WHAT ARE ECONOMIC FORCES?
Are those factors that are at the scenario where the organization performs, and affect either directly or indirectly the firm.
Analyzing the tendencies of each factor, will help to the firm's manager to understand the environment where they are and be able to see which possible decisions they could take. This means that they can see the impact on the business.
http://www.strategy-formulation.24xls.com/en105
Next we will explain each factor and how possible cases affects our company
8.FEDERAL GOVERNMENT BUDGET DEFICIT
What the government raises are the taxes in order to do things that benefit (always) the community. Taking into account the economy is changing, taxes, normally will be reduced. Nowadays, the planning "Plan reforma tributaria" which is not yet approved, can generate expectations of what the economy will be in the future. Healthy care's mission, apart of contributing on the health of the collage community of Bogota, is also to increase as much production as we can, in order to generate employment, increase de consumption, and finally obtaining profits.
http://www.dinero.com/economia/articulo/la-nueva-reforma-tributaria/201838
2. AVAILABILITY OF CREDIT
The wide availability of credit is useful for the new entrepreneur, and thanks to this we can form an initial basis for what will be my organization. “Credit is essential for the economy to function well. It funds new investments and allows people to purchase houses, cars, and other items. Of course, excessive lending and borrowing usually end up in financial crises but, in principle, credit availability is good for economic development”[4], have an availability of credit gives the engine to move forward, but we must use it by establishing a constant desire for savings.
“Colombia Bank credit to the private sector as percent of GDP: For that indicator, The World Bank provides data for Colombia from 1960 to 2014. The average value for Colombia during that period was 27.71 percent with a minumum of 17.55 percent in 1973 and a maximum of 42.74 percent in 2014”[5].
Available credit is the difference between the amount of the credit line or limit, and the amount that has already been borrowed[6], we can take the credit for the involved industry and to any other industry as the key foundation to establish this and any other organization, using as a key term entrepreneurship and the idea of forming a good idea with good support that eventually will constitute something much more level, clearly speaking in economic terms.
[4] Theglobaleconomycom. (2016). TheGlobalEconomycom. Retrieved 8 February, 2016, from http://www.theglobaleconomy.com/Colombia/Bank_credit_to_the_private_sector/
[5] Theglobaleconomycom. (2016). TheGlobalEconomycom. Retrieved 8 February, 2016, from http://www.theglobaleconomy.com/Colombia/Bank_credit_to_the_private_sector/
[6] Root. (2016). Investopedia. Retrieved 8 February, 2016, from http://www.investopedia.com/terms/a/available-credit.asp
4. PROPENSITY OF PEOPLE TO SPEND
The propensity to spend has many factors involved as we are talking about the person in general; the human being in relation to their social and cultural features, taking them as factors that form the basis of what the user is willing to buy[9].
It is important to know where to invest their money Colombians, because you have to take into account their ability to consume to launch a new product, “so a big trend, evident in the view of the analysis, it is for health as an issue obsessive”[10].
Is clear that in the healthy industry is essential to know what are the tendencies of spending that people have, because we're talking about the body who are involved sociocultural traditions and trends in the habits of each person, and that in some cultures there are impediments regarding sociocultural factors.
[9] Eco-finanzascom. (2016). Eco-finanzascom. Retrieved 8 February, 2016, from http://www.eco-finanzas.com/diccionario/P/PROPENSION_AL_CONSUMO.htm
[10] Constanza gómez g, C.G. (2016). Portafoliocomco. Retrieved 8 February, 2016, from http://www.portafolio.co/portafolio-plus/tendencias-consumo-colombia
6. INFLATION RATES
The inflation rates, basically a company or even an industry in general, is based on the general increase prices, or management case, a loss of purchasing power.
In Colombia was expected to be 7.68 percent by the end of this quarter, according to Trading Economics (2015) global macro models and analysts expectations. Looking forward, they estimated Inflation Rate in Colombia to stand at 5.17 in 12 months time. In the long-term, the Colombia Inflation Rate is projected to trend around 4.10 percent in 2020, according to the econometric models.
Health care depends directly on the trend of inflation due to the variability of the purchasing power of the community. If inflation is increasing, just as the earnings of a company will be somewhat reduced due to increased of wages, variable costs, etc. The monetary policy decisions are taken based on the analysis of the current state and the outlook for the economy, and in the evaluation of inflation forecast against Goals.
http://www.tradingeconomics.com/colombia/inflation-cpi/forecast
http://www.banrep.gov.co/es/informe-inflacion
Figura 1. Tasa de desempleo en Colombia: Total nacional, review of the last 15 years, update to January of 2016 Tomado de: Banco de la República, http://www.banrep.gov.co/economia/pli/bie.pdf
7. MONEY MARKET RATES
The stock exchange is a private organization that provides the necessary conditions for its members attending the mandates of its clients, and conduct negotiations enter orders to buy and sell shares, such as shares in companies or limited companies, public bonds and private facilities , degrees of participation and a wide variety of investment vehicles.
Large companies seek financing (resources to operate) through different options, like beginning to sell shares or equity partners, or through debts with money borrowed from banks. In case of Healthy care, could go public by selling shares to finance or issuing debts.
http://www.bvc.com.co/pps/tibco/portalbvc/Home/Mercados/informesbursatiles?action=dummy
http://www.wisdomtree.com/etfs/currency-etf-global-market-rates.aspx
5. INTEREST RATES
Interest rates are essential when starting a new business, as these involve the value for the money in the financial market, ie reflecting how much you pay a debtor to a creditor to use your money for a period.
in Colombia there are two interest rate or passive uptake, is the rate paid by financial intermediaries to providers of resources attracted by money and short words represents the risk or the potential gain for the creditor, for our business as either it is essential to have in mind as they consider this factor as the value of money to be deposited to the creditor of that government tax.
“The Gross Domestic Product (GDP) in Colombia expanded 1.20 percent in the third quarter of 2015 over the previous quarter, higher than a downwardly revised 0.5 percent rise in the second quarter. It is the biggest growth rate in six periods. GDP Growth Rate in Colombia averaged 1.08 percent from 2001 until 2015, reaching an all time high of 3.50 percent in the second quarter of 2002 and a record low of -0.90 percent in the first quarter of 2002. GDP Growth Rate in Colombia is reported by the Dane, Colombia”[11].
[11] Tradingeconomicscom. (2016). Tradingeconomicscom. Retrieved 8 February, 2016, from http://www.tradingeconomics.com/colombia/gdp-growth
1. SHIFT TO A SERVICE ECONOMY IN COLOMBIA
The services sector has had a growing progress in the economy not only in Colombia but in general all over the world, last century and beginning of this, the sector has been rising in the growth of the world economy basing on a simple concept that is to understand the point of view of the user, taking it as a key point to innovate and go continually growing as organization. The shift to a service economy assumes that the set of processes in the integrated systems of an organization will be more personalized, contextual and participatory clearly defined customer preferences, using good strategies that create a link between the user and the organization. “This new service economy is brought to life by a combination of people, data and technology”[1]. In Colombia the health industry is located in the services industry and is part as a large part of overall economic growth. Since this area covers more than 30% of GDP national whereby, "The service sector in Colombia has enormous growth potential, why has become a major commercial bets for the country"[2]. And consequently we could say that for this “reasons that have allowed this sector forward rapidly on its way to become one of world class”[3]
[1] Forbescom, N.M. (2012). Natalie McCullough. Retrieved 8 February, 2016, from http://www.forbes.com/sites/ciocentral/2012/04/19/services-not-manufacturing-will-revive-the-u-s-workforce/
[2] Procolombia. (2016). Invierta en Colombia. Retrieved 8 February, 2016, from http://www.inviertaencolombia.com.co/sectores/servicios.html
[3] Dinero. (2014). Dinerocom. Retrieved 8 February, 2016, from http://www.dinero.com/economia/articulo/sector-servicios-si-esta-haciendo-tarea/177057
3. LEVEL OF DISPOSABLE INCOME
Income can be defined as a net increase of wealth, is any income that a person receives without diminishing its heritage and is used improperly to define my total income. profitability refers to my profit and like considers the remuneration of the money received by me or my organization, “This indicator also corresponds to the sum of wages and salaries, mixed income, net property income, net current transfers and social benefits other than social transfers in kind”[7].
“Colombia’s disposable income and expenditure levels expanded at a slower pace than regional averages over the period of 2009-2014”[8]. Clearly the total income earned has full relevance in the industry as this could be considered as the meter that could give me the necessary information to know if my organization is having a good income and that their earnings reach the expected number.
[7] Oecdorg. (2016). Oecdorg. Retrieved 8 February, 2016, from https://data.oecd.org/hha/household-disposable-income.htm
[8] Euromonitorcom. (2015). Income and Expenditure: Colombia. Retrieved 8 February, 2016, from http://www.euromonitor.com/income-and-expenditure-colombia/report
9. GROSS DOMESTIC PRODUCT TREND
Increased production + increased employment + increased consumption = GDP
We would say these is the objective of any industry nowadays, due to the high competitiveness which had come, and which could come during the next years.
http://www.dinero.com/noticias/pib/82
http://www.portafolio.co/economia/pib-colombia-2015-segundo-trimestre-dane
http://www.portafolio.co/economia/pib-colombia-2015-1
Bogotá accounts for 57% of GDP the service sector contributes 71% to the GDP of the city, while the service sector is 48% of GDP.
http://www.dinero.com/pais/articulo/densidad-poblacional-bogota/207534
11. UNENPLOYEMENT TRENDS
According to Banco de la Republica in the year 2015 Colombia had the lowest unemployment rate of the last 15 years, with a rate of 8,9% different to 2014 where the rate was about the 9,1%, as seen in the chart the unemployment rate has decrease 7% in the last 15 years; that means that the competition has increased in Colombia, there are more companies and more opportunities.
13. VALUE OF THE DOLLAR IN THE WORLD MARKET
The dollar has a high value in the Colombian market, what makes more complex for Colombians to work with imported goods and services, according to Trading Economics, during the last 12 months the dollar has gained 42.76, one year 1 dollar was about 2,378.10 Colombian pesos, now has reached 3.394,97. As seen in the chart the dollar has been increasing its value against the Colombian peso since July of 2014, and is possible to predict that it will not be lower for at least one more year.
Figura 3.US dollar/Colombian pesos, interday chart, review of the last 5 years, update to February of 2016 taken in: Trading Economics, http://www.tradingeconomics.com/colombia/currency, how the dollar has increased its value in the Colombian market
17. DEMAND SHIFTS FOR DIFFERENT CATEGORIES OF GOOD AND SERVICES
Despite the negative relationship between imports and exports mentioned above, this situation brings positive benefits to the domestic industry. For example, one is that the demand for foreign goods decreases, while the products and services offered in Colombia become more attractive to the consumer because of the price difference , generating further economic growth and competitive organizations, boosting exports again. (Dinero Magazine, http://www.dinero.com/edicion-impresa/pais/articulo/analisis-sobre-exportaciones-colombia-2015/213005, 2015)
19. PRICE FLUCTUATION
The IPC (Índice de precio al consumidor) Concumer Price Index is the method how in Colombia the governmet is able to know the price fluctuation in services and goods. It is measured in terms of perecentage and is very close related with the inflation. IPC is the weighted sum of variation of the items. The index used as adjustment factor in determining salaries, financial statements, in resolving labor claims and tax.
For the last 5 years the percentage change between each evaluated period has increased, leaving 2015 with a cumulative 6.77%. (http://www.dane.gov.co/files/investigaciones/boletines/ipc/bol_ipc_dic15.pdf, 2015)
Prices are also influenced by the devaluation (reduction in value of the local currency against foreign currencies, Bank of the Republic, http://www.banrep.gov.co/es/contenidos/page/qu-devaluaci-n) of the Colombian peso, which in turn is related to imports of products generating a significant rise in value of the imported goods.
Below the corresponding graphs are displayed that shows
Source: http://www.dane.gov.co/files/investigaciones/boletines/ipc/bol_ipc_dic15.pdf
21. MONETARY POLICIES
In Colombia, Banco de la República is the entity in charge of the monetary policies, with the goal of this year being lower the inflation rates to between a 2% and a 4%, which according to them, will be achieved in 2 years. According to a report made by Banco de la República, the reference rate raised from 5,50% to 5,75%: also, according to Banco de la República, the forecast of the Consumer Price Index (CPI) from Banco Central is based on that the adverse effects of El Niño will move forward, the transfer from high devaluation to the domestic prices and the activation of some indexation mechanisms that could keep it (reference rate) at high levels during the first half of 2016. However, the Emisor expects that in the second half of the year, these temporary shocks will be diluted.
Also, credits to individuals and businesses began to slow their growth, especially the one to households, which is what has prevented a further slowdown of the economy, while real rates of these loans were in constant decline.
Sources:
http://www.eltiempo.com/economia/indicadores/inflacion-en-colombia-para-el-2016/16471289
http://www.banrep.org/es/politica-monetaria
http://www.portafolio.co/economia/codirector-del-banrepublica-opina-la-politica-monetaria
10. CONSUMPTION PATTERN
Consumption patterns are one of the most important drivers of development patterns in the industrialized world and will serve as case for the study of scenarios and transition management. It is about understanding the consumer need and desires, so that take a decision which will influence positively in the selling and production. In the segment of health care, students are with a poor eating habit, and a rather sedentary routine. What we want to achieve is to reach beyond what makes these people sedentary and have a kind of unhealthy lifestyle.
http://www.dinero.com/internacional/articulo/tendencias-consumo-para-2015/203784
12. WORKER PRODUCTIVITY LEVELS
According to the World Economic Forum Colombia occupies the 61th place out of 140 countries in the (GCI) Global Competitiveness Index, in the region Colombia has a good place in the list, according to Revista Dinero, the labor productivity is so low that for 1 American worker is necessary 4,5 Colombian workers
Figura 2. The 10 most competitive Latin American economies, what we can infer from the chart is that the effectiveness of workers in Colombia is lower in comparison with other countries and that affects the competitiveness of the country. Tomado de: World economic fórum, http://reports.weforum.org/global-competitiveness-report-2015-2016/top-10-infographics/
16. IMPORT/EXPORT FACTOR
National exports in Colombia over the past five years have decreased significantly since 2011. Similarly, imports have decreased, but the relationship between imports and exports was broadly the same, greater imports than exports of products due the devaluation of the Colombian peso. This factor makes it cheaper to do this kind of exchange of other countries to Colombia. Below the corresponding graphs are displayed.
Experts predict the same tendency for the following years.
(these graphics were taken from the web page of the Ministry of commerce, industry and tourism of Colombia: http://www.mincit.gov.co/publicaciones.php?id=47
Despite the fall in exports , on the side of Puerto Antioquia is expected that by 2019 Urabá will be a great attraction for investors, since the construction of the port will receive larger vessels, allowing the growth of the Colombian economy in terms export and import. How Oscar izas said president of SAS PIO "we want to increase the supply of ports which will result in more competition and bargaining power of the current positions "
18. INCOME DIFFERENCES BY REGIONS AND CONSUMER GROUP
In Colombia 's minimum wage is set, is that certain amount of money received by people when a definite or indefinite contract is concluded. So that the minimum wage is adjusted taking into account aspects such as GDP , inflation, CPI (consumer price index), and other jurisprudential parameters. However , for the year 2016, although the increase was 7% ( $ 589,454 ), the infalción was even greater with a percentage of 7.26 %. This situation should adjust the government, since for the lower social strata (1,2,3), which in some cases do not receive the minimum wage, prices of goods and services are unreachable. Below are two graphs that highlight the nominal minimum wage increase and the corresponding value is displayed.
http://www.eltiempo.com/economia/sectores/salario-minimo-de-2016-en-colombia-podria-ser-demandado/16474760
http://www.eltiempo.com/multimedia/infografias/ajuste-real-del-salario-minimo/16474897
http://www.salariominimocolombia.com/13-antildeos-del-salario.html
20. EXPORT OF LABOR AND CAPITAL FROM COLOMBIA
Devaluation is a factor that influences various economic aspects, one of which is in foreign direct and portfolio investment. For years and pronunciante in 2015 , FDI had dramatic falls of up to 42% because other countries do not see attractive trade due to lack of confidence in the market, avoiding investment, even in cases where the money is withdraw. (Portafolio Magazin, http://www.portafolio.co/economia/inversion-extranjera-colombia-noviembre-2015)
Even so, for others investors Colombia is one of the most atractive country in Latin America. According to Peter Cejas (Septima Partners´ founding member, a firm that advises investors seeking opportunities in Latin America), Colombia is a good choice to invest because "the political stability, has a competitive workforce and a very disciplined financial system. The country has a strategic location and is positioned to capture the growth of its exports through its trade agreements". FDI could possibly increase for the comming years.
http://www.portafolio.co/opinion/entrevista-septima-partners
22. FISCAL POLICIES
According to Credicorp Capitals, projections for 2015-2016 are stable. But for the outlook to remain so in 2017, the company suggests that Colombia should have a structural tax reform in 2016. Although the overall national budget will increase 2.5% in 2016 ($ 215.9 billion including debt repayment), the economic outlook is not very flattering. According to accounts of the same government, in 2016 oil revenues will fall to $ 3.3 billion, when in 2014 were $ 19.7 billion.
The expectation of the Ministry of Finance's for the tax revenues, making greater efforts to control evasion, is that it will go up to $ 117 billion this year and $ 126 billion in 2016. Still remains a large broken public finances that have been thought to fill with new credit.
Sources:
http://www.dinero.com/pais/articulo/panorama-fiscal-colombia-2015-2016/207984