Comparative Analysis: Argentina and Colombia for Business Expansion

This report analyzes the suitability of Argentina and Colombia for business expansion in Latin America, focusing on competitive advantages, economic development, and market dynamics. The study examines factors like economic growth paths, overall competitive positions, institutional environments, and market sizes to determine the optimal country for expansion. Colombia is recommended due to its regulated financial markets, macroeconomic stability, labor market efficiency, and business sophistication, offering a more favorable environment for investment compared to Argentina. The report evaluates the 12 pillars of competitiveness, including innovation capacity, training services, and business costs, providing a comprehensive assessment to guide strategic decision-making for the Australian organization. The analysis also delves into the domestic market size and export performance of both countries.

Investing in Latin America: Argentina or Colombia
Business Challenges 1

Executive Summary
A company in Australia wants to make an expansion in its operations to the country in Latin
America. This study is carried out to determine a suitable country for the expansion and the
country which is having competitive advantage in innovation. For choosing the country various
factors have to be considered like business costs of tourism and domestic market size. The CEO
of the organization of Australia wants to make a choice between Argentina and Colombia as the
both countries are showing economic growth. Colombia shows a rise in its rank in a continuous
way for the second year and thus a rise of five ranks and thus scores a rank 61. This shows the
financially development market of the country. The performance of the country is stable over the
years and also shown various sign of improvements when comparison is made to the previous
year in comparison to Argentina. Colombia has scored 80th rank in Local availability of
specialized training services and 98th rank in staff training which shows the competitive
advantage of the country. On the basis of the following study Colombia should be selected for
expansion.
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Contents
Introduction......................................................................................................................................4
Analytical development...................................................................................................................4
1. Economic development path of Argentina and Colombia-......................................................4
2. Overall competitive position of Argentina and Colombia-......................................................5
3. Choice of country depending upon overall competitive position of Argentina and Colombia-
......................................................................................................................................................6
4. Specify of the relevant rule in order to make evaluation of the competitive advantages of the
countries Argentina and Colombia-.............................................................................................7
5. Evaluation of competitive advantages-....................................................................................7
6. Reasons for explicit recommendation concerning country choice-.........................................9
Conclusion.......................................................................................................................................9
References:....................................................................................................................................11
Appendices....................................................................................................................................12
Business Challenges 3

Introduction
This study has been undertaken to investigate a suitable country for the expansion of the
Australian organization in Latin America. It is analysed that Colombia is having regulated stock
exchanges and other financial market in comparison to Argentina and thus this will increase the
competiveness of the country. The stability in the environment of macroeconomic shows the
competitiveness of the country and it is said that if there is no stability in the macroeconomics
than this will make various harm to the country’s economy. In this particular study analysis on
economic development path of Argentina and Colombia and Overall competitive position of
Argentina and Colombia has been carried out. Colombia has the highest ranking in the terms of
pillar of labor market efficiency when a comparison is made to Argentina. This will increase the
effectiveness in the employees and thus lead towards attainment of more competiveness and thus
lead towards more profit generation for the organization. By, making an analysis on overall
competitive position of Argentina and Colombia, Colombia is selected. The rank of Colombia in
the market of export showed a rank to 12th from 24th in 2011. The exports of the country were
also showed a double value of USD in the year 2016 amounted to 2.38 billion as compared to
year 2011.
Analytical development
1. Economic development path of Argentina and Colombia-
Argentina has shown a gain of two position and thus score 104th rank because of various
innovation factors in the country and thus this helps will help the country to make adaptations
according to changes which are going to incurred in future in the environment regarding changes
Business Challenges 4

in technologies, taste and preference. The country is showing improvement in the quality of the
institutions by protection of the intellectual things and a proper legal framework has been
introduced by the country in regard to no infringements. The country also shows a quality in the
education system and which is a good sign of effectiveness in the markets. The country has
various reforms practices regarding tariffs and the low prices of commodity which shows a
growth for the country in terms of economic development. In the Latin America, the major
challenge is to trap the middle income group and only Argentina is the country which has
overcome this challenge.
Colombia shows a rise in its rank in a continuous way for the second year and thus a rise of five
ranks and thus scores a rank 61. This shows the financially development market of the country.
The performance of the country is stable over the years and also shown various sign of
improvements when comparison is made to the previous year. The country has developed
sophistication in the business activities and also in the health and education system. The country
has a good results in macroeconomic. There is a tremendous improvement in the quality system,
of the education in the country and thus this shows diversity in the economy. There are different
other areas where the country has shown improvements and they are public institutions and
security. The quality of transport has also increased and thus this shows the economic
development of the country (Claessens and Van Horen, 2012).
2. Overall competitive position of Argentina and Colombia-
The institutional environment of Argentina is very effective and efficient and also the legal
framework introduction in the country helps in making determining the quality of the industries
in the country and thus this shows the strong competitiveness in the country. It can be analyzed
that the healthy employees and workforce plays a very important role in increasing the
Business Challenges 5

competitiveness of the country. In addition to the health, Education also plays a very important
role in increasing competitiveness as it will increase the efficiency of employees. Argentina has
showed a quality improvement in the education and health system which will lead towards
increase in the competitiveness of the country. It can also be analyzed that the technological
adaptation plays a very important role in increasing the productivity of the industries and also
innovation leads towards competitiveness (Ronconi, 2012). Argentina is making various
adaptations according to changes which are going to incur in future in the environment regarding
changes in technologies, taste and preference.
It can be analyzed that the effectiveness in financial sector leads towards proper allocation of the
resources to the population of the country and also lead towards more rate of returns for the
entrepreneurs. Colombia is having regulated stock exchanges and other financial market and thus
this will increase the competiveness of the country. The stability in the environment of
macroeconomic shows the competitiveness of the country and it is said that if there is no stability
in the macroeconomics than this will make various harm to the country’s economy. Colombia
has a good results in macroeconomic. The market size of the country is also large and this will
lead towards attainment of economies of scale and by including both the domestic and
international market, Colombia is increasing its competitiveness (Brust, and Liston-Heyes,
2010).
3. Choice of country depending upon overall competitive position of Argentina
and Colombia-
It can be analyzed that Colombia is a proper choice on the basis of the differentiation between
Colombia and Argentina regarding competitive position. Colombia has sounder institutional
environment which will lead towards more sound legal framework in the country ensuring more
competitiveness and growth. It can also be analyzed that the sound institutions always lead
Business Challenges 6

towards the development in the terms of the sustainable development in the country. This will
also ensure transparency in the accounting standards and thus fraud and mismanagement can be
prevented. Colombia has also showed stability in the macroeconomic environment and has the
highest rank in the pillar of macroeconomic environment when a comparison is made to
Argentina and thus Colombia will lead towards more productivity of the country (Bustos, 2011).
Colombia has the highest ranking in the terms of pillar of labor market efficiency when a
comparison is made to Argentina. This will increase the effectiveness in the employees and thus
lead towards attainment of more competiveness and thus lead towards more profit generation.
Business sophistication includes two things that are the quality of the business network of the
nation and the quality of the firms who are privately owned and this will lead towards more
innovation as Colombia has higher business sophistication (Salvatore, 2010). Columbia has the
high rank in terms of pillar of business sophistication is comparison to Argentina.
4. Specify of the relevant rule in order to make evaluation of the competitive
advantages of the countries Argentina and Colombia-
The 12 pillars of competitiveness are the relevant rules in order to make the evaluation of the
competitive advantage of the countries Argentina and Colombia. The competitiveness can be
defined as frame of institution, rules and the factors which help in determining the extent of the
production of the nation. The level of the production of the nation will help in identification of
the prosperity of the nation and this also helps in determining the return rate that can be attained
by making an investment in the nation (Cassiman et. al., 2010).
The model of competitiveness consists of various factors like fixed and dynamic. It can be
analyzed that the competitiveness of the nation helps in determining the level of income. The
competitiveness also determines the potential of growth in the country.
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5. Evaluation of competitive advantages-
Domestic market size
Colombia is considered as the fourth in the economy of Latin America and also has the third
highest population. The country has showed improvements in its security systems and also
showed an economic growth. Colombia has showed an increase in the investment and the other
commercial tie ups at the international level. A continue growth can be seen to Colombia and
majorly in the agriculture items. The rank of the country in the market of export showed a rank
to 12th from 24th in 2011. The exports of the country were also showed a double value of USD in
the year 2016 amounted to 2.38 billion as compared to year 2011 (Borland, 2016). This shows
the competitive advantage of the country in the domestic market size and also with growth in
economy.
Capacity for innovation
There are various innovation factors in Colombia and thus this helps will help the country to
make adaptations according to changes which are going to incurred in future in the environment
regarding changes in technologies, taste and preference and this leads towards competitive
advantage. The country has scored 79th rank in capacity for innovation (Schwab, 2016).
Local availability of specialized training services
Colombia has scored 80th rank in Local availability of specialized training services and 98th rank
in staff training which shows the competitive advantage of the country. If the country will have
specialized training services than the productivity can be increased by effective and efficient
utilization of resources present in the country (Brux, 2015).
Business costs of terrorism
Business Challenges 8

Colombia has scored 133th rank in Business costs of terrorism and 127th rank in Business costs
of crime and violence which shows that there is quite less risk for the organizations in order to
start the business in the country. Colombia has scored 132th rank in Organized crime.
6. Reasons for explicit recommendation concerning country choice-
The country which has been selected for expansion In Latin American country is Colombia:-
The wide-ranging and competent infrastructure is vital for ensure the successful implementation
of the nation, as it is a vital feature in formative the position of trade and industry activity that are
developing in the nation. Strong transportation reduces the outcome of remoteness between
regions and thus integration can be done with the international markets and this leads towards
attainment of competitive advantages for the countries. . Colombia is having the highest rank in
the pillar of infrastructure as compared to Argentina. Colombia has been chosen because of its
competitive advantage in innovations, easy availability of specialized services in training and
also in business costs of terrorism.
The countries which are having effective markets for the goods are termed as the well
established in order to production of products and different services in according to supply and
demand situations prevailing in the country. Healthy competition in the country in the both
foreign and domestic way is quite important in order to increase the productivity. This will lead
towards attainment of the competitive advantage, as it will force the countries to get more
innovation and the approaches which are more customers oriented. Colombia is having the
highest rank in the pillar of goods market efficiency as compared to Argentina (Komlos, 2014).
Conclusion
From the above study it can be determined that The countries which are having effective markets
for the goods are termed as the well established in order to production of products and different
Business Challenges 9

services in according to supply and demand situations prevailing in the country are having more
competitive advantage. It can be analyzed from the above study that Colombia is having the
highest rank in the pillar of infrastructure as compared to Argentina. Colombia has been chosen
because of its competitive advantage in innovations, easy availability of specialized services in
training and also in business costs of terrorism. It can also be stated from the above study that
Colombia has scored 80th rank in Local availability of specialized training services and 98th
rank in staff training which shows the competitive advantage of the country. If the country will
have specialized training services than the productivity can be increased by effective and
efficient utilization of resources present in the country. Therefore it can be concluded that
Colombia will be a better choice for the expansion of operations by Australian organization.
.
.
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References:
Salvatore, D. (2010) Globalisation, international competitiveness and growth: advanced and
emerging markets, large and small countries. Journal of International Commerce, Economics
and Policy, 1(01), pp.21-32.
Brust, D.A.V. and Liston-Heyes, C. (2010) Environmental management intentions: An empirical
investigation of Argentina's polluting firms. Journal of Environmental Management, 91(5),
pp.1111-1122.
Claessens, S. and Van Horen, N. (2012) Being a foreigner among domestic banks: Asset or
liability?. Journal of Banking & Finance, 36(5), pp.1276-1290.
Ronconi, L. (2012) Globalization, domestic institutions, and enforcement of labor law: Evidence
from Latin America. Industrial Relations: A Journal of Economy and Society, 51(1), pp.89-105.
Schwab, K. (2016) The global competitiveness report 2016-2017, ed. In WE Forum.
Bustos, P. (2011) Trade Liberalization, Exports, and Technology Upgrading: Evidence on the
Impact of MERCOSUR on Argentinian Firms. American Economic Review 101 (1),pp 304–40.
Cassiman, B., Golovko, E. and Martínez-Ros, E. (2010) Innovation, exports and
productivity. International Journal of Industrial Organization, 28(4), pp.372-376.
Borland, J. (2016) Microeconomics. USA: Cengage Learning Australia.
Brux, J.M. (2015) Economic issues and policy. USA: Cengage Learning.
Komlos, J. (2014) What every economics student needs to know and doesn't get in the usual
principles text. New York: ME Sharpe.
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Appendices
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