MGMT1101 ASSIGNMENT 1

PESTEL Analysis and Four Functions Approach

Student Name: Vitor Martins

Chiu School of Business

MGMT1101
Fall 2021
Instructor Name: Jeff Kawalilak

Course: MGMT1101 AT41

Due Date: Wednesday October 6th, 2021 by 3:00 pm

Word Count:1081

MGMT1101 (Instructor - Jeff Kawalilak) 1

Political
General Conditions:

Ontario’s political scenario is typically stable and offers a favorable business environment, taxes and

health policies are the most important aspects to take into consideration.

Tax:

Tax in Ontario is 13% HST, but prepared foods and beverages qualify for a rebate only if such

products are sold for no more than $4.00 in total, excluding HST.

Covid-19 Pandemic Scenario:

There are a few active policies regarding the covid pandemic, such as: Social distance, masks

MGMT1101
Fall 2021
required, and capacity limitation.

Economic
Economic growth is significant for a restaurant because it’s considered a luxury not a necessary cost

for the population. Therefore this business is affected by wages changes and inflation.

Without the Covid-19 pandemic, what to expect?

“$33 Billion in annual sales generated by the restaurant industry” (Restaurants Canada; Statistics

Canada; and Ipsos Foodservice Monitor (Updated June 19, 2018));

General Minimum Wage: $14.35/hour;

Median annual income in 2018 $36.760;

Inflation rate 0.72% before the pandemic;

Covid-19 Pandemic Scenario:

MGMT1101 (Instructor - Jeff Kawalilak) 2

food-service businesses reported lower income in 2020 than in 2019, compared to an average of

60.5% for all businesses in other industries. The inflation rate rose upon to 2% in 2020.

Menu prices at restaurants in Canada were 3.1% higher in July 2021

Sociocultural
An essential social factor is the frequency of eating out: a restaurant tends to be more successful in a

market where people choose to eat out than in those where homemade cooking predominates.

According to Restaurants Canada, drinking place sales were 6% lower in 2019 than were in 2012,

MGMT1101
while overall commercial foodservice sales jumped by a solid 43%.

Fall 2021
“Millennials are now the largest category of foodservice spenders in Canada,”

(Shanna Munro, President and CEO, Restaurants Canada., 2018)

Banning harmful single-use plastics as early as 2021

Technological
In general, food service is not a tech business, but there is a lot of space for social media and delivery

growth.

In 2019, e-commerce foodservice sales jumped by 34.2% to $3.37 billion. This accounts for 4.7% of

total foodservice revenue compared to 3.7% in 2018 and 3% in 2017.

Environmental
In general, the restaurant’s success depends if the environment is related to the food type served.

Proper food waste management policy;

An environment with social distance; Vegan/Vegetarian Menu’s choices.

MGMT1101 (Instructor - Jeff Kawalilak) 3

Comply: Federal government food safety laws, Ontario provincial food safety laws, and local

municipal legislation.

Synopsis

The results, statistics and data present at each point of this analysis provide complete mapping of

external factors, the PESTEL matrix is an excellent ally in the search for new opportunities for AB

Restaurant Inc. If the managers follow this report as a baseline for future enterprises, they will be able

MGMT1101
Fall 2021
to notice if the market have good potential growth or not when viewing the company’s market in a

macro scenario.

If opportunities need to be identified in advance to be seized, threats must be anticipated and avoided.

Data, statistics and official portals that provide vital information for intelligent decision-making were

consulted.

Some elements were pointed out as being of greater importance for decision-making on the

company’s expansion, such as economic, political, and sociocultural, in order of importance, since

favorable data from these indicators favor the business environment or could lead to a business

disaster, lastly, technology is the indicator that must be analyzed, as the customer behavior and way

of consumption have evolved, the foodservice needs to understand its consumer in order to serve it

better. Delivery apps or even social media are becoming into a completely new sphere of

consumerism, there is no more room for questions like “When the digital transformation is going to

happen?’ although “How will our company adapt to fulfill those digital demands?” In the last year,

MGMT1101 (Instructor - Jeff Kawalilak) 4

business going.

Therefore, the understanding made possible by the matrix can be identified as its primary benefit.

From the information generated by the study, it is possible to assemble and better understand threats

and opportunities in expanding restaurant locations into Ontario.

Four Functions Approach

Being part of the key role in decision-making about the possible expansion of the restaurant, I would

decide based on planning and organizing. This is part of the method I use to make any decision and

which I believe is the basis for any decision-making process.

MGMT1101
Planing

Fall 2021
I want to emphasize the importance of setting goals and how they will be achieved. Only through

planning are we able to decide what needs to be done, in which sectors and when it will be carried

out, that is, planning precisely defines the desired results.

It is necessary to think and analyze the situation so that the planning will be based on accurate data

from reliable and well-structured sources, as in the case of PESTEL.

Therefore, looking at those four main gathered data (economic, political, socio-cultural, and

technology), the only way to connect them is through planning. It’s not only to set an objective as we

already have it, in order to the expanse.

I can exemplify this function using a few pastel data. If we look at Ontario’s minimum wage and

taxes, we can cross it with our menu options and set prices for our dishes and drinks in the future

restaurant to have a greater view of possibility and revenue. This tangible action should elucidate and

make the decision more possible. If we cross those prices with the province’s general economy, it

will be even more evident or precise.

MGMT1101 (Instructor - Jeff Kawalilak) 5

So, after the planning step, it is necessary to define how the project will be going on, and whose will

do the steps. In other words, determine how the project will be carried out and distribute it among the

corresponding departments and professionals.

If planning is the step that connects data from the pestel, the organizing stage is the main connection

step for the expansion outcome.

There are so much data from the resources that it’s necessary to organize it, compile the most

important ones and empower competent people to have the things done.

For instance, in case of a confirmed expansion, my role is to determine who will visit the future

location, who is going to stay at the original’s restaurant or go to the new one, who we are going to

MGMT1101
hire.

Fall 2021

References

Restaurants Canada(Updated June 19, 2018) Statistics Canada; and Ipsos Foodservice Monitor

https://info.restaurantscanada.org/hubfs/Resources/Infographics/Ontario-Infographic-June201

MGMT1101 (Instructor - Jeff Kawalilak) 6

ESTABLISHMENTS

https://info.restaurantscanada.org/reopening-tracker#british_columbia

QuickBooks Canada Team, 2019 Canadian Restaurant Tax Guide

https://quickbooks.intuit.com/ca/resources/taxes/canadian-restaurant-tax-guide/

The Heritage Foundation, 2021, index of economic freedom,

https://www.heritage.org/index/country/canada

MGMT1101
Fall 2021
Government of Canada,2019, action to reduce plastic pollution

https://pm.gc.ca/en/news/backgrounders/2019/06/10/government-canada-taking-action-reduce-

plastic-pollution

The world bank, 2021, GNI per capita, Atlas method (current US$)

https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations

Restaurants Canada,2021, Foodservice Operations Report 2021

https://www.restaurantscanada.org/resources/foodservice-operations-report-2021/

Restaurants Canada,2021, Raise the bar

https://www.restaurantscanada.org/resources/raise-the-bar/

MGMT1101 (Instructor - Jeff Kawalilak) 7

On a new page, add the following paragraph:

I, Vitor Martins declare that the content of this assignment is my own work. Any information that was
sourced from anyone else, or anywhere else, such as websites, books, other sources, etc., has been
clearly identified using proper in-text citations and a reference page as per APA 7 ed. guidelines.

MGMT1101
Fall 2021

MGMT1101 (Instructor - Jeff Kawalilak) 8