Solution
Aarti J answered on
May 21 2020
KFL Super market
Course Name
Course Date
Student’s Name
KFL Supermarket International Expansion 2
Task 1
Introduction of the company
KFL supermarket is one of the biggest Asian style supermarket of Australia which is operating in different parts of Australia. This supermarket strongly emphasize on Asian products, Asian fruits and vegetables and other Asian food items.
International Expansion
Mexico
Mexico, according to the World Bank, is said to have the 14th largest economy in terms of nominal terms and tenth in purchasing power parity. The country offers open trade platform to different countries which includes El Salvador, Honduras, Guatemala, the European Free Trade Area, and Japan, with this the country has liberalized trade.
PESTLE Analysis
As stated by Mo
ison, (2009), all the places differ from each other, all the countries have different business environment and the firms needs to analyse the macro environment so as to analyse the way through which they will be operating in the particular country. With the help of the PESTLE analysis, the company will be able to analyse the business strategy that will be best suited for the country.
Political Environment
Mexico:
Mexico is considered as one of the progressing country with the growing middle class, It is an open and competitive economy. As the government of Mexico is federal government, the government has a direct effect on the business and the economy of the country. There are certain regulations which the company needs to follow and also taxes which are applied on the firms operating in the country. Mexico has the second-largest population in Latin America and is the 11th most populous country in the world. Population growth in 2017-21 will be relatively weak compared with previous decades, but, as over 25% of the population is aged 14 years or under, this will result in sharp growth in the labour force in the coming years. The country's ability to fully capitalise on this demographic dividend will be constrained by weak healthcare and education outcomes (despite a recently approved education reform). Migration to the US, a key demographic trend in the past decade, has fallen significantly, but remittances will support consumption for low-income recipient households.
One of the major issues that the Mexico political system has is its co
upt nature. The government works on
ibery and have significant effect on the companies operating in the country.
Economic Environment
Mexico:
The GDP growth rate of Mexico is around 0.80 and GDP of 1046.92 million. The inflation rate of the company is estimated to be 5.34% and the CPI is 132.01 index points. In Mexico, the service industries is the sector which employs maximum Mexicans and creates largest GDP. The country also has a free trade agreement with different countries which includes European Union, much of Japan, Central America, and Israel, making its economy one of the most open and globalized in the world. (Trading economics, 2018)
With the growing middle class the country is termed as one of the growing economies of the world.
Geographical proximity to the US and a large network of FTAs with the world's largest economies underpin Mexico's attractiveness to foreign investors. Also, the local market is increasingly appealing, more so after the opening-up of the energy and telecommunications sectors. Mexico is the world's fifth-largest emerging market, with the 11th largest population. Income per head is expected to rise in 2017-21 (although it will dip slightly in in 2019), as is access to credit (from a low base). But significant income inequality and poverty will restrict the pool of actual consumers and limit the dynamism of the domestic market.
Average GDP growth in Mexico over the next 15 years will be only slightly stronger than it was in the prior 15-year period, and will decelerate marginally after 2030. Mexico will benefit from a demographic dividend, and structural reforms could lead to better growth than we cu
ently forecast if properly implemented, but it is likely that institutional constraints will prevent this. Real income per head will make progress in catching up with US levels. Labour productivity will benefit from a more skilled workforce and more capital intensive production, but total factor productivity growth will stay below potential.
Enforcement of competition policy continues to face stumbling blocks in spite of improvements to legislation. New government will court business sector but confidence will be slow to build if a left-leaning candidate takes office.
Having appreciated steadily in the first quarter of 2018, the peso began to lose ground in midApril amid an emerging market sell-off. The latest cu
ency movements were not unexpected: we had assumed that depreciation would resume at some point in the first half of 2018 given concerns over the presidential election and uncertainty over NAFTA—and as the Fed lifts interest rates. With uncertainty in all these areas persisting, there is a risk of further cu
ency volatility this year and next, although our forecasts assume a steady but relatively gradual depreciation. After weakening further in 2020, owing to ill winds from a forecast downturn in the US, the peso should regain strength in 2021 as economic conditions improve, and will stand at Ps20.46:US$1 at end 2022. Reflecting its position as the most traded emerging market cu
ency, the peso will be subject to periodic volatility, exace
ated by concerns over US policy towards Mexico. We expect Banxico to utilise US dollar purchases and cu
ency hedging when necessary to cu
volatility.
Social Environment
Mexico:
Mexico usually had big families with children of 7 in a family, the trend has changed and the u
an family looks for two children in a family. Co
uption is one thing which is an evil aspect of the society. The people of Mexico values hard work, friendship, personal honor, humor, and honesty.
Technological environment
Mexico:
Being in trade with America, Mexico has strong technology aspect. Technology has helped the country to change its lifestyle and the buying patterns, the consumers are switching towards online purchase of the household as well as lifestyle items.
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