Download - Peru Case Study
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
PERUa case study of an emerging economy
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Presentation Agenda
�Country Overview
�SWOT Analysis
�Conclusion
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Country Overview: Basic Peru Facts
� Climate: � Tropical east
� Desert west
� Frigid Andes
� Government:� Constitutional Republic
� Currency: � nuevo sol (since 1985)
� Major industries:� Agriculture
� Mining
� Tourism
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Country Overview: Case Question
�Country credit rating*: �United States: 94.1
�China: 75.9�Peru: 58.2
�What factors affect the strength and the stability of the Peruvian economy?
*Credit Rating by Institutional Investor http://www.iimagazinerankings.com.
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
SWOT Analysis: Strengths
�Natural resources: oil,
natural gas, minerals etc.
�Major industries: mining and agriculture
�Cultural heritage and
tourism
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Strengths: Mining
�No.1 industry in Peru
�Largest producer of metals in Latin America
�Provides jobs (e.g. Yanacocha)
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Strengths: Agriculture
�No.2 industry in Peru
�Fertile land and weather
�Different plants: variety of potatoes
�Lama / Alpaca textiles
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Strengths: Cultural Heritage and Tourism
�Historical sites: Machu Picchu, Cusco, Sacsayhuaman
�Local culture: clothes, music, art crafts
�Food culture: exotic dishes, Inca Kola, Pisco Sour
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
SWOT Analysis: Weaknesses
�Natural resources-dependent economy
� Mining exports are subject to volatile commodity prices
� Agriculture sector is challenged by low productivity and highly-fragmented land ownership
� Insufficient infrastructure
� Hesitation in investing in high capital intensive infrastructure (e.g. hydroelectric energy)
� Inadequate transportation infrastructure (e.g. roadways, bridges, flight routes)
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
SWOT Analysis: Weaknesses
�High poverty and unemployment rates
� Pose risk for economic and political stability
� Hamper development of human capital
� Impact investor confidence
�Low capacity of local governments
� Conflict between companies and government as to who bares social responsibility in local communities
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
SWOT Analysis: Opportunities
� Tourism growth� Number of tourists doubled from
2000 to 2005
� Net Income of the hotels owned by ACRES has increased over 400% from 2000 to 2007
� This trend is expected to continue in the following years
� The U.S. - Peru Free Trade Agreement in 2006
� One of the best stock markets in Latin America� Political supports for attracting
foreign and domestic investors
� Peru’s growing economy with low inflation rate attracts investors
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Threat Analysis:
�Socioeconomic Stability
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
SWOT Analysis: Threats - Social
� Disparity between classes
� 44.5% of population is poor
� Most effected by mining
(extraction) industry
� Mining Villages, Indigenous Tribes, Remote Communities
� Welfare/Responsibility
� Income Redistribution: “How can
we improve welfare of population
through distribution of wealth?”
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
SWOT Analysis: Threats - Economic
� Trade Disputes: failure to maintain free trade agreement with the U.S. or seek out FDI
� Policy Failure: Dependence on Developed Countries
� Slowdown in world economic growth/Domestic GDP (i.e. Asian Financial Crisis)
� Volatile Commodity Prices
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Conclusion
�Strengths
� Natural Resources
� Cultural Heritage
�Weaknesses
� Natural resources-dependent economy
� Insufficient infrastructure
� High poverty and unemployment rates
� Low capacity of local governments
�Opportunities
� Tourism Growth
� Free Trade Agreements
� Attractive to Investors
�Threats
� Socioeconomic Stability
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Questions?
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
Thank You to All Our Advisors
� Pre-trip� Frank Benavides, Trip Advisor: Peru overview � Todd Milbourn, Olin Business School: “Estimating the Cost of Capital in Emerging Markets”
� Lima � Alberto Arispe, Project Development Manager, Bolsa de Valores de Lima (Peru stock exchange)� Ismael Benavides Ferreyors, Minister of Agriculture � Margarita Benavides, Sub-Director, Instituto Del Bien Comun (non-profit on common resource
management)� Javier Riofrio Orrego, Vice President, Acres Investments (venture capital)� Livia Benavides, Senior Social Sectors Specialist, World Bank� Victor Grande, Project Operations Officer, IFC� Raul Benavides, Vice President, Buenaventura (NYSE: BVN, mining company)
� Cajamarca� Carlos Scerpella, External Affairs, Communications, & Human Rights Senior Specialist,
Yanacocha Gold Mine� Operators of Yanacocha / Newmont Mining� Staff of Koriwasi Center of Technoloigcal Innovation in Jewelry
� Cuzco & Arequipa� Vamos Expeditions
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
The Team
Center for Experiential Learning Global Management Studies Symposium 2008© Jeannie Chan, 2008
About Me
Jeannie ChanA Curious Marketeer Exploring the World
www.jeanniechan.com
www.linkedin.com/in/chanj
Twitter: @jeannie_chan