Fortum & Mason Overseas Expansion: Macro and Micro Environment Factors in Argentina and Taiwan

Fortum & Mason Overseas Expansion: Macro and Micro Environment Factors in Argentina and Taiwan

            Fortnum & Mason has been around since 1707 as a departmental and travel store in London. Recognized around the world for its exotic and specialty products, Fortnum & Mason is looking for overseas markets to grow its revenues and growth by accessing new customers. However, success in these markets will only be possible if the selected market has the ideal macro and micro factors to facilitate easier entry and acceptance of its product. This report analyzes Argentina and Taiwan micro and macro factors as prospective markets for Fortnum & Mason.

Argentina Macro and Micro Factors

Macro Factors

Political Factors

  • Argentina is categorized as a federal constitutional republic
  • Gained independence on July 9, 1816
  • The country has an economic freedom of 52.2 (
  • HDI sore of 0.830, which place it at the 48th position (UN, 2019)
  • Ranked 66 out of 180 countries by the corruption index with a score 45/100 in corruption (
  • Argentina is a member of WTO, IMF, and GATT (
  • Politically unstable country

Economic Forces

  • Currency: Argentinian Peso, AR$ (
  • Country is facing economic crisis
  • Negative GDP growth by 3.1% in 2019, GDP expected to contract further
  • Since 1950, the country has spent 33% of these years in recession (
  • Middle upper income (
  • Major economic sectors: agriculture, energy sources, industries, and service sector (World Bank)
  • Business environment 70/82 (
  • GDP per capita 14,401.97 $USD (world bank)
  • Country is experiencing hyperinflation: 34% in 2018, 44% in 2019 and expected to reach 50% in 2020 and above (Statista)
  •  Ranked 83rd in global competitiveness index (

Scio-Cultural Factors

  • Population: 45,050,100 by the most recent data (World Ometers)
  • 92.8% of the population live in urban areas (World Ometers)
  • Median age: 31.5 years (World Ometers)
  • Life expectancy 77.17 years (World Ometers)
  •  Argentina is a highly masculine, individualistic and power distant society (Hofstede Insight)
  • Bueno Aires: most populated city with 13,834,000 people and it is also a top tourist destination (World Atlas)
  • Highly educated society: 99.13% literacy rates (Macro Trends, 2019)
  • Increasing unemployment rates since 2014 to 2018: from 7.64% to 9.48% (Macro Trends)

Technological Factors

  • 74.3% have internet access by 2017 (Statista)
  • 57% of Argentinians are using smart phones, and the number is expected to rise to 61% by 2023 (Statista)
  • High social media penetration: 61% of the country uses social media websites (Statista).
  • YouTube used by 93%, Facebook by 91%, WhatsApp by 91%, Instagram by 68%, and Facebook messenger by 63% (Statista)

Ecological/Environmental Factors

  • Non-uniform climate due to the vast region covered by Argentina (Weather & Climate)
  • Tropical climate in the North, temperate climate in Bueno Aires, Cold, Windy Climate in Patagonia, and subpolar climate in Tierra del Fuego (World Climate Guide)
  • Frequent rainfall in the another and frequent and extreme snowfalls in the South (World Climate Guide)
  • Major threats to environment: pollution, deforestation and soil erosion (World Climate Guide).
  • Ranked 64th in CO2 emissions, 149th out of 217 in land protection and 11th out of 27 in air pollution (Nation Master)

Legal Factors in Argentina

  • Argentina’s Federal Government sets business laws and legal requirements
  • Easy business registration (within 1 day)
  • Argentinian government is pro-Investment meaning that foreign and nation investments are encouraged and protected by the government (Oxford Business Group, 2018)
  • 2015 tax reform to simplify and reduce taxation for foreign investment
  • Argentinian laws are pro-employees – labor rules such as working conditions, salaries, and hours are determined by the government (Allende & Brea, 2010)
  • Companies must pay a statutory bonus and life insurance for every employee (Allende & Brea, 2010)

Micro Environment Issues


  • Purchasing power is concentrated: 10% own more wealth than 60% of the poorest people
  • Customers are frugal and look for value for money spent
  • Men have more purchasing power owing to the 19% wage gap between men and women
  • Customers in Buenos Aires have higher purchasing power
  • Purchasing trends follow new cheaper brand, special offers and have a higher preference for national products (Santander Trade, 2019)


  • Household expenditure: food and beverage – 34.0%, Clothes and shoes -7.2%, and Miscellaneous goods/services- 5% (Santander Trade, 2019)
  • Ecommerce retail sales – B2C 213 billion $AR, in 2018, an increase from 145 billion AR$ in 2017 (Statusta, 2019)
  • Stagnant offline retail sales due to economic and political instability


  • Supermarkets, stores and warehouses account for 35% of all food and beverage sales
  • Carrefour is the biggest retailer in Argentina with a market share of 24.6%
  • Jumbo/Disco owns 18.1% of the market share, and Coto – 12.6%


  • 33 professionally registered associations in Argentina who contribute to 30% of te nations GDP (Santander Trade, 2019)


  • M&A Exports, How2Go Consultoria Agrofood Point  (Global Trade, 2019)


  • Restricted media freedom, ranked at number 52/180 in the world press freedom index
  • Major media outlet: Grupo Clarin (RSF, 2019)


Macro Factors

Political Factors

  • Island, Independent 1950 but considered a rebel nation by China
  • Multiparty democracy
  • Government integrity 69.2, Judicial effectiveness 70.1
  • Economic freedom 77.3, 10th globally (Index of Economic Freedom, 2019)
  • Corruption perceptions Index 65/100 score, and ranked 28/180 (Transparency, 2019)
  • 13th ease of doing business (Index of Economic Freedom, 2019)
  • Labor freedom 60.9, monetary freedom 84.4% and financial freedom 60.0 (Index of Economic Freedom, 2019)

Economic Factors

  • Stable government (Index of Economic Freedom, 2019)
  • Agriculture 1.7% of GDP, secondary sector 35.7% and Service sector 62.82%.
  • GDP in USD bn, 532 in 2019 which has grown to 607 USD bn in 2018
  • GDP per capita $25,750 (Focus Economics, 2020)
  • Economic growth 2017-2018 2.8% (Focus Economics, 2020)
  • Reducing public debts (Focus Economics, 2020)
  • Inflation based on CPI 0.6% 2018 and 0.8% in 2019 (Index of Economic Freedom, 2019)

Socio-Cultural Factors

  • Population: 23.6 million (BBC, 2019)
  • Languages: Chinese mandarin, Hakka, and Min Nan Chinese (BBC, 2019)
  • Religion: Taoism and Buddhism (BBC, 2019)
  • Unemployment rate 3.8% (Focus Economics, 2020)
  • Taiwan literacy rate 98.5% (Knoema, 2016)

Technological factors

  • Individual internet usage rate 82.1%, 94.1% homes have access to internet, 96.8 smart phone used to access internet (TWNIC, 2019)
  • 17/38 million users of internet (TWNIC, 2019)
  • 18.8 million smart phones (Statista, 2020)
  • 98.5% use Facebook (Statista, 2019)

Environmental/Ecological Factors

  • Tropical climate, mild winters, hot &rainy summers (World Climate Guide, 2020)
  • 58% of land covered in woodland and bamboo (Life of Taiwan, 2019)
  • Acid rain falls 85 days for every 100 rain days in Hsinchu (Strong, 2018)
  • Severe pollution from rapid industrialization (Strong, 2018)

Legal Environment

  • Currency: New Taiwan dollar
  • Independent justice system (Nordea, 2019)
  • Equal treatment of nationals and foreigners (Nordea, 2019)
  • Civil law system (Nordea, 2019)
  • Taiwan is ranked 104/190 in getting credit sector (Focus Taiwan, 2019)
  • Ease of doing business, 15/190 (Focus Taiwan, 2019)
  • Increased corporate income tax from 17% to 20% in 2018, making tha tax rate in foreign companies 31.6% (Global Reach, 2018)

Micro Factors in Taiwan

  • Median age 41.3 years
  • 78.2% live in urban centers
  • Brand loyal customers
  • Customers are attracted most by aftersales services and quality
  • Customers spend a lot of time in online shops
  • Recent food scandals have made consumers more cautious


  • Retail market value: US$130 billion (MIC, 2019)


  • Hypermarkets: Carrefour, COSTCO, RT-Mart (Societe Generale, 2019)
  • Supermarkets: Simple Mart, CitySuper, Jason’s Market (Societe Generale, 2019)
  • Convenience store: 7-11, Hi-Life, and Family Mart (Societe Generale, 2019)


  • No Agro-food major supplier (MIC, 2019)


  • Tai Jie – food and beverages (Food 1, 2019)
  • AIF International Freight – Beverages (Food 1, 2019)
  • AceCombined International – Tea (Food 1, 2019)
  • Agenor Partners – food and beverages (Food 1, 2019)


  • Free media and press
  • Vigorous and aggressive reporting on wrongdoing (Freedom House, 2016)

Analysis and Recommendation

Fortnum and Mason strategy to venture overseas is very strategic but the success of it depends on the choice of region based on the macro and micro environmental factors discussed above. In the two predestined locations, Argentina and Taiwan, there are foreseeable opportunities for Fortnum to grow, but the macro and micro factors will determine the long-term success of this luxury brand

Although neither country is ranked as a developed country, both ranks highly on the standard of living, economic freedom and HDI score compared to other developing countries. But a closer look reveals that Taiwan is doing much better than Argentina whether it is based on per capita earnings, overall business freedom and economic diversification. Taiwan has a smaller population that’s more economically empowered, highly skilled and also advanced. This is because 62% of Taiwan GDP comes from the service sector. Fortnum should also consider one area of interest in that. In both countries, there is very high concentration in urban centers. Argentina’s urban centers carry 98% of the population, while the same scenario is synonymous in Taiwan where 78.2% of the people live in urban areas.

It is also good to realize that Fortnum market is high end, meaning that individuals with high net worth, high income and more surplus money to spend. Argentina has been hit with very tough times. The high inflation rate of 44% and unemployment rates of 9.48% means that the country’s resident are probably going to find Fortnum products expensive and most will not afford them. On the contrary, Taiwan inflation is at 0.8% and unemployment rate of 3.7%. Combining this with the fact that the per capita income is USD$25,750, then there ia significant number of people who can afford Fortnum products. 10% of Argentinians own more wealth than 60% of the population. This proves that there is a deeper problem in Argentina with abject poverty. Besides, customers in Argentina are frugal and look for value added to make purchase decisions. As such, they are less concerned about luxury goods like hampers and tea, and instead focused on more durable expenditures. On the other hand, customers in Taiwan are not concerned about price, but quality and aftersales services. These customers are looking for superior products especially due to the recent health scandals in the country. They would rather pay more than have inferior products.

Taiwan is a very suitable market for online advertisements and social media campaigns. The internet penetration is more than 88%, customers are great online shoppers, and they are highly literate. Since 94% of homes have internet and the country has almost 19 million smart phones, then marketing online would reach the majority of the population. In Argentina, more televised and radio advertisements can be common than online ads and campaigns. The current penetration is low and only 61% of the 74% Argentinians with internet use social media. Taiwan looks more favorable because online advertisements are cheaper, can be self-managed and are continuous. Tv ads are very expensive and cannot be run for a long time.

But the absolute differentiating factor between the two countries is the stability and management of government. While Argentina government is run by the old stereotypical male dominated regimes, Taiwan government is more progressive with a woman as president. In comparison, Argentina corruption is ranked 45th of 100 countries, while Taiwan is at the 28th position. Although Argentina is South America 2nd biggest economy, its huge population has been disenfranchised by former President Mauricio Macri. On the contrary Taiwan president Tsai Ing-wen is heading a government that’s commendable in many ways. For one, Taiwan is politically stable, media houses are among the freest in the world and the country is also economically growing.

Even though Taiwan appears to be the best possible location, one unspoken or looming risk is the current trade war between US and China. Taiwan long stability is very reliant on these two markets. Also, China does not consider Taiwan as a free country, but rather, China considers Taiwan a part of Chinese territory. China’s president Xi is willing to use military force to make Taiwan part of China. The main question is how this affect businesses looking to invest in the region. The best defense is that Taiwan people are unwilling to be part of China and the United States is advent protector of Taiwan as an independent country. Therefore, Taiwan is likely to proceed as a free country. Taiwan is also reiterating by finding new markets in Asia other than China. By finding new markets, it reduces reliance on China, hence gain more freedom.

Argentina’s problem appears deep and unlikely to get solved in the near while. The country inflation is projected to increase, GDP is contracting and customers are becoming more disempowered. On the contrary, customers in Taiwan present a lot of advantages for Fortnum. For one, Fortnum & Mason is a brand that can inspire loyalty, it has a strong online presence and its products are unique. Establishing operations in Taiwan should be done in urban centers, especially Taipei, which is the most populous city. The company should seek credit outside Taiwan because the country offers very expensive loans to investors. The focus on marketing should be digital as the Taiwanese population is highly digital. Another advantage is that Taiwan does not have many local food and beverage players. Almost all big retailers in the country are foreigners. Fortnum can surpass these other retailers by offering special experiences (aftersales services), high end-unique products, carry out health conscious online campaigns, have a localized ecommerce platform, and collaborate with top distributors to make sure that all products are available both in all Taiwan cities and rural areas.


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