Country Notebook PERU

The Country Notebook A Guide for Developing a Marketing Plan

NAMES: y Blanca Lopez y Natalia Cortez y Ana Maria Rodriguez y Santiago Munoz y Jorge Estupian The Country Notebook Outline I. Cultural Analysis II. Economic Analysis III. Market Audit and Competitive Market Analysis IV. Preliminary Marketing Plan

I. Cultural Analysis
Guideline I. Introduction

In this section, were going to talk about the culture of our target country that is Peru. II. Brief discussion of the countrys relevant history

Peru is a country in western South America; it was home to the Norte Chico civilization, one of the oldest in the world, and to the Inca Empire, the largest state in Pre-Columbian America. The Spanish Empire conquered the region in the 16th century and established a Viceroyalty, which included most of its South American colonies. After achieving independence in 1821, Peru has undergone periods of political unrest and fiscal crisis as well as periods of stability and economic upswing. III. Geographical setting

Peru is divided into 25 regions and the province of Lima. Each region has an elected government composed of a president and a council, which serves for a four-year term. These governments plan

regional development, execute public investment projects, promote economic activities, and manage public property. The province of Lima is administered by a city council. Regions:
y y y y y y y y y y y y y

Amazonas Ancash Apurmac Arequipa Ayacucho Cajamarca Callao Cusco Huancavelica Hunuco Ica Junn La Libertad

y y y y y y y y y y y y

Lambayeque Lima Loreto Madre de Dios Moquegua Pasco Piura Puno San Martn Tacna Tumbes Ucayali

Province: Lima A. Location . Peru covers 1,285,216 km2 (496,225 sq mi). It borders Ecuador and Colombia to the north, Brazil to the east, Bolivia to the southeast, Chile to the south, and the Pacific Ocean to the west. The Andes Mountains run parallel to the Pacific Ocean, dividing the country into three geographic regions. The costa (coast), to the west, is a narrow plain, largely arid except for valleys created by seasonal rivers. The sierra (highlands) is the region of the Andes; it includes the Altiplano plateau as well as the highest peak of the country, the 6,768 m (22,205 ft) Huascarn. The third region is the selva (jungle), a wide expanse of flat terrain covered by the Amazon rainforest that extends east. Almost 60% of the country's area is located within this region. B. Climate The climate of Peru varies quite a bit depending on the region and on the time of year. Humidity on the coast produces a sensation of cold, although temperatures rarely dip below 12C. During the summer the sun beats down and temperatures often top 30C. The central and southern sections of the coast feature two well-defined seasons: winter from April to October, and summer from November to March. The north coast is not touched by the effects of the cold current, which means it 2

enjoys 300 days of sunshine a year and warm temperatures all year-long (as much as 35C in the summer). The rainy season runs from November to March The highlands are much colder than the coast. A characteristic of the mountain region is the drop in temperature during the night. Temperatures commonly range around 24C at midday before plunging to -3C at night. The jungle features high humidity all year long. In the southern jungle, there are sometimes cold spells known locally as friajes or surazos, cold fronts which drift up from the far south of the continent between May and August, where temperatures can drop to 8-12C. C. Topography Peru is divided into three contrasting topographical regions: the coast (costa), the highlands (sierra), and the eastern rainforests (selva). The coastline is a narrow ribbon of desert plain from 16 to 160 km (10 to 100 mi) broad. It is scored by 50 rivers, which water some 40 oases. Only a few of these rivers, which have their source in the Andean snowbanks, reach the sea in all seasons. Although the coastal region constitutes only 12% of the national territory, it contains the ports and chief cities of Peru. Inland, the low costa rises through the steep wastes of the high costa (7602,000 m/2,5006,500 ft), and then ascends abruptly to the western cordillera (Cordillera Occidental) of the Andes, which, with its ridge of towering peaks, runs parallel to the coast and forms the Peruvian continental divide. The less regular Cordillera Central and Cordillera Oriental merge in central Peru with the Cordillera Occidental. They branch off to the southeast, meeting a transverse range that becomes a crescent of peaks forming the drainage basin of the 8,288 sq km (3,200 sq mi) Lake Titicaca, the highest large navigable lake in the world (about 3,810 m/12,500 ft high), which is bisected by the Peruvian-Bolivian border. Of the 10 Peruvian peaks that rise above 5,800 m (19,000 ft), Huascarn, 6,768 m (22,205 ft), is the highest. IV. Social institutions

A. Family 1. The nuclear family The "Peruvian family" is of course not a homogeneous entity, but rather reflects both ethnic and socioeconomic factors. If there is a generalization to be made, however, it is that families in Peru, no matter what their status, show a high degree of unity, purpose, and integration through generations.

2. The extended family 3

The average size for families for the nation as a whole is 5.1 persons per household, with the urban areas registering slightly more than this and, contrary to what might be expected, rural families, especially in the highlands, being smaller, with a national average size of 4.9 persons.

The roles of the different family members and sexes tend to follow rather uniform patterns within social class and cultural configurations. In terms of family affairs, Hispanic Peruvian patterns are strongly centered on the father as family head, although women increasingly occupy this titular role in rural as well as urban areas, amounting to 20 percent of all households. Family life at all levels of society is nourished by an ample number of ceremonial events marking all rites of passage, such as birthdays, anniversaries, graduations, or important religious events, such as baptisms, confirmations, and marriages. Family life is thus marked by small fiestas celebrating these events and passages. In this context, Peruvians have greatly elaborated the Roman Catholic tradition of godparenthood (padrinazgo) to encompass more occasions than simply celebration of the sacraments of the church, although following the same format. Women's roles in the squatter settlements cover a wide variety of tasks, including hauling water from corner spigots and beginning the daily preparation of food over kerosene stoves. In the 1975-91 periods, the food supply for substantial numbers of the urban lower class in Lima and other coastal cities came from the United States Food for Peace (Public Law 480) programs administered by private voluntary organizations. Women also keep their wide-ranging family members connected, seeking the food supply with meager funds, and doing various short-term jobs for cash. According to social scientist Carol Graham, the poor urban areas have a high percentage of female-headed households, as well as a large number of abandoned mothers who are left with the full responsibility for supporting their households and raising the children. B. Education 1. The role of education in society Education is nominally free and compulsory for children ages 7 to 16. For the year 2000, the adult illiteracy rate was estimated at 10.1% (males, 5.3%; females, 14.6%). The government has been responsible for public education since 1905; free secondary education began in 1946, but with far too few public schools to meet the need. Several long-term projects have been initiated to increase literacy and raise living standards among the adults of the remote

Sierra and Selva areas. In March 1972, new education legislation enhanced the central authority of the Ministry of Education, granting the government control over all teaching appointments in the public schools and increasing its authority over the private sector. a. Primary education (quality, levels of development, etc.) The student begins in the first cycle, which consists of the first and second grade. The age of the children entering this stage of their education is six years. This level begins at first grade, and ends with sixth grade and is divided, for curricular purposes, into three cycles: cycle one (first and second grade), cycle two (third and fourth grade), and cycle three (fifth and sixth grade); after sixth grade, the student passes on to secondary school. Additionally, there are decision-making systems available for the parents to determine whether they want to send their child to public or private school. b. Secondary education (quality, levels of development, etc.) Secondary school consists of five years, from first to fifth year. c. Higher education (quality, levels of development, etc.) Higher education in Peru consists of technological colleges, both public and private. They offer courses lasting three years (approximately 3,000 hours of study), graduating with a title as Technical Professionals. Some courses may be four years in length (approximately 4,000 hours of study), and a student would graduate with the title of Professional.

2. Literacy rates Literacy was estimated at 92.9% in 2007; this rate is lower in rural areas (80.3%) than in urban areas (96.3%). C. Political system

1. Political structure Peru is a presidential representative democratic republic with a multi-party system. Under the current constitution, the President is the head of state and government; he or she is elected for five years and can only seek re-election after standing down for at least 5

one full term. The President designates the Prime Minister and, with his advice, the rest of the Council of Ministers. There is a unicameral Congress with 120 members elected for a five-year term. Bills may be proposed by either the executive or the legislative branch; they become law after being passed by Congress and promulgated by the President. The judiciary is nominally independent, though political intervention into judicial matters has been common throughout history and arguably continues today.

2. Political parties
y y y y y y y y y y APRA

Peruvian Nationalist Party UPP PPC National Renewal Cambio 90 S Cumple Popular Action Possible Peru National Restoration

3. Stability of government Generally speaking, Peru has a lot of stability in its government; its policy has been marked by different periods cited below: y The Inca Empire and Spanish conquest in 1521 y Independence.- from 1981 to 1824 y Military Rule and the Role of the Democracy. y Instability at 1980s. y The Fujimori decade.- (1990 2000) y The Garcia Administration

4. Special taxes Peru applies a value-added tax (VAT) rate of 18 percent to most products, and special consumption taxes, ranging from 10 to 50 percent, on certain items. Peru's methodology of applying a "consolidated rate" to assess special consumption and sales taxes on imported goods is burdensome, since the taxes are applied consecutively. D. Legal system 6

1. Organization of the judiciary system The judicial branch of government is headed by a 16-member Supreme Court seated in Lima. The National Council of the Judiciary appoints judges to this court. The Constitutional Court (Tribunal Constitucional) interprets the constitution on matters of individual rights. Superior courts in regional capitals review appeals from decisions by lower courts. Courts of first instance are located in provincial capitals and are divided into civil, penal, and special chambers. The judiciary has created several temporary specialized courts in an attempt to reduce the large backlog of cases pending final court action.

2. Code, common, socialist, or Islamic-law country? Peru's legal system is based on civil law system. Peru has not accepted compulsory ICJ jurisdiction. In 1996 a human rights ombudsman's office (defensor del pueblo) was created to address human rights issues. The Peruvian legal system is based generally on the Napoleonic Code. The 1993 constitution guarantees the independence of the judiciary.

3. Participation in patents, trademarks, and other conventions In Peru exists The Copyright Act and Supreme Decree 061-62 to protect copyrights. It includes the copyright to all works of production of creative, scientific and artistic domain in every way of expressing it. Copyrights protect each other several types of creations: literary works, artistic works, scientific works, others like phrases, titles, translations, adaptations with permission and software.

4. Marketing Laws. There isnt restrictions for marketing.

E. Social organizations

1. Group behavior

Peru is a multiethnic country formed by the combination of different groups over five centuries. Amerindians inhabited Peruvian territory for several millennia before Spanish Conquest in the 16th century; historian David N. Cook estimates that their population decreased from an estimated 9 million in the 1520s to around 600,000 in 1620 mainly because of infectious diseases. Spaniards and Africans arrived in large numbers under colonial rule, mixing widely with each other and with indigenous peoples. After independence, there has been a gradual European immigration from England, France, Germany, Italy, and Spain. Chinese arrived in the 1850s as a replacement for slave workers and have since become a major influence in Peruvian society. Other immigrant groups include Arabs and Japanese.

2. Social classes Between the extremes of wealth and power represented by the white upper class and the native caste is the predominantly mestizo and cholo population, which largely comprises the lower and middle sectors of rural and urban society. These are the most numerous and diverse sectors, constituting the core of Peruvian national society in culture, behavior, and identity. Together, these sectors include a wide range of salaried workingclass families, persons in business and commercial occupations, bureaucrats, teachers, all military personnel (except those related to elite families), medical, legal, and academic professionals, and so forth. In terms of occupation, residence, education, wealth, racial, and ethnic considerations, the population is diverse, with few clear-cut markers differentiating one segment from another. Yet, there are obvious differences among the regions of the country that combine with those indicators to suggest a person's social position in relation to others.

4. Race, ethnicity, and subcultures Peruvian culture is primarily rooted in Amerindian and Spanish traditions, though it has also been influenced by various African, Asian, and European ethnic groups. Peruvian artistic traditions date back to the elaborate pottery, textiles, jewelry, and sculpture of PreInca cultures. The Incas maintained these crafts and made architectural achievements including the construction of Machu Picchu. Baroque dominated colonial art, though modified by native traditions. During this period, most art focused on religious subjects; the numerous churches of the era and the paintings of the Cuzco School are representative. Arts stagnated after independence until the emergence of Indigenismo in the early 20th century. Since the 1950s, Peruvian art has been eclectic and shaped by both foreign and local art currents. 8

F. Business customs and practices Peru, the third largest South American country and over twice the size of France, is the world's sixth largest producer of coffee with an estimated 1.9% of total world production. It is the third largest producer in Latin America, which produces 60% of the world total coffee production of which 30%, comes from Brazil and 10% from Colombia. Almost 90% of Peru's coffee production is exported. In 1989/90 this totaled 1,369,000 (60 kg) bags the main markets, which were 44% to the U.S., 18% to Japan and 13% to Germany. Unfavorable exchange rates caused a drop in exports to around 970,000 bags in 1990/91 but should increase slightly about 1,100,000 bags in 1991/92. In total, an estimated 500,000 workers depend on coffee for a living and it is one of Peru's major exports. Average annual production runs at 1.2 million bags; the 1991/92 crop is expected to be in the region of 1.3 million bags up 13% from the previous year's total. While the crop has benefitted from favorable climatic conditions, it has been affected by low market prices, high production costs, lack of credit, competition from coca (from which cocaine is derived) and civil unrest. As a result and as in recent years, a large portion of the crop will not be reaped.

V.

Religion and aesthetics

A. Religion and other belief systems

1. Orthodox doctrines and structures The Peruvian government is closely allied with the Catholic Church. Article 50 of the Constitution recognizes the Catholic Church's role as "an important element in the historical, cultural, and moral development of the nation." Catholic clergy and laypersons receive state remuneration in addition to the stipends paid to them by the Church. This applies to the country's 52 bishops, as well as to some priests whose ministries are located in towns and villages along the borders. In addition each diocese receives a monthly institutional subsidy from the Government. An agreement signed with the Vatican in 1980 grants the Catholic Church special status in Peru. The Catholic Church receives preferential treatment in education, tax benefits, immigration of religious workers, and other areas, in accordance with the agreement.

Although the Constitution states that there is freedom of religion, the law mandates that all schools, public and private, impart religious education as part of the curriculum throughout the education process (primary and secondary). Catholicism is the only religion taught in public schools. In addition, Catholic religious symbols are found in all government buildings and public places.

2. Relationship with the people Religious activity in Peru is important, and for many people, one of the "centers of energy" in the world is the city of the Cusco.

3. Which religions are prominent? In the 2007 census, 81.3% of the population over 12 years old described themselves as Catholic, 12.5% as Evangelical, 3.3% as of other denominations, and 2.9% as non-religious. The religion of Peru is an inheritance of the Spanish conquest, for this reason, it is a mainly Catholic country (more than 75% of the population). 4. Membership of each religion Seventh-day Adventists mission efforts in Peru began in the 1920 There are currently 769,980 Seventh-day Adventist members in Peru split into 2 conferences, according to the church website. This would represent 2.6% of the current population. Latter-day Saints Mormon missionaries first arrived in Peru in 1956. In 1981, the Lima Peru Temple was dedicated. The church has seen rapid growth in Peru. In 2008 The Church of Jesus Christ of Latter-day Saints claimed more than 460,000 members in Peru.[5] There is currently only one LDS temple in Peru, located at La Molina in Lima. However, Church leaders announced the building of a second temple in Trujillo on December 13, 2008.[6]

5. Any powerful or influential cults? Since the 16th century, along with Catholicism, expressions of the native religion, based on the cult of the Sun, the Pachamama (Mother Earth) and elements of nature, have also been present. Those who study religion, still cant agree how to treat two very different religions in a process of fusion or of parallel beliefs. B. Aesthetics 10

Art of Peru includes wood carvings, stone sculpture, pottery, painting, etc. Due to excellent art and craft of Peru the network of exporters are increasing day by day. The qualities of the artisans of Peru are seen in the concord of the geometric designs in weaving, the minute portrayal of barbarian farming life, etc. Many arts and crafts stores are found in Lima and other Peruvian cities. Pre-Columbian Art and Inca art are the two categories of Peru Art. Some of the forms of Inca art are:
y y y y y

Peruvian Mirrors Inca Ceramics Andean Painting Carved Stone Tapestries and Rugs

Peruvian Mirrors are wooden mirrors which are covered up with bronze leaf and mirrors in different shapes ans sizes. The colonial mansions and churches of Peru were adorned by these mirrors. Carved stones are the semi-precious stones of Andes. These stones are the good luck charms which are carved by proficient craftsmen in the shape of eggs, spheres and pyramids. Andean Painting is an oil painting of Peru which is composed by Peruvian artists in various manners. Among Pre-Columbian Art Moche ceramics are well known. Moche pottery, Moche metalwork, effigy pots, etc. are best known among Pre-Columbian Art in Moche. Peru has many art shops. One of the best art shops of Peru is Peru Arts and Crafts Stores. The products available in this store are leather goods, jewelry, carved gourds, tapestries, musical instruments, mirrors, copper sculptures, etc. All the varieties of Peru Art are very beautiful as well as attractive. VI. Living conditions

A. Diet and nutrition 1. Meat and vegetable consumption rates

The diet of the Peruvian population has a strong potato and rice, since the annual consumption in both cases reach 80 to 45 kilos per capita per year respectively. Also they consumed per year in addition to potatoes and rice, 22 kilos of bread, 10 kilos of pasta and 19 gallons of oil.

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In rural families, people consume Andean tubers and grains, while in low-income urban families food basket is also covered with tubercles, with very few grains and mainly industrial products like wheat, with which it makes the bread and noodles.

2.

Typical meals

Peru has a huge variety of typical meals

3.

Malnutrition rates

Malnutrition in Peru is by 4.3 percent until 2009, but that index is higher in rural areas where chronic malnutrition is over the 32.8 percent.

B. Housing

1. Types of housing available There exist many kinds of housing: y y y y y y y Detached houses. Department in a building. Housing estate Neighborhood home. Hut. Makeshift housing. Others

C. Clothing

1. National dress In Peru s rural areas, the way people dress makes an important distinction, as a result of the blend of pre-Hispanic influences with the European clothing that the natives were forced to wear during the colonial era. Traditional dress tends to be capped off by woolen or straw hats, sometimes in various colors. But in 12

the coldest reaches of the Andes, the highlanders tend to wear the chullo, a woolen cap fitted with earflap decorated with geometric motifs. Regional dances require different forms of dress, depending on the area. Along the coast, an exponent of the marinera dance replaces cotton with silk for their embroidered skirts. In the Andes, meanwhile, the danzantes de tijeras or scissors dancers decorate their fine outfits with small mirrors and embroider an image of their guardian deity on their backs.

2. Types of clothing worn at work As in Ecuador, it depends of the work, exists different rules to use clothes for every occasion and every place.

D. Recreation, sports, and other leisure activities

1. Types available and in demand

2. Percentage of income spent on such activities

E. Social security

F. Health care

VII.

Language

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A. Official language(s) Spanish, the first language of 83.9% of Peruvians aged five and older in 2007, is the primary language of the country. It coexists with several indigenous languages, the most important of which is Quechua, spoken by 13.2% of the population. B. Spoken versus written language(s) Other native and foreign languages were spoken at that time by 2.7% and 0.1% of Peruvians, respectively.

Sources of information

II. Economic Analysis

http://www.mhhe.com/business/marketing/cateora13/country_notebook/writing_guide/economic.html I. Introduction We have to know everything about the country target, such as number of habitants, lifestyle, economic situation and others to analyze the different factors that will change the normal course of the business II. Population With about 29.5 million habitants, Peru is the fourth most populous country in South America. Its demographic growth rate declined from 2.6% to 1.6% between 1950 and 2000; population is expected to reach approximately 42 million in 2050. As of 2007, 75.9% lived in urban areas and 24.1% in rural areas. Major cities include Lima, home to over 8 million people, Arequipa, Trujillo, Chiclayo, Piura, Iquitos, Cusco, Chimbote, and Huancayo, all of which reported more than 250,000 inhabitants in the 2007 census.

Sources of information

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II. Economic

Analysis

http://www.mhhe.com/business/marketing/cateora13/country_notebook/writing_guide/economic.html

Guideline I. Introduction

II.

Population With about 29.5 million inhabitants, Peru is the fourth most populous country in South America. Its demographic growth rate declined from 2.6% to 1.6% between 1950 and 2000; population is expected to reach approximately 42 million in 2050. As of 2007, 75.9% lived in urban areas and 24.1% in rural areas. Major cities include Lima, home to over 8 million people, Arequipa, Trujillo, Chiclayo, Piura, Iquitos, Cusco, Chimbote, and Huancayo, all of which reported more than 250,000 inhabitants in the 2007 census.

A. Total

1.

Growth rates

Population growth rate: 1.193% (2010 est.) 2. Number of live births

3.

Birthrates 2009 19.38

19 births/1,000 population (2010 est.) 15

B. Distribution of population

1.

Age 4,216,364) 9,574,018)

Age structure: 0-14 years: 29.1% (male 4,370,923/female 15-64 years: 65.2% (male 9,695,270/female 65 years and over: 5.7% (male 796,631/female 893,757) (2010 est.)

2.

Sex male(s)/female male(s)/female male(s)/female male(s)/female

Sex ratio: at birth: 1.046 under 15 years: 1.04 15-64 years: 1.01 65 years and over: 0.89 total population: 1.01 male(s)/female (2010 est.) 3.

Geographic areas (urban, suburban, and rural density and concentration) population (2008)

Urbanization: urban population: 71% of total rate of urbanization: 1.3% annual rate of change (2005-10 est.) 4. Migration rates and patterns

Net migration rate: -0.93 migrant(s)/1,000 population (2010 est.)

5.

Ethnic groups

III.

Economic statistics and activity

A. Gross national product (GNP or GDP)

1. Total 16

GDP (nominal) - Total - Per capita

2010 estimate $153.549 billion $5,195

2. Rate of growth (real GNP or GDP)

The Peruvian economy expanded 8.31 in October of 2010, as measured by the year-overyear change in Gross Domestic Product (GDP YoY). Unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment. The Peru Gross Domestic Product is worth 127 billion dollars or 0.20% of the world economy, according to the World Bank. From 1992 until 2010, Peru's average annual GDP Growth was 4.86 percent reaching an historical high of 17.64 percent in March of 1994 and a record low of -8.60 percent in July of 1992. This page includes: Peru GDP Growth Rate chart, historical data and news.

Its 2010 per capita income is estimated by the IMF at US$5,195

B. Personal income per capita

C. Average family income

D. Distribution of wealth

1. Income classes 17

2. Proportion of the population in each class

3. Is the distribution distorted?

E. Minerals and resources Investors in the mining and petroleum sectors are also entitled to several tax benefits. There are no restrictions on remittances of profits, dividends, royalties or capital.

F. Surface transportation

Peru's transportation system faces the formidable challenge of the Andes and the complex Amazon River system, which add to the high production costs

G. Communication systems

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1. Types

2. Availability

We are dedicated to implement projects with high technical level We design, physical and logical installation, preventive and corrective maintenance, certification and administration of local area networks and wide, both in intranet servers and web servers on the Internet. We want to achieve the integration of electrical, data, telephony and multimedia optimizing your project in addition to providing security, modernity and comfort. Projects Facilities power and special systems (communications and security) in buildings of all kinds. Design professional lighting and indoor lighting, outdoor large public areas, energy security decorative signs, warning lights, etc. Design of CCTV security systems and digital recorders. Design, automation and installation of electrical panels IPNET S.A.C Communications company specializing in fiber optics, structured cabling, ups, call centers, telephone exchanges

3. Usage rates H. Working conditions C:\Users\User\Downloads\writing_guide\economic_III_H.html 1. Employer-employee relations

the relationship of employee and the employer is not very good because it has not come to get a high percentage of 80% confidence is causing low work efficiency with which it is not reliable for the customer

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2. Employee participation
Is based on the way employees work, has most uninsured and are treated well, with good selfesteem by the employer, they have a 60% particicpacion labor. There is more than 150 employees in these companies

3. Salaries and benefits

ETELCOM the company of aintains electricity networks and a basic salary to employees for commissions, Its benefit is that within this salary does not appear that the value of insurance, doctor appointments, because of illness may be well served by choice of the company, cover weight

I. Principal industries

1. What proportion of the GNP does each industry contribute?

2. Ratio of private to publicly owned industries

J. Foreign investment In Peru, laws support enormously to foreigners, because the government is very flexyble with all kind of financial credits and legal proceedings to stablish an enterprise, the bareers to entry of new competitors are really weaks but it gaves facilities to Sweet & Coffee to penetrate the market. For example, is stablished to private foreign enterprises that want to entry Peru that the credits are given to very long time and with huge grace period to start paying the debt.

K. International trade statistics C:\Users\User\Downloads\writing_guide\economic_III_K.html

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1. Major exports
The export of Peruvian coffee HUANCARUNA PERALES added $ 632 000 406 000 000 January and August this year, ie 56 percent over the same period last year, when shipments totaled 259 million 206 thousand U.S. dollars, reported the Association Exporters (ADEX). Germany is the first purchaser orders for $ 973 000 163 000 000 (40 per cent of the total), followed by America with 82 million 549 thousand (20 percent), Belgium with 36 million 423 thousand (nine percent) and Colombia 20 million 222 thousand (five percent). Other target countries are Italy, Canada, Sweden, France, UK, Japan, Republic of Korea, Spain, Finland, Netherlands, Greece, Switzerland, Norway, Russia and Denmark, among others. Also, in the first eight months of the year there were new destinations such as Sao Tome and Principe, Tunisia, Barbados and Slovenia, where coffee was exported more than $ 50.000, while Costa Rica and Aruba samples were sent.

a. Dollar value Exporting companies are Perales Huancaruna which increased its shipments by 28 percent (115 million 243 thousand U.S. dollars), followed by Commerce & Co. (46 million 134 thousand), Ca. Caf International (36 million 664 thousand) and Central Cocla Cafetaleras Agricultural Cooperatives (17 million 355 thousand), among others b. Trends

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2. Major imports This was reported by Ricardo Huancaruna, president of the Peruvian Chamber of Coffee and Cocoa, who said that the product is having the best prices in the last 13 years. Currently, the pound was sold at U.S. $ 1.8, 30% more than last year. He also indicated that our main customers are the European Union and U.S., the latter an especially important market for specialty coffees. He stressed that this product has become the first national agricultural exports and provides more jobs than mining, it employs about two million people in the country. However, the per capita coffee consumption in Peru very low, ranging between 300 and 600 grams of coffee, compared with Brazil and Colombia, where consumption is about five and 1.9 kilos respectively. Huancaruna further explained that the quality of Peruvian products have reached levels as optimal, which for two years, Colombia imported Peruvian coffee to meet demand. "In recent months, Colombia has become the largest importer of Peruvian coffee in Latin America, "he said

a. Dollar value Currently, the pound was sold at U.S. $ 1.8, 30% more than last year. He also indicated that our main customers are the European Union and U.S., the latter an especially important market for specialty coffees. However, the per capita coffee consumption in Peru very low, ranging between 300 and 600 grams of coffee, compared with Brazil and Colombia, where consumption is about five and 1.9 kilos respectively.

b. Trends

3. Balance-of-payments situation

a. Surplus or deficit? 22

b. Recent trends

4. Exchange rates C:\Users\User\Downloads\writing_guide\economic_III_K_4.html

a. Single or multiple exchange rates?

b. Current rate of exchange

c. Trends

L. Trade restrictions

1. Embargoes

2. Quotas

3. Import taxes Import taxes as in Ecuador, are fixed by a government entity called ADUANAS, which is based in the General Customs Act and Customs Tariff. Import taxes are separated in different groups and exists a different tax to each one of them.

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[http://www.eumed.net/libros/2010a/640/Impuesto%20a%20las%20Importaciones%20 en%20Peru.htm] 4. Tariffs

5. Licensing Exist a large quantity of kind of licenses that people need to obtain to operate a business legally in Peru, for that reason exist a different rule to every specific case of license.

6. Customs duties All the custom duties that Peruvian ADUANA gives to customers are fixed in the General Customs Act and Customs Tariff. [http://www.aduanet.gob.pe/aduanas/informag/tribadua.htm]

IV.

Developments in science and technology

A. Current technology available (computers, machinery, tools, etc.)

B. Percentage of GNP invested in research and development 99% of world coffee production is obtained for 50 tropical and subtropical countries and involves over 70 countries in the export business. According to FAO reports, the average annual value of coffee exports for the decade of the nineties, represented 14 billion dollars. The coffee remains central to the economies of tropical and subtropical regions. Its importance is such that in many developing countries (approximately 40), in tropical areas, coffee remains the main source of income. In Africa, countries like Uganda,

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C. Technological skills of the labor force and general population

V.

Channels of distribution (macro analysis)

A. Retailers

1. Number of retailers In total, an estimated 500,000 workers depend on coffee for a living and it is one of Peru's major exports. Average annual production runs at 1.2 million bags; the 1991/92 crop is expected to be in the region of 1.3 million bags up 13% from the previous year's total. While the crop has benefitted from favorable climatic conditions, it has been affected by low market prices, high production costs, lack of credit, competition from coca (from which cocaine is derived) and civil unrest. As a result and as in recent years, a large portion of the crop will not be reaped.

2. Typical size of retail outlets There are 144 coffee exporters in Peru who have largely replaced the inefficient cooperatives of which only four remain. 3. Customary markup for various classes of goods

4. Methods of operation (cash/credit)

5. Scale of operation (large/small)

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6. Role of chain stores, department stores, and specialty shops

Sources of information

III. Market Audit and Competitive Market Analysis

I.

Introduction

Peruvians coffee market isnt exploited because people now a day is starting to get a Coffee culture that, years ago didnt have it. With this habit recently acquired, the coffee shops businesses had created a growing market with few competitors giving a lot of opportunities to investors for putting new cafeterias and create a more competitive market.

II.

The product

Basically, the products that Sweet & Coffee will sell in the franchise will be the same that the sold in Ecuadors cafeterias until know the customers better and remove or introduce other kind of products or varieties to satisfy them. A. Evaluate the product as an innovation as it is perceived by the intended market

1. Relative advantage There are two soluble coffee plants in Peru. Internal coffee consumption is estimated at around 5,000 tons annually. Coffee drunk in Peru is generally weaker than in other South American countries. Tea is more popular and is also produced locally. Last year, 16 coffee shops opened in Lima. Gloria Jean's Coffee and Hollys Coffee represent the strongest foreign entries, while La Folie, Organika Coffee & D'Elite and Mr. Muffin are locally-owned enterprises that stand out as delicious discoveries. In Peru, the sales reach more than 40 percent. Consistent with what their market research revealed, the executive says they have developed 40 salty desserts and 70 sweet desserts 26

with advice from renowned chefs. At the opening, he claims to have launched 20 sweet desserts and 12 salty ones, a mix that will be replaced shortly, after three months of ganging their customers' tastes.

2. Compatibility Sweet & Coffee has a lot of compatibility with this businesses, because in Ecuador, the products sold in the cafeterias are similar, exists a variety of coffees and also different kind of deserts to try.

3. Complexity Despite so many coffee enterprises, the per capita coffee consumption in Peru is one of the lowest in the Andean region. Several years ago, Peru was a country that used to consume a very small part of the coffee they produced, and people in general didnt have the habit of drinking coffee, now a days, the levels of coffee consumption has risen since 0.9 kg per year (by person) to 110 cups of coffee in a year, its more than 100%. 4. Trial ability

5. Observability

B. Major problems and resistances to product acceptance based on the preceding evaluation The principal problems that customer could show is a reject because the biggest competitor, Starbucks, is a multinational enterprise with a big reputation and fame around the world, and Sweet & Coffee is only a very recognized cafeteria in Ecuador, its probably that they just let their fidelity to a mark dont let them try a new product.

III. A.

The market Describe the market(s) in which the product is to be sold

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1. Geographical region(s) Peru covers 1,285,216 km2. It borders Ecuador and Colombia to the north, Brazil to the east, Bolivia to the southeast, Chile to the south, and the Pacific Ocean to the west. The Andes Mountains run parallel to the Pacific Ocean, dividing the country into three geographic regions.

2. Forms of transportation and communication available in that (those) Region (s) Those regions have a lot of mobility, transport hasnt an incredible technology but it is useful to the customers.

3. Consumer buying habits

a. Product-use patterns

b. Product feature preferences Internal coffee consumption is estimated at around 5,000 tons annually. Coffee drunk in Peru is generally weaker than in other South American countries.

c. Shopping habits

4. Distribution of the product a. Typical retail outlets

b. Product sales by other middlemen

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5. Advertising and promotion a. Advertising media usually used to reach your target market(s) Television, radio, social networks and publicity in avenues

b. Sales promotions customarily used (sampling, coupons, etc.)

6. Pricing strategy a. Customary markups

b. Types of discounts available Discounts to groups, when a person is with more than 5 persons they will have the 20% of discounts in all kind of desserts. Discount to a regular customer, people can have a card to sign it every time that they buy something in a cafeteria, and after that they will have a discount card.

B. Compare and contrast your product and the competitions product(s) C:\Users\User\Downloads\writing_guide\market_III_B.html1. product(s) Competitors

a. Brand name One of the biggest coffee shops in Peru is Starbucks, it seems to bet more on the sale of coffee and that translates to their meager display of sweet and salty desserts.

29

b. Features The Seattle firm would rather seek to consolidate its portfolio of beverages, since last July it announced the sale of wine and beer through its store format 15th Avenue Coffee and Tea. If this concept is imported to Peru, a new battlefield could emerge.

c. Package Starbucks sells drip brewed coffee; expresso based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and Panini, pastries, snacks, and items such as mugs and tumblers.

2. Competitors prices Its considered as Sweet & Coffees biggest competitor Starbucks coffee, for that reason, its necessary to set prices in relationship to the competition. For example, a croissant in Starbucks costs between $ 4.2 to $ 5.25 (12 to 15 soles) and in Ecuador the same croissant is sold in Sweet & Coffee by $ 1.25, its clear that Sweet & Coffee can compete enormously with Starbucks in prices. Politics in Peru, gives a lot of facilities to enterprisers for investments, and it makes easier to amortize its liabilities without set high prices.

3. Competitors promotion and advertising methods Other advertising methods that are used: vans that offer samples of coffee on the streets, coffee tastings, exhibitions, courses, website, etc. STARBUCKS uses the experience and culture as their main sources of marketing. The success of Starbucks demonstrates that a costly advertising is not a requirement to create a brand, since most advertising is Starbucks customer by customer, store by store, and market by market to be the best way to inspire loyalty and trust in each customer. 4. Competitors distribution channels Starbucks will now have an outlet of the chain with a full menu aboard the Allure of the Seas, the newest ship in Royal Caribbeans fleet.

SOMECSA, one of Peru's leading coffee exporters

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IV. Preliminary Marketing Plan

I. The marketing plan

A. Marketing objectives

1. Target market(s) (specific description of the market) Several years ago, Peru was a country that used to consume a very small part of the coffee they produced, and people in general didnt have the habit of drinking coffee, now a days, the levels of coffee consumption has risen since 0.9 kg per year (by person) to 110 cups of coffee in a year, its more than 100%. In this period, the target market has been the same, people between 18 to 60 years, that its a big range of ages to the target. 2. Expected sales 20. We expect that for introduction, sales will be regular, that is between 400 and 600 dollar per day. 3. Profit expectations 20. As a new business, we dont expect a huge profit margin, because exists a big risk that the products or the enterprise will not get the goals fixed; for that reason, we consider that a profit margin of 10% is enough to be a recently opened business.

4. Market penetration and coverage The best manner to penetrate a target market is with a franchise, because the owner of Sweet & Coffee is selling a mark of a business that will be administrated by a person that does not belong to the company. The products that will be sold in Sweet & Coffee will not change; this will be the same that in Ecuador also because are the same sold in the biggest competitor. With a response of the customers about the products offered in Sweet & Coffee, the administration will choice which product can or cant continue selling in the shop and if it is necessary to enter a new one.

B. Product adaptation or modification

1. Core component 31

The basic element of the product is the label; disposable cups, napkins, and different kind of elements that are used when a person enjoys a cup of coffee are basic to signpost and mark a difference.

2. Packaging component It depends of the product, for cups of coffee, the package consist in a disposable cup with Sweet & Coffees logo impressed, a napkin, and a teaspoon. For desserts the package is a box with Sweet & Coffees logo which is white to salt desserts and transparent to the other ones. 3. Support services component

C. Promotion mix

1. Advertising. Sweet & Coffee has been known to be present in all the malls of Guayaquil. Given the quality of their product has managed to secure the loyalty of its customers, in addition to the variety of products and good customer service providing servers. On many occasions, Sweet & Coffee featured in magazine advertising business and when they are produced interviews with the owners of the franchise. The strategy of word of mouth is the strongest they have and the fact of being located in strategic places such as malls and gas stations. a. Objectives Show to our target market the image that Sweet & Coffee represents in Ecuador as a place with the elegance and service perfect to enjoy the moment of drinking an excellent coffee.

b. Media mix Its important to do a big campaign in television, radio, and social networks like facebook and twitter to promote the opening of a new cafeteria, as the range of ages of our target market is big, its necessary to reach all ages that it covers, social networks is for persons between 18 to 32 years old mainly, and radio and television for the other ones. Also its necessary to do some 32

announcements in the principal avenues and streets in the cities where Sweet & Coffee will be located to show every kind of persons the cafeteria. c. Message The message we like to promote is basically Enjoy the moment, it is to make the moment of drinking a coffee and eating a dessert, a delectable moment to people because of the service and the good tastes in the products. d. Costs.

2. Sales promotions Its important to do some promotions for introduction to the market, it will be more attractive the business to go for a first time and it will make that the customer tastes our products and live the experience of drinking a coffee in a place like Sweet & Coffee. a. Objectives To attract a huge quantity of customers to taste the products sold in Sweet & Coffee and to get free publicity with them. b. Coupons For introduction, it can be really successful to give some free coupons with newspaper or magazines. It will helpful in two things: one, publicity, because people see the products and can have the impulse to go to the cafeteria, and two with low prices, every product is more attractive. c. Premiums It could be prized the fidelity of the customer. For example with a discount card for persons that go regularly to cafeterias.

d. Costs As we analyzed earlier, the costs of produce and sell a cup of coffee is similar to Ecuador, and comparing prices with the biggest competitor Starbucks, it is profitable to give discounts in several 33

products.

3. Personal selling Personal will be choose in agreed to their experience, after that they will be educated in relation to the politics of quality that Sweet & Coffee has.

D. Distribution: From origin to destination Its important to set the kind of distribution that the shops will have when they will be penetrating a new market.

1. Port selection

a. Origin port

b. Destination port

2. Mode selection: Advantages/disadvantages of each mode

a. Railroads

b. Air carriers

c. Ocean carriers 34

d. Motor carriers

3. Packing

a. Marking and labeling regulations

b. Containerization

c. Costs

4. Documentation required

a. Bill of lading

b. Dock receipt

c. Air bill

35

d. Commercial invoice

e. Pro forma invoice

f. Shippers export declaration

g. Statement of origin

h. Special documentation

5. Insurance claims

6. Freight forwarder

E.

Channels of distribution (micro analysis)

1. Retailers It is necessary to have different good retailers in a city, because is important to save money and reduce costs of transport in some products.

36

a. Type and number of retail stores To buy perishable products like fruits, is a big problem because the risk of loss them is very high, for that reason its necessary to get a reasonable number of retailers to cover the demand that the cafeteria can have any time. b. Retail markups for products in each type of retail store It isnt necessary to set a mark of products, because the main demand is for fruits but its imperative that the quality of them will be excellent. c. Methods of operation for each type (cash/credit) For facility, its better to have credit with the retailers, because it will avoid the necessity to go to a bank to retire money from a bank account and only do that to the end of the month when the credit must be cancelled. d. Scale of operation for each type (small/large) It is not necessary to operate with a big retailer; there is no problem if they are small as long as they dont fail with their responsibilities.

2. Wholesale middlemen

a. Type and number of wholesale middlemen

b. Markup for class of products by each type

c. Methods of operation for each type (cash/credit)

d. Scale of operation (small/large)

3. Import/export agents 37

4. Warehousing

a. Type

b. Location

F.

Price determination

1. Cost of the shipment of goods

2. Transportation costs

3. Handling expenses a. Pier charges

b. Wharfage fees

38

c. Loading and unloading charges 4. Insurance costs

5. Customs duties

6. Import taxes and value-added tax

7. Wholesale and retail markups and discounts

8. Companys gross margins

9. Retail price

39

G.

Terms of sale

1. EX works, FOB, FAS, C&F, CIF

2. Advantages/disadvantages of each

H. Methods of payment

1. Cash in advance

2. Open accounts

3. Consignment sales

4. Sight, time, or date drafts 40

5. Letters of credit

II.

Pro forma financial statements and budgets A. Marketing budget

1. Selling expense

2. Advertising/promotion expense

3. Distribution expense

4. Product cost

41

5. Other costs

B. Pro forma annual profit and loss statement (first year and fifth year)

III.

Resource requirements

A. Finances

B. Personnel

C. Production capacity

IV.

Executive summary

42

V.

Sources of information

VI.

Appendixes

43