Abstract： In this study， I will discuss how a country’s political， legal， technological， and economic environment pose an opportunity or a threat to MNC’s seeking to do business there. MNC is called Multinational Corporation for short， refers to an enterprise operating in several countries but managed from one home country. Generally， any company or group that drives a quarter of its revenue from operations outside of its home country is considered a multinational corporation. When the company expands its business into the international market， the company will has to face opportunities and threats. These opportunities and threats are mainly caused by other countries’ political， economic environment， legal and technological. In this paper， I will analyze opportunities and threats which MNC will faced based on PEST analysis. PEST analysis stands for “Political， Economic， Society， and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is a part of the external analysis when conducting a strategic analysis or doing market， and gives an overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline， business position， potential and direction for operations.
　　In order to be able to more detailed study the selected topic， I will choose one MNC， Wal-Mart as case. And analyze what are the opportunities and threats Wal-Mart faced in China.
　　Key words： International market ，opportunities and threats，WAL-MART ， strategic analysis
　　1.0 Wal-Mart Company Background
　　Wal-Mart Stores， Inc. was founded by American retail legend Mr. Sam Walton in Arkansas in 1962. For 49 years， the company has served customers and is now the world’s largest private employer and retailer， on the top of the Fortune 500 list. Wal-Mart is among the most recognized global brands. Today， with over 2.2 million associates worldwide， Wal-Mart operates over 10，000 units in 27 countries under 69 different banners， and serves more than 200 million customers per week. Wal-Mart recorded $419 billion in annual net sales in fiscal year 2011 （FYE10， Feb. 1， 2010 to Jan. 31， 2011）， an increase of 3.4 percent over fiscal year 2010. Wal-Mart and the Wal-Mart Foundation announced $319 million in cash and $480 million in in-kind contributions around the globe during the fiscal year 2011. In 2010， Wal-Mart regained the seat at the top of the Fortune 500， and ranked first among retailers in Fortune Magazine’s 2010 Most Admired Companies survey. 　　1.1 Overview the Conditions of China
　　China has experienced a remarkable period of rapid growth spanning three decades， shifting from a centrally planned to a market based economy with reforms begun in 1978. During this time， it grew at an average rate of about 9.7% per year， with exceptionally strong growth between 2003-2007 averaging about 11% per year. Growth remained strong during the recent global financial crisis， reflecting massive stimulus and strong underlying growth drivers.
　　China became the world’s second largest economy in 2010； increasingly， it is playing an important and influential role in the global economy. The discussion now tends to focus on how China can avoid “the middle-income trap，” as experience shows that transitioning from middle-income to high-income status can be more difficult than moving up from low to middle income.
　　Yet， with a per capita gross national income of about US$4，260 （2010）， China is an upper middle-income country that has complex development needs. With the second largest number of consumption-poor in the world after India， poverty reduction remains a fundamental challenge. Rapid economic ascendance has brought on many challenges as well， including demographics – issues related to an aging population as well as the internal migration of labor； high inequality； rapid urbanization； challenges to environmental sustainability； and external imbalances. Significant policy adjustments are required in order for China’s growth to be sustainable.
　　In its 11th Five Year Plan （2006 - 2010）， the Government of China set forth a “people centered” strategy aiming to achieve a “harmonious society” that balances economic growth with distributional and ecological concerns. Under this plan， considerable progress was made in improving basic public services in social protection， education and health， but structural issues remain under the strong momentum of China’s traditional pattern of growth.
　　The 12th Five Year Plan （2011 - 2015）， recently approved by the National People’s Congress， comes at a time when the need to rebalance toward a more domestic demand-led， service sector-oriented pattern of growth is stronger than before， partly due to the less favorable global outlook. The Plan has set five main objectives：
　　Maintaining stable and fast economic growth， with a focus on price stabilization， more job creation， improved balance of payment， and higher quality of growth.
　　Achieving major progress in economic restructuring， with higher share of household consumption and the service sector， further urbanization， more balanced rural-urban development， lower energy intensity and carbon emissions， and better environment. 　　Increasing people's incomes， reducing poverty and improving the living standards and quality of life.
　　Expanding access to basic public services， increasing the educational level of the population， developing a sound legal system， and ensuring a stable and harmonious society.
　　Deepening the reforms in the fiscal， financial， pricing and other key sectors， changing the role of the state， improving governance and efficiency， and further integrating into the world economy.
　　2.0 PEST Analysis in China
　　A PEST analysis is an analysis of the external macro-environment that affects all firms. PEST is an acronym for the political， economic， society and technological factors of the external macro-environment. Such external factors usually are beyond the firm’s control and sometimes present themselves as threats. For this reason， some say that PEST is an appropriate term for these factors. However， changes in the external environment also create new opportunities and the letters sometimes are rearranged to construct the more optimistic term of STEP analysis. Many macro-environment factors are country-specific and a PEST analysis will need to be performed for all countries of interest.
　　Political environment
　　At first，In modern China， the close-door foreign trade policy took its shape gradually. It includes restrictions on trading port， practicing on foreign firm system， restricting the business of foreign trade， limiting the quantity and sorts of export goods. These resulted， firstly， from the empire ideology， super-stable political structure， keeping a look out at the unity between the Chinese and foreign nationalities， keeping peace along the coast， secondly， from self-sufficient natural economy， sufficient domestic market and insufficient purchase etc. These policies， in a certain sense， are progressive， but on the whole， they are still inactive.
　　With the changing of economic situation， the foreign trade policy is changed as well in China， Which from closed protection trade policy to opened suitable protection trade policy at present time. The policy suits totally to the basic country situation and the foreign opened basic country policy. In order to realize the healthy develop of international trade balance and national economy， we should perfect the international trade policy， strengthen the macro-control， realize the free trade under management， extend import quantity and foster the own mark.
　　On the other hand， environment idea， legislations， regulations and measures touched the international flow of natural resources， commodities related to life and health of human， animals and plants， even to the field of trade in service and trade in techniques. Since trade and environment become a focus of the international society， it is necessary to promote the harmonization of trade and environment， and in the WTO， method should be found to harmonize the two aims. 　　Nowadays， China has not only increased its presence in mainstream world trade but has gained knowledge about the basic rules of market economies and become more adaptable to changes in the international economy. As a member of the WTO， being adaptable to changes in the international economy is essential. As a large developing country， China， with its rapid economic growth， huge volume of trade and substantial market potential， has exerted and will continue to exert profound influence on the world economy.
　　The second，In order to encourage foreign investment and protect the legal interests of foreign investors， China has established a legal system that is being strengthened by numerous domestic legislations as well as bilateral and multilateral agreements.
　　With reform and opening to the outside world， China is increasingly taking part in many international trade pacts. To fulfill its obligations and commitment as a new member of WTO， China has enacted new laws and constantly revised existing ones to improve its legal environment for investment. At the same time， about 30 government departments have up-dated regulations contained in more than 2，300 documents. With its laws and policies on foreign investment being brought into conformity with requirements of the market economy and international rules， China is gradually creating a legal environment that is favorable to foreign commercial interests.
　　The legal framework governing foreign enterprises comprises three basic legislations. These laws as well as their provisions constitute the core of the legal system governing foreign investments in China. To supplement these laws， a series of regulations and measures concerning the establishment， management， reform， purchase， investment， reinvestment， termination， and liquidation of foreign enterprises had been introduced.
　　Industrial policies and guidelines on foreign investments are attempts by which China seeks to regulate the entry of foreign capital. Based on the national economic and industrial development strategy， the government issued the newly-revised Directory- of Guidelines for Foreign-Capital Investment in April 2002 to encourage foreign investments to flow to targeted trades and industries such as agriculture， resource development， infrastructure construction， export and high-technology industries. At the same time， policies were put in place to disallow foreigners to participate or hold a controlling share in certain enterprises of strategic significance. 　　Economic environment
　　China has witnessed sustained and rapid economic growth and a good situation in the balance of international payments and foreign exchange earnings， in spite of global economic recession. Some overseas personages worry that the increasing share taken by China’s exports in the international market may blunt the competitive edge of other countries’ exports， thereby adversely affecting their economic growth. Some people even claim that China is exporting deflation to the world through dumping huge amounts of low-priced commodities in the international market. But the fact is that China’s exports take up only a small proportion of developed countries’ GDP. Moreover， processing trade exports make up more than a half of China’s total exports， have no power to set prices for final products， and therefore can hardly affect the price levels of importers. It’s obviously that viewed from various aspects， the sustained and rapid economic growth of China， a developing country with a huge population， is conducive to the economic development of its neighbors and the world at large.
　　China’s economic development has enhanced the countries. Last year， China’s imports from ASEAN， Japan， Russia and Australia increased by 34 percent， 25 percent， 6 percent and 8 percent respectively over the amount in the previous year. This resulted in China’s trade deficits of US$7.63 billion， US$5.03 billion， US$4.89 billion， and US$1.26 billion with respective countries. In the first two months， China’s imports from the United States， Japan， the ROK， EU and ASEAN rose by 37.8 percent， 58.3 percent， 75 percent， 43 percent and 71.9 percent respectively over the amount in the same period of last year.
　　Society environment
　　The society and culture environment include the changes of every region's living environment and values， as well as the attitudes towards work and leisure， can help to see the level of its consumption structure. The so-called changes resulted from the following factors：the ones in the population and its growth trend， residents' educational and cultural degree， their religious belief， aestheic standards， customs and their values.
　　Technological environment
　　The Chinese government has an ambitious plan to make China a world leader in science and technology by 2050. Moreover， in just 15 years from now， China’s leaders wish to see the country transformed into an innovation-oriented society. According to the Chinese science and technology officials， Chinese companies are to become less reliant on foreign technology and Chinese scientists are to pursue “indigenous innovation.” However， researchers in China face numerous hurdles， including bureaucratic control， policies， and an education system based on rote learning. 　　2.1 Opportunities of Multinational Companies
　　Marketing Opportunity
　　Multinational company has big market available in different countries. They have the necessary skill and expertise to sell their products at international level. Any company can enter into a joint venture with a foreign company to sell its products in the international market.
　　Research and Development
　　The resources and experience of multinational companies in the field of research enable the host country to establish efficient research and development system. This helps host country to produce quality products at least possible cost.
　　Export Promotion
　　Multinational company helps developing countries in earning foreign exchanges. These companies can supply necessary raw materials， technology， technicians and foreign exchange to promote exports and reduce imports.
　　Growth of Industry
　　Multinational company is specialized， fast growing and dynamic， so they offer growth opportunities for domestic industries. These companies assist local producers to enter the global markets through their well established international network of production and marketing.
　　Give Latest Technology
　　Technology plays an important role in bringing down cost of production and produce quality goods on a large scale. Multinational company is technologically rich. They can be of great help to bridge the technological gap between developed and developing countries.
　　Optimum Utilization of Resources
　　These companies ensure optimum utilization of natural and other resources of the home country. The home country refers to the country in which this multinational company has its head office. Thus， the growth of these companies is beneficial to home country.
　　Help to Local Industries
　　Multinational companies provide a readymade market to domestic suppliers of raw material or semi-finished products. In recent years many multinational company have opened their production units in India， and most of their requirement in respect of spare parts， raw materials， etc. are being met by local suppliers.
　　Management Opportunities
　　These companies open management opportunities to the management students of the host country. They can be appointed as professional managers by multinational company and can earn handsome salary and build reputation for the country.
　　3.0 Strategies of Multinational Countries
　　- Competitive Strategy 　　Competitive strategy specifies the distinctive approach which the firm intends to use in order to succeed in each of the strategic business areas. Competitive strategy gives a company an advantage over its rivals in attracting customers and defending against competitive forces There are many roots to competitive advantage， but the most basic is to provide buyers with what they perceive to be of superior value a good or service at a low price， a superior service that is worth paying more for， or a best value offering that represents an attractive combination of prices， features， quality， service， and other attributes that buyers find attractive Competitive strategy is thus the search for a favorable competitive position， in an industry， the fundamental arena in which competition occurs. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition.
　　- Cost Leadership Strategy
　　A firm producing at the lowest cost in the industry enjoys the best profits. Producing at lower cost is a strategy that can be used by various firms so as to have a significant cost advantage over the competition in the market. This in effect leads to growth in the market share. This strategy is mostly associated with large businesses s offering standard products that are clearly different from competitors who may target a broader group of customers. The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Factories are built and maintained； labor is recruited and trained to deliver the lowest possible costs of production. Cost advantage is the focus. Costs are shaved off every element of the value chain. Products tend to be 'no frills.' However， low cost does not always lead to low price. Producers could price at competitive parity， exploiting the benefits of a bigger margin than competitors. Some organizations， such as Toyota， are very good not only at producing high quality autos at a low price， but have the brand and marketing skills to use a premium pricing policy. A low cost leader’s basis for competitive advantage is lower overall costs than competitors. The need to manage cost is nothing new， yet surprising number of organizations struggles to successfully control their operating expenses overtime. Successful low cost leaders are exceptionally good at finding ways to drive costs out of their business.
　　- Differentiation Strategy 　　Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments， generating a higher than average price. For example， British Airways differentiates its service. The differentiating organization will incur additional costs in creating their competitive advantage These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve. Targeting smaller market segments to provide special customer needs is a strategy widely used in the corporate scene. It involves identification of the needs of the customers in the market and designing products that can fit their needs. Companies can pursue differentiation from many angles.
　　4.0 Wal-Mart in China
　　Wal-Mart entered the Chinese market and opened its first Supercenter and Sam’s Club in Shenzhen in 1996. Currently， Wal-Mart operates a number of formats and banners in China including Supercenters， Sam’s Clubs， and Neighborhood Markets. As of March 1， 2012， Wal-Mart had owned 370 units in 140 cities in 21 provinces and four municipalities， and had created over 106， 500 job opportunities across China. Wal-Mart China firmly believes in local sourcing. We have established partnerships with nearly 20，000 suppliers in China. Over 95% of the merchandise in our stores in China is sourced locally. In addition， Wal-Mart is committed to local talent development and diversity， especially the cultivation and full utilization of female staff and executives. 99.9% of Wal-Mart China associates are Chinese nationals. All our stores in China are managed by local Chinese. Furthermore， over 60 percent of Wal-Mart China associates are female and about 40% of those are at management level. In 2009， the company established the “Wal-Mart China Women’s Leadership Development Commission” for driving women’s career development.
　　In China， as elsewhere， Wal-Mart follow the three core values of respect for the individual， service to the customer， and striving for excellence， and stick to the Wal-Mart tradition of building their business one store and one customer at a time， so as to fulfill its core mission — save people money， so they can live better， and continue to make a difference in the lives of its customers， members and associates. 　　4.1 Wal-Mart's Strategies in China
　　Wal-Mart's success is mainly based on its concentration of a single-business strategy.
　　This strategy has achieved enviable success over the last three decades without relying upon diversification to sustain its growth and competitive advantages. In a sense， Wal-Mart’s low prices， service， and smile are their leading marketing strategies. However， there is risk in this strategy， because concentration on a single-business strategy is similar to "putting all of a firm's eggs in one industry basket". On the business side， Wal-Mart is the country’s most sophisticated retailer in terms of using information systems. Their cross-docking inventory and transportation services able them to have the goods needed by the consumer at all times.
　　The focus that Wal-Mart shares in all advertisements is service， low prices， and quality of goods. Wal-Mart is not a specialty shop focusing on one “good”， they are innovative offering a selection based on consumers overall needs. They do have some brand name merchandise however not has a specific section set aside for Polo Shirts. Unlike Wal-Mart， brand name stores in most circumstances， only offer their product at a price that is normally above affordable. These retailers rely on their name to sell； Wal-Mart relies on their convenience and low prices.
　　Wal-Mart has been through a lot in China and many of the lessons learned are perhaps easier to think about in retrospect， but it looks as if making the key-decisions about the China entry in real-time and under an extreme situation of uncertainty is a much more complicated task. Now， even though China has been opening to the WTO， there is still much that’s unknown about the retailing future in China and with the financial crisis emanating from Wal-Mart’s home market the right path for Wal-Mart is a tough call. Looking back， it seem that there are some major differences between Wal-Mart and Carrefour’s strategy that contributed to Carrefour doing better in comparison to Wal-Mart. The main difference seems to be around the issue of adjusting to local culture. While Carrefour was mainly trying to localize and do things “the Chinese way” by encouraging local branch decision making， building local supplier contracts， stretching local rules and regulations， and using local promotion marketing schemes， Wal-Mart was more focused on doing things the American way – the way that made Wal-Mart was it is today in the American market. This contributed to the fact that Wal-Mart has been struggling throughout many of the difficulties described above with the local customer， government and suppliers. China is considerably different than the states and yet Wal-Mart has been slow to try to adjust to that， which just might cost Wal-Mart the entire Chinese market. 　　Wal-Mart needs to adjust to the Chinese market， while leveraging its source of competitive advantage. This requires a delicate balance. At the US， the brand Wal-Mart is associated with low price rather than quality. In China， where everyone is going for low prices and providing low quality to do so， Wal-Mart’s own brand could be an assurance for low prices but with quality by making the Wal-Mart name about more than just retailing. The suggested strategy in the 2008 Wal-Mart supplier meetings shows that it’s heading in that direction （Business Week）. This also follows Gnome’s strategy of renaming its suppliers to their own brand， but goes beyond it as the foreign brand in China is already associated with higher reliability and quality assurance. This actually holds true in China were retailers do a better job of enforcing supplier quality than the local regulations. With that， Wal-Mart is still able to use its expertise and knowledge in supplier negotiation and distribution system to keep costs down.
　　Although Wal-Mart is a Joint-Venture， the sources do not mention any attempt to leverage the local partner to meet the local market， which seems the opposite to some other joint ventures discussed like Danone and Wahaha. Working together with the local partner to understand where and how the local regulations can be used or adjusted for Wal-Mart’s success and gaining a stronger hold of the potential customer’s heart might help Wal-Mart’s growth and dominance in the Chinese market.
　　5.0 Conclusion
　　Some countries， lack of market， unable to support large-scale production of the domestic companies. In this case， in order to improve their own market forces， companies will choose for to be multinational companies to take advantage of the market and the resources of other countries and to win more profits. In addition， some of the huge investment needed to have a large market to spread the cost， and then to achieve the expected profit. In recent years， the development of global economic integration also pushes companies to select international strategy to be multinational companies.
　　Become multinational companies can take advantages of other countries in the political， economic， legal， technological to help companies get more opportunities. However， multinational companies also need to have a correct understanding of the risks of international strategy. Multinational companies must develop the right strategy based on the country's investment environment to ensure that the company was able to seize the opportunity at the same time to avoid risks.
　　References
　　[1]Wal-Mart China. Com From： http：//www.wal-martchina.com/english/walmart/index.htm#china
　　[2]China， The World Bank. Com From： http：//www.worldbank.org/en/country/china
　　[3]“China’s foreign trade police”， Baidu Library From： http：//wenku.baidu.com/view/aa7a6e79168884868762d661.html
　　[4]“Technological Environment”. Huaran Consulting. Com From： http：//www.huarangroup.com/products/tzzg/to/as/2011-06-03/217.html
　　[5]"Ready for warfare in the aisles – Retailing in China”. The Economist， August 5，2006.
　　[6]"Outsmarting Wal-Mart”，Darrell K. Rigby and Dan Haas Harvard Business Review，December 2004.
　　[7]"Wal-Mart’s new sustainability mandate in China”， Business Week， October 28， 2008
　　作者簡介：
　　李佳南（1987-），女，四川德阳人，硕士，助教，主要研究方向：工商管理。