Peru Case Study

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A SWOT analysis on the Peruvian economy

Transcript of Peru Case Study

  • 1. PERU a case study of an emerging economy Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008

2. Presentation AgendaCountry Overview SWOT Analysis Conclusion Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 3. Country Overview: Basic Peru FactsClimate:Tropical eastDesert westFrigid Andes Government:Constitutional Republic Currency:nuevo sol (since 1985) Major industries:AgricultureMiningTourism Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 4. Country Overview: Case QuestionCountry credit rating*:United States: 94.1China: 75.9Peru: 58.2 What factors affect the strength and thestability 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 5. SWOT Analysis: StrengthsNatural resources: oil,natural gas, minerals etc. Major industries: miningand agriculture Cultural heritage andtourism Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 6. Strengths: MiningNo.1 industry in PeruLargest producer of metals in Latin AmericaProvides jobs (e.g. Yanacocha) Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 7. Strengths: AgricultureNo.2 industry in PeruFertile land and weatherDifferent plants: variety of potatoesLama / Alpaca textilesCenter for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 8. Strengths: Cultural Heritage and TourismHistorical sites: Machu Picchu, Cusco, SacsayhuamanLocal culture: clothes, music, art craftsFood culture: exotic dishes, Inca Kola, Pisco SourCenter for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 9. SWOT Analysis: WeaknessesNatural resources-dependent economy Mining exports are subject to volatile commodity prices Agriculture sector is challenged by low productivity and highly- fragmented land ownershipInsufficient 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 10. SWOT Analysis: WeaknessesHigh poverty and unemployment rates Pose risk for economic and political stability Hamper development of human capital Impact investor confidenceLow 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 11. SWOT Analysis: OpportunitiesTourism growthNumber of tourists doubled from2000 to 2005Net Income of the hotels owned byACRES has increased over 400%from 2000 to 2007This trend is expected to continuein the following years The U.S. - Peru Free TradeAgreement in 2006 One of the best stock markets inLatin AmericaPolitical supports for attractingforeign and domestic investorsPerus growing economy with lowinflation rate attracts investors Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 12. Threat Analysis:Socioeconomic StabilityCenter for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 13. SWOT Analysis: Threats - SocialDisparity between classes44.5% of population is poorMost effected by mining(extraction) industryMining Villages, Indigenous Tribes,Remote CommunitiesWelfare/ResponsibilityIncome Redistribution: How canwe improve welfare of populationthrough distribution of wealth? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 14. SWOT Analysis: Threats - EconomicTrade Disputes: failure to maintainfree trade agreement with the U.S.or seek out FDI Policy Failure: Dependence onDeveloped CountriesSlowdown in world economicgrowth/Domestic GDP (i.e. AsianFinancial Crisis) Volatile Commodity Prices Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 15. ConclusionStrengths Opportunities Natural ResourcesTourism Growth Cultural HeritageFree Trade AgreementsAttractive to InvestorsWeaknesses Natural resources- Threats dependent economySocioeconomic Stability Insufficient infrastructure High poverty and unemployment rates Low capacity of local governmentsCenter for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 16. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 17. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 18. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 19. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 20. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 21. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 22. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 23. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 24. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 25. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 26. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 27. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 28. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 29. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 30. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 31. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 32. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 33. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 34. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 35. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 36. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 37. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 38. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 39. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 40. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 41. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 42. Questions? Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 43. Thank You to All Our AdvisorsPre-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 ExpeditionsCenter for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 44. The Team Center for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008 45. About MeJeannie ChanA Curious Marketeer Exploring the Worldwww.jeanniechan.com www.linkedin.com/in/chanjTwitter: @jeannie_chanCenter for Experiential Learning Global Management Studies Symposium 2008 Jeannie Chan, 2008