Assessing the Social-Cultural Environment
The demographics of Thailand and Bangkok, in particular, represent the recent changes in the nation’s population. Overall, the number of people living in Bangkok has exceeded 10,5 million in 2020 (“Bangkok Population 2020”). This is a significant increase in comparison to 2016 when Bangkok had about 8 million citizens (“Thailand Demographics”). Moreover, if one includes people commuting to the city from neighbouring regions, then the population grows to 15 million (“Bangkok Population 2020”). This shows the vast popularity of the town and its place as the centre of business, commerce, and tourism.
The population pyramid for the country reveals the prevalence of the working-age group. Currently, the largest part of the residents is 25 to 54 years old – about 40% and the second largest group is infants and children below 14 years – around 16% (see fig. 1). Nevertheless, the birth rate in Thailand continues to fall as the country disseminates knowledge about sexual health and birth control. Furthermore, infant mortality also declines but remains rather high at more than 6 infant death per 1,000 births (“Thailand Demographics”). These facts imply that the population is slowly ageing, although the dominant youth population is still significant.
It is also notable that Bangkok’s population density is much higher than that of other cities and areas of Thailand. While Bangkok has more than 10 million residents, the second-largest city has less than 400,000 people (“Bangkok Population 2020”). The population density in the capital is about 136 people per km2 (“Bangkok Population 2020”). The city’s population growth also resulted in increased stress on the infrastructure which led to traffic and population. Nonetheless, Bangkok remains a popular destination for both tourists and locals. The absolute majority of the citizens are Thai, but the city is also home to Chinese, Japanese, Indian, Arab, and other communities. Immigrants from North and South America, as well as various European countries, are present as well.
Religion plays a major role in the country’s traditions and cultural standards. About 90% of all citizens practice Buddhism; Islam, Christianity, Sikhism, and other faiths have minor followings (“Thailand: Statistics”). The country and its capital place Buddhism on the basis of cultural and societal norms, thus making it a prominent factor in business development. For instance, most religious holidays are connected to Buddhism – Songkran, Buddha’s birth and other celebrations have specific rituals (Lopez 156).
Other holidays are secular and tied to the governmental system (monarchy) and the royal family. The latter factor is especially relevant to interpersonal communication – the monarchy cannot be criticized in any way (Haberkorn 937). Furthermore, Buddhism is also protected from criticism by law, but, otherwise, the freedom of expression is present in the city.
The official language in Thailand and Bangkok is Thai, but other languages are spoken due to the multicultural nature of the country. Moreover, English is taught in schools, and, since education is free and compulsory, the level of literacy and the knowledge of both Thai and English are very high (“Thailand: Statistics”). Thailand is also a destination for many tourists, making its people used to talking in English.
Media often use Thai and English to deliver information, and businesses use both languages to hold meetings (“Thailand: Foreign Investment”). However, this does not mean that Thai people also follow Western standards of communication. In contrast, their manner of interaction is rooted in their culture.
Hierarchy and respect for status play a substantial role in the ways people greet and address each other. It is apparent that younger people are expected to show respect to older ones, and nobility is still placed in a separate group. However, the modern class system also separates people according to wealth and corporate hierarchies (Haberkorn 939). Thai people also pay increased attention to small children – mothers rarely leave their young children at home.
As for traditions, people use a special greeting gesture (wai), remain calm and positive during negotiations, and aim to keep their and others’ “face” at all times (Haberkorn 935). The latter may pose problems in business negotiations and conflict situations, as Thai people may not disagree openly and expect that their response will be understood from the context.
When discussing Thai culture, one cannot avoid talking about food. Thai cuisine is extremely popular around the world, and Thai people also have many standards for preparing their food. Rice is the foundation of all meals, but different regions use specific rice types (Aoki et al. 276). Furthermore, fish and meat are added to most recipes, but many Buddhist followers are vegetarian (Aoki et al. 276). According to Chanruechai and Fernando, taste and presentation are the most important to consumers, while healthiness may not be as significant (9). Thus, it may be difficult to challenge Thai cuisine with the traditional menu of Panera Bread.
Considering the city’s makeup described above, the company Panera Bread should adapt to the Thai culture in negotiations and business decisions. First, it is vital to emphasize the quality of its foods and adhere to the rules of interaction expected by the locals. Second, religion is essential to all citizens, and the business should recognize the role of religious celebrations and rituals for customers and employees. A special place in the store should be allocated for children, and toys or activity tables may be viewed positively by visitors.
Assessing the Political-Legal Environment
Thailand is a constitutional monarchy, but, in 2014, the government was overtaken by a military junta (Haberkorn 935). As a result, some of the previous policies included in the country’s constitution were annulled, but the state continues to uphold hereditary monarchy. In fact, the kind and the monarchy, as a whole, are revered and highly respected by the population. Federal entities usually appoint local authorities, but, in Bangkok, the governor is elected.
The Bangkok Metropolitan Administration governs the area, and the city is further divided into locally-governed districts. Nonetheless, the central government remains the primary source of legislation and enforcement, while local authorities have limited power.
In 2020, the city will hold an election for the new governor, and this political event may impact the situation in the region (Wancharoen and Kongrut). The city is the centre of political and economic life, as most international and national organizations place their headquarters in Bangkok. Thus, civil unrest, demonstration, and violence are common in the city. While these events happen due to changing governments and military action, their occurrence does not significantly affect the current ruling organization.
A major change in food-related political action happened in 2015. The Bangkok Metropolitan Administration, with the help of the military junta (affiliated with the National Council for Peace and Order), started a conflict with street vendors (Wancharoen and Kongrut). As a result, many street food markets were eliminated, and vendors were evicted from the public areas. While it was a response to the increasingly congested spaces, many argue that this decision would negatively affect the appeal of Bangkok and remove its charm (Wancharoen and Kongrut).
Recently, these prohibitions were relaxed, allowing some food vendors to return to their business in some regions of the city (Wancharoen and Kongrut). This change may pose challenges for companies such as Panera Bread since it increases the competition for affordable meals.
Thailand has a strong relationship with the United States and China both in imports and export. Some prominent areas of trade are technology, transportation, and metals (“Thailand (THA) Exports”). However, foodstuffs are also a broad category, and Thailand is interested in working with other nations due to its consistent tourism industry. Furthermore, it is possible to source many types of food from Thailand, since its agriculture produces rice, fruit, and sugar (“Thailand (THA) Exports”). It is also a part of free trade, which allows the majority of the world’s countries to export and import goods.
The possible barrier to trade and successful business is based on the political conflicts described above. The principles of the ruling military junta may not align with those of international companies. Furthermore, the unstable position can endanger the company in the long run, as the country has had many protests and government changes over the last few decades. The sudden change in policy regarding street vendors is a clear sign of quick changes in policy that may either relax or strengthen the government’s control.
Nevertheless, the Thailand Board of Investment offers some benefits to businesses in certain industries to promote the country and the city of Bangkok as well. Agriculture and food are among these sectors, providing companies with tax exemptions for eight years, and a reduction in taxes of 50% for five years (“Thailand: Foreign Investment”). Furthermore, the food business may get increased deductions for utility payments, including electricity, transport costs, and re-supply (“Thailand: Foreign Investment”). Finally, Panera Bread may expect to receive additional tax deductions on its net profits and some assistance with materials produced locally.
Intellectual property laws in Thailand require the company to have a local presence. The infringement of these rights is a criminal offence, and the country’s legal system fights counterfeit goods’ production and dissemination (“Intellectual Property Law”). In order to register intellectual property or a trademark, the company has to ensure that its brand is unique in the country, distinctive and recognizable, and connected to the goods sold by the owner. Moreover, the business has to have a fixed place or address in Thailand, and all documents have to be translated into Thai. The Department of Intellectual Property oversees such contracts and makes final decisions.
Overall, the legal-political environment of the country has both negative and positive points for international businesses. Panera Bread should consider the benefits of tax deductions and exemptions and research the possibilities of establishing local resource channels for foodstuffs. Next, it should evaluate the location of its future business to minimize the impact of political changes and possible future involvement of street vendors. Finally, the company should register the brand’s intellectual property to ensure its rights to the name and design.
Aoki, Keiko, et al. “A Choice Experiment to Compare Preferences for Rice in Thailand and Japan: The Impact of Origin, Sustainability, and Taste.” Food Quality and Preference, vol. 56, 2017, pp. 274-284.
“Bangkok Population 2020.” World Population Review. Web.
Chanruechai, Tipjaree, and Maria Socorro Cristina L. Fernando. “Factors Affecting Customer Satisfaction on Brand X Green Tea: A Case Study of Bangkok Consumers.” International Research E-Journal on Business and Economics, vol. 3, no. 1, 2017, pp. 1-12.
Haberkorn, Tyrell. “Dictatorship, Monarchy, and Freedom of Expression in Thailand.” The Journal of Asian Studies, vol. 77, no. 4, 2018, pp. 935-943.
“Intellectual Property Law in Thailand.” Thailand Court. Web.
Lopez, Greg. “Heritage and Identity in Contemporary Thailand: Memory, Place and Power by Ross King.” Journal of the Malaysian Branch of the Royal Asiatic Society, vol. 91, no. 1, 2018, pp. 155-158.
“Thailand Demographics.” Worldometer. Web.
“Thailand: Foreign Investment.” Santandertrade. 2020. Web.
“Thailand (THA) Exports, Imports, and Trade Partners.” OEC. Web.
“Thailand: Statistics.” UNICEF. Web.
Wancharoen, Supoj, and Anchalee Kongrut. “A Look Ahead to Bangkok in 2020.” Bangkok Post. 2020. Web.