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1. Politicals

In terms of politics, in the Overseas Business Risk Analysis analyzed by GOV.UK in 2021, it was shown
that Vietnam is one of the more stable countries politically in general and in other areas in
particular in Southeast Asia. Moreover, Nguyen Tan Dung - President of Vietnam stated that
Vietnam has maintained socio-political stability and is considered as one of the most dynamic
economies in the world and has potential for growth in the field of industrial development F&B, and
this is also an opportunity for western fast food chains to enter. In addition, the speech of the
President of Vietnam also mentioned that the Government of Vietnam always strives to promote a
fair and attractive business environment for foreign investors, as well as constantly upgrading the
legal and institutional business and investment. In addition, the government has been making
efforts to restructure the economy and development model, as well as improve national
competitiveness. Therefore, it can be seen that Vietnamese politics is favorable for foreign brands of
fast food such as McDonald's, KFC, and so on to import and develop.

2. Economics

The Vietnamese government has established goals for the country's economy, including being a
middle-income state by 2025, a high-income country by 2030, and a high-income developing nation
by 2045. Vietnam also understands that in order to achieve this goal, there must be significant
economic change and long-term prosperity (United Kingdom Government, 2021). Whenever there is
economic growth, people's disposable income has also increased, creating a significant expansion in
their purchasing power. The typical Vietnamese household's food expenditure will account for
20.8% of its overall spending in 2025, up slightly from 20.1% in 2005. (Fitch Solution, 2021). As a
result, entering the Vietnamese market can profit from people's propensity to spend on food of all
types, which is currently a crucial human need.

3. Social

In terms of social aspect, it has some advantages and disadvantages. An advantage is that the
number of people of working age under 35 years old accounts for 55.5% of the population (Vietnam
Census, 2019). Moreover, VNExpress also pointed out that Vietnam is one of the fastest growing
middle-income countries in the world (2021). In this era, people not only have more discretionary
income, but also have the ability to spend big on food and drink because it fulfills basic human
needs. Furthermore, young people have a preference for outside food and beverage consumption,
with Western food accounting for 35% of outside consumption in Vietnam, thanks to the growing
number of international franchisees ( Decision Lab, 2017), 71% of survey respondents said they like
and very much like fast food, and 47% of them are regular users (Q&Me, 2016). Therefore, the entry
of the McDonald's fast food chain into Vietnam under the form of a franchise may be a right
decision. However, MMcdonald's is a Western dish, although Vietnamese people accept these
dishes to have new experiences, they quickly get bored because they are deeply influenced by Asian
culinary traditions. Moreover, Vietnamese tastes tend to shift to healthier eating because out of
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3,081 discussions about motivation for changing healthier eating habits, up to 31% of the
participants discussed for that it will improve their overall quality of life (Konvoi.vn, 2021). In
addition, the difference in culinary culture is the main cause, according to many types, one of which
is the culture of fast food and giving way to customers of fast food restaurants that do not really fit
the habit of eating food. Vietnamese people are used to sitting, sipping, relaxing and sharing food,
so somehow this will also be a downside for this fast food chain. Therefore, to get loyal customers or
maintain revenue, McDonald's should have the best menu adjustment or marketing strategy.

4. Technology

Technology is seen as having an impact on every aspect of life and eating habits are no exception.
According to Q&Me (2021), fast food has been ordered by 87% of people online. The most popular
methods for ordering fast food online are Grab Food and Now. Due to this trend, many restaurants
offer customers the option of ordering food online. Thus, it makes it possible for companies to
increase revenue by selling food and beverages not only in stores but also take-out food. Beside,
Partnering with many food delivery companies is a great decision as some of the food delivery
companies are extremely popular in Vietnam, such as Now, Grab food, Go food and Baemin because
building a mobile application will incur additional development, installation, maintenance and
promotion costs. Furthermore, the Internet usage rate in Vietnam is 70.3% in January 2021 (Kemp,
S. 2021), shows that Vietnamese people are used to using the Internet and that using the Internet to
make purchases is not a challenge. However, due to the impact of the Covid-19 pandemic, the
Vietnamese government enacted social distancing in many provinces and cities, actively promoting
the demand for delivery services. Therefore, for businesses that use technology as an ordering
application, they will have a competitive advantage and partly maintain business during the
pandemic.

5. Environment

Nature has endowed Vietnam with many biological and hydrological species. It can be said that the
North of Vietnam has a humid subtropical climate with high temperatures in the mountains, the
South has two distinct seasons: the rainy season and the dry season, the average temperature is
from 25 degrees Celsius to 27 degrees Celsius. Moreover, despite belonging to a tropical climate,
there are certain differences between the two regions that help Vietnam have a rich and diverse
food supply. However, food is still purchased in open-air markets today, and street vendors are a
common source of food. This is one of the most important concerns as it makes food and cold chain
safety more difficult to ensure. Besides, McDonald's also needs to pay attention to environmental
issues when the awareness of environmental protection of Vietnamese people is increasing, so any
damage to the environment can reduce the brand image. For example, heavy use of plastic bags and
straws for both takeout and in-store can reduce the number of consumers who feel that they are
harming the environment. Therefore, this should be a campaign that brings an environmentally
friendly image to customers, and at the same time encourages people to join hands to preserve the
environment.
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6. Legal

Legally, in order to open a shop or restaurant in Vietnam, a company must first apply for some
permits before commencing operations, which takes longer than in neighboring countries (Briefing
Vietnam). , 2017) because restaurants must apply for certain permits. For example, a food business
franchise needs a certificate of food hygiene and safety, a certificate of eligibility for fire protection,
commitment to environmental protection, advertising license, and so on. In addition, McDonald's
must state to which business party it is franchising, as well as whether its franchising activities are
registered with the appropriate authorities. Besides, about food safety and hygiene, Franchisees
must meet food safety regulations by self-certifying food safety and hygiene and publish responsible
food safety practices on Vietnamese multimedia websites, and they are now no longer subject to
routine customs checks (Vietnam Briefing, 2018). So legally, if McDonald's meets the above
conditions, the business will be carried out in a complete way.

Therefore, what is not clear here is why, despite meeting most of the conditions required by the
pestle analysis above, the McDonald's brand chain has not been very successful in the Vietnamese
market and up to the present time. Currently, there are only more than 20 McDonald's stores across
the country. So after much research, these are the reasons why this brand fails.

+ Specifically, the main reason lies in the difference in community culture in the Social section, and
the difference in food culture is the main reason why McDonald's failed in Vietnam. In 2014,
McDonald's came to Vietnam, becoming the first fast food brand present in our country. At this
time, McDonald's was warmly welcomed and responded by the people. However, after experiencing
a sense of curiosity and novelty in enjoying American food, customers quickly ignored this brand,
leading to the desertion and stagnation of the chain of stores. Because fast foods such as
hamburgers, fried chicken, and so on often contain a lot of fat and calories and this food provides
almost only starch, protein and fat. For Vietnamese people, the menu in each meal usually has to
include vegetables and very low-fat food, so eating fast food is often not suitable with the eating
habits of Vietnamese people and with the culture of eating at restaurants. A restaurant like sitting
back, relaxing, sipping and sharing Vietnamese food is very opposite to the fast-food culture and
gives way to Westerners. Therefore, the above cultural features of eating habits and forms of dishes
have created enormous competitive pressure for McDonald's in the Vietnamese market.

+ The next reason after the main one above can be mentioned is the competition of local
restaurants. As of 2018, nearly 430,000 of the 540,000 restaurants are owned by locals, the street
food culture has flourished in this country after decades. Besides, the dishes served to diners are
always available and extremely diverse compared to McDonald's whose menu is mainly burger and
drinks. So locals have a lot cheaper and more traditional options than those offered by McDonald's.

+ The third thing is that According to research, McDonald's has applied a Western pricing strategy in
an Eastern country. It can be said that to enjoy a burger, you need to spend $2.82 (about 66,000
VND). This price seems reasonable if you are living in a Western country and enjoying the salary of
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Western workers. But for people in an Eastern country, this price is too high and they only spend on
special occasions. According to Numeo, the average price of a meal at local restaurants in Vietnam is
about 50,000 VND (about $2.16), while to enjoy a meal at McDonald's, diners need to pay an
average of 100,000 VND (about $4.32). So paying double the price for a burger, a Coke and some
fries really doesn't appeal to local diners, even though McDonald's menu includes local dishes like
chicken rice, grilled pork rice, and so on but it seems most customers are not financially ready to
dine here.

In the end, Entering Vietnam in 2014, after 4 years of operation, McDonald's failed in Vietnam.
Because the mistake in customer and product research along with inappropriate business strategy
planning has caused the king of the fast food industry to suffer huge losses. In addition, entering a
new market is always a challenge that is not easy, entering the market is not too difficult, but to gain
a significant share of the pie, it requires competitive strength and dedication. understand the
psychology of investors.