upcoming years, once New Relic introduces its business in the Netherlands. The inflation rate of the country is expected to go down in the upcoming years due to the current increase of the revenue generation and GDP along with the increase in the employment rate in the country (Aykin, 2016).
Forbes has also included the Netherlands at rank 7 in its latest list of ‘Best countries for business’. This list focuses on its current GDP growth rate of 2%, GDP per Capita of $44,400 and trade balance/GDP of 8.6%. According to this list from Forbes, the Netherlands is a better country for business than Australia and Switzerland, where New Relic is already operating (Egron-Polak, 2014).
The transportation system in the Netherlands is one of the best in the European Union. As per a survey by the World Economic Forum, the transportation infrastructure of the Netherlands has received top ratings. The transportation infrastructure in the Netherlands has been ranked at least 6 or above in the entire European Union. The quality of the railroad infrastructure, port infrastructure, air transport infrastructure, roads along with the completion of TEN-T rode core network and TEN-T conventional rail core network and TEN-T high speed rail core network has been ranked to be one of the best in all of European Union. This high quality of the transportation infrastructure along with the highly advanced technological infrastructure allows New Relic to have efficient business operations in the country (Knight, 2015).
The Netherlands has been a member of the World Trade Organization (WTO) from the year of 1995. This allows the trade activities and transactions to be completed as per the regulations defined by the WTO. The WTO also ensures that the trading activities and transactions done with the Netherlands are completed smoothly to allow the organizations to have high performance in their trade activities. The WTO membership of the country allows New Relic to have efficient business transactions in between the Netherlands and any of the countries of operation (Forsgren, 2015).
This section of the report focuses on the political and legal factors in the Netherlands that can affect the business activities of New Relic in the corresponding markets.
The type of political state in the Netherlands is a constitutional monarchy based on the parliamentary democracy, which allows the King to be the head of the state within the defined constitution. So, the power of the head of the state are defined within the parameters of the constitution and the head of the state works as a facilitator of the constitution defined in the country (De Wit, 2015). The head of the state is supported by a parliament, which is used for the election to choose a prime minister of the country. This implementation of the democratic politics allows the Netherlands to have a stable political environment, which in turn provides the business operations of New Relic to have a stable environment and market (Grönroos, 2016).
The regulations affecting the process of setting up a business in the Netherlands are included in the Dutch law, which allows a foreign individual or organization to operate in the corresponding markets without any special restrictions. The foreign individual or organization is allowed to operate in the markets in the Netherlands through either an incorporated or unincorporated entity (Arendsen, 2014). The Company Act of Holland and the Dutch corporate law allows the foreign organizations to have a flexible framework to invest in the regional markets along with carrying out their business processes with a lot of support from the government. The recent amendments to the Dutch Corporate laws have included a lot of changes, which in turn allows the foreign organizations to have better control on their business operations in the corresponding markets (Knight, 2015).
As per the report published by Transparency International, the corruption index in the Netherlands was at 83 on a scale from 0 being highly corrupt to 100 being very clean. This corruption index shows that the public sector of the Netherlands has been quite clean and the impact of corruption on the business activities of any organization is minimal (Awate, 2015).
The 2017 index of economic freedom on heritage.org provides an overview of the regulatory efficiency in the Netherlands. As per this rating, the regulatory framework implemented in the Netherlands is quite transparent and supports healthy competition. The business freedom is quite high in the legal system implemented in the Netherlands, which allows a lot of flexibility to the business operations of New Relic (den Hond, 2015). The labor freedom in the country is comparatively lower, which in turn suggests that the costs of employing or dismissing an employee are quite high in the Netherlands. The monetary stability is quite good as per the rating of 85.8, which suggests that the currency being used in the country is quite stable and allows efficient business transactions (Storey, 2016).
This section of the report focuses on the culture and ethics in the Netherlands along with their impact on the business activities of the Netherlands.
The languages used in the Netherlands are Dutch, English, Frisian and Papiamento, among which Dutch is the official national language spoken by almost the entire population. This in turn allows the business processes of New Relic to use English and Dutch for efficient completion. The national budget of the education system in the Netherlands is close to 50 billion dollars, which in turn ensures the government of the country to have good education system in place (Entzinger, 2014). This in turn allows the population of the Netherlands to have good education. The education system in the Netherlands is known to be one of the top 10 education systems in the world. The Netherlands is the home to various religions such as Roman Catholic, Christianity, Hinduism, Buddhism and Islam. This in turn allows New Relic to have a diverse workforce in the Netherlands (Pukall, 2014).
The analysis of the culture in the Netherlands by Hofstede’s dimensions allows the management of New Relic to understand a number of factors that can affect the business processes in the corresponding markets. The lower rating of the power distance suggests that the culture in the Netherlands has low inequalities among the people from various social classes (Andeweg, 2014). The high rating of the individualism suggests that the people in the corresponding societies are more dependent on themselves rather than anyone else. The low score of masculinity suggests that the societies in the Netherlands operate on the factor of value of life rather than winning or losing in the competitions (Janssen, 2014).
The scores on Hofstede’s dimensions show that the culture of the societies in the Netherlands allow a stable and supporting environment for the business processes of New Relic.
The psychic distance of the culture and belief systems in the Netherlands is not very high as compared to the other European countries in which New Relic operates. This in turn allows the business processes of New Relic to be successful in the Netherlands without a lot of changes (Huijben, 2013).
Conclusion
The markets in the Netherlands provide a lot of opportunities to the business of New Relic as per the analysis of the macro environmental factors done in this report. The cultural values and beliefs in the societies in the Netherlands also support the business processes of New Relic along with the legal system and regulatory framework implemented in the country. This in turn provides New Relic with an effective environment to operate successfully (Hudzik, 2014).
References
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