Pestle Analysis Argentina

PESTLE factors

POLITIC

A. Christina Fernandez De Kirchner is President since 2007, she decided to enforce a strong statal control on:

1. transports (railway, national air lines, aerospace company)

2. price of food, water and energy

3. service and industrial sector (like banks, steel maker and media).

This involved in a big inflation and withdrawal of foreign investments.

B. Lack of discipline on fiscal policy and lack of reliability of inflation data

C. importers are subject to tax on income gained in Argentina. The tax applicable to resident companies and branches set up in this country is 35% of total earnings. The VAT is 21 %, Moreover importers have to pay: Statistics Duty (0.5% on cost, insurance and freight - CIF up to USD 1,750) and in some cases, Destination Confirmation Tax (2% of CIF) and Income Tax (usually 3% in most cases).

D. the government actually is stable but the request of markets (for the future)for less state interventionism and the recent health conditions of Kirchner open scenarios of uncertainty.

ECONOMIC

A. Argentina recorded a strong economic recovery in 2010, driven by renewed consumer and private investor confidence spurred by accommodating policies and the rise of prices for exported raw materials and farm sector.

B. High inflation Rate (22% in 2010 against a world average of 2.2%), the 3rd highest rate after Venezuela and Congo.

C. Since 2003 the GDP increase with an average of 7.37 % per year with a significant decline during 2009 because of international crisis. For 2012 is expected an increase of 6 %.

D. Since summer of 2008 the exchange rate Peso/US $. Has been decreasing. Actually is 0.23 $ per peso!

SOCIAL

A. health expenditures: since 2008 is increased from 7.4 to 9.5% of GPA

B. Football has a foundamental role in Society: all the activities are stopped during world cup or national big matchs, moreover

Argentineans concede 2-3 hours during the day to have siesta.

C. High level of crimes and rapes (15th. In the world)

D. high level of corruption in public and private sector

The Company need to take into consideration aspects like these if wants avoid delays or problems with delivers.

TECHNOLOGICAL

A. % Expenditure R&D/GDP: 0.51 that is lower than other countries like Brazil (1.1), China (1.44) and India (0.8) (weakness)

B. Argentina is one of the main