Economic factors

The violence in Kenya has had serious economic ramifications, trade was at all time low, there was mass pull out of investor funds, this not only affected LG but the whole industry. Due to the global economic recession, imports were reduced due to the high exchange rates. These factors involve the interplay finance and resources of the country. Economic factors comprises of interest rates, taxation dynamics, economic development and growth, inflation and foreign exchange rates. These factors can have a remarkable impact on the business operation of a firm.(3) Higher interest rates have a tendency of reducing borrowing capability since it is costs more to borrow. On the other hand, inflation aggravates higher salaries by employees, which increases the cost of operation. This economic situation influences the decisions of LG in any particular country of operation. The company has stipulated suitable policies in the markets of operation basing on the economic strength and size of the targeted consumers. Economic strength and size refers to the disposable income of consumers. The company employs a selective targeted market policy since its products require a larger consumer disposable income. Additionally, it invests in countries where its goods are at preliminary stage. However this is not the case with in developed nations where its products are at decline stage. This policy of entering a readily available market has proved to be beneficial to LG Company.

Social-cultural factors

The social environment consists of customs, practices and traditions that vary from one social group to another. Variations in the social status affect demand for a product and the readiness of people to work. LG is contributing to the development of the society by providing employment, to the local people. It also has in place a retired benefit scheme for its employees. Ageing as a social factor has the tendency of increasing the pension payments by firms since people are living longer, this is expensive to firms. The ageing population also affects demand. It also increases the demand for products for the aged. LG has succeeded to overcome the social challenges by incorporating itself in new markets. The approach of think global and act local has efficiently connected the social and cultural gap between its native country and foreign country.(4) However, the company admits that it faces bribing to be offered a business chance operation.