The strategic choice of Poland is analyzed using the tool of PESTEL analysis in the following section:
Political
One of the key strengths of Poland for automobile industry is the political stability which provides the businesses with a sound basis. Even though the country has been exposed to political issues and the resultant volatility, in the past decade the developments evident in case of the country have restored its position as one of the prime areas for investors and organizations (Orenstein, 2014). Gera (2013) has also corroborated this opinion by suggesting that the participation of Poland as an active member in European Union (EU) has brought about reforms that have significantly improved the political outlook of the country.
On the other hand, the political factors in Turkey indicate that the lack of stability could create issues in carrying out smooth flow of operations. The Guardian (2014) has reported that the high level of political volatility in the region has been a leading factor in possible decline in the economic output of the region.
Economic
Even though the GDP growth in Poland has depicted a decrease from 4.5% in 2011 to 1.6% in 2013, it is expected to gain an increase of up to 3% in 2014, thus showing the momentum towards growth in the GDP (Zurawski, 2014). The GDP per capita has increased from $20,800 (in 2012) to $21,100 (in 2013) while the inflation rate is reported to be 1%. The estimated labour force available in the Polish industries in 2013 is 18.22 million. Another favourable component in the economic aspect of Poland is the low labour cost incurred by the organizations manufacturing the products. The labour force (age 15 to 24 years) shows unemployment rate of 26.5% which suggests that the entry of new businesses could support Poland in creation of new job opportunities thus declining the rate of unemployment. In case of the Foreign Direct Investment (FDI), Poland had received an investment of $3,356 million in 2012.
The GDP growth rate of Turkey was 3.8% in 2013 but the political turmoil had negative impact on the economic outlook of the region including the decline in the economic activities in Turkey. GDP per capita was estimated to be $15,300 (in 2013) which is less than Poland and inflation rate was 7.6% in 2013. The labour force in 2013 was 27.91 million and the unemployment rate was 9.3%. Turkey has indicated an FDI of $12.6 billion in 2013 (Daily News, 2014), which is greater than the investment received by Poland; however, the political instability carries negative implications for the potential investors.
Social
The population of the country was reported to be 38,346,279 (in 2014) with the highest ratio of population (43.8%) belonging to the age group of 25-54 years. As far as the perception of the population about the necessity of environment friendly business practices is concerned, the people in Poland have demonstrated some level of awareness pertaining to the use of socially and environmentally responsible business practices. The public is also concerned about the way companies manage their internal operations in terms of the well being of the personnel (The World Bank, 2005).
In Turkey the population ratio estimated in 2014 was 81,619,392, out of which 42.9% were from age 25-54 years which is lower than Poland. The focus of the government and public on environment friendly business practices is manifested through the emphasis the public has laid on developing and implementing environment protection policies (Aksogan, 2013).
Technological
In case of Technological development, Poland has maintained a leading position in this domain. OECD (2012) indicated that the country intends to increase its focus on the integration of R&D and technology development which could be used as a source of advantage by the businesses. Furthermore, institutes such as National R&D Centre (NCBiR), National Science Centre (NSC), and The Polish Agency for Entrepreneurship Development (PARP) support the country to adapt with the rapid pace of technological evolution.
The technological aspect in Turkey offers similar technological advancements which can support automobile manufacturers in carrying out their operations effectively. The annual expenditure in the domain of R&D is estimated to be $ 1.77 billion. The Supreme Council of Science and Technology (SCST) play a vital role in helping the country to embrace new and advanced forms of technology. However the private firms in the country do not depict a significant focus on technology integration and investment in R&D (Meissner, n.d).
Environmental
The ministry of the environment in Poland focuses on creating policies that offer support to the environment. The core objective of the ministry is to implement sustainable development in the country which provides a framework of environment friendly regulations. Since Poland is a part of European Union, it also needs to upgrade its environmental protection standards, aligning them with the values promoted by EU. A few of the areas of focus by the ministry include enhancing the management of wastage, effective resource management and the effectuation of environment friendly business practices in the organizations (Ministry of the Environment, 2014).
The effective use of various sources of energy can be observed in the form of increased emphasis on use of thermal water resources and shifting from fuel based energy to reduce the carbon dioxide emission. The businesses operating in Poland will be subjected to the laws and regulations pertaining to the emission of wastage, waste management and adoption of environment friendly business practices. Similarly, the government of Turkey has been playing an active role in minimizing the damaging impact on the environment. Moreover, the emphasis on sustainable development also holds prime importance in this regard.
Legal
Poland is a part of various international entities such as European Union (EU), World Trade Organization (WTO), Organization for Economic Co-operation and Development (OECD), International Energy Agency (IEA) etc. Therefore the legal framework of the country needs to accommodate the standards upheld by these entities. The policies developed for the various industries are also a reflection of the positive influence the international entities have on Polish legal framework. Another important area of consideration in the legal aspect of the region is the stress on protecting the intellectual property rights which makes it an appealing option for Multinational Corporations.
Turkey also holds significant position globally through its membership in different international organizations. A few of the examples are Financial Action Task Force (FATF), World Trade Organization (WTO) and North Atlantic Treaty Organization (NATO). As far as the intellectual property protection is concerned, Turkey has been dealing with issues in this regard. Along with that the problems pertaining to rule of law also serve as an unfavorable indicator for companies such as Volkswagen.