Macro-Environmental Analysis of South Korea and Vietnam Markets

This report undertakes a comprehensive comparative analysis of the macroeconomic environments of South Korea and Vietnam, focusing on factors relevant to business development and market expansion. The analysis is structured around two primary tasks. Task 1 involves a quantitative assessment, using a weighted scoring system to evaluate political, economic, technological, legal, social, and environmental factors for each country. Data includes metrics such as corruption scores, political stability, GDP per capita, GDP growth, unemployment rates, internet usage, and mobile network coverage. Task 2 provides a critical evaluation of the comparative data, delving into the implications of these factors. It examines political stability, economic indicators, social dynamics, and technological advancements, assessing their potential impact on business operations and expansion strategies. The report concludes with recommendations for business expansion based on the comparative analysis, emphasizing the strengths and weaknesses of each market. The report also considers the dairy industry in particular.

Task 1 – Macro environmental factors comparative data of South Korea & Vietnam
Weightage system of numerical values of 1 least attractive & 2 most attractive based on number
of factors for each.
Political Factors South Korea Country Score Vietnam Country Score
Corruption Score
(Transparency
Index, 2017)
54 [E] 4x2 =8 35 [E] 4x1 = 4
Political Stability 0.29 [A] 3x1 = 3 0.31 [B] 3x2 = 6
Government
Effectiveness
1.08 [D] 2x2 = 4 0.01 [C] 2x1 = 2
Political Risk 1.0 [F] 2x1 = 2 4.0 [G] 1x1 = 1
Political
Subtotal
27/20 13/20
Economic
Factors
South Korea Country Score Vietnam Country Score
GDP per Capita 39,500 $ [A] 2x2 = 4 6,900 $ [C] 1 x2 = 2
GDP Real
Growth Rate
3.1% [A] 5x1 = 5 6.8% [C] 5x2 = 10
Unemployment
Rate
3.7% [A] 4x1 = 4 2.2% [C] 4x2 = 8
Poverty Line 14.4% [A] 3x1 = 3 8% [C] 3x2 = 6
Labor Cost 7.43$ [B] 1x1 = 1 0.18$ [D] 2x1 = 2

Economic
Subtotal
17/30 28/30
Technological
Factors
South Korea Country Score Vietnam Country Score
Internet Usage 95.1 [A] 3x2 = 6 46.5 [B] 3x1 = 3
Mobile Network
Coverage
99.90 [C] 2x1 = 2 70 [D] 2x2 = 4
Capacity for
Innovation
56.60 [E] 4x2 = 8 37.90 [F] 4x1 = 4
R&D
Expenditure
4.23 [G] 2x1 = 2 0.37[H] 1x1 = 1
Technological
Subtotal
18/20 12/20
Legal Factors South Korea Country Score Vietnam Country Score
Efficiency of
Legal Framework
in challenging
regulations
3.5 [A] 3x2 = 6 3.3 [A] 3x1 = 3
Efficiency of
Legal Framework
in settling
4.1 [B] 2x2 = 4 3.3 [B] 2x1 = 2

disputes
Foreign
Investments
1.11 [C] 1x1 = 1 6.3 [D] 1x2 = 2
Legal Subtotal 11/12 7/12
Social Factors South Korea Country Score Vietnam Country Score
Population 51.4 Million [A] 3x1 = 3 97 Million [B] 3x2 = 6
Population
Growth
0.44% [A] 1x2 = 2 0.9% [B] 1x1 = 1
Labor Force 27.75 Million [A] 2x1 = 2 54.8 Million [B] 2x2 = 4
Social Subtotal 7/12 11/12
Environmental
Factors
South Korea Country Score Vietnam Country Score
CO2 Emissions 778.4 [A] 1x1 = 1 235.3 [B] 1x2 = 2
Energy Use 5413.35 [C] 2x1 = 2 654.96 [D] 2x2 = 4
Livestock
Production
117.8 [E] 3x1 = 3 151.4 [F] 3x2 = 6
Agriculture Land 17008 [G] 4x1 = 4 121780 [H] 4x2 = 8
Environmental
Subtotal
10/20 20/20

Overview of comparative data & attractiveness score
Factor South Korea Vietnam
Political 27 13
Economic 17 28
Technological 18 12
Legal 11 7
Social 7 11
Environmental 10 20
Total 90/114 (Least Attractive) 91/114 (More Attractive)
Task 2 - Critical evaluation of the comparative data
Political
The high military influence in South Korea might result in interrupting the functioning
processes that are planned by the business. Unstable political situations are dependent on the
intervention of the military forces, which adversely affects the capabilities of business
organizations. The rigid regulations and the unstable business environment might affect the
operations of Cows and Co. On the other hand, it was found during the macro-environmental
analysis that the South Korean market includes the Dairy industry as one of the profitable
ventures in the market. Therefore, the expansion in the South Korean market would result to a
huge number of competitors. Maximum level of competitors in the market might affect the
expansion objectives of the concerned business in the South Korean markets. (Thi Hong Nguyen,
Wood and Wrigley, 2013) Stated that the enhanced threat of competitors in the market might

affect the smooth functioning of the business, which would restrict the business expansion. On
the other hand, the unstable political environment might bring forth changes in the legislation,
which might affect the operations of the business undertaking.
On the other hand, Vietnam is governed by the communist party, which has helped in
stabilizing the political environment in the nature. However, the degradation of human rights in
the nation has affected the livelihood of the people and businesses in the nation. (Khan, 2013)
stability in the governance and political scenario helps an organization in empowering the
smooth functioning of the processes. The minimization of trade tariffs will be helping the
organization in making an expansion in the nation. The delineation of the different regulations
and the flexibility of the same helps an organization in supporting the efficiency of the
operations as per the needs of sustenance in the market. The stable political situation of the
nation will be helping the organization in holding positive relation with the different government
stakeholders. Collaborative functioning with the government stakeholders will be helping the
organization in supporting the processes as per the needs of the same. (Rowley, 2013) stated that
the collaborative functioning of the business with the government stakeholders helps the same in
upholding the efficiency of the operations as per the needs of the same. Therefore, as per the
comparative study of the political situations in South Korea and Vietnam, the organization must
take steps to make an expansion in Vietnam for working on the profitability and smooth
functioning initiative.
Economic
The GDP of South Korea per capita was 39,5000$ computed in the year 2017 (CIA,
2017). On the other hand, the potentiality of the dairy firms in the market might help the
concerned organization in undertaking an expansion. However, the nation facilitates a lower rate

of imports as compared to the other countries. It might challenge the capabilities of the
concerned organization in making an expansion in the South Korean markets. The import tariffs
and restrictions are regulated by the nation to minimize the volume of imports in the nation from
the other countries. The lower receptive nature of the economy might affect the organizational
operations while making an expansion in the South Korean economy. On the other hand, the
increased rate of employment in the South Korean economy has affected the potentiality of most
of the customers. It has been reported that 14.4% (CIA, 2017) of the total South Korean
population is below the poverty line, which has affected the affordability of the same to the
product and service offerings. The enhanced cost of labour force might affect the capabilities of
the organization through enhancement in the operating expenses.
On the other hand, the GDP of Vietnam was 6,900$ as was computed in the year 2017
(CIA, 2017). The lower GDP of the nation might affect the organizational expansion in the
Vietnamese markets. However, the higher potential of dairy industry in the nation will be helping
the organization in following a steady expansion policy. One of the major opportunities that is
faced by the concerned organization is dependent on the fact that Vietnam is one of the emerging
nations in East Asia. The organization can prosper in the developing nation through minimal
trade tariffs and restrictions. (Edwards and Phan, 2013) stated that most of the organizations aims
at expanding their activities in the developing nations to support the flexible functioning of the
same as per the market demand. On the other hand, the rate of unemployment in Vietnamese
market is 2.2%, (CIA, 2017) which is lower than that of South Korean markets. It will be helping
the organization in finding potential customers in Vietnam over the South Korean markets.
(Hewison and Kalleberg, 2013) stated that the development of organizations is dependent on the
identification of the minimum rate of unemployment as it helps in supporting the organizational

operations through the supply of potential customers. Higher employability of the people in
Vietnam has helped in enhancing their livelihood. Moreover, Vietnam constitutes of a lower-
middle income group, which is developing. Therefore, the developments in the employment
opportunities will be helping the business in maintaining the efficacy of the operations through
better demand. Therefore, the organization must take steps to expands their venture in the
Vietnamese markets to facilitate the smooth functioning of the systems with diverse economic
capabilities.
Social
The total production of raw milk in South Korea was KRW 2.2 trillion computed in the
year 2016 (Do, Oh & Lee, 2014). On the other hand, the nation ranks 3rd in the context of dairy
and food processing industry. The production of milk in the nation contributes to the total GDP
of the agricultural sector by 3.6%. It provides the organization with an ample scope of expanding
in the South Korean markets. However, the enhanced competitiveness in the markets might
affect the smooth functioning of the concerned business as per the objectives of sustainable
growth. In a research, it has been reported that the South Korean consumers are more loyal to the
organizational offerings of their own nation. Therefore, there is minimum scope for the
organization in coping up with the competition in the South Korean markets. The nation itself
contributes to the food and agricultural production in a vast quantity. Therefore, the nation
restricts the expansion or import of agricultural or dairy products from the other countries. It
might affect the interests of the concerned business while holding their expansion proposition to
the government of South Korea.
Vietnam has an ample amount of labour force amounting to 54.8 million, which will be
helping the concerned business in allocating cheap labours to the processes that are designed by

the venture (CIA, 2017). On the other hand, the increasing demand of fresh milk in the nation
will be helping the concerned organization in supporting the goal of expansion in the markets.
The higher rate of malnourished children in the nation will be helping the organization in placing
their product offerings and market the same more efficiently. The lower availability and
processing of milk in the nation, which is indicated through the lower consumption of the same
will be helping the organization in increasing the sales volume. Therefore, it will be helping the
concerned organization in enhancing the sales volume through the higher demand that will be
faced by the same. Most of the potential customers are aware of the benefits that might be
derived from the milk. Therefore, the Vietnamese market provides the organization with a higher
scope of expansion for supporting the enhanced profitability of the same.
Technological
The enhanced utilization of broadband and internet penetration in the South Korean
markets will be helping the concerned organization in maintaining the efficacy of the marketing
propositions as per the needs of the buyers. On the other hand, it has been reported that 95% of
the total mobile utilizing population depends on the internet services (The Global Economy,
2017). It will be helping the organization in undertaking digital and social media promotional
activities. The government of South Korea also introduced milking robots for supporting the
dairy production related farmers. It has helped the nation in making aggressive progression in
enhancing the milk processing and producing capabilities. On the other hand, the existing players
in the market have enhanced the rate of competition in the market. It might affect the smooth
functioning of the concerned organization while adhering to the different changes in the
organizational design. The rigid regulations and frameworks that are imposed by the South
Korean Government relating to the utilization of technology by the expanding organizations

might affect the capabilities of the concerned organization while making an expansion in the
South Korean markets.
The emergence of IT systems in Vietnam has helped the same in maintaining the pace of
development. The nation ranks 18th among the world for the maximum number of customers
indulged in internet operations. On the other hand, (Khan, 2013) stated in a report that 20% of
the internet users in Vietnam utilizes online shopping sites. It has also enhanced the scope of the
concerned organization in making a huge expansion in the Vietnamese markets. The Vietnamese
government approved a project “Improvement of computer usage and public Internet access
ability in Vietnam”. It will ensure the developments in the IT systems, which will be helping
Cows & Co in maintaining the efficacy of the operations as per the needs of the business
expansion. (Rowley, 2013) stated that the rapid growth of the IT systems in the nation helps an
organization in maintaining the efficacy of the marketing initiatives leading to expansion of the
same. On the other hand, the increased dependency of the nation on the agricultural imports, like
milk, from the different nations will be supporting the objectives of the concerned organization
in making a wide expansion in the markets.
Environmental
The South Korean government intervenes in the different environmental protection and
controlling the high level of emissions. (Hoadley, 2017) stated that the environmental policies
that are designed by the governments helps in maintaining the efficacy of the environmental
protection activities. The dairy firms release significant amount of impurities in the environment
that might be toxic in nature. Therefore, the environmental protection agencies and the
government formulated and imposed different regulations for controlling the release of toxic
wastes in the environment. The rigid policies and regulations that are framed by the South

Korean government might affect the smooth functioning of the concerned organization as per the
needs of supporting sustainability as they already have a high CO2 emission of 778.4 Mt (CIA,
2017)
On the other hand, Vietnam has a tropical monsoon climate, which challenges the
production of milk as the cows produce milk at the range of 5 to 21°C temperature (Aspalter,
2017). The different impurities that are released through the milk processing activities might
affect the health and wellbeing of the people. Therefore, the Vietnamese government has taken
steps to implement strict quality standards. The enforcement of the quality standards and the
regulation relating to the installation of filters might increase the operational cost of the
concerned organization. The increased operational cost will reflect on the pricing structure that is
followed by the organization. The enhanced price of the commodities will be affecting the rate of
sales volume as the lower-middle income group will not be able to afford the high-priced
commodities. The implementation of the different control and quality mechanisms will also
affect the organizational capabilities of retaining the potential customer base. On the other hand,
the natural disasters like Hurricanes and storms challenge the smooth functioning of the dairy
farms.
Legal
The South Korean government leveraged several regulatory incentives to attract different
international firms to make foreign investments on the different sectors. (Dang, 2016) stated that
the regulatory incentives help an international organization in maintaining their efficacy while
operating in different economies. However, separate milk pricing system that is introduced by
the South Korean government will be aiming at supporting the increasing needs of communities
to consume milk at a lower price. (Grafton et al., 2019) stated that the government regulated

price systems often affects the organizational pricing structures. The different changes in the
government’s rigid pricing structure might affect the interests of the concerned organization
while making business in the nation. (Kerkvliet, 2018) stated that the concern of most of the
governments are dependent on the wellbeing of the people rather than the profitability of the
business firms. In this relation, the enumeration of the pricing structure by the government might
bind the activities relating to profitability and expansion of the concerned organization while
operating in the South Korean markets. The imposition of the rigid regulatory system by the
South Korean government might affect the smooth functioning of the concerned organization as
per the objectives of the business.
On the other hand, the legal environment of Vietnam is rather complicated than South
Korea. (Lai and Nguyen, 2017) stated in a research that the legal framework that is followed by
the Vietnamese government is inconsistent and lacks transparency. It might affect the
organizational understanding of the regulations. However, the reduction in the trade tariffs and
barriers will be helping the organization in maintaining the efficacy of the expansion procedure.
The leniency of the trade tariffs and the barriers has helped the organization in supporting the
market entry of the same in the Vietnamese markets. On the other hand, the government agencies
support the growth of the new entrants in the market. The major factors that has been considered
by the Vietnamese government is based on the needs of the nation in importing milk/cheese from
the other nations. Therefore, the Vietnamese government has taken steps to reduce the tax and
business tariffs relating to the milk trade with the foreign companies. It will be providing the
concerned organization with an opportunity of making an expansion to the Vietnamese markets
as per the rising demand for fresh milk.

Recommendations for expanding in a market
Therefore, from the above comparative assessment it might be stated that the Cows & Co.
must take steps to expand in Vietnamese markets as it provides lesser trade tariffs and will
provide the organization with a stable political situation. On the other hand, the ample amount of
workforce will be assisting the business in facilitating the smooth functioning of the systems as
per the concerns faced by the business. The major benefit that the organization will derive from
the expansion in the Vietnamese markets is dependent on the high market demand that will be
faced by the same, which will increase the rate of profitability.
Task 3 – Critical Reflection
The comparative assessment of the different macro environments and market structures
help an organization in identifying the threats and opportunities relating to political, economic or
technological elements. The better identification of the different macro- environmental factors
and comparison of the same between the different markets helps an organization in facilitating
profitability through market entry. Benjamin, Brandt & McCaig (2017) stated that the study of
the macro environmental factors helps an organization in identifying the modifications that might
are undertaken by the same for sustainable growth. On the other hand, Langham and Parry
(2017) noted that the comparative study of the macro environmental factors helps an
organization in understanding the legal constrains that might be encountered by the same while
operating in economies.
The political factors in the macro environmental analysis helps an organization in
identifying the political situation of the nation and the trade tariffs that might be faced by the
same while making an expansion. Again, study of the economic situation of the nation helps an