BLAIR THORPE CARMEN RIVAS

DARA HILL RUSSELL GORDON

RYAN FERONS

Peru’s PPP Per Capita GDPIn terms of U.S. Dollars

PPP = Purchasing Power Parity. The value of all final goods and services produced within a country in a given year divided by the average population.

GDP Growth in Peru

GDP Growth Per Capita in USD

US Per Capita GDP is $48,100 (as of 2010)

Inflation of the Nuevo Sol

Perc

ent o

f In

flatio

n

Year

Peru interest rates

Lower interest rates make it easier to get money, but also depreciates the currency, and raises inflation.

Inte

rest

Pe

rcen

tage

GINI Coefficient

The USA is between .45-.49

Percent of Unemployment in Peru

1999 2001 2003 2005 2007 2009 20117

7.5

8

8.5

9

9.5

10

Unemployment in Peru

Unemployment

The US is ay 8.3 %

Currency

Peru’s overall Economic Freedom

Fiscal Freedom of Peru

Peru’s Government Spending

The Trade Freedom of Peru

Peru’s Property Freedom

Peru’s freedom From Corruption

Economic and Financial Risks

The Country is rated as an A4 country. There is a shaky political system and economic outlook in the long runRelatively volatile trends in the business worldLack of reliability in corporate financial informationLack of infrastructure such as roads and utilities

Peru does have a bad ranking on the corruption scale (3.4), but as you can see by the color coding below, it is average for Southern America.

POLITICAL - LEGAL ENVIRONMENT

GovernmentPresidential Representative DemocraticPresident, Ollanta HumalaHe led a rebellion around 6 years agoHumala wants to distribute wealth from country’s key natural resources

BusinessRank in the world

41st overall24th getting credit17th protecting investors22nd registering property

The Bad111th enforcing contracts101st construction permits100th resolving insolvency

TariffsIn 2006

25% on foodCaused lack of trade

In 2009U.S. exports were duty free to Peru on 90% of tradeAll tariffs with the U.S. will be phased out soonUnder ATPDEA legislation 99% of Peru’s exports to the U.S. will be duty free

Religion & Language90% of the country is Roman Catholics80% of the country speaks Spanish16% speaking Quechua

Relationships and Respect

Peru is a group-oriented culture, where the collective group is deemed more important than selfBusiness is built on personal relationships, which have been established over a long period of time Business in Peru only proceeds after both parties have good working relationships and feel comfortable with each otherBusiness relationships in this country exist between people, not necessarily companiesThere is great value placed on conducting yourself in every situation with: tact, diplomacy, sincerity, integrity, and sociability

Negotiation TipsDo’s

Build RelationshipBe PersistentMove at their paceShow interest in CultureEmphasis what you can do for each otherBe honest

Don’t’sBe AggressiveBe LoudBe PushyBe late for appointmentsUse their negotiation tactics

Hofstede DimensionsPDI-Power DistanceIDV-IndividualismMAS-Masculinity/Femininity UAI-Uncertainty AvoidanceLTO-Long Term Orientation

Consumer CultureReligious practices

It is a democratic republic, where they elect a president and members of congress every five years. 90% of the country is Roman Catholics and 80% of the country speaks Spanish, then 16% speaking Quechua as the other dominating language.Attitudes toward the U.S. & Shopping behaviors if different from the U.S.

The typical Peruvian consumer has considerably evolved over the last decade. The consumer is more interested in the components of a product before they purchase. If the product does not meet their expectations, they are more inclined to complain today, even if this attitude is still a very marginal phenomenon. They also view American products to be of superior making and are willing to spend top dollar on those items. They are still known to do the bulk of their leather and shoe buying from less expensive surrounding countries.

Product # 1 - Cyanide Leaching Fields

Some large companies but large population of illegitimate small minersCurrently use a mercury amalgam mix in order to separate Gold from oresMercury Burned in gold shops and produces high quantities of mercury vapor exposing many to health risksSolution is to bring alternative process to extracting Gold from oresCyanide Leaching fields require a lot of capital up front and large plots of land that smaller miners don’t have capability to build

For mining Gold, not killing

CompetitionLarge corporations use this technique all over the world including U.S.Opportunity: Normally they use it for their own mining purposes. Threat: it would be easy for a large company to open operations for small miners.

Product # 2 -BioFuel Producing Algea

Some large companies but large population of illegitimate small minersCurrently use a mercury amalgam mix in order to separate Gold from oresMercury Burned in gold shops and produces high quantities of mercury vapor exposing many to health risksSolution is to bring alternative process to extracting Gold from oresCyanide Leaching fields require a lot of capital up front and large plots of land that smaller miners don’t have capability to build

Mining large industry in Peru

Competition

Lots of biofuel companies in the worldThreat: A highly innovative technology, requires constant new developmentsOpportunity: can license technology from Joule UnlimitedRenewable energy technology is not being used in developing countries

Product #3: Mobil Phone Equipment

MarketPeruvian population had shown an increasing interest in the use of cell phones.

The market for it has been growing over time with an amazing speed. “The cell phone market during 2006 exceeded the growth rates in recent years, which had a direct impact in increased coverage nationwide,” says the author, “Since 1998 the market showed further growth as the year 2006, an increase of 68.99%.”

There are 3 companies that sell mobile service; Telefonica Movistar, Claro, and Nextel del Peru.

LogisticsEquipment sold is not the latest technology, even though people are willing to pay in order to get itRural populations are increasingly using cell phones (from 1.1 in 2001 to 29.4 in 2008)Peruvians love Americans and products imported from there as wellDirect competitors are small import companies listed in MercadoLibre.com (Craigslist or Amazon model)

Our plan: Get advantage of their high prices and/or narrow selection to offer quality equipment at reasonable prices. Also, work with cell phone companies to sell their services as third party, similar to Best BuyPlan to serve two segments of the market; the high end that is attracted by exclusive last generation cell phone equipment, and the middle class with affordable second generation cell phones.

Their advantage: Well established in the Peruvian market and dominate the cell phone service segment; therefore, loyaltyAlso, they have offices all around the country.Vulnerabilities: Lack of first generation technology equipment at a reasonable price like in the US, and narrow selection of products.