Task 1) Mc Donalds? PEST Analysis in emerging markets. E.g. Argentina
When we talk about Business Analysis, a usefull tool to understand how an organization operates is
the PEST Analysis, previosly knwon as ETPS Analysis according its author, Francis Aguilar, who in
1967 released the novel Scanning the Business Environment.
This is an analysis of the politcal, economic, social and technological factors in the external
environment of an organisation (Jurevicius, 2013) used to identify possible problems, needs,
failures as well as opportunities that might affect the companies.
What I?m proposed to achieve with this notes is a practical example of the possible external
influences that a hugh and well knwon company like Mc Donalds may have in a risky and volatile
environment like the emerging markets. In this case, the information was collected only for one
-Government inestability. Elections due in October 2019. Candidates haven?t presented a formal
proposal yet. High level of uncertainty
-High level of corruption: a) Lately ex-president Cristina Kirschner was involved in various
scandals and was called to defend herself in court.
Rumors confirmed she will be a next candidate.
b) Panama-Papers: many companies where involved in misconduct linked with some members of
-Tax policy: a) Since 01/01/2019 all companies who pays dividends and increase their shares need
b)Individuals must pay 10% of extra taxes due their revenues in stock market.
-Tarifs: Because of the high inflation (2018: 40% year-to-year), was settled that Utilities companies
-Education law: still good, with free university education.
-Data protection law: there?s no an explicit law who cares about specifications of the contents in the
– Growth Rates: Economists project -1,5% ungrowth
-Inflation: 2018: 40% year-to-year. 3 Months 2019: 7,5% accumulated.
-High level labor costs: unions are strong and aware about inflation. In average unions propose 35%
increase of the salary (negotiations still open)
-Unemployment: 2018: 10% (but great increase of public employment year-to-year 35%)
-Monetary Policy: higly restrictive. Interest rate average 58%.
-Downward stock market trend: S&P MERVAL -9,9% 2018
-High level of consumers? disposable income in sector Beverages and Foods
-High Education level in the main cities
-Possitive attitudes toward imported goods and services
-Lifestyle: Mc Donald is popular and conected with a sensation of happyness.
-Buying habits: a)it?s cheap and the cafeteria extension in stores captured the essential of the
culture: locals stay long when eating o drinking a sundae or coffee.
b) Hence, take away, is not the core business.
-Population growth 3% in 2018 year-to-year
-Many displaces had been developed to orden in stores
-New systems were settled by the delivery: nowadays it?s faster.
-Free WiFI in all stores
-Good online marketing campaigns
According the information, Argentina is not the best place to invest in this moment. Because of its
political and economic crisis (ungrowth, inflation and corruption) is really difficult for companies to
increase their profits. Particulary, for Mc Donalds, who survive to many crisis in this country could
be an opportunity that consumers didn?t change their habits.
How ever PEST tool can be usefull for some managers who are not aware about the current
situation in Argentina, it?s not enough. This analysis must be complemented with other tools and
analysis. Business Analysis should consider to gather internal and external information such as
SWOT Analysis, Monitoring processes and other financial indicators like ratios to track how is the
performance of the firm due the political, economic and social circumstances.
Argentinas? Central Bank B.C.R.A. (2019). Statistics. [online]. Available at:
Instituto de Estadisticas y censos I.N.D.E.C. (2019). [online]. Available at:
Jurevicius, O. (2013). PEST & PESTEL Analysis. Strategic Management Insight, 12 February
[online]. Available at:
Trading View Charts (2019). ?S&P MERVAL Argentina Index?. [online]. Available at:
Weberience LLC. (2019). ?PESTLE Analysis? [online]. Available at:
Task 2) Within the above article the CFO of Wolters Kluwer is quoted as saying that
uncertainty is good for business. To what extent do you agree with this statement?
I personally think that the statement of CFO of Wolters Kluwer is accepted nowadays. Uncertainty
is part of our life. Of course it extends into business. External and Internal (within the firms)
variables impacts in business. Firms need to confront uncertainty in the best way and challange
uncertainty with strategic resources, such as good products and services and a top-disruptive
management team as well. According to Georg Ludviksson, CEO of Meninga Firstly, we diversify
our income source by pursuing business in many different countries and regions. Secondly, we maintain a
substantial cash buffer to be able to withstand shocks. Thirdly, we stay agile and able to quickly adjust to
new business realities, and fourth and finally, we show leadership by keeping calm and not overreacting,
even when things are changing all around you (Forbes, 2019, Alison Coleman).
But it looks like uncertainty is so abstract. In order to try the understand this concept, scientists tried
to find other explanations to define it. In finance, for example, take place as risk an d how affect to
interest rate. According to Gallagher & Andrew (1999:31-32) risk in lending can be seen as default
risk, liquidity risk and maturity risk. Economists study the choise of firms and consumers under
uncertainty by considering a setting in which alternatives with uncertain outcomes are describable
by means of objectively known probabilities defined on an abstract set of possible outcomes. Mas-
That?s why in social sciences is really common to prepare scenario planning and to use statistical
knwoledge to measure uncertainty by model building, estimating and predicting. More further
uncertainty can be found in data. Econometricians use the regression model analysis in order to
measure the variation between two or more variables,in which the error term or disturbance implies
all that variation that the model cannot explain itself. This variation probably comes from sources
such as omitted influences, measurement error, incorrect functional form, or purely random and
totally unpredictable occurrences (Studenmund 2006:10).
Forbes (2019). Why Uncertainty Means Just One Thing To Entrepreneurs: Opportunity. Alison
Gallagher, T. and Andrew, J. (1999) ?Financial Management. Principles and Practice?. Part One the
World of Finance, pp. 31-32. Prentice Hall. Upper Saddle River, New Jersey 07458.
Mas-Collel, A. Whinston, M. and Green, J. (1995) Microeconomic Theory . New York Oxford
Studenmund A.H. (2006) ? Using Econometrics . A practical guide?(5th ed.). Part I: The basic
regression model, pp. 10. Pearson International Edition.