South Korea & Vietnam: A Macro Environmental Comparative Report

This report presents a comparative analysis of the macro environmental factors influencing business operations in South Korea and Vietnam. Utilizing a weighted scoring system, the analysis evaluates political, economic, social, technological, legal, and environmental (PESTLE) factors in both countries. The findings indicate that while South Korea boasts technological advancements and higher GDP per capita, it faces challenges such as rigid regulations, strong competition, and high labor costs. Vietnam, on the other hand, presents opportunities with its stable political environment, developing economy, lower unemployment rate, and increasing IT infrastructure. The report concludes that Vietnam may be a more attractive market for Cows & Co. due to its growth potential and favorable conditions, despite its lower GDP and some human rights concerns. Desklib offers this assignment as a resource for students studying business development and international market analysis, providing access to a wide range of solved assignments and past papers.

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
Challenging
Regulations
3.5 [A] 3x2 = 6 3.3 [A] 3x1 = 3
Settling disputes 4.1 [B] 2x2 = 4 3.3 [B] 2x1 = 2
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 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. An
increase in competitors may affect the market’s expansion objectives of a concerned business
located in the South Korean markets. An article states that smooth functioning of the business
might be interrupted by the threat that competitors impose which could have a direct impact on
the business expansion plan (Thi Hong Nguyen, Wood and Wrigley, 2013). On the other hand,
the unstable political environment might bring forth changes in the legislation, which might
affect the operations of the business undertaking.
However, Vietnam is governed by the communist party, which has helped in stabilizing
the political environment in the nature. On the contrary, degradation of human rights in the

nation has affected the livelihood of the people as well as the businesses in the nation. Khan
mentions the stability in the governance and political scenario helps an organization in
empowering a smooth functioning of the processes (Khan, 2013). As trade tariffs are minimized
in the nation, organizations will continue to expand vastly. The delineation of the diverse
regulations and the flexibility of the matching regulations aids an organization in supporting the
efficiency of operations in a market that requires sustenance. The state of political stability of the
nation helps the Cows & Co. in holding positive relations with different government
stakeholders. Collaborative functioning with the government stakeholders will help Cows & Co.
in supporting the processes as per needs of the same. Rowley claims that collaborative
functioning of the business with government stakeholders helps the same in upholding the
efficiency of the operations as per the needs of the same (Rowley, 2013).
Economic
The GDP of South Korea per capita was 39,5000$ computed in the year 2017 (Refer to
table). 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. This might challenge the capabilities of the Cows
& Co. to expand in the South Korean markets. Import tariffs and restrictions are regulated by the
nation to minimize the volume of imports in South Korea 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. However, an increase in the rate of unemployment in
the South Korean economy has affected the potentiality of most of the customers. It has been
reported that 14.4% (Refer to table) 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 labor force might affect the capabilities of the organization through
enhancement in the operating expenses. (Refer to table)
On the other hand, the GDP of Vietnam was 6,900$ as was computed in the year 2017
(Refer to table). 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 help
Cows & Co. in following a steady expansion policy. One of the major opportunities that is faced
by Cows & Co. is dependent on the fact that Vietnam is one of the transpiring 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 aim 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%,
which is lower than that of South Korean markets (Refer to table). This will assist Cows & Co. in
finding potential customers in Vietnam over South Korean markets. An article states 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 (Hewison and Kalleberg, 2013). 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 employment
opportunities will provide support to the business to maintain the efficacy of operations through
better demand.

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. It provides Cows &Co. with an ample scope of expanding in the
South Korean markets. However, the enhanced competitiveness in the markets might have an
impact on the smooth functioning of the concerned business as per the objectives of sustainable
growth. Research shows 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 Cows & Co. while holding their expansion proposition to the
government of South Korea.
Vietnam has an ample amount of labor force amounting to 54.8 million, which will be
helping the concerned business in allocating cheap labors to the processes that are designed by
the venture (Refer to table). On the other hand, the increasing demand of fresh milk in the
country will be aiding Cows & Co. to support the goal of expansion in the markets. Higher rate
of malnourished children in Vietnam 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 Cows & Co. 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 South Korean markets
will improve Cows & Co. maintaining the efficacy of marketing propositions as per the needs of
buyers. On the other hand, it has been reported that 95% of total mobile utilizing citizens
depends on internet services (Refer to table). 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. It may
influence the smooth functioning of Cows & Co. while adhering to the different changes to
organizational design. The rigid regulations and frameworks that are imposed by South Korean
Government relating to the utilization of technology by the expanding organizations might affect
the capabilities of Cows & Co. whilst producing an expansion in South Korean markets.
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 states in a report that 20% of the
internet users in Vietnam utilizes online shopping sites (Khan, 2013). 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 named “Improvement of computer usage and public
Internet access ability in Vietnam”. It will ensure the developments in the IT systems, which may

provide help to Cows & Co in maintaining the efficacy of the operations as per the needs of the
business expansion. According to research, the rapid growth of the IT systems in the nation aids
an organization to maintain efficacy of the marketing initiatives leading to expansion of the same
(Rowley, 2013). 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 have a direct impact to the smooth functioning of Cows & Co. as per
the needs of supporting sustainability as they already have a high CO2 emission of 778.4 Mt
(Refer to table)
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 Cows &

Co. 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 stated that the
regulatory incentives help an international organization in maintaining their efficacy while
operating in different economies (Dang, 2016). 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. Research shows that government regulated price
systems often affects organizational pricing structures (Grafton et al., 2019). The different
changes in the government’s rigid pricing structure might affect the interests of Cows & Co.
while making business in the nation. Kerkvliet states that the concern of most governments is
dependent on the wellbeing of people rather than the profitability of business firms (Kerkvliet,
2018). In this relation, the enumeration of the pricing structure by the government might bind the
activities relating to profitability and expansion of Cows & Co. while operating in the South
Korean markets. The imposition of the rigid regulatory system by the South Korean government
might influence the smooth functioning of Cows & Co. as per the objectives of the business.
However, the legal environment of Vietnam is rather complicated than South Korea.
Research shows, that the legal framework that is followed by Vietnamese government is

inconsistent and lacks transparency (Lai and Nguyen, 2017). It might affect the organizational
understanding of the regulations. However, the efficacy of the expansion procedure within the
organization will improve by the reduction in trade tariffs and barriers. Leniency of trade tariffs
and 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 Cows & Co. 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 Cows & Co with a strong and developing economic situation, 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 PESTLE. The better