P&G Expansion: A Comparative Analysis of Argentina & Vietnam Markets

This report analyzes the entrepreneurial opportunities for a consumer goods manufacturing company, Procter & Gamble (P&G), in Argentina and Vietnam. It compares and contrasts the ease of doing business in both countries, drawing from the World Bank's 'Doing Business 2018 Reports,' and examines fluctuations in macroeconomic indicators such as growth, inflation, and unemployment rates over the last three years, using data from the IMF database. The report highlights Vietnam's stable economic growth, young population, and favorable FDI flows due to the Trans-Pacific Partnership (TPP), while also noting challenges in obtaining bank loans for new businesses. Argentina is presented as a potential entry point into Mercosur, offering tax incentives and access to a large market, but also facing difficulties in enforcing contracts and accessing credit. The report concludes by discussing the implications of these factors for P&G's potential expansion into these emerging markets.

Running head: EMERGING ECONOMY ENTERPRISE
EMERGING ECONOMY ENTERPRISE
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Comparison and Contrast of the entrepreneurial opportunities in Argentina vs Vietnam..............2
Differences and similarities of ease of doing business in these two countries................................3
Fluctuations in the macroeconomic indicators of these countries for the last three years...............6
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
The present report focuses on a consumer goods manufacturing company planning to
expand its business in the new destinations. The company that is selected for this study is Procter
&Gamble (P&G). The two new destinations this enterprise is planning to expand its business are
Argentina and Vietnam. P&G is one of the biggest multinational consumer goods enterprise
headquartered in US. This company primarily specializes in huge range of personal care,
hygienic products and cleaning agents products. It is one of the leading companies in the
consumer product industry and directly competes with another leading global player ‘Unilever’.
This enterprise mission is to provide branded goods and services of high quality in order to
improve the lives of customers of all generations. Their vision is to be identified as one of the
best consumer goods and services enterprise around the globe. This report provides this
enterprise a clear idea about the entrepreneurial opportunities in Argentina and Vietnam. The
differences as well as similarities of ease of doing business in these two nations are also
highlighted in this report. The fluctuations in the macroeconomic indicators including growth
rate, inflation rate and unemployment rate of these two countries for the past few years is also
discussed in this study, as these are factors that might influence this enterprise in doing business.
Comparison and Contrast of the entrepreneurial opportunities in Argentina vs Vietnam
For the past few years, Vietnam has seen stable economic growth, averaging by near
about 6.15% each year. Vietnams’s population is another factor in the nation’s economic growth.
Around 70% of the total population is younger generations who are internationally minded and
highly ambitious. They usually take ideas from other nations and try to adopt them that is
suitable to Vietnamese market. This nation signing of TPP (Trans Pacific Partnership) with many
neighboring countries has also enhanced the FDI (Foreign Direct Investment) Flows in this
nation (Corcoran and Gillanders 2012) This in turn made this nation highly attractive mainly for
the new investors to enter this nation for making investments in business whilst facilitating the
existing enterprises to raise their vertical integration by taking benefit of this TPP rules on the
sourcing materials. Starting a new business in this nation is comparatively simple with respect to
other countries. The regulation in this nation constantly changes, which in turn makes easier for
the business to enter. Although this nation has minimum wage laws as well as strict policies of

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security, labor is cheap and hence hiring staffs is relatively easier. The government of this nation
has the main agenda of improving capabilities in business. Although the bank loans in this
country for the new businesses are challenging to obtain, banks prefer to lend money to the
established businesses that offers higher security as well as collateral. However, P&G enterprise
will not face any difficulty in acquiring any bank loans in this nation. Establishing this
company’s brand will be a discrete advantage in this country. The main reason behind this is that
Vietnamese using social media makes it highly affordable as well as attractive option of
increasing brand recognition and market penetration. Overall, it can be noted that this country is
suitable for the business since it offers several entrepreneurial opportunities.
Argentina also offers several opportunities to the business owners planning to start-up or
expanding their business to this nation (Kelly, Simmons and Doshi 2016). For the past few years,
the emerging markets have been attaining inspiration mainly for their entrepreneurial laws,
which has been increasingly credited as prime framework of successful intervention of the
government in the venture capital. Even the new business law in this nation consists of several
measures that are aimed at enhancing entrepreneurial as well as investment activity in this nation
by providing new financing channels, attractive new incentives and tax breaks to those interested
in making investment in the business. This nation provides tax incentives for the investors who
are willing to invest in business. This in turn attracts large number of investors to make their
investment in the businesses of this nation. Also, the corporate tax is lower in this country
compared to other nations. Moreover, this nation has been considered as the best entry point in
Mercosur, which us mainly a common market comprised of several nations such as Chile,
Uruguay, Peru Bolavia and Paraguay. Through Mercosur, this nation provides high accessibility
to the market of more than 226 million inhabitants. In addition to this, both the non tariff as well
as tariff restrictions between the member countries is convenient. This in turn creates free
movement of services and capital within the country. However, it is evident from the above
mentioned facts that Argentina will be the suitable place for doing business in this nation.
Differences and similarities of ease of doing business in these two countries
Vietnam has been ranked 68th amongst the 190 economies according to the latest World
Bank data on ease of doing business. This country has been ranked fifth amongst the ASEAN

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nations. Recent studies reflects that there has been considerable improvements in this nation in
certain areas , which includes- accessibility to credit, enforcement of contracts, paying taxes,
trading and so on (Ani 2015). Accessibility to credit has been strengthened by implementation of
new civil code , which in turn widens the scope of the assets utilized as collateral. Paying taxes
has become easier with abolishment of mandatory 12 month carry forward period for VAT
( Value added tax)credit. Furthermore, import as well as export procedures has been made easier
with up gradation of automated system of cargo clearance and enhancing operating hours of
customs department. This in turn has lead to less customs clearance times as well as more
transparency in the process of customs. Another vital improvement that has occurred in the ease
of doing business is that enforcing contract has been made easier with adoption of new civil code
procedure and new law on the voluntary mediation (Jovanovic and Jovanovic 2013). However,
this nation has improved significantly in the ease of doing business over the last few years. The
figure below reflects that the ease of doing business in this nation averaged to around 90.30 from
2008 to 2017, thereby reaching the highest at 99 in the year 2013 and lowest at 68 in the year
2017.
Figure 1: Ease of doing business in Vietnam
Source: (tradingeconomics.com 2018)
Argentina has been ranked 117 among the 190 nations regarding ease of doing business
according to latest ratings of World Bank. Argentina has also made trading easier across borders

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by introducing new licensing system mainly for importing , which in turn decreased the time
needed for the documentary compliance (Cavusgil, Ghauri and Akcal 2012). Similar to Vietnam,
Argentina also lowered the cost of paying taxes by enhancing the threshold by about 5%
turnover tax. Additionally, this nation has also made the paying taxes much easier by improving
online portal for tax filing. But this nation has made enforcement of contract for transferring
property difficult by adding requirement that notary obtains reference of tax agency for the
property before making the deed of sale. Even the accessibility to credit is also difficult in this
nation with respect to other developing nations. The figure below highlights that the ease of
doing business in this nation averaged to around 117 from the year 2008 until 2017, reaching the
highest at 124 in the year 2013 and lowest in the year 2008.
Figure 2: Ease of doing business in Argentina
Source: (tradingeconomics.com 2018)
The similarity of ease of doing business between these two nations is their rules for
paying of taxes and trading across the borders. Both these nations have improved the policies of
these two areas in order to bring about reforms in doing business (Corcoran. and Gillanders
2012). On the contrary, the difference between these two nations regarding ease of doing
business lies in their enforcement of contract and accessibility to credit. However, Vietnam has
made improvement in these two areas but Argentina has made no reforms in it.

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Fluctuations in the macroeconomic indicators of these countries for the last three years
Macroeconomic indicators basically highlights on the state as well as efficiency of the
particular economy. The fluctuations in the macroeconomic indicators including economic
growth, inflation and unemployment rate of these two nations are explained below:
Argentina economic growth-According to IMF (International Monetary Fund) database,
this nation has experienced increase in growth rate of about 2.7% in the year 2017 after negative
growth for the last two years (Bloom 2014). The IMF has projected high economic growth this
year. Moreover, this nation has been recovering its credibility and hence leading to an attractive
economy mainly for the investors. As the private investment has been increasing, it shows
positive signs in business growth. The government of this nation has also been planning to make
higher investment in the infrastructure over the past three years. The figure below reflects on the
GDP growth rate, which also measures the economic growth rate of this nation.
Figure 3; GDP growth rate in Argentina
Source: (tradingeconomics.com 2018)
Inflation rate in Argentina- The inflation rate indicates percentage change in the level of price.
According to the data provided by IMF, it reflects that this nation has stable inflation rate over
the past three years. The inflation rate recorded at 25.60% in the year 2018. However, it is
predicted by the IMF that high rate of inflation might restrict the business from entering this
nation. Moreover, it might lead to decrease in people real income and increase in cost of
borrowing for the businesses.

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Figure 4: Inflation rate in Argentina
Source; (tradingeconomics.com 2018)
Unemployment rate in Argentina- Unemployment rate signifies total number of unemployed
individuals with respect to total laborforce (Morrison 2012). The database of IMF shows that
unemployment rate in this nation has been decreasing for the past three years although it has
been higher than other developing nations. However, this might improve the Argentina’s
economic condition this year and hence it is predicted that P&G planning to enter this economy
will achieve success in its business.
Figure 5: Unemployment rate in Argentina
Source; (trading economics.com 2018)

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Vietnam economic growth-According to IMF databases, the economic growth rate of this
nation has been stable for the past three years. The growth rate measured in terms of GDP
reflects that good health of the economy. Moreover, this indicator also attracts new investor for
making their investment in business. Hence, this will provide this enterprise (P&G)huge
opportunity in doing business in this nation.
Figure 6: GDP growth rate of Vietnam
Source: (tradingeconomics.com 2018)
\Vietnam inflation rate- The IMF database also reflects that the rate of inflation in this country
has been decreasing over the past few years. Although it showed slight fluctuation in the recent
years, the inflation rate in this nation has been stable over the years (Weale et al. 2015).
However, low inflation rate has been encouraging saving, investment and also aids in
maintaining international competitiveness. Hence, this will benefit P&G for doing business in
this nation.

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Figure 7: Inflation rate in Vietnam
Source/; (tradingeconomics.com 2018)
Vietnam unemployment rate- The IMF database reflects that the unemployment rate of this
nation has been continuously decreasing over the past three years. But it highlights that there has
been slight fluctuations in unemployment rate in this nation. However, P&G entering this nation
might face shortage of labor owing to doing business in this nation.
Figure 8: Unemployment rate in Vietnam
Source: ( tradingeconomics.com 2018)

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Conclusion
From the above report, it can be concluded that both Argentina and Vietnam are the
suitable nation regarding ease of doing business. Moreover, it is predicted P&G will achieve
success in doing business in this nation. All the above macroeconomic indicators also reflects
that both these nations have reformed their policies in different areas in order to improve their
economic condition. Also, the ,macroeconomic indicators highlights that the health of these two
economies have improved from the past three years, which in turn will help P&G to avoid
challenges as well as risk of doing business in these nations. Moreover, it is recommended the
management of the company must adopt effective strategy before entering these new
destinations.

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References
Ani, T.G., 2015. Effect of Ease of Doing Business to Economic Growth Among Selected
Countries in Asia. Asia Pacific Journal of Multidisciplinary Research, 3(5), pp.139-145.
Bloom, N., 2014. Fluctuations in uncertainty. Journal of Economic Perspectives, 28(2), pp.153-
76.
Cavusgil, S.T., Ghauri, P.N. and Akcal, A.A., 2012. Doing business in emerging markets. Sage.
Corcoran, A. and Gillanders, R., 2012. Foreign direct investment and the ease of doing business.
Jovanovic, B. and Jovanovic, B., 2013. Ease of doing business and investment in Eastern Europe
and Central Asia. Recuperado de http://www. doingbusiness.
org/special-features/conference/~/media/GIAWB/Doing%
20Business/Documents/Miscellaneous/Conference2014/S7-3. pdf.
Kelly, J., Simmons, B. and Doshi, R., 2016, September. The power of ranking: the ease of doing
business indicator as a form of social pressure. In Annual Meeting of the American Political
Science Association Mini-Conference on Assessment Power in World Politics, Philadelphia,
PA (Vol. 2).
Morrison, C.J., 2012. A microeconomic approach to the measurement of economic performance:
Productivity growth, capacity utilization, and related performance indicators. Springer Science
& Business Media.
Tradingeconomics.com. (2018). Argentina Inflation Rate | 1944-2018 | Data | Chart | Calendar |
Forecast. [online] Available at: https://tradingeconomics.com/argentina/inflation-cpi [Accessed
21 Apr. 2018].
Tradingeconomics.com. (2018). Argentina Unemployment Rate | 2002-2018 | Data | Chart |
Calendar. [online] Available at: https://tradingeconomics.com/argentina/unemployment-rate
[Accessed 21 Apr. 2018].