STOCK MARKET TRENDS
The National Stock Exchange has dropped dramatically this year, which indicates that demand has fallen and with it, the price of the shares offered.
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TradingEconomics.com
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The dollar has had significant and surprising changes in recent times. This has led an increase in costs of negotiations with different countries.
VALUE OF DOLLAR IN WORLD MARKETS
WORKER PRODUCTIVITY LEVELS
According to an article in Forbes magazine, Colombia is one of the countries with the highest score in "Happiest workers" (in third place). This result is favorable because it assures us a better quality custumor service.
However the productivity of workers is not equally high. The average production of a Colombian worker is 11 (GDP) PPP. Based on data from 2013.
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Economic Forces
AVAILABILITY OF CREDIT
During the second half of 2011 the establishments of credit investments amounted $64 b, showing a growth rate real annual 2.3%, when six months earlier had She was 10.9%. This decline in the trend of the growth can be explained by increases in the speech, along with the largest interest rate uncertainty in international markets.
The highest growth of gross portfolio (17.9%) in comparison with investments (2.3%) is translated in an increase in the participation of the first inside of the total assets of the credit establishments. While investments accounted for in December 2010 22.3 per cent of assets, a year later they went to have a stake equal to 19,6%. Thus, the proportion of the portfolio within the assets of credit institutions increased in This period, from 65.9% in June 2011 to 66.5% in December of the same year.
The growth of the portfolio was presented during 2011 in a scenario of economic expansion; However, the dynamics of credit was superior to the displayed by GDP. This resulted in increases in the indicator deepening financiera10, who went from a level 34.6% in June 2011 to 36.2% in December of the year. By types of credit, the largest increases in the indicator are commercial portfolio and consumption, presenting an annual variation of 88 pb and pb 51, in his order.
Due credits increased is the possibility to develop business in the food sector, to gain a positive expansion in the market.
PROPENSITY OF PEOPLE TO SPEND
The individuals with major wealth have more aptitude to decide on the use of its income, while the have-nots destine most of its earnings to satisfy its minimal needs, that is to say, they consume today the income that possibly they will obtain tomorrow.
The winning line in the last years has been that of meals out of the hearth: in the eighties, an urban typical hearth was destining 3.6 % of its family budget in food and drinks consumed out of house. At present, this proportion has doubled.
First of all, it would be necessary to mention the hypothesis of which it displeases the consumer to cook; but also, the influence of the children in this sense is decisive. A third explanation has to do with the opening and rapid growth of agreeable restaurants and of attractive prices; quarter, the social norms are changing: the informal dinners in restaurants are every time a more frequent and less occasional activity. Finally, the growth of the cities is more and more difficult that the personnel of the offices is going to have lunch to its houses.
The pleasure of the siesta is a species in extinction route for the personnel. Two notes on the topic: first, the meals bars are turning into anchor of several Colombian shopping centers, and second, the stores of big format must insist on surprising the consumer in the section of prepared meals. An approximate calculation suggests that of the whole of the invoicing of a shopping center of good size, 10 % corresponds to the squares or courtyards of meals. In the year 2000 this participation was not overcoming 5 %.
With this information found to say that thanks to the growth of the population and trends that are being created to meet the desires of children, or is the case of people who do not often eat lunch that do not have the time to eat something very elaborate. You can clearly see that the consumption of fast food is today a large percentage.
LEVEL OF DISPOSABLE INCOME
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There was a reduction in housing prices, we see an increase in the percentage of disposable income, since the country has fewer expenses.
With the passing of the years, consumer loans have increased significantly, up to a 16% increase approximately from 2002 until 2014. In the same way, mortgage loans have been increasing, although to a lesser extent. Both types of loan growth have been in a growth of general costs, declining disposable income of the population.
INTEREST RATES
The interest rate in Colombia has ranged in the last months between 2 and 4 %, but because the inflationary expectations have increased for this economy, most of the analysts bring that will be located between 4.25 and 4.5 % on having finished the year, it would close in 2015 between 5 and 5.25 %.
INFLATION RATES
For about a year the inflation rate has increased to currently reach a figure that is above the goal should be 2-4, accelerated inflation increase is due to the transmission of the peso devaluation against the dollar and the consequent increase in the cost of imported raw materials. Also, the effect of El Niño, which intensifies, also has an effect on prices to consumers. (Castaño, 2015)
How does it affect us? With high inflation, companies must allocate more resources to managing the portfolio to avoid financial losses. Likewise increases the uncertainty, this prevents an efficient allocation of resources and consequently decreases the economic growth. Also affects investment and long-term decisions: These decisions depend crucially on the degree of uncertainty about the future and having high inflation we have a macroeconomic destabilization. (Banco de la República, 2015)
MONEY MARKET RATES
Intervention rate Central Bank: 6%
DTF: 5.87%
In order to counter inflation that has been presenting the Central Bank has decided to raise the interest rate by 25 basis points.
The IMF focuses the "high or fast growth of loans". For 2012 and 2013 it had been presented growth in loans. (Revista Semana, 2016)
How does this affect us? Interest rates being so high it reflects cost of borrowing taking Colombians in all its forms, including SMEs...
Government projections indicate that the fiscal deficit in 2016 will be located at 3.6 percent of GDP. That is to say, present an increase of 0.6 compared to 3 percent of 2015.
The structural fiscal deficit of the Government will be located on 2.1 percent of GDP, with a cyclic additional 1.5 percent. The missing amount would be about 30.9 billion pesos. (Castaño, El Colombiano, 2015)
What about the above? The government competes with the productive sector to attract financial resources, limiting the possibility of production growth. In addition, this competition raises the cost of these resources, ie, it raises interest rates, making people and businesses will pay more for their debts.
You can also say that when governments try to solve its deficit, apply restrictive policies, ie reductions in their spending and tax increases. (Leandro)
GOVERNMENT BUDGET DEFICITS
GROSS DOMESTIC PRODUCT TREND
By 2016 the government forecasts growth of 3.6%, although Fedesarrollo estimates it could be less and would point to 2.8%.
All on behalf of a minor oil contribution to public finances, which would generate a fiscal deficit of 3.6% of GDP, which the government must cover with a new tax (El País, 2015). Finance Minister Mauricio Cardenas said that oil revenues will continue to fall but that the strongest blow was suffered in 2015.
CONSUMPTION PATTERNS
According Fenalco, the guild of merchants give the consumption pattern among these is the careful consumer, consisting of manufacturers who care about the environment; health, including healthy food and media such as spa, gym, etc .; the luxury market; related entertainment and technology products. (Gómez, 2013)
Rising incomes and a growing middle class are driving spending on an increasing array of areas, particularly self-indulgent ones such as travel, beauty and health.
UNEMPLOYMENT TRENDS
The unemployment trends in Colombia has changed favorably, so that in 2015 was obtained the lowest unemployment rate in the last 14 years.
Low unemployment rates generate an improvement in the quality of life in general, urging progress in the country.
Unemployment Trends in Colombia. (2015)
Unemployment Trends in Colombia. (Last 5 Years)
The risks that are taken when you invest, have to be evaluated. Every single investment has advantages and disadvantages and there are some aspects that you have to take in account for take a correct decision:
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Economic and Political risk.
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Measuring Economic and Political risk.
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Sources of Information on Country risk.
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Developing, Emerging and Frontier markets.
There are some "tips" for choose the correct Country to invest and develop a safe business.
FOREIGN COUNTRIES' ECONOMIC CONDITIONS
IMPORT/EXPORT FACTORS
In our industry, the import and export factor will affect us in a Little part, mainly because in terms of imports, just a Little part of the products will be imported, basically El burrito Sabanero Works with foods, and livestock products, and the level of import in our country is 8% in total imports, and many of the food that we import is also produced in our country, in terms of supply, we shouldn’t have problems, we can have a Little growth in costs when we need to buy our cars in which we will distribute and promote our product, because the level of manufactured products is relatively high (22%), but it’s an invest that we can recover.
In terms of export, the level compared with imports is minor (2, 54 USD billion) more than the half (56% of the total import are the total export in terms of money), but for the industry, for the beginning is not much important the export facts.
References:
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TradingEconomics.com
INCOME DIFFERENCES BY REGION AND CONSUMER GROUPS
“The position of the demand curve will shift to the left or right following a change in an underlying determinant of demand.
Increases in demand are shown by a shift to the right in the demand curve. This could be caused by a number of factors, including a rise in income, a rise in the price of a substitute or a fall in the price of a complement.”
http://www.economicsonline.co.uk/Competitive_markets/Shifts_in_demand.html
DEMAND SHIFTS FOR DIFFERENT COTEGORIES OF GOODS AND SERVICES
The importance for us related with shifts in the demands are principally trends, and the relation between substitute products, we need to take special attention to the hamburgers and hot dogs costumers, this trends, and in general, the activity of our principal competitors determine how will be our demand and we need to answer with the optimum supply.
The income differences or income inequality is a big problem that resent our country, according to a study from 2014, Colombia was in the 12 place of the world in terms of inequity, it means that in a Colombian city you can find rich people but also people really poor, it make more difficult the way that the organization need to follow, because the price range should be as low as poor people to buy but as high as we can assure a quality level high too.
There are 2 options, we can make segmentation and choose a target with low or high income, and the second one is to create a balance between the two segments, all of them eats Tacos so the principal difference is the monetary income.
PRICE FLUCTUATIONS
The price fluctuation is the difference between a closing price and the closing price of the previous trading date.
The changes in the price should affect in a low grade our final product that are tacos, because we sell the product as a one, and these fluctuations change constantly, what we have to do is to adequate a price standard because we can’t change the price in order of the price fluctuations.
As a fast and simple product the volatility of the price is not as important as we believe, because we need to follow a trend.
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http://www.finanzaspersonales.com.co/dolar-minuto-a-minuto, siendo las 3:38 p.m del 5/2/2016
EXPORT OF LABOR AND CAPITAL FROM THE UNITED STATES
For the country, the export of labor and capital principally is important in order to grow in the industry and to have the enough tools to work providing a better service, and with labor export we can improve knowledge and specialization in terms of service.
For our industry, the export from the United States can be useful related with capital, we can use and implement tools that we don´t have yet and take a competitive advantage in the strategy of the process and the successful of the service, and start to win marketshare in the industry.
FISCAL POLICIES
Fiscal policies is basicly the managment of income, cost and finance of the public sector. Then talking about strategies the country or state establishes is not only to make resources, but to efficiently handle those resources as well.
(tradingeconomics.com,2012)
Roughly speaking all fiscal policies affect all bussines in a country, therefore when the Colombian government introduces fiscal policies are affecting us due to we have to be paying taxes anyway. Another fact is that if the economy is not doing well people would not spend any money on our service and product we are offering. And to end if Colombian government does not regulate interest rates any banking entity could raise them so it affects the consume power, meaning that the demand of our business will be low.
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TAX RATES
The percentage at which an individual or corporation is taxed. The tax rate is the tax imposed by the federal government and some states based on an individual's taxable income or a corporation's earnings. ( investopedia.com,2016)
In our business Taxes affect us in a variety of ways, from influencing the particular legal structure of the business to where the business chooses to locate itself. Then if Colombian government implements high tax rates means that the climate of the business will be affect negativly and then we will not be able to grow and thrive.
EUROPEAN ECONOMIC COMMUNITY POLICIES
It was mainly setted up to make a common market, to integrate economics. Nowadays, is the European Union.
Europe is the continent that provides and imports the most to Colombia. Europe basicly imports electrical equipment, machinery and mechanical appliances. a coulple of years ago Colombia and EU removed all trade barriers meaning that imports bring us more products that increases the options to buy and sell, therefore that can benefit the industry market in all aspects.
The OPEC is transcendent organism in the world economy; it represents the majority of petroleoum exporting countries around the world, controlling a valueable commodity for every nation, this organism presents a significant role in the world economy, since it affects nation's economy, prosperity and wealth.
ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) POLICIES
The OPEC establish policies, taxes, regulations and oil basket prices all around the world in general terms it controls the oil market. All its moves have a major impact on the world economy. It can generate generate benefits on reducing trasnportation costs of the inputs to make our business run well.
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COALITIONS OF LESSER DEVELOPED COUNTRIES (LCD) POLICIES
African countries formed this group the LDC and Colombia currently does not form or participates on this group.
Nevertheless, in the future Colombia might be part of the LDC. Exporting our goods and importing them therefore will have a significant impact on our business.
Economic factors that contribute to the success or failure of companies, business ventures, and individual products. These factors may include the rate of inflation, interest rates, stock market performance, the level of unemployment, demographic changes, and fiscal policies or changes made by the government.