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Trade mission Colombia Health, Life and Sciences Commissioned by the Netherlands Enterprise Agency 2 Certification of Authorship We hereby certify that we are the sole author of this report. All assistance we have received from outside sources have been documented in the report, as well as, listed after the conclusion and recommendations under “Work Cited”. This report was created exclusively and specifically by ​ ​ Group 1 for the Business in Latin America Minor at The Hague University of Applied ​ ​ Sciences and the Rijksdienst Voor Ondernemend Nederland (Dutch Enterprise Agency in ​ English). Date: 4 November 2018 3 1. Executive summary The aim of this research is to identify the possibilities and opportunities for a successful entry into the Colombia Life, Sciences and Health industry. This research was conducted at The Hague University of Applied Sciences on the topic of Medical Devices, eHealth and Hospital building. It is the main goal to give advice to develop a successful Market Entry Plan on behalf of the RVO, for dutch companies willing to enter the Colombian market The central question is: which are the Market entrance possibilities and barriers for Dutch Corporations? Medical Devices, eHealth and Hospital building are selected as high scoring markets and assessed on successfulness by the comparison of the following market analysis Methods created during our findings: Hofstede 6D Model, PESTEL analysis, the CAGE framework, SWOT and TOWS matrix. Furthermore, we included the market analysis, sub-sector analysis and competitor analysis to sketch and substantiate our recommendations. In answering the main research question, based on the selected criteria, the results of this research show that the following subsectors we researched; Medical Devices, eHealth and Hospital building are the successful industries within Colombia, although each industry has their own limitations. These sub-sectors are potentially the one of the best industries for the Netherlands to explore in greater detail. Based on this research, it is recommended to initiate research regarding specific requirements of industries in Colombia. The information provided should provide a clear and general insight in the Colombian health and life sciences industry. However, with most secondary research, it is recommended to gain a more recent insight of the health, life and sciences sector in Colombia by actually having in depth field research. The team has established to develop the requirements, evaluate the alternatives and create the following report in order to give a clear picture of the possibilities and on the status of the (sub)sectors. 4 5 Table of contents Certification of Authorship 3 1. Executive summary 5 Table of figures 9 2. Introduction 11 3. Hofstede’s 6D Model 13 3.1. Introduction 13 3.2. Power Distance 13 3.3. Individualism 14 3.4. Masculinity 14 3.5. Uncertainty avoidance 14 3.6. Long Term Orientation 15 3.7. Indulgence 15 4. Sustainable development goals 16 4.1. Introduction 16 4.2. Goal #3: Good health and well-being 16 4.3. Goal #17: Partnership for the goals 17 5. Pacific Alliance regarding Health, Life and Sciences sector 19 5.1. Introduction 19 5.2. Targets 19 5.2.1. Target #1: 20 5.2.2. Target #2: 20 5.2.3. Target #6: 20 5.2.4. Target #7: 20 5.2.5. Target #9: 21 6. PESTEL Analysis of Colombia 22 6.1. Introduction 22 6.2. Political 22 6 6.2.1. Mission 23 6.2.2. Vision 23 6.2.3. Proposed government budget of 2019 23 6.2.4. Political difficulties 24 6.3. Economical 25 6.3.1. Economy of health in Colombia 25 6.3.2. Free Trade Zones in Colombia 27 6.4. Sociological 28 6.5. Technological 29 6.6. Environmental 31 6.7. Legal 32 7. CAGE Framework 34 7.1. Introduction 34 7.2. Cultural Distance 34 7.3. Administrative Distance 34 7.4. Geographic distance 36 7.5. Economic Distance 37 8. Business Model Canvas 39 8.1. Introduction 39 9. SWOT Analysis 40 9.1. Introduction 40 9.2. Strengths 41 9.2.1. Subsectors in the Netherlands 41 9.3. Weaknesses 43 9.4. Opportunities 44 9.5. Threats 45 10. TOWS Analysis 47 10.1. Introduction 47 10.2. TOWS Matrix 47 11. Competitor Analysis 49 11.1. Introduction 49 11.2. Competitive rivalry 49 7 11.3. Threats of new entrants 50 11.4. Threat of substitution 50 11.5. Buying power 51 11.6. Supplier power 51 11.7. Conclusion 52 12. Market Analysis and Trends 54 12.1. Introduction 54 12.2. Medical Tourism 55 13. Sub-sector analysis 58 13.1 Introduction 58 13.2. eHealth analysis 58 13.2.1. eHealth in general 58 13.2.2. eHealth in the Netherlands 58 13.2.3. eHealth in Colombia 59 13.2.4. eHealth and the sustainable development goals 59 13.3. Medical devices analysis 60 13.3.1. Medical devices in the Netherlands 60 Core medical devices 61 13.3.2. Medical devices in Colombia 61 13.3.3. Medical devices and the sustainable development goals 62 13.4. Hospital building analysis 63 13.4.1. Hospital building in general 63 13.4.2. Hospital building in the Netherlands 63 13.4.3. Hospital building in Colombia 64 13.4.5. ACHC accreditation 65 14. STPD Analysis 66 14.1. Introduction 66 14.2. Consumer market segmentation 66 14.2.1. Segmenting business markets 68 14.3. Targeting 68 15. Five-year Forecast of the Health, Life and Sciences Sector in Colombia 70 15.1. Introduction 70 15.2. Forecast 70 16. Conclusion and Recommendations 72 8 17. Cited works 74 Table of figures Figure 1 - 6D Model of Colombia and the Netherlands 12 Figure 2 - Goal #3 of the SDGs of the UN 15 Figure 3 - Goal #17 of the SDGs of the UN 16 Figure 4 - Political SWOT by Marketline 22 Figure 5 - Colombian inflation rate 22 Figure 6 - Free Trade Zones in Colombia 24 Figure 7 - Free Trade Zones focussed on the health sector (S.A.S.) 25 Figure 8 - Top 10 causes of death in Colombia 26 Figure 9 - R&D intensity in Latin American countries 27 Figure 10 - Carbon emissions comparison between Colombia, the Netherlands, USA and Russia. 29 Figure 11 - Overtime pay allowances in Colombia 30 Figure 12 - Cultural distances between the Netherlands and Colombia 32 Figure 13 - Geographical distances between the Netherlands and Colombia 35 Figure 14 - Health expenditures as a share of GDP, 2016. Provided by the OECD. 36 Figure 15 - Economic Distances between the Netherlands and Colombia 37 Figure 16 - Business Model Canvas of the Colombian Health, life and sciences sector 38 Figure 17 - MEdical technology market 2016 40 Figure 18 – Travel time to the nearest hospital in the Netherlands 41 Figure 19 - Travel time to the nearest hospital in (west/central) Europe 42 Figure 20 - TOWS strategy matrix 46 Figure 21 - the 5 forces by Porter 47 Figure 22 - the core medical devices conveyed in most healthcare facilities 56 Figure 23 - WHO mentioned goals on medical devices 58 Figure 24 - the ACHC Accreditation process in 6 steps. 61 Figure 25 - The Colombian population segmented in different groups of age. 63 Figure 26 - The Colombian population segmented in 6 groups 63 9 10 2. Introduction In this report, research is done concerning the trade mission from the Netherlands to Colombia, focusing on the Health & Life Science Sector. The main focus in Colombia lays in the cities of Bogotá and Medellín/Calí/Cartagena. This report may provide focus areas and opportunities for Dutch companies to increase their business contacts or to expand to Colombia and to understand opportunities for doing business in this Latin American country. In order to be able to obtain credible and up-to-date sources, a cooperation with Colombian students from the La Sabana Universidad has been established. This, while they have the opportunity to do more in-depth desk- and field research on Colombian, and therefore in Spanish, sources. As both parties will do deep research, a gap of opportunities in this sector will appear which may be interesting for Dutch companies to anticipate to. In addition, the Health & Life Science Sector is very interesting to examine, due to the fact that the Netherlands is having a leading position in this sector in Europe. As Colombia strives ​ ​ for a similar healthcare system and high-quality hospitals, this trade mission is adecuatefor companies in the Netherlands to anticipate to. However, it needs to be stressed that Colombia is already advanced in this sector as they are number one of Latin America, and according to International Living, they are even number twenty-two on the world ranking list, which is higher than countries such as Canada and the United States (International Living). The structure of this report will include multiple frameworks and analyses providing a clear overview of the situation within the Health & Life Science Sector in both the Netherlands and Colombia. At first, the frameworks will be discussed and are followed by multiple analyses such as the 6D Model by Hofstede. After, two of the seventeen Sustainable Development Goals (hereafter SDGs) relating to the Health & Life Science Sector are reviewed and linked with the information found during the research. Moreover, the Pacific Alliance has goal related to the SDGs, and therefore indirectly related to the Health & Life Science sector of Colombia. This may also create value for the participating companies to this Colombian trade mission. This, while the SDGs, and to accomplish them, are becoming more important in the coming years considering the climate crisis. 11 Overall, the trade mission of the RVO and similarities between the Netherlands and Colombia are making this research extremely important and could surely offer opportunities and understanding for Dutch companies to do business in Latin America.
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