Macoys is a Frozen Food Supplier who supply frozen cooked meals including rice, pasta and pizza, frozen French fries, and frozen cut vegetables in their product portfolio. They like to expand their market in to another Asian country. Now they want to know which Asian country is most suitable for their business. If they select a country before that they should make some analyzes like SWOT analyze, PEST analyze and etc.Here, I mentioned the PEST analyze for two Asian countries such as India and China. First we should know that what PEST analysis is. The dimension of the PEST analysis model shows the political, economic, socio-cultural and technological factors analyzing. Identifying PEST influences is a useful way of summarizing the external environment in which a business operates.
Political factors explain that how political situation of a country affect a business environment. In our case, we should analyze the political situation of India and China. It includes new taxes, policy changes, and stability of governments, political unrest and government regulations.
In India, policy changes, instability of governments and government regulations are the political factors which decided the entering of new company in the business market. There is no strongly decided policy in India. When government changes time to time, policy also change according to the government’s preference. Sometimes government suddenly ban some export import items. This will be a limitation to the business. The west is looking towards Asia for new markets and at the same time Indian government also accepts the foreign investment. This is a chance to easily enter in India.
In China, unchanged political policies, stability of governments and best government regulations are the political factors which decided the entering of new company in the business market. China has sustainable policies in their growth and never change due to government change. There is no fluctuation in their political situation. It will not affect the import export policies. So if the company enters in China, it never faces political problems there.
Economic factors are concerned with inflation rate, exchange rate, interest rate, economic growth and changes in consumer spending pattern.
In India, changes in consumer spending pattern are the most powerful economic factor which accepts the frozen foods in the Indian markets. Inflation rate also affect the business in India. Compare to 2012(10%), in 2017 (around 4.95%) inflation rate is decreasing in India. Business people have difficulties to earn gain during periods of decreasing prices. When prices are reducing, the value of their inventories will decrease in the same proportion. So it is not a good situation to enter in Indian market. The economic growth also decided the economic situation of business. GDP of India in 2015 (around 8.6%) is decreased up to (2017) around 6.74%. it tells that the decreasing economic growth rate is not more much affect entering the new business in Indian market. But if the government put some regulation to avoid foreign investment and increase local production, it will affect the frozen supplier entering into India. Economically India has more labor force. If Macoy’s enter in the Indian market it can easily get labors.
A booming Chinese economy which has a consumer base of 10 million and with a market for processed food has created opportunities for global food processors. This is a good chance to entering in the china market. Inflation rate has the decreasing trend compare with 2012(2.65%) and 2017(2.2%). But after 2015 it has an increasing trend. It is somewhat difficult to entering organization to get the profit. China is reporting its fastest economic growth in seven years, saying its gross domestic product grew by 6.8 percent in 2017. So it is bad situation to enter in Chinese market. But it reduced to 6.7% up to June of 2018. So, according to the work burdens of Chinese, mostly they prefer fast foods and frozen foods. So the consumer choice pattern also decided the new business into the markets. China has labor force with low cost. If Macoy’s enter in Chinese market, it can reduce its expenditure on labors.
The food habit of a country is mainly important factor to the companies who are trying to enter in those country business markets. The existing and acceptance of new tastes also decide the social factors to a newly entered business. The life style, education, social status and demographical factors are the deciding factors of newly entered businesses.
India has lots of demographical locations with different income classes, status, races, religions, and cultures and they have different life styles and educational level. Mostly city side people like frozen food items when village side people prepare themselves. Some religious people never take frozen food items against their religions. High income class people think that using fast food increase their status and they have the intention to change to this life style. Low income class people never like to buy fast food because of the expenditures on fast foods. Within races, some people never like some kind of frozen foods. The increasing of education level within people, educated people mostly involve in the more earning only, not for healthy food. So they mostly prefer fast foods and frozen foods.
The socio- cultural aspect plays a vital role as the demographics change. Family size is the well-known factor which decided the food preferences. In china the population is very high than other countries in the world. So the work burdens also high. If the people face work load they never like to prepare foods as their own. They mostly prefer fast foods and frozen foods. The literacy rate in China is over 90%. China emphasizes on education and majority of the nation are literate. The educated people consider only earning money. So they never like to spend the time on food preparation.
It is an important aspect which is vital to the business markets. Without technical factors, none of the company can alive in this competitive world. Influence on innovation of technology and the consumers’ awareness on the technology are factors which decided the state of technology in a particular country to attract new entrance to markets. Technology is necessary to create packaging, food labels, and the production of food.
When the Macoy’s enter into India, it will need more technology advancement. But in India it is somewhat difficult to get more developed technology. Indian technology fails to meet the micro- biological specifications. Indian labors also have not enough knowledge about the advance technology and machines.
China has more developed technology. So it is easy to Macoy’s to enter and establish its business in China. China improves its technology for every fields time to time. According to that, food process technology also has the more advancement. It is an opportunity to Macoy’s to enter and easily process its work in China.
After compare and contrast the two countries’ PEST analysis the company could know that which country is suitable for expanding its business. I think, China is best for expanding the business of Macoys’ in Asian countries.
China has unchanged political policies. When the government of china changes with uncertainty also the policies of china never change. China has the constant policies and their policy makers never support to changing government. So that policies are always constant.
The government of China never change suddenly. There is no chance to instable government. Stable government always have best regulations for its every sectors. So the china government regulations are good for Macoys’ expanding procedures in Asian countries.
So that, Political factors of china may allow the Macoys in expanding its business in China. In the economical view, the inflation rate of china had a decreasing trend up to 2015 and thereafter it has an increasing trend. In 2015 the rate is 1.44% and it increases up to 2% in 2017. The economists assume that it will go up in the following years. So there should be a positive chance to get more profit to Macoys by expanding its business in China.
Economic growth of China now has a decreasing trend because it was 6.8% in end of 2017 but it is 6.7% in the end of June 2018. This is somewhat positive to Macoys entry in China. The consumer choice pattern is an important factor that easily allow the new product or new company in the market. Due to the work burdens and job stress, most of the people prefer fast foods and frozen food items. Because they don’t have the time to prepare meals as their own.
And the labor cost in china also very low compare with India. The population of china is too high. So the labor cost is very low.
So, economic factors of China also have positive impact on new company entry in Chinese market. So Macoys can easily enter in china and can get profit more and more.
In the socio-cultural view, china has the highest amount of population in the world. So, it has different type of social classes who are following different cultural aspects. The average family size of china was 4.8 persons in 1982 and 3.1persons in 2016. It has a decreasing trends. So nowadays family size is very small and both father and mother have to go a job and they don’t have the time to cooking. So they mostly prefer fast foods and frozen food items. From 1982 to now, china has an increasing trend in literacy rate of both male and female. In the overall, 96% of Chinese has the education. The educated people have the intention to work hard and earn more. They don’t have the time to preparing meals. They mostly prefer fast foods. It is a good chance to Macoys to enter in china market. The people of china has a modern life styles based on their status. Mostly they prefer modern restaurants and fast food items. So the social factors of china also have positive impact on new company entry in Chinese market. So Macoys can easily enter in china and can get profit more and more.
In the technical aspects, china has more developed technology advancement in all fields. The food processing industry of china going more developed. As Asia’s first-choice event for food processing and packaging machinery ever since its establishment in 1989. Since that, up to now china develops its technology in food processing. So macoys can adapt new technology in china and if the company use Chinese technology within its boundary it leads to low cost. So Macoys can use the new technology with low cost. It is the most preferred chance to Macoys to expand its business in china. The people in china laso have the knowledge of new technology. So Macoys can get knowledgeable labors with low cost. The technical factor is mostly supporting to the Macoys expansion plan in china in many ways. As the conclusion, china is the best Asian country to Macoys expansion plan into Asia by supporting PEST analysis.