Warwick Business School
Today, our aim is to analyze the Golden State to see whether it is an attractive place to welcome an automotive retailer.
California’s development has been most impressive for our current world. It’s importance for the world economy is crucial, with more than 12% of the US GDP.
However, in 2009 the housing bubble the financial crisis struck California in such a way that it faced a slow-down never experienced before.
This raises the following questions: Is California’s economy, heavily based on technology and respect of the environment, recovering from both crises? Are policies taking the right measures?
To answer these questions, we have made use of the PESTLE environmental analysis, which we have complemented with the factor of productions in Porter’s diamonds model.
California provides a stable political context with low business risks. Being a liberal market economy, it is highly respectful of competition and rivalry between firms with relatively low state intervention. It also offers high intellectual property to promote R&D, the backbone of sustainable development.
However, its policies trend towards market socialism. Democrats have had hold of California for a long time. Nevertheless, with the current context, Gov. Jerry Brown, a democrat, is forced to take measures that are to the antipodes of democrat measures. The housing bubble and the financial crisis have forced him to cut spending if no solution is found to reduce the deficit and debt.
Brown also promoted raising taxes. The measure plans to increase both income and sales taxes to avoid cutting spending, mainly on education. More important than the direct consequences that would have a provisory...