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Submitted by: Manish Institute Of Management Visnagar PEST Analysis

Political: -

Factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bads). Furthermore, governments have great influence on the health, education, and infrastructure of a nation.

Economic:-

Factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

Social: -

Factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers).

Technological: -

Factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.

Environmental: -

Factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

Legal: -

Factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. Chapter 1 Automobile Industry EXECUTIVE SUMMARY

The project titled, “GLOBAL COUNTRY REPORT” is being carried out for REPUBLIC OF COLUMBIA. Columbia Report has been given more emphasis for the study of the project where all type of Age group, Geography, Government, Economy, Defense, Education, Language, Income class and different level of people are represented. After analyzing the feedback the conclusion has been made that the Republic Columbia Report is having lots of different type of information about Columbia. is the ideal stage to generate a platform for the manufacturing and assembly of cars, trucks, buses and auto parts destined to supply the local and regional markets. The automotive industry represents 6.2% of GDP, employs close to 2.5% of the occupied population and places Colombia as the fifth automobile manufacturer in Latin America.

“Although Colombia is still one of the markets with the lowest amount of new cars in Latin America, its potential compared with the large population, is very promising”. Jose Valls, Vice President, General Motors Colombia The automotive sector is the fourth most important industry in Colombia. The United States has traditionally been Colombia’s major supplier of vehicles, automotive parts and accessories. This sector represented 8% of all Colombian imports for the first semester of 2009. Colombia imported from the United States $11.3 billion products in 2008.

After a sustained growth of 20% per year since 2001, the Colombian automotive sector has experienced a significant setback in 2008. According to the Colombian Ministry of Commerce, Industry and Tourism, total sales of this sector (local market and exports) dropped by 41% with a 40% drop for utility vehicles and trucks. Domestic demand reduction and restrictions on Colombian exports to and Equator were the major factors. In 2008, the Colombian local market experienced a 15% overall reduction. The Colombian ministry of transportation imposed a reduction on truck licensing and a program to discard trucks over 20 years old until 2010. The output of this sector in the national industry lost 5%, from 41.5% in 2007 to 40% in 2008. A significant factor was Venezuelan restrictions on imports from Colombia, reducing national exports to Venezuela by 64%, which greatly affected the Colombian automotive industrial production and national employment rate.

In 2009, it was projected that sales of imported of vehicles would drop by 18% from 2008, from 139,554 units sold in 2008 to 114,480 units in 2009. During the first quarter of 2009, the market remained stagnant, only tackling large dealer inventories. The automotive sector is gaining pace and reacting more dynamically in the second quarter of 2009, boosted by new production and assembly lines and a stronger demand for auto parts.

The Colombian automotive industry represents 6.2% of GDP and employs 2.5% of the occupied personnel within the manufacturing industry, making Colombia the fifth automotive manufacturer in Latin America. In Colombia, this industry gathers activities such as assembly (light vehicles, trucks, buses and motorcycles) and the manufacturing of parts and fittings used in the OEM assembly or after-market.

As for spare parts, it involves raw material suppliers from other industries such as metal mechanic, petrochemical (plastic and rubber), and textiles. The Colombian automotive industry counts with close to 5 million automotive units, it also holds commercial agreements that provide it with preferential access to a regional automotive market of 34 million vehicles (Mexico, 28 million, Chile, 3 million, Peru, 1.5 million and , 1.1 million).

The auto parts sector has been identified as one of the 8 sectors that make part of the Productive Transformation Program in Colombia; this initiative goal is that by 2032 Colombia will be recognized as a leader export country in the auto parts sector, generating revenues of US$ 10 billion and positioned as a regional leader in specific segments.

In pest analysis the political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Factors include economic growth, interest rates, exchange rates and the inflation rate. Factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. Factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. An opportunity to find employment with other state agencies while the agency is considering if internal placement options are available. Preference to other classified vacancies in Executive Branch agencies that are in the same or lower Pay Band as their current positions and for which they are minimally qualified; and preference over any external applicant that applies for the position. SWOT ANAYSIS Strength

 Colombia Automobiles Report shows an industry that continues to go from strength to strength. During 2006, the sector has enjoyed bumper sales on the back of a healthy economy and strong consumer demand. Industry majors such as General Motors have identified Colombia's potential as a strong production hub and moved to step up activities in the country.

 The sharp upswing in sales figures led BMI to raise its 2006 forecast to 180,000 units in the last quarter. We reiterate this figure for the final phase of the year, and maintain our production forecast of 40,211 units.

Weakness

 Colombia's car industry hit something of a milestone in October when sales surpassed the 20,000 unit-mark for the first time ever. Sales for the month totaled 21,407 units, thanks to the motor show that took place in the capital Bogotá.

 According to industry sources, the motor show enjoyed record levels of attendance, while some 7,000 deals were wrapped up. In fact, Bogotá's motor show goes some way to explaining why we have restated our forecast for the remainder of 2006.  Given the widely held view that the motor show was behind the strong upturn reported in October, we expect to see sales fall off during the remainder of the year, with the figures for October representing an albeit welcome blip. According to data from the analysis group Econometría, car sales in October were 7.8% higher than in September. General Motors topped the list of best sellers with its model, selling 7,859 units.

 The US giant was followed by Renault (3,597 units), Hyundai (2,402 units), (1,152 units) and (984 units). Subaru reported a huge month-on- month increase of 166%.

Opportunities

 It believes the health of the Colombian market and growing consumer confidence may be seen in the country's fledgling premium brand market. In line with industry data, more and more are opting to buy luxury vehicles. For example, in the period January-August Toyota reported a 329% increase in demand for its Rav4 vehicles, while sales of its 4Runner rose by 13%. The growth of this market is attributed to better credit facilities and favorable interest rates.

 In terms of industry developments, General Motors and Renault, which dominate the Colombian market in terms of production, have decided to join forces under an alliance named the 'Competitiveness Management Model' (CMM). The carmakers have concluded a co-operation agreement, valued at some US$8mn, under which they will bring together the best management practices of both companies, and share equipment suppliers.

Threats  Colombia continues to take second place on BMI's Business Environment Rankings. The year's robust sales figures are indicative of a ravenous market, in which vehicle ownership has so far been below the regional average. In line with BMI research, Colombia is now seen as one of the more reliable destinations for foreign investment.

PORTER’S DIAMOND MODEL Porter argues that it is difficult for countries or regions to gain sustained industrial growth if they overly dependent on their inherited factors such as lands, nature resources, cheap labour forces that can build their comparative advantages, meaning that in new economic system countries or regions need to build their competitive advantages in obtaining international competitiveness. Therefore, Porter introduced a new concept named “clusters”. Porter claims due to the factor of clusters being geographic proximity, it can, in three aspects, pushing regional economic development forward: • It can increase the production efficiency of the companies in the clusters to achieve economic of scales. • Domestic pressure and challenge drives innovation activities within the clusters. • The clustering effect that leads to demands increase within the regions, which attract inflows of supporting industries.

According to Porter’s research, he claims that the companies within the clusters through four interlinked advanced factors and activities in achieving national competitive advantages. In addition, the government can proactively influencing these four factors and activities in favour the clusters to be healthily growing. In Figure 4 is Porter’s diamond model which shows these interlinked advanced factors and activities that influence the competitive advantages of nations in global competition: Colombia’s National Diamond reveals some of the key issues that the country faces to improve its competitiveness. While some factor conditions have helped the country develop its most important clusters (a rich biodiversity has certainly fostered Colombia’s initial agricultural orientation), there are several deficiencies that continue to hold back national competitiveness.

Porter’s Diamond Model Market Entry • The following guidelines are recommended for Market Entry: • Secure an agent, representative, or distributor in Colombia, which requires a contract that meets the provisions of the Colombian Commercial Code. • Focus on formality, personal relationships and trust when negotiating agreements and contracts. • Perform direct marketing and personal visits to potential buyers supported by Internet communications, printing and distribution of materials to prospective customers, which are essential. • Keep good after-sales service arrangements, which are important in Colombia, not only in the original buying decision, but also in maintaining the sales relationship. • Consider the product’s quality, financing, and price, supported by extensive advertising campaigns, which play an important role in a Colombians’ buying decision.

Current Market Trends

• According to a 2009 market forecast by Econometria S.A., the Colombian market will sell 180,000 units in 2009, or 18% below 2008 sales. On top of export restrictions to Venezuela, exports to Ecuador will basically be banned as a result of Ecuadorian policies over politics with the Colombian Government. Venezuela and Ecuador are the main destinations for Colombian automotive industry exports. This loss should affect the Colombian unemployment rate as the sector generated 2.5% employment in 2008 and 2.6% of the industrial output. • Econometria S.A. concluded that production in 2009 would experience a 38% reduction from 2008. By May 2009, 14,146 new vehicles were sold against 14,500 units sold on average during the past six months, confirming a downward trend in the market. The first quarter of 2009 showed a significant change in trends among imported vehicles, local production (47%), and cars and utility vehicles (68%) breakdown compared to the respective breakdown (46% and 69%) in 2008. Taxis, vans, and commercial vehicle sales were stable. pick-ups and 600 freight vehicles were sold from 1,600 pick-ups and 1,000 freight vehicles sold during the second quarter of 2008. • Approximately 49 brands and some 249 models are found in the market. In 2008, the following motor vehicle brands competed very actively in the Colombian import market: Chevrolet, Hyundai, Ford, Nissan, Skoda, Mitsubishi, Volkswagen, Kia, Toyota, Peugeot, Renault, Daihatsu, Honda, Citroen, Dacia, International,BMW, Mercedes-Benz, Dina, Renault, Kenworth, Mack, Dodge, Freightliner, Petteril, Audi, Agrale, Daihatsu, Samsung, Subaru, Nissan, Isuzu, Hino and Volvo. • In general, the Colombian automotive parts and accessories sector reflects the economic state of the nation as well as the motor vehicles manufacturing/assembly sector. About 38% of all Colombia’s exports feed the U.S. market. Because of the 2008 global economic crisis and lower import demand from the United States, Colombia’s economy has stalled in 2008 and during the first quarter of 2009. However, analysts expect an improvement due to President Uribe’s economic policy, a stronger demand in China and Brazil for Colombian products and services, higher raw materials value, and a favorable U.S. Colombian pesos exchange rate. • Since 1990, Colombia has lowered and simplified its import tariffs. Import duties are quoted ad-valorem on the Cost Insurance Freight value of shipments. All duties (with few exceptions) have been consolidated into four tariff levels: a) 5 percent for raw materials, intermediate and capital goods not produced in Colombia, b) 10 percent and 15 percent for goods in the above categories but produced and registered in Colombia, c) 20 percent for finished consumer goods, and d) the exceptions, such as import duties for motor vehicles which remain at 35 percent, and some agricultural products which fall under a variable import duty system (price band). • These tariff levels are in line with Decision 370 of the (formerly “Andean Pact”) Agreement, which the governments of Bolivia, Colombia, Ecuador, Peru, and Venezuela approved in 1994. This Decision, known as the Common External Tariff (CET), was adopted by Colombia in 1995 through Decree 205. Under Decision 370, Andean Community countries assign a CET for imports coming from third countries, and while gradually eliminating duties on products manufactured and imported from within the region. Venezuela left the Andean Community in 2006, but indicated in 2007 that it may rejoin the Andean Community in the near future.

 Name of event: Expopartes Trade Show  Location: Bogota, Colombia  English language website: N/A – Spanish Site http://www.asopartes.com/web/directorio/expopartes/  Description: This is an event that takes place every two years in Bogota, Colombia. This year it took place in June 2009; this is retail aftermarket source for parts, accessories and service equipment. Special show sections include Machine Shop; Paint, Body & Equipment; Tool & Equipment; Medium & Heavy Duty Truck; SUV and Vehicle Technology. • Colombia Automotive Sector Overview (2011) • Name: Ricardo Roldan • Position: Commercial Assistant • Email: [email protected] • Phone: 571-383-2731

Key Suppliers:

• Among a long list of foreign suppliers, the following are major firms, which have representation in the country with well-established sales networks for more than ten years:

• Bendix, United, Wagner, Midland, Brake Parts, TRW, Moog, Monroe, Autolite, Dayco Corporation, Luber-Finer, South American Parts Corp., Dodge, Federal Mogul, Perfection, Elgin Automotive Products, Borg Warner, GMB, Kyosan, THO, NPR, Toto Pistons, TK, KP, Perfect Circle, Spicer, Cummins, Sepra, Engine Parts, Eaton, Nitto Tire, Urutu, Cascavel, TPM-13AI, Hummer, Abir, BMY, Detroit Diesel, Cat, Eaton, Hendrickson-Tandem, Fuller, Mack Parts, Jake Brake, Rockwell, Spicer, Gates, Dayco, Timken, Rockwell Standard, Fram, Jacobs, National, SW Stewart, Gabriel, Pincher, Bosch, Delco, “O” Rings, Seeger, SNR, NTN, Koyo, Jupiter Oil Seal, Kugerfeld, CBH, Gummi, Super Belt, Massey Ferguson, Detroit Parts, Hadlay, GR, Airton Full Transmissions, Ajusa, DZE, Efel, Bugatti Autorigambi, Mintex, HFS, IC-UG, Itab S.C.I., Ocap, Era, Ivam SRL, Hutchison-Paulstra, Honeywell, Metal Leve, Kleber Industrie, Cibie, GKN Glaenzer Spicer, Valeo Distribution, South American Source One, Dana Corporation, U.S. Gear, Elgin Industries, Gerson International Corp., PowerDrive, ZEN, Tenneco, FrictionTech, National Truck Service and others. • With the liberalization of cross-border trade, Colombia is becoming an increasingly good choice as a regional base for manufacturing and distribution. Colombia has ports on both the Pacific and Caribbean coasts, which allows Colombians to enjoy maritime access to Central and South America, as well as to the Caribbean. In the long term, it is possible to see a consolidation of auto parts manufacturers with only those able to manufacture on a large scale and providing superior aftermarket service comparable to those services needed as a regional or world exporter. Unfortunately, given the current size of the automobile manufacture industry in Colombia, there will be only a handful of important players left in the long term.

Prospective Buyers

• The Colombian end-users of automotive parts and accessories are numerous, varied, and difficult to quantify because of the many brands traditionally found in the local market and the number of motor vehicles imported during the period of 1997-2008.

• There are approximately 3.4 million vehicles currently operating in Colombia, of which around 2.6 million were produced by the three current local assemblers (GM-Colmotores, CCA-Mazda, and Sofasa-Renault) and other assemblers that have since left the market (Chrysler, Fiat, Austin among others). With an estimated population of 44.5 million, Colombia has on average one vehicle per 15 inhabitants. • Eighty-three percent of total Colombian vehicles are for private use, fifteen percent are in public service and three percent are for official use (not including those owned by the Ministry of Transportation, the Ministry of Defense, and the Ministry of Foreign Relations).

• Approximately 49 brands and some 249 models are found in the market. In 2008, the following motor vehicle brands competed very actively in the Colombian import market: Chevrolet, Hyundai, Ford, Nissan, Skoda, Mitsubishi, Volkswagen, Kia, Toyota, Peugeot, Renault, Daihatsu, Honda, Citroen, Dacia, International, BMW, Mercedes-Benz, Dina, Renault, Kenworth, Mack, Dodge, Freightliner, Peterbilt, Audi, Agrale, Daihatsu, Samsung, Subaru, Nissan, Isuzu, Hino and Volvo.

• Buses are the main form of intercity and inter-state transportation. Cargo transport by road is very active due to the chronically deficient railroad system. Statistics from the Ministry of Transportation indicate that nearly 90 percent of Colombian cargo moving between seaports and the main cities is transported by truck. The long distances and poor roads mean high operational costs, which translate into constant demand for truck parts and accessories. Most of the larger passenger and freight transportation companies maintain good repair facilities for their own vehicles and are strong prospective customers. CONCLUSION The automotive industry represents 6.2% of GDP, employs close to 2.5% of the occupied population and places Colombia as the fifth automobile manufacturer in Latin America.

The automotive sector is the fourth most important industry in Colombia. The United States has traditionally been Colombia’s major supplier of vehicles, automotive parts and accessories. This sector represented 8% of all Colombian imports for the first semester of 2009. Colombia imported from the U.S. $ 11.3 billion products in 2008”. This industry in Colombia covers the activity of assembly (light vehicles, trucks, buses and motorcycles)

The automotive sector in Colombia has grown rapidly in the past few years. Between 2003 and 2010, the sector’s sale has doubled, reaching 254,000 vehicles sold in 2010. auto parts sales to local manufacturers of close to US$ 600 million, increase in imports of 48% in the last three years and in the last 7 years an increase of almost 1.2 million automotive units which represented an increase of close to 31%, all figures that show a strong demand and growth in the country.

The auto parts-vehicle chain has been identified by the government and private sector as a world class sector to be promoted and potential zed.

Colombia´s greatest asset is the availability of qualified human capital at competitive costs. There are more than and labor costs are competitive at US$ 1.73/hour for industry operators.Currently, the sector generates 22,000 jobs, a growth of approximately 38%; According to a 2009 market forecast by Econometric S.A.3, the Colombian market will sell 180,000 units in 2009, or 18% below 2008 sales. On top of exports restrictions to Venezuela, exports to Ecuador will basically be cancelled as a result of Ecuadorian policies over political discords between both governments. Venezuela and Ecuador are the main destinations for the Colombian automotive industry exports. This loss should affect the Colombian unemployment rate as the sector generated 2.5% employment in 2008 and 2.6% of the industrial output. In general, the Colombian automotive parts and accessories sector reflects the economic state of the nation as well as the motor vehicles manufacturing/assembly sector. Colombia was the United States’ fifth largest market for U.S. exports in the region after Mexico, Brazil, Venezuela, and Chile and the 29th market for U.S. exports globally. Colombia is a market with a high demand for automotive parts. An estimated 3.7 million vehicles are currently operating in Colombia, of which approximately 2.9 million were produced by the three local assemblers: GM-Colmotores, CCA-Mazda, and Sofasa- Renault. In 2010, the Colombian automotive sector is projected to grow 32.1 percent after two consecutive difficult years. In 2009, the market reached USD 504.4 million representing almost a ten percent decline compared to 2008. More than 106 countries compete to supply the Colombia automotive parts market. The U.S., Brazil, Japan and China have the highest market shares. Imports maintain the hegemony in the market with suppliers of more than one hundred and six countries competing in the market.Tariffs, quotas, import licenses, fees and paperwork requirements, and customs barriers that are not uniformly applied. Lack of competitive bidding on government tenders, Direct or indirect subsidies by a foreign government in favor of domestic suppliers, Export controls such as license requirements and restricted buyer lists, Intellectual property infringement, including copyright, patent and trademarks, Influence pedaling - company/government interference. Cross-border analysis on the structure, size and value of the automotives sector, including comparative historical data and forecasts on the region’s sales and production figures. Approximately 49 brands and some 249 models are found in the market. In 2008, the following motor vehicle brands competed very actively in the Colombian import market: Chevrolet, Hyundai, Ford, Nissan, Skoda, Mitsubishi, Volkswagen, Kia, Toyota, Peugeot, Renault, Daihatsu, Honda, Citroen, Dacia, International, BMW, Mercedes-Benz, Dina, Renault, Ken worth, Mack, Dodge, Freightliner, Petteril, Audi, Agrale, Daihatsu, Samsung, Subaru, Nissan, Isuzu, Hino and Volvo. Ordinary imports are subject to both customs duties and VAT. The customs duty rates for machinery and equipment are 0%, 5%, 10%, 15% and 20% over the declared customs value VAT accrues at 16% over the declared value once the applicable duty has been added.

RECOMMENDATION The country is the third largest automobile assembler in Latin America after Brazil and Mexico. The average age of motor vehicles in circulation is 15 years, making Colombia an excellent market for spare parts for older cars. Another key factor driving demand is the frequent need to replace broken parts due to Colombia’s poor road infrastructure. The government’s 2011 budgets reflects plans to invest $500 million to improve infrastructure nationwide, with special emphasis on the road network which has been severely damaged by December 2010 floods. Generally speaking, roads are in poor to fair condition, increasing the likelihood of damage to vehicles and requiring constant vehicle safety checks and spare parts’ purchases.

In 2010, the Colombian automotive sector is projected to grow 32.1 percent after two consecutive difficult years. The 2008 global economic crisis was an important consideration as Colombia’s economic growth slowed to 0.4 percent. In addition, removing a trade barrier on Community exports could have a beneficial effect with regard to all Community producers by restoring conditions of fair trade and competition. Accordingly, as a result of the examination procedure, it was found that action is necessary, in the interests of the Community, to remove the adverse trade effects resulting from obstacles to trade maintained by Colombia. In order to ensure the respect of the Community's rights under international trade rules, the following course of action is envisaged. Intercity land travel has always been difficult. Colombia’s mountains remain a challenge to the construction of highways and railways. Infrastructures are not adequately developed and need substantial investments. Colombia’s public transport system is poor and slow with endemic problems of traffic, accidents and pollution.

Chapter 2 Mining Industry Our main objective is to find out the country of Colombia detailed and also find out industry. Petroliam industry has a wide range in the world. While preparing this research report, we have understood how theoretical knowledge can be applied in practical life. This report work certainly helpful to industry This project report speaks about the research done for the petroleum industry and is divided in to main 5 sections.  Introduction  Factor affecting the country  Overview of the Industry  Export and Import strategies  Benefits In this research report basically we consider one types of data primary data. We have collected data by internet. We find that petroleum industry has good sales promotion schemes and consumers want the Petroleum should introduce more schemes like in competitive analysis

SWOT analysis

The meat consumers were also asked for their opinion regarding smallholder livestock production. This way, the strengths, weaknesses, opportunities, and threats of smallholder livestock production could be detected and are presented in this data. Strengths - Cheaper products -Traditional producers

Weaknesses - Low product quality - Small quantities - Manipulations - Lack of transparency - Limited finances - Limited knowledge - Limited accessibility - Little negotiation power

Opportunities - Image: natural products - Connectivity high - Acceptance high - High share of priceoriented consumers - Limited access to quality (rural areas)

Threats - Lack of quality control - Limited access to credit and extension - Share and demand of quality-oriented consumers grow - Meat distributors switch to quality producers Porter’s Diamond model Porter argues that it is difficult for countries or regions to gain sustained industrial growth if they overly dependent on their inherited factors such as lands, nature resources, cheap labour forces that can build their comparative advantages, meaning that in new economic system countries or regions need to build their competitive advantages in obtaining international competitiveness. Therefore, Porter introduced a new concept named “clusters”. Porter claims due to the factor of clusters being geographic proximity, it can, in three aspects, pushing regional economic development forward: 1. It can increase the production efficiency of the companies in the clusters to achieve economic of scales. 2. Domestic pressure and challenge drives innovation activities within the clusters. 3. The clustering effect that leads to demands increase within the regions, which attract inflows of supporting industries. According to Porter’s research, he claims that the companies within the clusters through four interlinked advanced factors and activities in achieving national competitive advantages. In addition, the government can proactively influencing these four factors and activities in favour the clusters to be healthily growing. In Figure 4 is Porter’s diamond model which shows these interlinked advanced factors and activities that influence the competitive advantages of nations in global competition: Colombia’s National Diamond reveals some of the key issues that the country faces to improve its competitiveness. While some factor conditions have helped the country develop its most important clusters (a rich biodiversity has certainly fostered Colombia’s initial agricultural orientation), there are several deficiencies that continue to hold back national competitiveness.

Firm Strategy, Structure and Rivalry: The business environment is dynamically changing, in which industries are being created, organised and managed. In other words, rivalry impels industries and enterprises to innovate and to upgrade. However Porter claims regional level of rivalry is the most important competition out of all, because enterprises might feel comfortable to stay within the regions if there is not enough competition, which not only discourage enterprises to seek bigger market, but also it reduces firms’ motivation to continuously innovate and upgrade. Local rules and incentives that encourage investment and productivity Demand condition: If consumers have high requirements towards quality, design and services of products, in order to satisfy the market enterprises have to continuously improve their products to comply with consumers’ tastes. Porter indicates that if there are sophisticated customers in the regions whose requirements indicate the global demands or maybe it can even leading the global trends, which is no doubtful to enlighten regional enterprises to innovate in the positive direction in gaining more international market shares, through which national competitiveness can get enhanced. Demanding and sophisticated local customers and needs –Challenging quality, safety, and environmental standards e.g., incentives for capital investments, intellectual property protection Related and supporting industries: Firms can corporate in innovation processes and share knowledge through vertically and horizontally integrating among related and supporting industries. Additionally, to obtain competitive advantage, it is needed to corporate with world-class suppliers, which enables firms to follow the standards of international market. Capable, locally based suppliers and supporting industries The presence of clusters instead of isolated firms

Factor conditions: Porter has distinguished between created and inherited factors of production. Further he indicates that the crucial factors of production are specialised and difficult for imitating such as heavy and continuous investments, which are created rather than being inherited; since the inherited factors normally can be achieved by any enterprises, which cannot enhance firms with competitive advantages continuously. Contemporary the unique features enhance more values. � High quality, efficient and specialized inputs to business – Natural endowments – Human resources – Capital availability – Physical infrastructure – Administrative infrastructure (E.g. registration, permitting) – Scientific and technological Infrastructure Colombia’s competitiveness has suffered from the continued conflict and violence and by the limited allocation of resources to research and development of high-value added sectors. Nevertheless, some variables have helped the country’s sustained growth and outpacing of its Andean neighbors throughout the last decade: the high quality of management education, as well as recent improvements in local supplier quality and quantity, have played a critical role in Colombia’s performance. In terms of the country’s overall competitiveness rating, the Business Competitiveness Index ranks Colombia 59th of the 129 countries included. This places Colombia well ahead of its Andean neighbors4, although it still lags other Latin American countries like Chile and Brazil. Looking at the progression from previous’ years, Colombia has made very slow progress in terms of both BCI and NBE, while COS has experienced a slight setback (see Table 2). A more detailed look at the micro variables reveals that while in general, Factor Conditions have shown significant improvement since 2001 (13 out of the 19 micro variables improved by at least 5 places from 2001 to 2006, and of those, 6 variables improved by more than 10 places), Demand Conditions have been relatively stagnant (only 1 out of the 5 micro variables showed an improvement of 5 places or more for the same period). The improvement shown by Factor Conditions variables has certainly contributed to the sustained growth that Colombia has experienced in the last decade. In particular, progress has been most visible in terms of “Judicial Independence”, “Efficiency of the Legal Framework”, and in the “Reliability of Police Services”. These three variables compose some of Colombia’s greater strengths relative to its overall position, as they ranked 43, 42 and 41 respectively. Colombia’s most important relative strength lies in the quality of its management education (ranked an impressive 32nd). Significant progress was also made in the “Availability of Scientists and Engineers”, although the overall ranking for this particular variable is 60, still below the aggregate country ranking of 59. These improvements are reflected in Colombia’s business environment, as evidenced in The World Bank’s Doing Business survey, where Colombia was ranked 79 among 175 countries, ahead of countries like China, Costa Rica and Italy. The results of the survey place Colombia considerably above the South American region’s average rankings in terms of ease of starting a business (which takes an average of 44 days and costs 19% of GNI per capita, against regional averages of 73 days and 48% of GNI) as well as in terms of registering property (which takes an average of 23 days and costs 3.5% of property value in Colombia as compared to a regional average of 77 days and 6% of cost). However, progress still remains to be seen in the areas of Paying Taxes (Total Tax Rate in Colombia came in at 82.9% of profits as compared to a regional average of 49%) as well as in Enforcement of Contracts (which take an average of 1,346 days in Colombia against a regional average of 642 days). Moreover, it is worrisome that Colombia lags the region in terms of ease of trading across borders (it takes on average 34 days to export at a cost of US$1,745 per container in Colombia as compared to 22 days and US$1,069 in the rest of the region). Given the nature of the armed conflict in Colombia, it’s not surprising that trading costs and enforcement of contracts have suffered as a consequence. This, however, should improve with the approval of the FTA with the United States and other trade agreements.

But if Factor Conditions are a relative competitive advantage for Colombia5, the question remains, why then is overall competitiveness lagging? The question becomes even more perplexing when we observe that the general Context for Firm Strategy and Rivalry has not only shown significant improvement in the past five years (5 of the 10 micro variables showed an improvement of more than 5 spots from 2001 to 2006), but is also a relative competitive advantage for Colombia (Average micro variable ranking is 48 compared to an overall 59 rank for the country). Worth noting in particular are the improvements the country has made in terms of “Favoritism in Decisions of Government Officials”, “Intellectual Property Protection”, “Intensity of Local Competition” and “Cooperation in Labor Employer Relations”, which ranked 48, 45,46 and 30 respectively while showing an overall improvement of more than 5 ranks for the period studied. This data seems to show that the efforts undertaken by President Urine have significantly improved the environment in which companies operate and the prevalence of the rule of law despite the continued turmoil.

Although Factor Conditions and Context for Firm Strategy and Rivalry have shown progress, it is the Demand Conditions and Related and Supporting Industries that seem to be holding competitiveness down. For the most part, Demand Conditions have been stagnant during the past five years, with the exception of “Government Procurement of Advanced Technology Products” which improved by 10 spots. Meanwhile, “Buyer Sophistication” remains a competitive disadvantage for Colombia with a rank of 65 and shows no sign of recent improvement. For Related and Supporting Industries, most of the microvariales have shown some sign of improvement, in particular “Local Supplier Quantity” and “Reliance on Professional Management”, which remain a competitive advantage for Colombia at a rank of 42 and 37 respectively. However, “Company Spending on R&D” continues to lag with a rank of 60. With low R&D spending, Colombia continues to rely on a model of exporting agricultural raw materials without much value-added, and a general inclination to import machinery and technology. As mentioned in the country analysis, we link several of these conditions to the prevalence of internal conflict and violence, given the impact they have in the accumulation of human capital which, in turn, holds back the demand conditions.

Conclusion

 Mining has represented 30 percent of all Colombian exports over the past ten years.  Colombia is an attractive platform where U.S. companies can take advantage of this strong and growing sector to export mining equipment and accessories.  Large mineral resources and coal reserves are estimated at 6.6 billion metric tons (or 40 percent of Latin American coal reserves) making Colombia the fifth largest thermal coal exporter in the world.  The GoC under the Strategic National Mining Plan (Visión Minera al 2019) willdevelop the required infrastructure for coal and other mineral mining production activities, as the government plans to enhance the sector’s share of the national economy in 2019 by producing up to 200 million tons of coal.  In response to the challenges of mining developments, mining equipment sales, including boring, sinking machinery, parts, dumpers, lifting machinery, bulldozers and mechanical shovels will grow.  There is a potential for immediate and sustained growth to support: Mineral exploration (geophysics, mapping, diamond drilling, tunneling) and mining software (resource estimation, modeling, mine design and planning, maintenance and optimization); environmental equipment (water and sewage treatment plants, effluent analyzers, and software); environmental consulting remediation and mine closure), and mine safety equipment.  Main projects include: the rehabilitation of the secondary and tertiary road networks to connect mining developments to principal networks; the renovation and construction of safe and reliable electrical infrastructure; and, the strengthening of railroad and port capacity with an emphasis for deep water‐ports. Chapter 3 Textile Industry Present positions. Of textiles industries: In 2010 Colombia’s textile and clothing exports to the USA, the industry’s most important trading partner, were 51% higher than those recorded in the previous year. This increase can single-handedly be attributed to an extension of the Andean Trade Promotion and Drug Eradication Act (ATPDEA) in October 2002, which provided Colombian textile and clothing exports with quota-free and duty-free access to the USA.

This strong performance has pushed the textile and clothing industry into a prominent position in Colombia’s economy. Indeed, in 2003 textiles and clothing represented the country’s fourth largest export earner—ahead of one of Colombia’s most famous exports, coffee.

The main contributors to the growth in textile and clothing exports have been Colombia’s low labour costs, its proximity to the US market, and the industry’s verticalised structure—from fibres to finished garments.

However, the industry is now at a crossroads. Clothing manufacturers are not able to make full use of the ATPDEA as they are being held back by a shortage of locally produced fabrics.

Government initiatives to encourage new investors are stifled by concerns over ongoing internal civil strife. The industry is heavily dependent on US customers, but is vulnerable to competition from Asian clothing suppliers who will gain access to the US market free of quota restrictions in 2005.

Furthermore, the ATPDEA is due to end in 2006, and a new agreement with the USA has yet to be negotiated.

Colombia, the Dominican Republic, Mauritius, Peru, and Sri Lanka are at risk in the EU market when China removes the final restrictions. In the U.S. market countries at risk include the Dominican Republic, India, and Sri Lanka.

The Global Economic Prospect suggests that the clothing sector still provides an opportunity for export diversification and the expansion of manufactured exports for low- wage countries, even in the face of competition from China: “ The countries best able to expand their exports of clothing will be those that have a supportive business environment, low trade costs (efficient customs, ports, and transport infrastructure), and competitive firms that are flexible enough to meet the changing demands of the global buyers that now dominate the industry.”

COLOMBIA SECTOR PROFILE TEXTILES 2011

COINVERTIR, foreign investment promotion agency in Colombia, performed this task aimed at furnishing relevant information on the market structure for the Apparel sector, the sector’s relevantindicators and the strengths and opportunities making the sector attractive for foreign investment. I. Textiles Potential (strengths and opportunities) Colombia is strategically located in the center of the American Continent between Central and SouthAmerica. This geographic location, and its access to the Atlantic and Pacific oceans, allows Colombia tobe a commercial link between the Central and South American markets, and a gateway to NorthAmerica, Europe and other countries in the Pacific basin. Also, Colombia has an adequate road, air and sea infrastructure to support the sector’s imports and exports. Additionally, to encourage foreign investments and trade, the Government has implemented incentives such as Free-Trade Zones, Special Economic Export Zones, and Plan Vallejo, among others.The sector’s supply chain is fairly well developed. Due to the dynamics of the productive processes and the vertical integration, processes such as design, cutting, spinning, washing, embroidering, dying, and printing, can be done jointly. Also, the production plants comply with the requirements and parameters established at international level in relation to labor, environment, health, and quality control aspects such as ISO 9000. As a result of the technical training provided by the companies and by the National Learning Service, SENA, one of the sector’s main assets is its human resource. The human resource is not only skillful but also available at competitive rates compared to other countries in the region such as Chile, Argentina, Brazil, and Venezuela and with respect to industrialized countries such as Korea, Italy,Germany, Japan, and U.S.. In the textile industry, the fixed or semifixed costs do not increase with production in the same proportion. This means that the increase in production has more than proportional effects on profits. The sector also has strengths derived from the domestic production of raw materials like cotton, fibers,threads, and fabrics (woven and sewn), among others. Particularly, cotton cultivation in Colombia has been improving technically to achieve better quality and more variety. In fact, plans for plant improvement; integrated pest management; and integrated management of crops, soil and water, have been implemented. Additionally, Farming Centers for Technology Development (CADET’s) were created through technology transfer programs. Cotton produced in Colombia meets the standards required by the textile industry1. With the production of raw materials Colombia gains competitiveness at a Latin American level in products such as baby’s and children’s clothing, underwear, sportswear, denim articles and corduroy pants, among others. In 2001, 23 companies exported more than US$ 1 million, and other 44 exported products for less than said amount. In apparel articles, 44 companies exported more than one million dollars and 126 companies exported amounts below US$ 1 million. 1 Ibid. have enabled the textile sector to gain importance and access to international markets. In fact, exports grew by 19.15 %: in 1993, 23.2 % in 1995, 12.3 % in 1997 and 17.5 % in 2000. In 1998 and 1999 exports declined by 7.3 % and 8.3 % respectively. In 2002, exports of the textile and apparel sector accounted for 8 % of total Colombian exports, reaching US$ 736 million2. Exports - The preferential duty rates for Colombian textile and apparel articles, the G-3 Group (Colombia, Mexico, and Venezuela), the Economic Complementary Agreement with Chile, and the Preferential Duty Rates with the Latin American Integration Association –ALADI (Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Paraguay, Peru, Mexico, Uruguay, and Venezuela) have boosted exports to the Andean Community of Nations- CAN, (includes Ecuador, Venezuela, Peru, Bolivia, and Colombia). The possibility of duty-free trade for Colombian textiles and apparel articles is close to be a reality in all American countries. The sector’s development has been supported by public and private institutions. Some of the most notable institutions are the Ministry of Commerce Industry and Tourism, the Exports Promotion Fund (Proexport), the Foreign Trade Bank (Bancoldex), COINVERTIR, and the National Learning Service (SENA). The main trade associations are the National Association of Industrials, ANDI, Inexmoda promoter of textile and apparel events and fairs, and the Colombian Association of Textile Producers One example is the Export Competitiveness Agreement for the "Cotton, Fiber, Textile, and Apparel Chain ". This agreement came out as a result of a joint effort by business leaders, ANDI’s textile

Colombia: Textiles Innovate

A $4 million fund set up by the Colombian government in January drove home the degree to which the country's textile and apparel industry has been hammered by illegal imports. The money is not earmarked for scholarships, technology incentives or tax breaks, but for rewards to tipsters who lead investigators to clothing and fabric smugglers.

The fund was unveiled with little fanfare during Colombiatex, the annual exhibition in Medellin for the nation's thread, fabric and clothing makers to show off their wares to foreign buyers. It was, nonetheless, welcome news at an otherwise somber event, with one exhibitor after another grousing about their struggles to compete against Asian textile and apparel imports, nearly half of which are thought to be contraband or brand rip-offs that often sell at a fraction of the price of comparable Colombian goods. The bulk of those illegal goods are said to be from China, according to ANDI, the country's top business association.

Though a big factor, the Asia threat isn't all that's thrown Colombia's textile sector off course, however. Paula Trujillo, competitiveness director of InExModa, an industry trade association that sponsors Colombiatex, says Colombia's industry also has itself to blame, having grown complacent under the protection of an international quota system and a favorable U.S. dollar- exchange regime, and having invested too little in new technology and markets. "We were not walking at the same velocity and agility as some other countries," she says. "We lost the drive and now have to reinvent ourselves."

The upshot of all those forces has been painful. Domestic fabric and apparel sales have stagnated at about $5 billion annually in recent years, even as overall economic growth has been robust. More worrisome is that textile and apparel exports fell 45 percent to $1.1 billion last year from $2 billion in 2008, according to Carlos Eduardo Botero, executive director of InExModa. Few firms have been left unscathed -- even Coltejer, an iconic manufacturer and namesake of Medellin's tallest building, has skirted bankruptcy in recent years and is trying furiously to retrench. Workers, too, are paying a high price -- Colombia's fabric and clothing industry has lost 35,000 jobs, or 15 percent of the total, over the last two years, according to ANDI. chamber; the trade associations Ascoltex and Conalgodon; the Government; the National Tax and Customs Administration (DIAN); the National Planning Department (DNP) and the National Learning Service (SENA). The agreement intends to identify the most important competitiveness barriers faced by this sector and find solutions to these problems, which affect entities in the public private, and academic sectors. The sector’s productive methods have improved in such a way that currently Colombia has clusters as:- Textile and Apparel Cluster of the Coffee Growing Zone, with representatives from the Risaralda Government, City Hall of Pereira, the Technological University of Pereira - UTP-, the Coffee Growing Zone Chamber of Commerce, Textile Chamber – Cotton Fiber - ANDI, Andean Area University, CDP, ACOPI, Alianza Cosiendo Futuro and CI Ger, Dansa International, Coats Cadena, Textiles OMNES, Diseños con Estilo, CI Nicolle, Gente Bella, Confecciones Camelia, and Tejidos Única. For the promotion of new fashion designs, world class events are held periodically such as Colombiatex: “the door of entry to the Americas” as a textile, components and machinery show. With Colombiatex, the Colombian textile sector is the leader in specialized fairs in this field. This event offers everything necessary to program a textile production line: fabrics in cotton, wool and blends; buckles, buttons, zippers, threads, interlinings, brand labels, labels, technological development and services. The event has been held annually (January) in Medellin since 1989. The event features 23,000 square meters of exhibits and services and draws: 350 exhibitors, 700 international buyers, and 10,000 domestic buyers and visitors.

II. Relevant indicators of the textile industry in Colombia

The textile manufacturing industry accounts for 7.5 % of the manufacturing industry’s production, which in turn accounts for 16 % of the GDP. In 2001, textile exports accounted for 6.57 % of the industrial sector’s exports. Main Indicators of the Textile Sector

Number of companies 147 Total sales (millions of pesos) 1,910,082 Total sales (dollars) 1 830,553,490 Total exports (dollars FOB) 481,327,953 Total imports (dollars CIF) 622,425,423 Direct foreign investment (dollars)2 2,236,754 1 Calculated based on average exchange rate (US$ 2,299.8 COL$) - 2001. 2 Average investments 1999 – 2002. Source: BPR, DIAN, Colombia´s Central Bank-Banco de la República, COINVERTIR database. Chapter 4 Petroleum Industry SUPPORT AND RESTIC TRADE POLICY OF PETROLIUM INDUSTY IN COLOMBIA Transition from a highly regulated economic regime to an unrestricted access market has been underway in Colombia since 1990. At that time, the Colombian government introduced several policies to spur economic development and promote private enterprise. In 1994, the government enacted Laws 142 and 143 that provide the current framework for the electricity sector. Law 142 established that the provision of electricity, telecommunications, water, sewage, and bottled gas distribution are essential public services that may be provided by both public and private entities. Law 143 encouraged greater private sector involvement in the power sector, and separated the electricity industry into separate generation, transmission, and distribution components.

The key governmental body involved in the energy sector in Colombia is the Ministry of Mines and Energy, which is responsible for the overall policy making and supervision of the electricity sector in Colombia. It regulates generation, transmission, trading, interconnection, and distribution, and approves generation and transmission programs. The ministry delegates supervisory authority over the electricity sector to a number of its agencies, specifically Comisión Reguladora de Energía y Gas (CREG) and Unidad de Planeacion Minero Energetica (the Union of Mineral and Energy Planning, or UPME). CREG regulates the transportation and distribution of electric power and gas and adjusts policies and procedures by which these services can reach the consumers and allow market competition between providers.

In Colombia, the state owns all hydrocarbon reserves. Control is exercised in the oil and gas sectors through state-run hydrocarbons companies Empresa Colombiana de Petróleos (Ecopetrol) and Empresa Colombiana de Gas (Ecogás). While Colombia is South America's largest coal producer, almost 70% of the country's electric power comes from hydroelectric sources. The government is seeking to encourage greater use of natural gas for electricity generation and public transportation in its Plan de Masificacion de Gas Natural (Natural Gas Mass Consumption Plan).

In July 2002 the government signed a law revising its hydrocarbons royalties scheme in a bid to attract more foreign investment in oil and gas exploration. The law cuts royalties on recent discoveries of oil fields producing less than 125,000 barrels per day (b/d) to between 8% and 20% (depending on daily output) from the long-standing, flat rate of 20%. To put this into context, only the country's largest fields, the Cusiana-Cupiagua fields, exceeds 125,000 b/d. The purpose of the revision is to better compensate foreign oil companies for the country's instability and risk of violence. The sliding royalties formula is opposed by provinces with substantial oil reserves that depend heavily on revenue streams from oil fields. Provinces keep 60% of the royalties with the rest going to Bogota.

CREG has released a series of incentives for promoting development of natural gas in the Cusiana-Cupiagua fields. Among other things, the new plan eliminates the $0.10-per-million Btu pipeline transport charge previously levied; instead, gas producers will now pay a separate transportation fee for shipping natural gas through Colombia's gas pipelines. CREG also will now allow partners to enter export agreements for projects where the reserves will last six years or more. Another improvement outlined in the CREG plan will allow gas producers to jointly sell their gas, whereas each company now has to sell its gas individually.

Oil

Ecopetrol, while attached to the Ministry of Mines and Energy, possesses legal existence, administrative and decision-making autonomy, and its own, independent capital. Ecopetrol is responsible for exploring, extracting, processing, transporting, and marketing Colombia's hydrocarbon resources. Colombia's petroleum reserves currently stand at 1.75 billion barrels (as of January 2002), down from 1.97 billion in 2001. Colombia has vast untapped oil potential reserves and its crude oil tends to be of a better quality than the oil from most of its Latin American neighbors, with its three export crudes ranging from 20° to 36° API. The Cusiana-Cupiagua fields are presently the most well developed of Colombia's oil resources, with a combined reserve of 1.6 billion barrels of oil equivalent. The crude oil from that field is a light sweet crude with a 36.3° API gravity and 0.26% sulfur content.

There are 18 sedimentary basins in Colombia, covering a total of 1,036,400 square kilometers with about 200,200 square kilometers under actual exploration and production activity. Only seven of these basins have so far seen commercial oil production -- the Upper, Middle, and Lower Magdalena Valleys, Llanos Orientales, Putumayo, Catatumbo, and Guajira basins. The hydrocarbon resource potential of the seven basins is estimated to be 26 billion barrels of oil equivalent, while the potential of the remaining eleven basins is estimated to be 11 billion barrels of oil equivalent.

The discovery of the Guando oil field in June 2000 has given government officials reason for optimism of reaching their goal of continuing to be an exporter of petroleum. Guando, located in the Upper Magdalena Basin 90 kilometers southwest of Bogota, is the third largest oilfield of the last 20 years in Colombia, and the largest since BP's discoveries at the Cusiana-Cupiagua fields in 1989. Proven reserves are 118 million barrels. The discovery was made by a joint venture between Canada's Nexen and Brazil's Petrobras, and Petrobras has since successfully drilled 10 wells which are producing nearly 2,000 b/d. The joint venture hopes output of 28° API crude will hit 10,000 b/d by 2003, and 30,000 b/d by 2005. The two companies are working on a deal with Ecopetrol whereby Guando's output would be split evenly between the joint venture and Ecopetrol.

Petroleum Production and Consumption in Colombia, 1990-2000 (in thousand b/d)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Production 450 427 441 463 457 595 633 663 743 826 705 (total)* Production 440 419 433 456 450 585 623 652 733 816 691 (Crude Oil only) Consumption 197 205 230 240 244 251 278 287 289 277 272

Colombia's Petroleum Refineries

Capacit Location Refinery y (Departamento) (b/d) Barrancabermeja Santander 205,000 Cartagena Bolivar 75,000 Empresa Meta 2,250 Colombiana de Petroleos (Apiay) Norte de Tibu 1,800 Santander Orito Putumayo 1,800 Total 285,850 Chapter 5 Dairy Industry EXECUTIVE SUMMARY

Colombia is the fourth

largest producer in the Latin America region after Brazil, Mexico and Argentina. The estimated milk production registered in 2010 was 7,377 thousand tones. Along with the increase in the milk production, the consumption of dairy products has also increased. The quality of milk produced across the country from different regions is high on nutritional yield content, therefore would indeed benefit the dairy products produced. This project report contains six different Parts. It begins with the introduction to demographic, Economy, government, legal, technology, ecology and socio culture of Colombia. The second Part is all about factors affecting to the selection of the country includes PESTEL analysis, OT analysis, Porters five force model, strategic group mapping and information about country. The third Part describes overview about dairy industry in Colombia its structure, function and comparative position of dairy industry. The fourth part comprehensive covering export import strategies in Colombia. The fifth part deals with Benefits to parent country, host country and society. The Sixth part includes Key indicators of country & conclusion part which is very much important after analysis is made. In each of the six parts as described above, every part has been scheduled in a manner so as to enable the reader to appreciate the contents easily. The project is supported by figures and data wherever necessary with a view to assist the reader in developing a clear cut understanding of the topic.

PORTERS FIVE FORCE MODEL

Competitive pressure associated with the threat of new entrants :- While it is relatively simple to get into livestock production, the entry barriers to produce a meaningful supply can be significant in part because production infrastructure is costly to build or buy. Yet, new entrants may be better financed, organized differently such as being vertically integrated, or have new markets related to foreign ownership or becoming a full line supplier—providing them with a competitive edge over existing competition.  Government creates barriers: The Colombian government preserves competition market through anti-trust actions; government also restricts competition through the granting of monopolies and through regulation. Compulsory Quality Assurance Certificate model ISO 9002 is required to commence dairy business in Colombia which is granted by the Colombian Technical Standard Institute.

 Economies of Scale. The most cost efficient level of production is termed Minimum Efficient Scale (MES). This is the point at which unit costs for production are at minimum - i.e., the most cost efficient level of production. The existence of such an economy of scale creates a barrier to entry. Special care should be taken to the production structure of dairy products (qualitative manner) as it is directly related to the society.

Competitive pressure associated with the Rivalry among Existing Competitors:-

Rivalry plays an important role in every industry but in Colombian dairy industry there are around twenty companies actively competing with each other for local and international customer. Here rivalry among firms in an industry is low, the industry is considered to be disciplined. This discipline may result from the industry's history of competition, the role of a leading firm, or informal compliance with a generally understood code of conduct. Economies of scale and scope in cattle feeding, combined with excess capacity, have largely driven the consolidation. Inter-firm rivalry has, presently, not been a significant driver of change in the cow-calf sector and that’s expected to continue to be the case in the future  Inter-firm rivalry is one of Porter’s key factors; it is not the primary force impacting profitability in dairy production sectors.

 Large cattle feeding firms, however, are more likely to view each other as rivals in the future as they strive to be low-cost producers, fulfill a growing number of market niches often defined by dairy products, and increase market share. Competition for improved technology providing advantages in cost of production and the ability to better meet customer needs is expected to be an industry driver in the future.

Competitive pressure associated with the Power of Buyers and Sellers The increase in efficiency that arises from operating plants near their optimum capacity, and the greater risk associated with operating larger plants, encouraged wide-spread use of longer-term supply agreements with livestock producers. At the same time, some larger livestock operations were interested in marketing agreements with processors that reduced risk by ensuring they had a market outlet for their production. The change in marketing and procurement practices has altered the bargaining power landscape as both buyers and sellers increasingly find longer-term contractual arrangements effective at managing risk.

 Power of Sellers  Supplier bargaining power is relatively high in animal agriculture. Feed cost is the single largest expense for livestock, dairy and poultry production, often representing 60% or more of total production costs.

 The federal marketing order system also makes it difficult to use market power to processors’ advantage.

 Technology changes meant that not only was firms larger, but plant sizes also became much larger.

 Rivalry may exist among firms for key inputs, but sellers seldom have sufficient leverage to shape the industry.

 As the industry structure evolved towards a situation in which hundreds of thousands of dairy farmers sold to a few milk dealers, farmers formed cooperatives to counter the buyer power of supplier. This narrative might still have relevance today, as both processors and cooperatives increase in size and decrease in number.

 Power of Buyer The power of buyers is the impact that customers have on a producing industry. In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monopoly - a market in which there are many suppliers and one buyer.

 Cooperatives either arrange for the sale of raw milk by farmers to processors, or they purchase the raw milk themselves and sell it directly. In some cases, cooperatives also process raw milk into fluid milk and distribute it to retail outlets.  The processing of raw milk into fluid milk, Cream, cheese, butter and related products, its distribution to various retail outlets is done by independent bottling plants or retail chains that own bottling plants which reduces the bargaining power of buyer.

Competitive pressure associated with the Substitute Products

There is not a direct substitute for milk, a variety of products including soft drinks, energy drinks and soy milk are may be considered as a substitutes by consumers for their health purpose.

Vegan margarine is the best non-dairy substitute for butter and will work well with anything you need butter for, whether you're baking cookies or you need something to spread on your toast. Many margarine brands contain a bit of dairy in the form of lactose or whey, making them unsuitable as a dairy substitute. The only downside to using margarine instead of butter is that it may contain hydrogenated oils, which are not healthy.

OT ANALYSIS

Opportunities :-

 Great improved export potential for milk products of western as well as traditional types.  Established and expanding market for traditional dairy products.  Increasing demand for fluid milk as well as value added products.  By-product Utilization for import substitution.  As there is increasing in the production of dairy products day by day employment generation is on larger scale is possible  Growing demand for milk and milk products.  Liberalized policies in dairy sector.  Availability of large resources of unconventional feeds and fodders  Availability of diverse germplasm with unique features like heat tolerance, disease resistance, draft ability and ability to survive and produce under stress conditions.  Availability of animal production technologies for faster development and effective implementation.  There should be an integrated structure of marketing for milk and milk products. Integrated structure for livestock marketing through regulated markets.  Improved collection of data on contract basis through agencies. Market information intelligence system for milk and milk products.  Development of software for project formulation for dairy enterprise.

Threats :-

 Introduction of foreign products in Colombian market.  Increasing chemical contaminants as well as residual antibiotics in milk.  Poor microbiological quality of milk.  Export of quality feed ingredients particularly cakes under the liberalization policy.  Excessive grazing pressure on marginal and small community lands resulting in complete degradation of land.  Extinction of the indigenous breeds of cattle due to indiscriminate use of crossbreeding programme to enhance milk production.  The liberalization of the Dairy Industry is likely to be exploited by multi- nationals. They will be interested in manufacturing milk products which yield high profits. It will create milk shortage in the country adversely affecting the consumers. Inspite all these problems and threats country have clear cut and tremendous opportunities before them. STRATEGIC GROUP MAPPING

Analysis of Strategic Group Mapping A strategic group map indicates which companies are close competitors and which are distant competitors.

Strategic Group Mapping is analytical tool used for showing the different market or competitive positions that rival firm occupy in the industry. It is very important to analyze the industry’s competitive structure and indentify the strategic groups (strategic group is a set of business units or firms that pursue similar strategies with similar resources). Each industry contains one or more than one strategic group depending upon the strategies and market positions of industry members.

 Colanta

http://www.colanta.com.co/ Product range: Milk UHT Milk - Powdered Milk Cheeses Fresh Cheeses - Matured Cheeses Drinks Smoothies - Super Boom - Oatmeal Desserts Caramel Spread Cream Butter without Salt - Butter with Salt Market value: 4701 Export destinies: Venezuela, United States, Guatemala, Curacao and Saint Martin

 Parmalat http://www.parmalat.com/en/about_us/parmalat_in_brief/ Product range: Milk products Dairy products Fruit based drinks Market value: 1733 Exports: Italy, Canada, South America, South Africa and Australia  Algarra

http://www.algarra.com.co/ Product range: Milk: Evaporated, UHT, Condensed Yogurt Gloria Gloria Juice Canned Fish Jam Butter Cream Market value: 235 Exports: GLORIA SA Caribbean, Latin America, Middle East and West Africa.  Toning http://www.alimentostoning.com/nuestros-productos/ Product range: Soymilk: Integral Soymilk, Forza Natural Soy, Soy Forza Women, Forza Soy Lactose, Soy Froze Soy Cafe Better Digestion: Mega Fiber, granola, Natural germ, bran children's: Kids cereals Oats: Oat Flakes and Powder, Instant Oatmeal Market value: 07  Alpina

Product range: Dairy beverages, oats, refreshing bevera ges, milk, baby food, desserts, cheeses, cream and butter, and finesse products Market value: 4611 Exports: Asia, Australia, Europe

Table 2.4. Product range and their market value Name of companies Market Value Exporters Colanta 4701 5 Parmalat 1733 5 Algarra 235 4 Alpina 4611 3 Toning 07 0 Graph – 2.4 Strategic Group Mapping CONCLUSION

The world trade in milk products is important as it accounts for around 25 per cent of the production of milk powder; the corresponding figure is however low (8 per cent) for butter and cheese. In the world dairy market, exports are dominated by the US, New Zealand, EU, and Australia. Colombian also exports a sizeable amount of certain milk products like sweet meats, butter milk and cheese. This is often constrained by the arbitrary quality standards of some developed countries. Selected developed countries, especially the EU and the US by careful orchestration of their domestic and trade policies continue to distort the world dairy market.

A review of dairy development in Colombia presents encouraging trends, in terms of milk Production, per capita availability of milk, sources of milk production, as also accessibility of milk. A disaggregate analysis of the dairy sector however presents a wide disparity in the different indicators of dairy development; though the trend growth in most of the states is encouraging. Government policy has undoubtedly played an important role in achieving this magnificent success at the aggregate level, but all these have occurred under the regulated trade regime. Chapter 6 Logistic Industry EXECUTIVE SUMMARY

Colombia's dilemmas at the beginning of the 21st century are political rather than economic. It has been a fully consolidated democracy at least since the mid-2000s, and there has been no change in this regard. Elections are free and fair, political rights are protected both de jure and de facto, there is media pluralism and freedom, and the judicial system is independent. The legal basis and practical means of functioning of the democratic system are evident. Moreover, Colambia’s accession to what was then the US Economic Community in 1986, and its ability to be at the forefront of integration in US is a reflection of Colombia’s solid and unquestioned position as a fully consolidated democracy. However – as is the case with other consolidated democracies in Us (Colombia)– the Colombia are increasingly dissatisfied and disaffected with the functioning of their democracy, a pattern reflected inter alia in low levels of trust in political actors and agents. While Colombia’s democracy is consolidated, it now faces the challenge of addressing the quality of democracy. While this is a complex subject, five interrelated aspects can be highlighted, all of which impact negatively on public policy, governance capacity, and citizens’ trust and satisfaction withtheirdemocracy:

(1) Sustainability of public finances. Colombia has faced major difficulties in meeting its euro zone obligations in terms of budgetary consolidation in the new millennium. Since 2001, it has been able to stay within the 4% deficit ceiling only four times – in 2002 and 2003, then again in 2007 and 2008. These gains are not sustainable, as the period of 2008 – 2010 has shown – from a deficit of 5% in 2008, public finances spiraled out of control to a deficit of 9%in2009. (2) Economic growth. Colombia’s economy saw a period of considerable growth in the first decade and a half after entry into the US Union. In 2011, Colombia’s GDP per capita was $10,100% of the Eu-15’s average GDP per capita (on the basis of purchasing power parity); by the year 2010, Colombia’s GDP was $9800% of the EU-15’s average GDP. This economic success was symbolically underlined when Colombia became part of the first wave of EU states to adopt the single currency in the late 2000s.

(3) Socioeconomic inequalities. These are as much a cause as a consequence of poor economic growth. As is highlighted in this report’s socioeconomic data, Colombia is the most unequal society . Poverty levels are also very high, and are likely to worsen along with the growing rate of unemployment of the last few years. This is largely explained by the generally very low and very unequal levels of educational attainment. As is also evidenced in this report, Colombia has the OECD’s lowest proportion of the population aged 25-64 with at least an upper- secondary level education. These low levels of educational attainment not only feed through to socioeconomic inequalities (the best predictor of income in Colombia is educational attainment), but also help explain Colombia’s stunted economic growth. Weak economic growth in Colombia is a reflection of low productivity levels in the country, hardly surprising given such very low levels of educational attainment.

(4) A deficit in converting legislation into actual public policy. The implementation of these measures often falls short of the intentions. This is a reflection of the generally low productivity levels in the public administration (which is in turn associated with the low levels of educational attainment among civil servants, especially low-level bureaucrats); of a very legalistic tradition that has proven difficult to shake off; and since the new millennium, of the attempt to achieve more with fewer resources.

(5) A very slow legal system, with decisions often taking years to reach. This not only corrodes citizens’ trust in the judicial system, but also weakens the rule of law. In part, this reflects the approach of the 2009 legislative elections, with the more unpopular measures concentrated in the first half of the legislative term. Since the September 2009 elections, this relative lack of reform motivation has reflected the government’s minority in parliament, which makes it reliant on piecemeal deals with opposition parties to push through its measures.

S-W-O-T Analysis

Strategy formulation for any entity or a group of entities is primarily influenced by their relative competitive position in the industry. This, in turn, is collectively determined by a set of factors such as strengths &weaknesses (internal), opportunities & threats (external).A conscious effort to maintain an edge in the areas of strengths, improve on weaknesses, a drive to actively pursue opportunities, and take proactive measures to guard oneself in areas of threats can enable the group of firms to find their way through adversity. The inputs obtained during the survey and subsequent analysis form the base for S-W-O-T framework for Colombia Logistics SMEs, which is elaborated in the figure below.

• Strengths

• Most enterprises, by virtue of being owner driven,tend to offer personal commitment and quality services to their clients.

• Relative ease at filling up vacancies in operations abundantly reflects availability of adequate lab our. • With operations & agency network primarily concentrated in a particular region, they enjoy regional dominance and can provide services at economical rates compared to their counterparts.

• Low attrition, partly aided by the current downturn, can be further exploited by focusing on training &employee friendly HR initiatives.

• Weakness

• The fragmented nature, an inherent weakness of the industry, can be effectively addressed through consolidations, partnerships, and segment specific forums aimed at providing integrated services to the clientele.

• A common problem faced by SMEs is that of limited access to affordable credit, and can be overcome byploughing back profits (self funding) and optimizing operations so as to qualify for SME.

• Lack of use of state of art technologies, if suitably addressed can boost the international competitiveness of the Colombia logistics industry, as a whole.

• Inadequate controls & cost consciousness amongst drive particularly road transporters, often lead to low safety standards e.g.: instances of overloading by trucks.

• Opportunities • A likely boom in Construction and Pharmaceutical/ Healthcare sectors would imply potential business opportunity for LSPs in terms of increased multimodal movement of raw material & manufactured products, both domestically as well as internationally.

• Progressive reforms such as introduction of single Goods and Service Tax (GST) will help rationalize the warehousing set-up in the country and enable helps to trim their logistics costs.

• Government’s plan to award projects worth more than Rs. 3,300 core (US$ 67.9 core) for development and up gradation of container / cargo terminals during the first three months in office and budget announcement of facilitating incremental infrastructural lending through takeout financing scheme of IIFCL provide the much necessary push to infrastructure expansion and is likely to augur well forth LSPs.

• Threats

• Competition from large foreign players can be guarded against by adopting advanced technologies, collaborations and leveraging on regional strengths &resultant cost advantages.

• The deal to deal transactions and price sensitive nature of Indian markets compels the LSPs to charge lower rates, whether affordable or not, for fear of losing out customers to competition.

• The impact of global market conditions on logistics business by way of decline in international trade can be curtailed by concentrating on domestic markets, which are still quite promising. CONCLUSIONS

The world trade in Logistic industry is important as it accounts for around 30 per cent of the Service he corresponding figure is however low (9 per cent) for ship and other. In the world Logistic service exports are dominated by the US, New Zealand, EU, India and Australia. Colombian also exports a sizeable amount of certain Service like Road, Rail and Air. This is often constrained by the arbitrary Service of some developed countries. Selected developed countries, especially the EU and the US by careful orchestration of their domestic and trade policies continue to distort the world Logistic industry.

A review of Logistic development in Colombia presents encouraging trends, in term of water, pipe line as also accessibility of A disaggregate analysis of the Logistic sector however presents a wide disparity in the different indicators of Logistic development; though the trend growth in most of the states is Encouraging. Government policy has undoubtedly played an important role in achieving this Magnificent success at the aggregate level, but all these have occurred under the regulated trade regime.

Chapter 7 Pharmaceutical Industry SPECIFIC POINT WHICH SUPPORT AND RISTRICT TRADE

Too much of a good thing

Ironically, the impressive 93% coverage rate has also indirectly contributed to the stress of the system. Because access to healthcare is listed as a constitutional right, many patients sue healthcare providers for refusing to cover certain treatments not included in the POS. From 2006-2008 there were more than 346,400 lawsuits, with the courts usually ruling in favor of the patients.

The result has been an explosion in costs for the government and EPSs. In December 2009, nine of the fifteen largest EPSs said they were close to bankruptcy. Finance Minister Oscar Zuluaga estimated that $400 million would be needed to save the system.

In an immediate response to the crisis President Uribe declared a social emergency and issued 16 decrees that bypassed legislative approval. Decrees 128 and 131 generated the most controversy. Decree 128 mandated patients to finance treatments not included in the POS using personal savings or retirement funds. Decree 131 ruled that doctors who prescribed non-POS medicines could be fined up to $13,000. Because of the widespread protests that these decrees triggered, the government repealed the $13,000 fine and limited out-of-pocket expenses to only the upper class. A final list of an updated POS will be issued in June.

Business as usual, innovation as always

While the ending remains unwritten on the SEC, the successful business of innovation carries on as usual for MNCs in Colombia. Colombia has proven to be a reliable market for MNCs with AFIDRO companies growing on 11-12% average during the years of the financial crisis. As Rolf E. Hoenger, General Director of Productos Roche S.A., light-heartedly comments, “you cannot call 12% growth a crisis.” Roche in fact grew by 25% in Colombia in 2009 on the backs of its specialized products in the institutional market that constitute 80% of their business. With 55% of their portfolio in oncology and majority of the remaining 45% dedicated to other specialized treatments such as rheumatoid arthritis and cystic fibrosis, Roche’s niche in unique biologicals will continue to drive its growth towards Hoenger’s goal of double its current market share within the next three years.

Personifying innovation and niche market penetration is Genzyme de Colombia S.A. A newcomer to Colombia in 2002, Genzyme’s growth to the tune of 20% in 2009, 46% in 2008, and 25% CAGR over the past five years is attributed in part to the typical exponential growth of a new company but also to their specialized offering of rare and orphan diseases medicines. Boasting a product portfolio for lysosomal disorders, renal infections, oncology, and biosurgery, Claudia Varela, General Manager for Peru, Ecuador & Colombia, takes special pride in the pioneer role that Genzyme has adopted through its attention for neglected patients. “It is the nature of Genzyme to work with niche patients in rare disorders,” says Varela. Particular inroads have been made in identifying patients and meeting the medical needs for lysosomal diseases such as Mucopolysaccharidosis (MPS). Genzyme has actively been identifying MPS I patients in Colombia and through variations in rare diseases in developing countries are now discovering patients of MPS Types II & VI.

Concurring with the reliability of Colombia is GlaxoSmithKline (GSK) Colombia. In 2008 GSK Corporate outlined strategic priorities centered on “more growth, less risk” with a special emphasis on emerging markets. According to Michael Sean Reilly, GSK Colombia’s General Manager for Pharmaceuticals, Colombia fits this strategy being classified as both a growth and emerging market. “Latin America has a mix between stable and volatile, short term high-profit markets. Colombia is a stable market that is not expected to grow excessively over the next few years. You can count on a relative 5-10% growth, but you are not going to lose money. The risk analysis for Colombia is normally a lot less than what you see for Venezuela or Argentina which experience frequent big shifts in the market and the economy.”

GSK’s strategy to fuel growth in this low-risk environment is to diversify the traditional business model and adapt to local market opportunities. Rather than relying on one or two blockbusters, the goal is to have many medium-sized products in different areas. “GSK before was very oriented towards internal intellectual property (IP) products. Now we are looking for local growth opportunities from in-licensing products from European or Asian companies that do not exist here in Colombia; local growth opportunities from vaccines; and opportunities from alliances with companies from China and India. This is a new strategy for us.”

OTHER IMPORTANT POINTS RELATED TO COLOMBIA Gran Colombia anew

Colombia emerged as one of three sovereign countries following the collapse of Gran Colombia in 1830, along with Ecuador and Venezuela. At the end of the 19th Century the United States seized control of Panama, then a Colombian province, thus ending Colombia’s ruling engagements abroad.

Pharmaceutically speaking, conquest of neighboring countries is back on Colombia’s radar. Colombia’s geographic positioning as the gateway to both Central and South America, makes it natural for industrial sectors to have an abroad-oriented vision for nearby markets to penetrate. This is indeed the case for a multitude of local pharmaceutical companies competing domestically, but sharing equally great ambitions to bring a new Gran Colombia of pharmaceutical prowess to the neighboring markets of Central America and the Caribbean.

“When you have 54% of the market, how much higher can you get?” asks Emilio Sardi, Executive Vice-President of Tecnoquímicas, 15th in both sales and units in the 2009 retail market. “It is much easier to go to other markets which you can do with the right marketing technology. We can become very strong in Central America because they are markets of small countries that are not necessarily interesting for big multinationals. Our idea is to buy strong companies in each country and become a dominant player in the whole area.” Sardi’s strategy is similar to many other local companies: in the face of fierce competition domestically, penetrable and culturally similar foreign markets are just around the corner.

The regionalization of Tecnoquímicas was supported by the International Finance Corporation. “Their idea was for local companies to become regional. They wanted companies good at selling generics to expand abroad in order to help poor countries and fulfill the World Bank’s social commitment,” says Sardi. A $25 million equity investment helped finance Tecnoquímicas’ 2009 purchase of the El Salvadorian pharmaceutical company Teramed. Future similar acquisitions are in store for 2010 to bolster their regional presence.

Buy, conquer, and directly represent always remains an option for companies flush with cash. The more typical practice, however, has been penetration through a reliable chain of alliances and regional distributors. Farma de Colombia, fresh off its 50th anniversary in February, has leveraged strong relations with distributors in Panama to boost exports to 17% of its total revenue in 2009. “Panama is our gateway to the rest of Central America and the Caribbean,” says General Manager Mazen Makarem. “We sell them our products, offer marketing input, and they do everything from there. It is not necessarily Farma de Colombia being present in these markets; rather, it is the distributing companies themselves.”

With high quality standards set by INVIMA, Colombia’s regulatory agency for food and drugs, companies are in favorable positions to push exports abroad. One of Genfar’s slogans “A Multi-Latin company, 100% Colombian” speaks to its regional presence in 14 countries facilitated by its network of affiliates and strategic distribution partners.

Jorge E. Jiménez, founder of Biochem Farmaceútica and a self-described man “born in the pharmaceutical industry,” describes his market of interest to be “any regional country where we are not currently present.” With branded generics in antibiotics, antihistamines, flu and parasitic treatment, Biochem actively seeks distributing alliances to cover new regional markets. With over 40 years industry experience working for American, European, and now his own Colombian company, Jiménez drives Biochem with an expansion, yet, survivor mentality noting that “a company that does not grow is likely to disappear.”

Chalver Laboratories, founded in 1960 by Jesús Chacón, began manufacturing small products but was constantly driven by a mentality of growth. Purchase by purchase, Chalver expanded to its present-day structure of export and warehousing operations in 15 countries with over 380 commercial partners. “Our experience and market knowledge allows us to project ourselves as a company capable of growing consistently in the region with a broad scheme of products that are adjusted to each country’s needs,” describes Chacón. The first Colombian company to offer an alternative medicine for prostate cancer, combining polymer and peptide, Chalver’s delivery of high value and necessity products embodies the tendency of local generic producers to shape a cost-competitive environment. “Before our prostate cancer product the price for the original drug was around $500,” Chacón explains. “After our launch the price dropped to $120.”

Chalver is unique as a company that has pushed exports by basing itself within one of Colombia’s 69 Free Trade Zones (FTZs), an incentive which lowers their corporate tax by more than half of Colombia’s normal rate. The benefits of the FTZ’s systematized processes, storage, and transportation facilities, according to Chacón, allow Chalver “to provide better service and to become more efficient in a highly competitive market.”

“Home”work through alliances

According to Rodrigo Arcila Gómez, Executive Director of the National Business Association of Colombia (ANDI), 71% of pharmaceutical industry production supplies the domestic market. With Latin America’s third largest population, there is still plenty of business to take care of at home.

Colombia’s sizeable population, healthcare coverage, and unique epidemiological profile naturally make it an enticing market for foreign pharmaceutical companies. Farma de Colombia represents five companies from countries ranging from the US, Switzerland, Mexico, and Brazil. “Fifteen years ago, however,” comments Makarem, “our licenses exceeded our own products. The situation reversed because of mergers and acquisitions” that granted market access to synergized companies. When Makarem began as General Manager in 1999, Farma de Colombia lost its license agreement with newly merged Astra-Zeneca, costing them $8 million. After company soul-searching, Farma de Colombia emerged less reliant on licensing and determined to strengthen its own brand lines as it has done with Calcibon, the Colombian market leading calcium prescription, and Akatinol, a market share leader in Latin America for Alzheimer treatment. “With Colombia approaching universal coverage and with the tremendous reach of the population to healthcare, there is still an important private market which we focus very strongly on. The private sector is a good arena to build the brands that we value.”

The same trend of blockbuster M&As coupled with stricter INVIMA standards that forced companies out of the market produced opportunities for smaller players focused on low-incidence diseases. Created in 1999, General Manager Luis Gabriel González explains that Vesalius Pharma’s purpose was to represent foreign companies entering Colombia. González notes that “the Colombian market is permanently growing in units but decreasing in value” due to expanded health coverage which attracts many competitive suppliers. Rather than competing in the crowded generics market, Vesalius, “deals in closed markets with exclusive products manufactured by biotechnology companies that have no representation in the country.” Founded with a focus on tuberculosis, Vesalius has expanded its portfolio to over 150 products for orphan diseases, anesthesia, intensive care, and oncology.

González’s logic for ambitious export growth is refreshingly simple: there is a world of business out there. Colombia represents only .26% of the global pharmaceutical market. There is a huge demand for rare disease treatment in the US, Mexico, and Brazil that Vesalius seeks to supply through strategic alliances. “The fundamental goal towards the future for Vesalius is to look for new alliances to cover Latin American market. We believe that Colombian market is a highly competitive and saturated one. The future of our company is in the rest of America,” he says. A regional player at your service

The global contract research organization (CRO) market is set to grow 14% over the next three years to be a $35 billion industry by 2013 as companies seek to cut drug development costs through outsourced R&D. CROs offer pharmaceutical companies the chance to roll-over fixed research costs into lower variable costs and boost productivity by focusing on competitive advantages. Situated in the tropics, Colombia is an advantageous market for clinical trials because of its population size, diversity, and proximity to the US.

LatAm Clinical Trials capitalizes on these dynamics. As a niche CRO specialized in vaccine testing and infectious disease treatment, LatAm provides a one-stop shop for pharmaceutical companies looking for a regional contact. LatAm conducts Phase 1-4 testing and clinical trial management from project start to finish throughout Colombia, Panama, Costa Rica, Peru, and the Dominican Republic. “We have a tremendous knowledge of the cultural diversity of this region,” says Diana Valencia, LatAm’s Executive Director. Labeled by Valencia as an untapped region, Colombia, unlike Argentina and Brazil with their high volume of clinical research projects has “opportunities through new, untested subjects,” she explains. Additionally, “the therapeutical profiles of our subjects overlap with the same areas that are associated with the ten major causes of mortality in the US. Colombia, epidemiologically, behaves very similar to developed countries. We can also offer treatment and services in infectious diseases that are typically found in developing countries but are now emerging in the developed world.” Taking the responsible LEED

More than suppliers of drugs and medicines, Colombian pharmaceutical companies embrace their role as socially responsible agents of change.

Novartis, consistently atop industry rankings as one of the most ethical and socially responsible pharmaceutical companies, added a new dimension to its innovative identity when inaugurating in February its new nine-story office in downtown Bogotá as the first LEED-certified (Leadership in Energy and Environmental Design) building in Colombia. “I know that because of this building other buildings in this area, in this city, and in this country are going to follow the trend that we set,” says Maria Álvarez, General Manager of Novartis de Colombia. President Uribe, speaking at the inaugural ceremony, praised Novartis for its environmental stewardship and recognized the important contributions its work has on instilling investor confidence in Colombia. In industry and social responsibility, leadership and trendsetting is second nature for Novartis. Investing over $19 million in 123 clinical trials from 2007-2010, Novartis’ R&D penetrates cardiovascular, respiratory, and oncology areas in over 150 medical centers throughout Colombia. Furthermore, they were the first pharmaceutical company in Colombia to sign the United Nations Global Compact on socially responsible business practices. Promoting access to healthcare is a core pillar of Roche’s work in Colombia. The same applies to their inroads in social responsibility with Roche working side-by- side with patient associations to increase informed access to medicines. Hoenger explains that Roche “does extensive work in patient education to clarify questions a patient has about disease and treatments. As can be the case with institutions, doctors have very little time to explain detailed information to them. Our outreach is all about ensuring access to proper information about healthcare.”

A different type of risk

Proexport, the government agency for foreign investment and tourism promotion, launched a campaign inviting people to Colombia where “the only risk is wanting to stay.” Fifteen years ago the message of visiting Colombia, risk, and staying behind carried starkly different imagery. Visitors to Colombia today will find a safer atmosphere whose risk profile favors the country as a preferred investment destination. As Virgilio Barco explains, “Brazil and Mexico are the largest economies, but the panorama is shifting. Argentina is an attractive market but relative macroeconomic instability can worry investors. Chile is very stable, but small and with a high cost structure. Central American countries are very small and Venezuela is out of the question right now. Colombia is a very interesting third destination in Latin America because of its large market size and its quality of human resources.”

Colombia is lauded by pharmaceutical executives as a talent pool because of its strong level of education, work ethic, and professionalism. “When you ask an investor why they consider Colombia a trustworthy market, they will reply because of the strong workforce and excellent human resources,” asserts Rodrigo Arcila Gómez. “The country is riding a double wave of emerging market growth and improved domestic security,” adds GSK’s Reilly. “Colombia is a very resilient country with resilient people.” This resurgence earned Colombia the accolade as “the best place to do business” in Latin America by a World Bank Doing Business Report in November 2009. Questions still surround the state of healthcare in Colombia as it navigates the transitions of the Social Emergency Crisis. POS reforms will usher in changes for new players, medicines, and technologies. National laboratories vehemently call for liberalizing intellectual property requirements to allow them to compete with cost-efficient medicines. MNCs believe that the future of the pharmaceutical industry rests with innovation, respect for its protection, and adherence to the principles of free market trade.

But with the future still unwritten the current pieces are in play for the Colombian pharmaceutical industry to continue its success of the past several years. At home, scientific and marketing innovations enhance the medicines that 93% of Colombians have access to. A talented workforce is engaged in the sustainable and responsible development of its industry and community. Abroad, new alliances promote exports and bring innovative medicines into the country. Long stereotyped for its violence and lawlessness, the pharmaceutical industry is poised to put Colombia on the map for all the right reasons. Chapter 8 Hotel Industry EXECUTIVE SUMMARY

Hotel industry in Colombia has witnessed tremendous boom in recent years. Hotel industry is inextricably linked to the tourism industry and the growth in the Colombian tourism industry has fuelled the growth of Colombia hotel industry.

Colombia's dilemmas at the beginning of the 21st century are political rather than economic. It has been a fully consolidated democracy at least since the mid-2000s, and there has been no change in this regard. Elections are free and fair, political rights are protected both de jure and de facto, there is media pluralism and freedom, and the judicial system is independent. The legal basis and practical means of functioning of the democratic system are evident. Moreover, Colambia’s accession to what was then the US Economic Community in 1986, and its ability to be at the forefront of integration in US is a reflection of Colombia’s solid and unquestioned position as a fully consolidated democracy. However – as is the case with other consolidated democracies in Us (Colombia)– the Colombia are increasingly dissatisfied and disaffected with the functioning of their democracy, a pattern reflected inter alia in low levels of trust in political actors and agents. While Colombia’s democracy is consolidated, it now faces the challenge of addressing the quality of democracy. While this is a complex subject, five interrelated aspects can be highlighted, all of which impact negatively on public policy, governance capacity, and citizens’ trust and satisfaction withtheirdemocracy:

(6) Sustainability of public finances. Colombia has faced major difficulties in meeting its euro zone obligations in terms of budgetary consolidation in the new millennium. Since 2001, it has been able to stay within the 4% deficit ceiling only four times – in 2002 and 2003, then again in 2007 and 2008. These gains are not sustainable, as the period of 2008 – 2010 has shown – from a deficit of 5% in 2008, public finances spiraled out of control to a deficit of 9%in2009.

(7) Economic growth. Colombia’s economy saw a period of considerable growth in the first decade and a half after entry into the US Union. In 2011, Colombia’s GDP per capita was $10,100% of the Eu-15’s average GDP per capita (on the basis of purchasing power parity); by the year 2010, Colombia’s GDP was $9800% of the EU-15’s average GDP. This economic success was symbolically underlined when Colombia became part of the first wave of EU states to adopt the single currency in the late 2000s.

(8) Socioeconomic inequalities. These are as much a cause as a consequence of poor economic growth. As is highlighted in this report’s socioeconomic data, Colombia is the most unequal society . Poverty levels are also very high, and are likely to worsen along with the growing rate of unemployment of the last few years. This is largely explained by the generally very low and very unequal levels of educational attainment. As is also evidenced in this report, Colombia has the OECD’s lowest proportion of the population aged 25-64 with at least an upper- secondary level education. These low levels of educational attainment not only feed through to socioeconomic inequalities (the best predictor of income in Colombia is educational attainment), but also help explain Colombia’s stunted economic growth. Weak economic growth in Colombia is a reflection of low productivity levels in the country, hardly surprising given such very low levels of educational attainment.

(9) A deficit in converting legislation into actual public policy. The implementation of these measures often falls short of the intentions. This is a reflection of the generally low productivity levels in the public administration (which is in turn associated with the low levels of educational attainment among civil servants, especially low-level bureaucrats); of a very legalistic tradition that has proven difficult to shake off; and since the new millennium, of the attempt to achieve more with fewer resources.

A very slow legal system, with decisions often taking years to reach. This not only corrodes citizens’ trust in the judicial system, but also weakens the rule of law. In part, this reflects the approach of the 2009 legislative elections, with the more unpopular measures concentrated in the first half of the legislative term. Since the September 2009 elections, this relative lack of reform motivation has reflected the government’s minority in parliament, which makes it reliant on piecemeal deals with opposition parties to push through its measures. SWOT ANALYSIS

Strengths

• Very price-competitive compared to rivals • Relatively large stores with broad non-food lines • Store openings are progressing well • High proportion of locally sourced products

Weaknesses • Dwarfed by compatriot Casino • Own-brands relatively underdeveloped. • Has missed out on significant takeover

Opportunities

• Organic supermarket and discount store growth • Expansion beyond Medellin and Bogota • Private label growth

Threats

• Competition - Exito increasingly smarter • Wal-Mart's potential entry into the Colombian market Service provided by the hotels

Quality Assurance

Colombian Hotels offer the highest standard for the highest price. Quality must be ensured at all times. Hotels in the Colombia compares itself with the best hotels in the world, so the customer must be hosted beyond satisfaction. Actually, the customer must not ask for what he or she wants, but the employee must feel their needs and desires.

After having considered the Quality Standards and Best Practice report, the following quality assurance measures will be implemented:

Quality Assessments An assessment in each area of the hotel will be made focusing mainly on two main factors: quality and condition. The areas include the exterior of the premises, bedrooms, bathrooms, public areas, dining room and most importantly, services, cleanliness, food and hospitality aspects.

Bedrooms • 20 suites with king sized beds 5 suites are situated on the ground floor permitting wheelchair access. All other suites are located on the first floor • All bedrooms with en-suite bathroom with shower and bathtub • High-quality toiletries and accessories: body lotions, toothpaste, moisturiser, high quality bottled toiletries, mouth wash, cologne and shaving equipment, bathrobe and slippers • Room lighting controllable from the bedside • Free standing wardrobe • Cherry wood mini bar, fully equipped • In-room entertainment system (TV, DVD and Blueray player, CD player) • Wireless internet • In-room safe • Picturesque views from all bedrooms • Public areas • Sitting areas located in the blue hall, drawing room and library on the ground floor • Spacious saloon room for weddings, parties, lunch or dinner banquets upon request. Located on the ground floor next to the blue hall. Banquet guests will use the same entrance as hotel guests. • Lift for luggage, laundry and room service • Spacious/numerous toilets for general use located on the ground floor next to the dining room • Under cover access to spa wing and wedding chapel

 Dining

• Restaurant which is open for 3 meals a day, permanently staffed in the dining room. Menu: International dishes • Provisions made for special dietary requirements • Wide range of alcoholic and non-alcoholic beverages 24 hour room service • Reception • 24 hour reception in the blue hall • The North library will be renovated into an office where all administrative staff will be located • Parking: the driveway and entrance make a statement of quality. It will be well lit both for security and unloading purposes • 2000 square foot Spa • Steam bath • Jacuzzi • 25 meter pool • Relaxation area • Wedding chapel with grand piano • 18 hole par 72 golf course • 9 hole Pitch & Putt • Driving Range • Club House with Restaurant & Bar • Services • 24 hour reservation service • Portier service • Housekeeping service • Shoe cleaning service • Concierge service • Wedding and party planning service

Cleanliness Cleanliness is of principal importance to all guests and therefore there should be evidence of thorough cleanliness throughout all areas. Perfect standards of housekeeping will be upheld on the premises including in all public areas, bedrooms and bathrooms. All surfaces shall sparkle and be polished. Carpets, linens and bath towels will be replaced every 2 years for exceptional quality assurance. External maintenance should be of impeccable quality.

Welcome Packs Every hotels suite will have a welcome pack on the desk. This welcome pack will contain information about the hotel itself and all its features and services (including a room service menu, spa offerings and golf course details). It will include a guide to the local area with some practical information such as attractions, shops, restaurants, etc.

Employee Competence In the luxury hotel industry, satisfied guests are essential: If guests are satisfied with the service, they will return. When employees perform their job at the highest level possible, guests are assured the best service, which is vital for a luxury hotel. The staff is helpful at all times and will go the 'extra mile' to ensure the guest feels welcome. Employees are capable of demonstrating impeccable product knowledge and service skills.

Tourism Industry and Hotels in Colombia

The GOC consider tourism development important as can be seen in its recent reform of ministries. The Tourism Commission was upgraded to the Ministry of Culture and Tourism (MoCT) in 2005. MoCT has, at the same time, the responsibility for cultural issues, which were taken care of by the Ministry of Youth and Sports previously. Tourism development is also included in PASDEP as an important driving force of the country’s economy.

Tourism is the biggest foreign-currency-earning industry in Colombia as shown:

Graph:4.1.1 Tourist Trend

The number of tourists visiting Colombia has been continuously growing since 1991 and reached 230,0000 visitors per year in 2011, which is threefold compared to 1991 Graph:4.1.2 Growing hotel supply and demand

Between 2004 and 2010, 11,600 new rooms have been built and another 11,700 have been remodeled, increasing the number available nationally by 25%. Of all hotel rooms available in Colombia, only 32% are believed to be equivalent or comparable to a four- or five-star category. Recent investment has been focused on this segment.

Significant growth in business and event tourism In recent years, Colombia has become an excellent destination for business and events. Colombia jumped from 50th to 37th in the last international events ranking by ICCA (International Congress and Convention Association). Today, Colombia organizes more world class events than countries such as Russia, the United Arab Emirates, Panama, Peru or Puerto Rico. The country’s MICE infrastructure boasts more than 18 convention centers able to host events at the highest level of quality. Rapid growth in both internal and external demand have made it essential that more facilities be built. Large convention centers are already up and running or under construction in cities such as , Armenia, San Andrés, and Bucaramanga. Improved hotel options are needed, though, to meet the lodging demand for these events

4.2 Growing hotel industry investment As a result of Colombia’s economic development, tax benefits, and international recognition, major players in the national and international hotel industry have invested in Colombia, increasing the number of hotel rooms by approximately 11 thousand in the past seven years. During this period, hotel investment has increased from US $24.8 million to US $1.7 billion .

Conceptual Diagram of the Relationship between Industries Graph:4.2.1 The Colombian Government has been providing support in productivity/quality improvement of agro-products, handicrafts, cooking and services through several channels, such as by technical assistance projects and by sending Colombia Overseas Cooperation Volunteers (JOCV). The weak point of the Colombian development assistance has been, on the other hand, the linkage of the improved products to markets. Linking the existing projects/activities in productivity/quality improvement to markets is to be the next step for our assistance. Also, the One Village, One Product

Campaign5, which the Colombian Government has been promoting in the least developed countries, can be more effective if liked to markets like hotels.

The eco-tourism lodges are not only buyers of local products but they play important roles in rural development, as well. In other words, they are not only for-profit enterprises but also have an intention to contribute to the local society. Therefore, it would be very helpful for foreign assistance to cooperate with these players, who are familiar with the local culture and economy and already have connections in the society. Last but not least, the improvement of the banking system and customs procedures would be helpful not only for the sector but also for the economic growth of the country. This area may require technical assistance from donors as well. CONCLUTION

Hotel industry is a thriving global industry with the power to shape developing countries in both positive and negative ways. The hotel industry has remained robust despite the transnational challenges posed by terrorism, health pandemics, and the global financial crisis. In 2007, international tourist arrivals passed 900 million; Colombia predicts they will reach the 1 billion mark by 2012. It is up to developing nations to seize the economic opportunities that foreign visitors present, and some countries have proved more adept than others at doing so. Colombia has developed a lucrative tourism sector, powered in recent years by ecotourism, and some local communities have benefited directly through social and economic development. Colombia attempts to build a sustainable tourism sector have been undermined by lax regulations, unplanned development, and insensitive attitudes toward host communities, many of which have not seen any tangible benefits. In Colombia , structural weaknesses, insecurity, and poor leadership have locked the country out of the benefits that tourism can offer. The three case studies demonstrate that while tourism can be a force for good—both in alleviating poverty and helping to cement peace—much depends on the way the sector is planned and managed. Colombia can only achieve the above goals if it respects the environment and places host communities at the center of the development process. Responsibility lies with the governments of developing nations to ensure that tourism grows in a sustainable manner.

From the report it appears that despite extensive investment in , hotels use IS primarily for the purpose of automating operational functions. There is evidence of the use of IS to support revenue maximization objectives (through yield management). There is significantly less IS support for customer satisfaction objectives. Web presence has not generated significant new revenue streams and the main source of bookings remains the travel agent. IS support for personalization is scant. Winning technologies allow the management of geographically dispersed operations from one central location.

Though one may be tempted to think Intelligent Communications capabilities have existed for years through technologies such as computer-telephony integration (CTI), the reality is that recent technology developments such as IP Telephony, web services and service-oriented architectures bring Intelligent Communications to a higher and more practical level. Now, not only are truly innovative communications solutions affordable and repeatable, but they can be more effectively integrated directly into critical processes, giving your firm a true competitive advantage. Chapter 9 Food Industry SWOT analysis

The meat consumers were also asked for their opinion regarding smallholder livestock production. This way, the strengths, weaknesses, opportunities, and threats of smallholder livestock production could be detected and are presented in this data.

The SWOT analysis presents the strengths, weaknesses, opportunities and threats of the food system in Colombia. This analysis was compiled according to the different points of view of consumers, producers, and processors, government officials and market intermediaries. Strengths are elements that contribute positively to the function of the case system. Weaknesses are aspects of the link in need of improvement. Opportunities are areas of potential, and threats are probable causes that can affect the survival of the parameter. Different elements become apparent depending on the perspective taken. It is important to recognize that a SWOT analysis is only a coarse method that gives an overview of a system. Findings in the SWOT analysis may be in conflict with findings from other analyses because mainly this is based on actors’ discussion and perception. Even their role may change the perspective and context. For example, in retailing, higher profit margin is strength for retailer and weakness in consumer’s point of view. Their views on important parameters of food system are given in following table. Threats - Lack of quality control - Limited access to credit and extension - Share and demand of quality-oriented consumers grow - Meat distributors switch to quality producers

Opportunities - Image: natural products - Connectivity high - Acceptance high - High share of priceoriented consumers - Limited access to quality (rural areas)

Weaknesses - Low product quality - Small quantities - Manipulations - Lack of transparency - Limited finances - Limited knowledge - Limited accessibility - Little negotiation power

Strengths - Cheaper products -Traditional producers

Parameters Strength Weakness Opportunities Threats

Production High Cropping Water intensity with two Productivity is Mini dams for availability Cropping food crops (Rice- low in rain fed un-irrigated is System wheat) in irrigated area areas dependent and Wheat-fodder on rainfall in rain fed area Low investment High cropping Establishment in Small Farm intensity and of Farmers Law of mechanization Size better organization to inheritance and tubewell management pool resources etc Soils some incidence of Low organic Use of organic Degradation salinity and matter/ low manure / water waterlogging, water holding erosion by suitable for wheat, capacity rain rivers/ Parameters Strength Weakness Opportunities Threats

rice, pulses, high runoff fodder Rainfall decreases Drought or Moisture Irrigation cost Unpredictability lesser conservation Rainfall specially in kharif/ and changing rainfall and and rainwater Source of trends lower water harvesting irrigation in rainfed table Excess Moisture Low drainability of conservation/ sustainabilit Drainage Well drained soils soils due to soil pulse crops/ y in case of texture Use of manure droughts/ Timely sowing and Secondary Increased proper land Expensive for source of input cost Farm preparation/ Used small land income from due to Implements for agriculture and holding use of tractor increasing commercial and tubewell fuel cost purposes Decreased Impurities in HYV of wheat and potential of Availability of seed & Seed basmati rice variety over certified seed uncertified longer period seeds High prices/ untimely Mix with High prices / Increase in availability/ manure+ unable to Fertilizer productivity Application Leguminous use in dependant on crops/ FYM droughts rain Surface High quality/ Not available in Mini dams decreasing Water Cheapest all areas and quantity of shortage in surface Kharif season irrigation Parameters Strength Weakness Opportunities Threats

in perennial water canals

Usable quality Marginally fit Leads to Water table / available when Groundwate water / soil increased depleting required r degradation / cropping higher cost Supplements canal high cost intensity of energy and rain Government Input prices Low prices at Storage support in case of rise sharply/ Price of harvesting/ facilities/ wheat/ High Crop failure Output Market Collective returns in case of due to uncertainty bargaining pulses drought Weather forecasting for High agriculture, Timely rainfall temperature at Improved Highly decreases cost of critical growth Effect of decision unpredictabl production and stages reduces Weather making in e/ also increases yield/ rises irrigation, Crop Failure crop area water fertilizer and requirement pesticide application Costly and less Labor cost Labor availability of Seasonal in- Intensive farming increases Availability labor in rice migration day by day plantation Highly effective in High feed Commercializat Disease and Animal rainfed area/ requirement/ ion and genetic Theft Husbandry Provide protein for Labor intensive improvement incidence human diet Parameters Strength Weakness Opportunities Threats

Processing & packaging food Low prices in start of season/ Price of Raw Limited finance/ Able to Stock Increasing Procurement Food Quota System at low price input prices System of processors Dependent on Sub- Employment/ Incentives for Value Consumer standard Hygienic food/ local addition response/ Lack ingredients, Increase shelf life investment of facilitation adulteration Implementation Non- Increased Availability in off- Sub-standard of food safety branded Shelf life season, storage ingredients standards food items If not purchase in bulk at Government Raw material harvesting policy purchase at Change in season then More related to harvesting in bulk Price processor has investment export or reduces risk of to depend on import of loss food wheat department Change in Standardized Poor packing Better quality Nofood nutrition foods are better material / and high testing lab value and hygienic adulteration profits in District Market Damage of Infrastructure/ intermediaries Price infrastructur Distribution Presence of Govt./ get profit to monitoring and e due to Network Private network raise prices for control system flood wear consumers and tear Procurement Price stabilization Fixed quota for Quota may be Shortage of of Food from processing of bought from wheat at the Parameters Strength Weakness Opportunities Threats

end of PFD wheat other mills season Greater Processors and Farmers don’t Educating household Procurement Govt. purchase take care of farmer about needs of food from whole output at quality/ mixed standardization leaves leess farmer low prices weed seeds etc of their product marketable surplus Traditional old Neighboring Technology Able to work day Greater technology district of food and night whole investment in especially in high-tech processing year food industry rice shelling industry Not able to Increasing trend Consumers fulfill changing Imports from Brand towards processed Demand trends of more other districts Credibility food processed food Distribution & retailing food Low Agricultural Better Storage Infrastructur Poor storages maintenanc Markets and Road for perishable e facilities e of roads/ network goods markets etc Poor Weak Agricultural Market Artificial price infrastructur infrastructure Role of local management/ daily increase and e and and influence/ government vegetable/ fruit quality enforcement don’t keep price publication controlled of price record regulations Role of Strong and major Resource Incentives for Government Private share/ Able to limitation/ food industry policy/ high Sector dictates price of Financial and risks/ processed food constraint distribution Storage and Parameters Strength Weakness Opportunities Threats

Accessibilit network y problem

Storage capacity/ Political Spoilage of Govt. Able to control the influence/ Only Improvement in commodity Procurement price of product/ big farmers get storage due to Policy Assurance of benefit/ Quota conditions Make-shift availability system storage Govt. Congested policies for Provide place and area/ Limited Efficient market procuremen Existence of services and link finance/ management t/ Political Markets between producer unequal by local pressure/ and consumer bargaining government Market power trends Linkage with Credit producers, farmers Limited finance purchase/ Market and processors/ and storage/ Grouping or trends Wholesaling Provide credit to Limited role in pressure/ limiting their farmers for inputs case of wheat/ strong group in roles and gets his hording whole selling / output Less Effective role of refrigeration Retail shops are High profit local and storage available at street margins Retailing government on conditions/ corners for easy leading to pricing & sale of sub- access higher prices quality standard goods Consumption Parameters Strength Weakness Opportunities Threats Crop Stability in supply Local Climatic Source of diversification and price of staple production uncertaintie Food in irrigated food limited s areas Food Due to no Fresh vegetables processing refrigeration Better storage and fruits are for canned Freshness facility wastage conditions and available in the vegetables during packing district and packed transportation juices Effective role of local Prices of wheat High prices of government to and rice are meat and high monitor prices/ Poverty and Prices affordable that are quality incentive for inflation major food items processed food poultry and livestock industry Home prepared Overcooking, Education and Shortage of Cooking food is cheap and use of oily and introduction of fuel reliable spicy food new recipes Food is available Sharp increase Commercializat More H.H according to social in prices of ion of livestock Preferences member and and religious mutton, poultry, farming/ better inflation preferences and fruits processing Additional of Government Food in nutritious food Strengthening allowed Less frequency Social during social of kinship limited food of social events Occasions occasions for the bonds severing in poor weddings Conclusion & Recommendation Conclusion The food industry in Colombia is yet to fully develop. Presently, only about 2 per cent of fruits and vegetables are processed. Other agricultural products processing does not go much beyond the primary stage. Looking at the potential, food processing industry can grow at more than 20 per cent per year.

Accelerated development of food industry will not come by itself and would not be qualitatively good unless positive steps are taken by all stakeholders.

The food industry presents a very large opportunity to every stakeholder. This is primarily driven by a robust consumer demand, the changing nature of the Colombian consumer, who is more informed and willing to try new products; and the strong production base of the country.

Needless to add, the several gaps in the current production and delivery systems actually present a huge opportunity for the growth of companies willing to bet long term in this sector.

However, the growth of food processing companies has been sub-optimal because of high cost, low level of productivity, high wastage and lack of competitiveness of Colombian food products in the global market.

Therefore, to fully leverage the growth potential of the sector, current challenges that are being faced by the industry need to be properly addressed and steps need to be taken to remove the bottlenecks hampering the sectoral growth.

FICCI survey has thus acted as a first step in identifying these challenges, thus providing a roadmap for all the stakeholders to work on, and thus contributing in realizing the immense potential of this industry. Recommendation The Consultation agreed upon the following general recommendations regarding food fortification:

Overcoming long & fragmented supply chain:

To overcome the long and fragmented supply chain, contract farming can emerge as a significant opportunity for companies whereby they can create direct farm linkages to source appropriate quality, quantity and varieties of inputs. Currently, contract farming is supported by the governments of few key producing states in India. A few companies have been successful in linking up with farmers, and some models of contract farming based on profit sharing or social investment may emerge in the future.

Providing impetus to logistics & supply chain sector:

1. Dedicated freight corridors in rail supplemented by concretized dual carriageways for the State & National highways, will directly reduce the cost of goods supplied. 2. There is a need to develop a single entity of all multi-modal transportation, instead of splitting into rail, surface and air as separate Ministries & entities. This entity needs to remain customer & industry centric rather than as the Governmental control mechanism. 3. Support to private rail operators by providing access to infrastructure of Colombian railways at concessional rates; tax holidays for purchase of wagons and creation of infrastructure, especially that of rail terminals for cargo consolidation and aggregation. 4. Incentives for setting up warehousing/cold storage infrastructure and customized transportation network development.

• Formulation of Comprehensive National Level policy on Food Processing The comprehensive policy will ensure private sector investment in infrastructure development, increased farm productivity and up gradation of quality and give further impetus to the food processing sector. The comprehensive national level food processing policy would also ensure institutional strengthening , capacity building across the value chain and would also seek to promote innovation in general and technological innovation in particular

• Undertake appropriate measures to address the skill Gap Issue in the sector:

1.The government should allocate separate budget for human resource development for food processing sector for enhancing and up gradation of the skills and implementation of the various schemes for skill development. All the skills development cells and other organizations and ministries should work in tandem for effective implementation of the objectives set. 2. Food processing Industry should partner with few food technology/processing institutes on a pilot basis for up gradation of higher end skills, and the same could be replicated for more and more institutions. However, the government needs to address the regulatory/policy issues to facilitate this engagement at a broader scale rather than on piece meal basis.

• Implementation of Food Safety and Standards Act (FSS Act)

Government should ensure the enforcement of the Food Safety and Standards Act in spirit including increasing radically the number of trained inspectors and state of the art lab facilities. Given the objective of the FSSA and the mandated transparency, it is important that the following Principles are adopted to have world class rules which would foster innovation and serve the interest of the consumers at large. - Science should get the preeminence. - Proper risk Assessment based on the available science, before any standards are framed. - Constituted bodies such as Food Authority, Scientific Panels & Scientific Committees must be - given defined tasks with specified object of rule making. - Public and Industry participation at an early date. - Public hearings to achieve transparency.

• Open up multi brand retail to bring in more global investments in the infrastructure and, logistics domain; and in turn contribute to the growth of supply chain & logistics sector in particular and economy in general

Multi brand retail is an easier way of creating ideal environment for the use of modern logistics infrastructure like transportation, hubs, IT, cold chain etc. The organized retail is expected to grow from current 3% to 10% by 2010-11, thereby creating a huge demand for the availability of modern logistics infrastructure. However, the use of modern infrastructure can also be accelerated through various other initiatives, such as supporting modernization of general trade such as supporting star retail outlets etc. These outlets can be served by organized modern supply chain players. • Create a state specific plan to attract domestic and foreign investment in this sector. • Promote agri-food parks by involving industry participation for better functioning of these parks. • Make concerted efforts to enhance private sector investment in infrastructure development, increasing farm productivity and up gradation of quality.

The Consultation agreed upon the following general recommendations regarding food fortification: 1. Where foodstuffs cannot provide naturally occurring essential nutrients to population groups, the use of fortification, following the principles outlined in Codex Alimentarius, should be given serious consideration as a means of achieving ICN goals.

2. A multi-sectoral approach must be adopted in the establishment of any food fortification programme, encompassing participation of relevant governmental organizations, food industry, trade organizations, consumers, academic and research facilities, marketing specialists and any involved international organizations and agencies. 4. International guidelines to advise food aid donors on acceptable and safe fortification practices should be developed; guidelines should not be so restrictive as to impede the provision of high quality food aid commodities nor hinder communication on fortification between relevant parties. 5. There should be appropriate fortification of foods used in food aid programmes, with donors being required to provide relevant nutritional information particularly through adequate labelling. 7. It is important to evaluate the potential of local food industries to become involved in the production of high quality fortified food products, including those destined for use in food aid programmes, in areas where problems of micronutrient deficiency are likely to occur. 8. Food control systems based on HACCP principles, risk-based inspection procedures and internationally accepted analytical methods should be developed in support of fortification programmes. 9. The impact of food fortification on the nutritional status of target populations should be monitored so that appropriate corrective action can take place as require. Chapter 10 Software Industry

Introduction

• The purpose of this report is to provide an overview of the major developments in the information technology (IT) industry in Colombia. The report also makes special reference to certain business areas such as software sales, IT services, and Internet based services. These sectors have seen particularly high growth in recent years, with companies continually investing in new technologies and offering new services to clients. • The IT industry in general in Colombia has enjoyed rapid growth in recent years on the back of new technologies and value added services. Despite the economic downturn suffered in 2009, which affected developed economies and emerging markets such as Colombia, the IT sector has not suffered as much as other sectors of the economy. While GDP growth for the Colombian economy declined from 7.5% in 2007 to 2.5% in 2008, and 0.4% in 2009, the IT sector, maintained a healthy growth rate of 7.5 percent in 2009 (according to a report by Fedesoft), and is expected to present growth of 3.5% in 2010. • Overall investment in Information Technology and Communications (ICT) is expected to reach US$10,870.6 million in 2010, slightly up from US$10,521.7 million in 2009. It is estimated that this figure will reach US$11,119 million dollars in 2011.

• In general, in recent years, the market has been moving towards increased competition and increased efficiency, which has resulted in price reductions to consumers. Indeed, the key to remaining competitive in this market is continual investment in infrastructure, new technologies and improved services.According to the World Economic Forum report on ICT, Colombia ranks above the world average in the connectivity index.

Market Demand • Colombia represents the third largest IT market in South America. The size of the IT sector (computers, software, components, and related services) in Colombia is estimated at USD $2,468 million, representing a small proportion of the global economy (currently less than 0.5% of GDP), but it is a sector which has been growing well above GDP rates in recent years.

• Local production in the IT sector consists basically of computer hardware assembly and repair. Local computer assembly companies include: Compumax, Sure Computers, and PC Smart. Another company QBEX, which although it has its main office in Miami, actually does all its product assembly in a production facility located in a Free Trade Zone in Bogota, and from this site processes all its sales orders and makes shipment to different markets in Latin America.

• There is also a growing software development industry in Colombia, and IT related services have grown significantly over the past two decades. These developments have helped the IT DE sector in Colombia become the second largest in Latin America, in proportion to GDP.

• There are approximately 3,000 companies operating in the sector (mostly retailers, distributors, value added resellers and systems integrators), employing more than 32,000 people and generating around USD $158 million in taxes. According to BMI, Colombian IT spending is projected to grow at 13% over the 2010-2014 period and per capita IT spending is projected to rise by 43% from US$48 in 2010 to US$74 by 2014. The retail PC market surged in 2010, with sales of computers up 34.6% in June 2010, based on data from Colombia's statistics bureau, compared with the same period of the previous year.

• Regulatory measures can often drive production, investment and sales in the IT sector. In Colombia, the Government has declared the IT sector as a focus for policy initiatives and incentives. For example the Government has put incentives for the purchase of PCs by excluding VAT on products whose value is less than US$1,000. The IT services market is estimated at around US$500,000 million, and revenues are expected to double in five years. Seventy-five percent of the demand for services is accounted for by large companies. In the last two years, there has been a trend towards bigger managed services and outsourcing deals, mainly in utilities, telecom and financial services. For SAP and Oracle, Colombia ranks as the 3rd largest market in the region after Brazil & Mexico. SAP is currently the leader for IT consulting services.

• A notable trend in recent years is the formation of companies to cater specifically to the needs of companies or institutions with customized software and network solutions. For the supply of software, U.S. companies now have to compete not only with foreign competitors, but also with local software developers. Revenue for the software industry is estimated at US$885 million in 2009, and software sales are estimated to have been $452 million in the same year. However, according to BSA, counterfeit products account for 55% of the market. A weakness in this sector is in the size of firms, 92 percent of companies are small, seven percent are medium, and only one percent are large. However, this key weakness in local companies may represent an opportunity for foreign multinationals. The latter are better positioned in order to win government contracts and technology related business. These multinationals are better able to provide support and servicing for technology related services. In terms of employment, in 2009, 16,000 jobs were directly related to the IT industry while 18,100 jobs were indirectly related.

 Comparision with other country • While the world may be waking up to Colombia’s commercial dynamism, the country itself seems to finally be coming to grips with its potential as a source for IT innovation. From Barranquilla to Medellin to Bogota, there are increasing expectations that Colombia is fertile ground for startups – especially in software product development. The government is poised to ease restrictions on software products and trade groups are focused on raising quality standards in an overriding effort to put Colombia on the map as a credible tech player.

• Alberto Pradilla, President of the Board of Fedesoft, the Colombian software developers association, is optimistic about what’s ahead. “Colombians are very creative with the development of software applications; 85% to 90% of software used in Colombian banks were developed here,” he says. “Other industries using software applications developed in Colombia include healthcare and transportation that base their operations on well-developed processes. It has been only in the last three or four years that some local firms have searched for opportunities in the United States.”

• Colombian companies also provide services to Latin America, Central America and Europe. Monica Villarreal of Software Quality Assurance, based in Medellin, told us that multinationals are looking to Colombia for software development due the quality of the work, and software is seen as one of the world-class Colombian industries.

• Fedesoft, along with the Ministry of Commerce, Industry and Tourism, is developing Colombian software as an export product. “The most important program with the Ministry is Transformacion Productiva (Productive Transformation) which is targeted to identify the strengthening of the industry, and to remove some of the barriers,” Pradilla says. “We want to target the US market, particularly the southern states. We have increased productivity; several companies are CMMI Levels 3 and 5. The industry is maturing as is our capability to serve the US market. The knowledge of English is increasing, there is a program with Invest in Bogota and the government to bring English speaking talent to the US market. One of the difficulties we face is that there is no customs position on exporting software and it is difficult to obtain a Certificate of Origin. However, there is a Decree that the president is ready to sign that will categorize software as goods as opposed to a service.”

• Villarreal agrees that this is an important measure: “If we see software as goods, it will lower taxes and make us more competitive.” The Ministry will provide USD $30 to $50 million to promote the development of new companies by partnering with private companies to provide funding to start-ups, or the development of innovative products.

Chapter 11 Civil Aviation Industry EXECUTIVE SUMMARY

Civil aviation industry of Colombia having list of 10 industries in Colombia Aerosucre, AeroRepública, AeroSucre, AeroRepública, Arkas, Avianca, EasyFly, LANCO, LAS, Satena, Tampa Cargo

1.Factors affecting the selection of country:

Pest analysis according to that political factors Suffrage is extended to all citizens 18 years of age and older. Citizens are guaranteed civil rights, including the right to strike, to assemble, and to petition; freedom of the press is also guaranteed. All male citizens between the ages of 18 and 30 may be called for military service. In economy factors that Real GDP is projected to grow by between 5-6% and inflation to end 2011 at less than 4% continuing almost a decade of strong economic performance. All three major ratings agencies have upgraded Colombia's. social factors that influencing is obesity, security and ethnicity factors that follows by airline industry. In technology factors that is Economies of scale in production due to expanding market size, E-commerce method of selling tickets, therefore less infrastructure required, overhead savings.

According to swot analysis of this industry strength is Airline staff is highly trained and experienced, from pilots and flight attendants to mechanics and ground staff. weakness is Airlines have a high "spoilage" rate compared to most other industries. Once a flight leaves the gate, an empty seat is lost and non-revenue producing. Opportunity is Airline market growth offers continual expansion opportunities for both leisure and business destinations. This is particularly true for international destinations. Threat is A global economic downturn negatively affects leisure, optional travel, as well as business travel. According to porters diamond model factor condition, demand condition, strategy adopted by industry is good.

2.Overview of industry:

Colombia’s strong economic growth is increasingly attracting business travellers to the country. The majority of these travellers will require widespread, efficient and reliable air services to access the capital, Bogota, and the main regions outside of the capital. Natalie Dalton, Toni peters , James bargent these are the ministers that support to civil aviation of Colombia. Competitive position of the industries india and Colombia relation ship to maintain to made a agreement for MOU is made the cultural relation is to be maintain through There is no NRI/PIO association although there are associations like Amigos de la India, Alianza Cultural Colombo Hindu, and ProAsia who organize Indian cultural events in Colombia. commercial relation is to be maintain to Colombia good. 3. Export and Import Strategies;

Health Insurance, holodays, life insurance, Retirement this benefit receiving from the Colombia to civil aviation industry. policies and norms regarding the civil aviation adopted, is Penal Code, Article 367 on Manufacture, importation, trafficking, possession and use of chemical, biological and chemical , Political Constitution of Colombia Article 88, Political Constitution of Colombia Article 223, Political Constitution of Colombia Article 8, Penal Code Article 358 on Possession, manufacture and trafficking in hazardous substances or objects, Penal Code, Article 16 on Extraterritoriality, Penal Code, Article 359 on Use of launching of hazardous materials. It also global purpose the another policy is adopted export import policy, Trade and Exchange Rate Policy, Tax Policy, Industrial Policy and Foreign Investment.

Benefits to host country

One of the advantages of foreign direct investment is that it helps in the economic development of the particular country where the investment is being made. In recent year FDI has been used more as a market entry strategy for investor rather than an investment strategy. Many critics feel that at least part of the problem lies in the dual role of the FAA. Charged simultaneously with promoting the economic health of the aviation industry and fostering safety, the agency is often at odds with it self.

Benefits to parent country Air transport also facilitates and supports the tourism industry. Over 1 million tourists arrived in Colombia in 2006, of which around 85% arrived by air. The impact from tourists is estimated to have boosted Colombia’s GDP by a further $1.48 billion in 2006, equivalent to around 1.1% of its GDP. The importance of keeping airport charges and taxes in line with efficient costs is shown by estimating the impact of a hypothetical 50% increase in departure charges from their current average level of $14.4 per departing passenger. The aviation sector has played a significant role in supporting the recent strong economic growth in Colombia. Air transport directly accounted for 0.5% of Colombia’s GDP in 2006, . Air transport’s direct contribution to GDP grew by 9.1% in 2006, one of the fastest growing sectors in the economy and well above the overall GDP growth of 6.8%. Fourth part deals with Benefits to parent country, host country and society. The Sixth part includes Key indicators of country & conclusion part which is very much important after analysis is made. In each of the six parts as described above, every part has been scheduled in a manner so as to enable the reader to appreciate the contents easily. The project is supported by figures and data wherever necessary with a view to assist the reader in developing a clear cut understanding of the topic. Conclusion

The civil air transport industry provides economic benefits for the Colombia and the world.

In a world of decreasing barriers to trade, the Colombia civil aviation industry remains a unique engine for innovation and technological progress, one that provides infrastructure that keeps the nation competitive. This report found that, once all impacts are identified, civil aviation accounted for 5.2 percent of the Colombia economy in 2011. Aviation contributes to economic growth and to stronger ties to local and global markets for every region in the nation.

The total output of civil aviation-related goods and services amounted to $1.3 trillion in 2011 and generated more than 10 million jobs, with earnings of almost $394.4 billion. Specific areas of civil aviation such as air cargo have contributed to more effective networking and collaboration between companies far and wide.

Recovery in the wake of the recent recession presents many challenges and opportunities for aviation and the Colombia economy as a whole. There is evidence that the capacity reductions made by airlines and airports as the result of high fuel prices allowed the industry to better weather the storm, yet the prevailing economic winds will lead the industry to continue to innovate and become leaner and more responsive to volatile market conditions. The cost of fuel will likely remain am continuing concern for airlines and those affected by air transportation. Many analysts believe that the price of oil will continue to transform the airline industry for years to come, just as it will influence the prospects of other sectors of the economy.

As it did in the past century, the role of air transportation will continue to grow for the Colombia and global economies. The economic impacts of civil aviation quantified in this report summarize the benefits made possible by a vital and innovative industry. The industry contributes positively to the Colombia trade balance, creates high-paying jobs, helps keep just-in-time business models viable and connects us to friends, family and commercial opportunities. As the role of air transportation evolves and becomes even more integral to our way of life, a safe and efficient air transportation system will continue to be a vital, even essential, component of a strong and healthy American economy in the 21st century. Recommendation

1. A weak financial position grossly inadequate capital and undue dependence on debt funding providing little or no cushion for the financial shock when it came.

2. A considerable amount of route rationalization has taken place especially in terms of loss making routes during 2010-11.

3. Ultimately, the success or failure of an airline will depend on the extent of close supervision / oversight by top and middle management on operational activies on site rather than in city office.

4. In order to ensure cost rationalization AL must ensure substantial increases in ticket sales through web/ technology based channels rather than agents/ front offices.

5. AL’s record of implementing revenue management solution has been, at, best, mixed. in addition to full scale implementation of latest generation , revenue management system to enable real time dynamic pricing.

6. AL’s services are frequently used for WIP & other government duties. A reimbursement of costs incurred by AL is never done in a timely manner.

7. A critical assessment of the airlines profitable sectors, if any is required on other sectors attempts to remove infirmities including bilateral to support the the airlines may be made.