Political and Business Environment in Columbia
Columbia is a country situated in Latin America. It has many market opportunities that ensure growth in investment and exports, which are fueled by good combination of business policies, political and economic stability, a flourishing government-led safety and security strategy and a diversified economic strategy with a hefty domestic market. Most of businesses in the world’s main cities are politically determined. For Colombia, it is the free trade agreement between Columbia and Canada and this has helped Canadian investors and exporters who are well positioned to gain from the growing business opportunities in all sectors. The country provides support to countries who partner with them through representatives in various parts in the world. Regional representatives develop planned relationships with potential buyers in various sectors as well as a widespread system of local links in the market. Columbia has signed many trade agreements with other nations to ensure that there is a strong security for the investors (legal stability), expanded entrance to service markets, better intellectual assets rights protection, easy market access for industrial goods, increased accountability and enhanced conflict settlement channels (Keyser 1992, p. 97).
The state provides major export market opportunities to most countries in the world. The improvement of infrastructure will require development financing, sub-contracting of public works, construction machinery for public roads, logistics, water treatment, electric power generation, water supply, oil and gas discovery, air navigational, railway structure, transportation facilities, security and defense heavy transit systems. These facilities are important since there is the upgrading system of the Bogotá’s El Dorado International Airport and it requires great use of machinery.
Challenges faced by Business Firms in Colombia
To begin with, only firms with viable licenses under Colombian law may offer legal services. For a foreign firm to operate in the country, it has to collaborate with another Columbian firm and use a single license of the Columbian firm. Economic tests should be done to foreigners who provide professional services to ensure that they operate temporarily and also control the trans-border trade of particular services. These services include accounting, architecture, bookkeeping, auditing, urban planning, engineering, health and dental services.
In addition, a commercial presence is necessitated to give information dispensation services or to contract with the Colombian government. Technology and communication barriers to entrance include the requirement for a profitable presence in the country, cross subsidies and a test on economic needs. For bigger business firms exceeding ten employees, a greater percentage of the general workforce and specialist may be foreigners. International financial institutions should maintain a business presence in Colombia through auxiliary offices. The country has been on the forefront in enforcing intellectual property rights. Colombia has been struggling with the requirements of the current government procurement framework to openly bid the public tenders. Transparency, accountability and justice should be improved to ensure competitive bidding conditions. Market entry also requires Columbian commercial code.
The country has been the most risky in the world for unionized workers and leaders. It has a record of being one among the few worst violators of human rights. It is a country where majority of labor union leaders are assassinated each year as compared to the rest of the world. A study done by the House of Commons standing committee regarding the international trade suggested support should be given to the impartial, independent and comprehensive human rights impact appraisal by an independent commission before Canada signs trade agreements with Columbia. The prime minister insisted that there were political structure, which should be followed between the two countries.
Marketing of Baby Food in Columbia
An adequate baby care provision is a major issue for growth, not only for children’s well being but also for the relationship with female production and reproduction timings. It therefore has a greater impact on the present and the future human resource, technology development and labor markets’ interventions. In Columbia, there are trade-offs between the readiness and quality of baby food supply. There are a number of challenges facing health care and there should be a workshop to add to a better perception of the challenges of development in childcare plans suitable for both parental needs especially the low-income earners. There should also be the need for a better childhood schooling to reduce prospective vulnerabilities in children. The country is also trying to proceed in better examination and assessment of the impact of present programs on children health especially on the food supply.
Considering the World Bank experience about the health of children in Latin America especially in Columbia, it stressed the significance of the theoretical outline for Child development from a two approaches: rising female participation in the labor force and the provision of the best childhood growth especially by ensuring access to food and health care. The study also includes indicators such as physical condition, maternal care, safe water and sanitation, presenting the relationship between overall growth and development.
Columbia can act as good platform to expand the business of baby food to other Latin American countries. It is also important to understand that children in this region are at a very high risk of hunger strike due to the poverty in the area especially the“infantilization of poverty”. This is mostly experienced in areas such as Brazil, Peru, Chile and Venezuela. In a country like Brazil, research shows that one out of every four of the residents is poor. In addition, the total population of children living in poverty is twice as the general population.
Columbia as a good platform for expansion to Latin America
Research has showed that within the last decade, deaths among children who are aged less than 5 years declined, though at a slower pace as compared to the end of the 20th century. Although the county is strategically located and much developed as compared to less developed countries, it is still far from attaining the expected standards of child’s health care. Due to the poverty condition in the area, there is lack of the basic amenities especially food and health care. This calls for an investment opportunity for companies dealing with food supply and health care into the region.
Inflation in Latin America has had negative impact on the nutrition rate. This mostly affects the poor in the society especially the children. It does not only reduce access to foodstuff but also means that there will be a dietary change to cheaper and poor quality meals. For that reason, he demanded urgent government support for the most vulnerable sectors to reinforce social safety, food programs in schools, and the pension system. Supply of foodstuffs will help the country in access to good and quality meals and also help the company benefit commercially. The company can ensure reduced food delivery to the developed and rich countries and concentrate on the developing countries because there will be less waste. Consequently, the countries in the Latin America depend on imported commodities. This means that there will be low competition because the supplying industries present in the market cannot adequately meet the country’s demand. Examples include Venezuela and Peru where food production strategies are very poor.
The recent republics of Latin America have faced political instability and external economic domination. Food insecurity, Civil wars, and regimes are common in these regions. Progressive leadership that had tried to modernize the countries had to come across opposition by very powerful traditional institutions. This has dragged development behind thus the country is unable to feed its citizens. This calls for foreign direct investment in the area to provide ready market for consumable products. Exports to the country are very high and foreigners earn much from them. There are various reasons that cause food prices to increase in Latin America. They include speculation in the goods markets, the flourishing demand from Asian countries for grains and the switch of land use from plantations to production of energy (Gutierrez 2004, p. 65). Investing in these countries especially in baby foodstuffs is vital since there is growing consent that the prices of food increase due to primary shifts in international supply and demand. Various forces contribute to increase in food prices, energy prices, income, climatic change and the increased biofuel production. Grain reserves have declined and the land and water accessibility for food production has also decreased. This increases demand and thus the prices of the commodities are high. Foreign investors can now venture in due to the encouraging returns. The major challenge facing trade with these countries is the increased transport costs and the multiple delays, which is seasonal.
Market Entry Strategy
Licensing a Brand to a Local Market Player
Many international countries have used corporate marketing of their brands and given it to the local market players. Among the licensing deals, some firms tend to completely succeed while others totally fail due to lack of adequate licensing knowledge and business knowledge and the difference of operations in these areas. Coping up with the brand licensing of other regions to the area of business is so risky because it can register large amount of losses, which are unable to be recovered. There are obvious different licensing methods and it is important to have strong trade registration since the world has many languages, legal and trade practices that an investor needs to be aware of (Shaw & Ivens 2004, p. 73).Licensing in European countries and the American countries is quite different and a long run deal is determined by various factors. This means that a brand licensor should understand these differences, review the programs and take action on how to work on them.
Having rationally strong product awareness in Latin America can be a good point to start with. However, due to the inadequate knowledge in the consumer brand, a local market player is necessary. The licensees ask for other securities such as the product design and marketing collaterals and the shared supplier network. Brand owners deserve to have some knowledge of the locally available market and appraise potential licensee associates against a specific set of standards different from those used at their home market. The licensee can demand high premium on particular brand based on the royalty rates of particular products of a different region (Merchant 2005, p. 211).
Moreover, recording requirements are also vital in brand licensing. If alterations are made on the licensing accord, the licensor should record the re-filing. There are no penalties for the action and there will be no effect on the failure.poor recording weakens attempts by the licensing firm to enforce commercial rights to the third party.
Setting up a Fully Owned Subsidiary
This process requires greater control and a key commitment in terms of capital and entails both higher risk and less flexibility. A firm may desire to invest through a fully owned subsidiary in the following circumstances:
- It must possess very precise assets with great possibility of generating high profits. An investing organization may wish to guard itself against probable opportunistic performance by a partner who uses firm’s assets to undertake his own interests. Moreover, the firm may prefer not to share the potentially high income that is generated by its assets.
- It must possess implicit assets allied to the firm internal organization, whose transmission to an external associate is not easy. In this case, a fully owned subsidy is preferred as compared to a joint venture (Barbara 2005, p. 156).
Setting a Joint Venture with a Local Market Player
A firm’s preference to set up a joint venture with a local market player is applicable in the following situations:
- The firm should share risks. For example, it is vital when the host country has economic and/or political stability.
- The business organization needs extra resources to add into foreign investment.
- The industry needs supply of complementary information by an associate. For instance, when it does not have sufficient trade know-how or country-specific familiarity, or the host state seems to be very exceptional to the home country.
This information is very hard to obtain in the market due to the related high cost of transacting business. Experimental studies have frequently focused on industry’s specific variables and country-specific variables in their advancement towards these hypothetical notions.
In conclusion, the nature lab should license a brand to a local market player since there are differences in brand licensing in different parts of the world. The company should therefore use direct exports to Latin America. Using the advantage of large scale economies, it can effectively control distribution. Licensing will ensure that the company:
- Has the ability to enter the market by using its existing resources
- Gain more income from using the available technology
- Minimize political risk because the license provides local ownership
- The company is new in the area and licensing favors mew companies
- The company will experience the market for future investment
- Accessibility to those markets restricted by trade barriers
There should also be the need for a better childhood schooling to reduce prospective vulnerabilities in children (Gutierrez 2004, p.133).
Barbara, K 2005, Columbia, Arcadia Publishing, Mount Pleasant.
Gutierrez, D 2004, The Columbia history of Latinos in the United States since 1960, Columbia University Press, Washington.
Keyser, J 1992, Indian rock art of the Columbia plateau, University of Washington Press, Washington.
Merchant, C 2005, The Columbia guide to American environmental history, Columbia University Press, New York.
Shaw, C & Ivens, J 2004, Building great customer experiences: beyond philosophy, Palgrave, Macmillan.