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The objectives of this study are to analyze and explore the Jordanian business impacts of foreign investors and multinational companies, especially airline industries that decided to operate in the Jordanian market. These impacts include economic, cultural, political, and legal. The questionnaire will be used as a data collection tool to investigate the attitudes of the Samples towards the Jordanian market. The "Average" will be used as a statistical criterion to measure the reactions to the environmental factors that will be analyzed in this study. In addition, the sample t test will be used to test the hypotheses, while the analysis of variance (ANOVA) will be used to analyze the differences and similarities in the results between the sample groups.
The year 2009 was marked by many changes, mainly in the business environment, due to the economic crisis. So, the world economy, in general, is changing and continuously, and because of this, technologies and communications have developed rapidly. On the other hand, the new economy appeared as; Multinational corporation, international economies and investment. These corporations crossed geographic borders and began to invest in other countries to expand their resources to international markets. In these years after all these developments in technology, some companies extract raw material in one part of the world and manufacture it in another part of the world, while supplying and consuming it in another part or country. When multinational companies or other types of investors wish to operate and make the entry decision to invest abroad, an analysis of environmental factors must be carried out. These factors include economic, political and legal, cultural and social. Governments around the world try to attract these multinational investors for the benefit and well-being of their citizens. Through the creation of jobs, implementation of multinational activities to effectively participate in the growth of the economy and the diversification of goods or services that must be provided to its citizens, in addition to technology and administrative knowledge. The attraction process can be done by providing financial incentives “such as tax breaks” if the entry process and reducing the burden of the business environment on foreign investment. The present study aims to explore the effects of the Jordanian business environment on multinational companies and foreign investors of Airline Industries in economic, political, legal, cultural and social terms. Also describe the differences in responses based on the characteristics of these multinational companies in terms of nationality, size, international experience and expansion, sector, entry strategy, and percentage of the Jordanian workforce.
History of the problem
Attracting foreign investment is one of the main objectives of many governments around the world, since it plays an important role in the creation of thousands of jobs, moving millions of dollars necessary to use national resources, implementing multinational activities and some other benefits.
Jordan, as a poor country with few natural resources, should be more willing to do so. In addition, public decision makers need to understand the problems facing foreign investors and identify ways to attract as many of them to enter the Jordanian market.
Depending on the opinion of foreign investors, this study provides important information that can help in solving problems and makes a clear appreciation of the investment process.
Study objectives (research objectives)
The purposes of this study are to focus on five main areas:
The study aims to analyze and explore the business environment in Jordan and determine its impact on multinational corporations and airline investors.
The study aims to find the role of environmental factors in determining the type of entry (or entry strategy) when making an entry decision, such as total direct investment, strategic alliance, joint venture, franchising, and licensing. (If the direct investment is considered total investment, the rest will be partial investment).
The study aims to observe any variation in the degrees of environmental influence in multinational corporations (these corporations differ in terms of nationality, investment strategy, size, experience, expansion, and percentage of local labor).
The study aims to point out the most influential factors related to the business environment and its impact on the entry of multinationals (airline industries). He then recommended how to ease the entry process to attract more foreign investment to the Jordanian market.
Identify the problems and obstacles faced by foreign investors and provide sets of recommendations that can be used as strategic solutions to facilitate the investment process.
The study will explore different environmental factors and their effects on multinational airlines in the Jordanian market. No doubt any foreign decision maker looking to invest and enter the Jordanian market will scrutinize and scrutinize these factors.
After analyzing and scanning the country's environment, and after determining the opportunities and threats available in the country, the decision maker will issue the entry decision to invest in the desired country or not. In addition to other factors, the present study will not emphasize financial risk, operational risk and the availability of sufficient capital due to the need to specify the research.
If the decision is to invest, other more elaborate decisions must be issued such as: when and where to invest, the amount of capital that should be invested abroad, what type of investment strategy should be chosen.
The investment strategy is to choose between direct investment, strategic alliance, joint venture, franchise or license to penetrate international markets, as shown in Figure .
The entry decision
Cultural and Social
Political and Legal
The effect of environmental factors on the entry decision: Before entry
After the entry, and the foreign company starts its operations in the internal market, it will be exposed to environmental factors in different degrees according to its characteristics such as: nationality, size, experience, expansion and percentage of Jordanian workforce. As with the entry strategy, this was selected at the time of the entry decision.
The Effect of Environmental Factors on the Organization 'After Entry'
This study intends to continue with this process and show the impact of environmental factors on the entry decision, to then indicate possible variations according to the characteristics of the organization.
It is very important to identify the obstacles faced by the airline industries in Jordan that could effectively prevent or contribute to the reduction of invested foreign capital. One of the main obstacles is the business environment. This environment can be seen as an opportunity to attract investors rather than an obstacle. This can be achieved through the continuous improvement and development of the different existing institutions interested in supporting and facilitating the investment process in the airline industry.
Both the public and private sectors should make greater efforts to create an attractive business environment through different ways, such as: reducing administrative obstacles, liberalizing and developing the regulatory system, and building the necessary investment culture.
This study aims to reproduce the following questions:
What are the main environmental factors that affect the entry process?
What are the differences in influence according to the different types of societies?
The following (4) sets of research questions were developed for this study.
Economic environment in Jordan
1.1 To what extent do economic conditions influence foreign airline industries to enter the Jordanian market?
1.2 Are the economic incentives provided sufficient to attract foreign investment to Jordan?
1.3 Is the infrastructure of the Jordanian economy adequate and accepted by different types of multinational corporations?
1.4 Does the economic impact vary according to the characteristics of the foreign companies?
Cultural and social environment in Jordan
2.1 To what extent does the cultural environment influence the entry of multinational airlines into the Jordanian market?
2.2 To what extent is Jordanian culture adapted to international business?
2.3 Does the cultural impact vary according to the characteristics of the foreign corporation?
Political and legal environment in Jordan
3.1 To what extent does the environment (political and legal) influence the entry of multinational airlines into the Jordanian market?
3.2 Is Jordanian political status described as stable?
3.3 To what extent are the legal system and relevant laws in Jordan adapted to this area?
3.4 Do the impacts (political and legal) on foreign companies vary according to their strategy of entry or international expansion?
Jordanian business environment in general
6.1 Is Jordan's business environment generally attractive or does it have a negative impact on the entry of foreign airlines?
6.2 Does the impact of the Jordanian business environment vary according to the different attributes of foreign airline investors?
Importance of the study
This study was designed to explore the impacts of the Jordanian business environment on foreign investment, direct survey of the views of foreign investors gave great importance to the study. Policy makers in Jordan may find useful findings to improve their strategies in the case of attracting foreign investment. The study presents some conclusions with recommendations on the following:
Fundamentals to attract more investors.
These issues demonstrate that the process of monitoring the investment environment should be carried out at high official levels, both in government and in the private sector. The results of this study can be applied in future similar studies on the business environment and its impact on entry into the airline industries, it can also be used as a useful material to solve problems and confusions in investment programs.
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Scope of the study
Purposive and area sampling technique was used to select the sample of prominent foreign companies in the airline sectors in the Jordanian market. Data was collected through a self-administered questionnaire. Many copies of the questionnaire will be distributed in Amman, the capital of Jordan, due to the concentration of foreign airlines in the mentioned areas. The questionnaire will be written in English with Arabic translation to be understood by different foreign investors.
These variables represent the business environment, which include (economic, political and legal, social and cultural).
This variable represents the attitudes of foreign airlines in the Jordanian market towards the Jordanian trade component, which are influenced by environmental factors before and after issuing the entry decision.
These variables represent:
The characteristics or attributes of the organization, consisting of (nationality, size, experience, expansion and percentage of local labor).
The entry strategy selected by issuing the entry decision, which includes four main forms (full direct investment, joint venture, strategic alliances and mergers, and franchising and licensing).
By linking the aforementioned variables, it is expected that any change in Jordan's business environment (independent variable) will lead to a change in the attitudes of multinationals towards entering the Jordanian market (dependent variable). Although the intervening variables can facilitate or obstruct the impact of environmental factors in the multinational company, the process can be explained using the following model, figure 1.3:
What are the environmental factors of Jordan? ›
Jordan's principal environmental problems are insufficient water resources, soil erosion caused by overgrazing of goats and sheep, and deforestation. Water pollution is an important issue in Jordan.What is the economic environment in Jordan? ›
Jordan has begun its recovery from the COVID-19 shock — real GDP grew by 2.2% in 2021 following a 1.6% contraction in 2020. Growth rebounded to 2.5 percent in Q1-2022, supported by the reopening of the economy and the recovery of contact-intensive services notably tourism.What are environmental and economic factors? ›
The economic environment of the business is one of the external factors that can influence strategy and decision-making. Economic factors include GDP, exchange rates, taxation, interest rates, fiscal policy, monetary policy and inflation. The business cycle is an important tool for understanding how the economy works.What are the 6 macro environmental factors? ›
Macro Environmental factors
Six components of macro environment are Demographic, Economic, Natural, Technological, Political and Cultural environments.
Air, water, climate, soil, natural vegetation and landforms are all environmental factors. By definition, the environmental factors affect everyday living, and play a key role in bringing health differences across the geographic areas.What are the 7 environmental factors? ›
Environmental factors include temperature, food, pollutants, population density, sound, light, and parasites.Does Jordan have a market economy? ›
Economy of Jordan.
|Country group||Developing/Emerging Upper-middle income economy|
|GDP||$45.344 billion (nominal, 2021) $109.296 billion (PPP, 2021)|
|GDP rank||89th (nominal, 2018) 87th (PPP, 2018)|
|GDP growth||1.9% (2018) 2.0% (2019e) −3.5% (2020f) 2.0% (2021f)|
The extraction of phosphate, petroleum refining, and cement production are the country's major heavy industries. Food, clothing, and a variety of consumer goods also are produced.What are the environmental factors that affect business? ›
Examples of environmental factors affecting business include employees, competitors, suppliers, customers' needs, owners, government regulations, market trends, technological developments, social factors, and economic factors.How does environmental factors affect the economy? ›
Poor environmental quality in turn affects economic growth and wellbeing by lowering the quantity and quality of resources or due to health impacts, etc. In this context, environmental policies can curb the negative feedbacks from the economy on the environment (and vice-versa).
How are natural environmental factors affecting business? ›
Environmental factors like climate change, natural disasters and pollution levels can affect the supply chain or increase costs for raw materials. This is clear in the recent trend of energy companies creating clean energy alternatives for their consumers, such as solar and wind energy.What are the 10 environmental factors? ›
- Oxygen Concentration.
- Radiation. Key Words. Essential Questions/Objectives. Exploratory Questions (OPTIONAL)
Environmental risks to health include pollution, radiation, noise, land use patterns, or climate change .What are the environmental factors in marketing? ›
There are six critical environmental marketing factors. These comprise the socio-cultural, legal, economic, political, and technological factors.What do you mean by environmental factors? ›
Environmental factors, as related to genetics, refers to exposures to substances (such as pesticides or industrial waste) where we live or work, behaviors (such as smoking or poor diet) that can increase an individual's risk of disease or stressful situations (such as racism).What are the 5 environmental factors that impact growth? ›
Environmental factors that affect plant growth include light, temperature, water, humidity and nutrition.What are the 5 environmental factors that influence growth and development? ›
Over the past 100 years, the study of environmental influences on human physical growth and development has focused on the influences of social and economic factors; family and household characteristics; urbanization/modernization; nutrition; and features of the physical environment such as altitude, temperature and ...What are the 5 major environmental problems explain each? ›
These include pollution, overpopulation, waste disposal, climate change, global warming, the greenhouse effect, etc. Various environment protection programs are being practised at the individual, organizational and government levels with the aim of establishing a balance between man and the environment.What is Jordan's market size? ›
The GDP (gross domestic product) in Jordan is forecast to amount to US$59.59bn in 2026. The real total GDP (gross domestic product) in Jordan is expected to grow by 5.88% by 2026. The GNI (gross national income) in Jordan is forecast to amount to US$56.26bn in 2025.Is Jordan's economy stable? ›
Jordan's economic freedom score is 60.1, making its economy the 87th freest in the 2022 Index. Jordan is ranked 5th among 14 countries in the Middle East and North Africa region, and its overall score is above the regional and world averages.
What economic problems does Jordan have? ›
Notwithstanding the tremendous amounts of foreign aid received by Jordan, the country is currently suffering from a 22.6 percent overall unemployment rate, a public debt constituting around 110 percent of the country's GDP, and around 27 percent of the population living in poverty.What are the main segments in the Jordanian market? ›
As the Jordanian government prioritizes security, there is strong demand for imported safety and security equipment. The market is comprised of four main segments: premises security, personal protection, security services operations, and firefighting.What natural resource is most common in Jordan? ›
Phosphates. The Jordanian Natural Resources Authority estimates that phosphate deposits cover approximately 60% of the country, they are mainly concentrated in a 300 km wide strip running north to south with most of the economically viable reserves in the Eshidiya region.How many types of market environment are there? ›
There are two significant types of marketing environments: Internal marketing environments. External marketing environments.What is an example of economic environment in marketing? ›
The economic environment consists of different things for different people. For example, for a farmer, the weather and price of fertilizers are important factors. For a TV channel on the other hand, the growth in Internet advertising matters a great deal, but not the weather.What are the examples of business environment? ›
Some of the examples of a business environment are values, culture, competition, market segmentation, demographics, business cycle, and economic security.How do environmental factors affect the development of a country? ›
A healthy environment supplies the necessities of life, like water, food and air. It also provides resources for economic growth and the means to fight natural hazards. The well-being of developing countries is often linked to the state of the natural environment and the opportunities it offers.What are the environmental factors on global economy? ›
Some factors that affect the international economic environment are exchange, inflation, unemployment rates, global trade, and labor costs.Which is an example of an economic factor that affects the business environment? ›
Examples of economic factors affecting business include:
Interest rates. Exchange rates. Recession. Inflation.
Important terms and concepts: The common external environment factors that businesses should consider are political, economic, social and cultural, legal, technological, and environmental/natural.
Why is environmental factors important? ›
Environmental factors significantly impact human livelihoods, health, and well-being. About one quarter of the global disease burden and one quarter of all deaths result from modifiable environmental factors.What are the 4 main environments? ›
Four Components of Environment
The four major components of environment include lithosphere, hydrosphere, atmosphere and biosphere, corresponding to rocks, water, air and life respectively. Lithosphere is the outermost layer of earth called crust, which is made of different minerals.
Abiotic factors include ambient temperature, amount of sunlight, and pH of the water soil in which an organism lives. Biotic factors would include the availability of food organisms and the presence of biological specificity, competitors, predators, and parasites.What are the 5 environmental factors required to survive? ›
- What are the 5 environmental factors needed to maintain life? Water. ...
- Water. Metabolic processes, transports substances, regs body temp.
- Oxygen. Release energy from food substances.
- Heat. Regulates the rates of metabolic reactions.
- Pressure. Atmospheric pressure for breathing, hydrostatic pressure to circulate blood.
Pollution is the largest environmental cause of multiple mental and physical diseases, and of premature deaths, especially among children, people with certain medical conditions and the elderly. Pollution is also one of the five main threats to biodiversity.What are the five environmental factors in business? ›
The major environmental factors in business are technological factors, economic factors, social factors, political factors and cultural factors. These environmental factors are further classified as either specific factors or general factors.What is environmental factors and examples? ›
Environmental factors, as related to genetics, refers to exposures to substances (such as pesticides or industrial waste) where we live or work, behaviors (such as smoking or poor diet) that can increase an individual's risk of disease or stressful situations (such as racism).What do you consider the 5 most important environmental issues? ›
- Deforestation: How you can help.
- Air Pollution: How you can help.
- Global Warming: How you can help.
- Water Pollution: How you can help.
- Natural Resource Depletion: How you can help.
Climate change is increasingly recognised as a risk for business owners. Climate-related risks to your business may include: growing frequency and/or severity of extreme weather – you may have increasing insurance costs, more damage to property and resources, and disruption of power and water.Is Jordan environmentally friendly? ›
Jordan only uses a small proportion of sustainable materials, such as organic cotton, or recycled materials, such as recycled nylon and recycled polyester. Most of the fabrics it uses are highly polluting synthetic petroleum-based fibers such as polyester, nylon, spandex, acrylic, and polyethylene.
What is the main industry in Jordan? ›
The extraction of phosphate, petroleum refining, and cement production are the country's major heavy industries. Food, clothing, and a variety of consumer goods also are produced.