External Analysis of Ashtead Group Plc. (Research Paper Sample)

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External Analysis of Ashtead Group Plc.
From an economic perspective, China is arguably one of the most attractive markets for foreign investments globally, owing to its enormous market size, unparalleled infrastructure networks, robust business ecosystem, and favorable investment policies. According to Zheng (425), recent reforms in China’s ‘Foreign Investment Law’ indicate its commitment to encouraging flows in Foreign Direct Investment (FDI). Moreover, China is forecasted to experience a massive boom in construction and manufacturing, which will increase the demand for construction equipment. The focus to improve infrastructure developments in China will see a growth in the construction industry. Thus, this economic growth momentum justifies the strategic priority of Ashtead Group Plc. to increase its rental equipment penetration in the Chinese market. In this context, applying PESTEL analysis is imperative in auditing the macroeconomic variables of the Chinese business environment (where Ashtead Group Plc seeks to expand and leverage its rental equipment competitiveness) in six critical areas, including political, economic, sociological, technological, legal, and environmental.
Political
Political Stability.
In many economies, political factors such as the level of corruption and government incentives play an influential role in exerting the long-term profitability of an enterprise. The success and stability of business activities are influenced by the nature of political structure in society (Kamali et al. 3). The political environment in China is stable, thus providing a friendly business environment with predictable trends in economic growth. However, growing tensions and trade wars in the global political landscape limit potential growth opportunities that Ashtead Group Plc. can explore.
Government Policies.
Tariffs, trade regulations, and tax imports related to the industrial sector in China enhance investment efficiency. As a member of the World Trade Organization (WTO), China gradually commits to promoting trade efficiency, through adopting and implementing laws such as the ‘Foreign Investment Law’ to guarantee additional protection to the interests of Foreign Direct Investments (FDI). Moreover, China’s accession to the WTO has effectively lowered tariff rates, particularly on imports, which expands opportunities for foreign investments.
Governance System.
The governance structure in China is centralized, characterized by guidelines entrenched in the overarching ideology of sociology, which effectively advances economic development. The governance model efficiently influences inflows in foreign investments, providing more opportunities for Ashtead Group Plc. to expand its market share of rental equipment in China. In addition, the Chinese governance system accentuates responsibility for the use of public resources, stabilizing the business environment.
Bureaucracy and Corruption.
The Chinese government is committed to reducing corruption levels, particularly in industrial sectors, by increasingly enforcing legislative policies that encourage transparency. A 2021 report by Transparency International ranked China at position 66 globally on the corruption perception index, a significant change in score from the previous year (“2021 Corruption Perceptions Index”). On the other