International Marketing

Title:

PRONACA: Mr. Pavo exportation to Bolivia since 2018

Members:

 María José Hernández

 Sheyla Lozano

 Giovanny Parra

 Claudia Mendez

Lecturer:

Ing. Mónica Echeverría

Semester C-2019

Guayaquil, Ecuador
 II

Index

The Company ................................................................................................................... 1

The product ................................................................................................................... 2

Value Chain .................................................................................................................. 3

Research and development ....................................................................................... 4

Production................................................................................................................. 5

Receipt and storage of raw material ......................................................................... 6

Inspection ................................................................................................................. 6

Transportation to the refrigeration area .................................................................... 6

Refrigeration ............................................................................................................. 6

Transportation to the cooking area ........................................................................... 7

Cooking .................................................................................................................... 7

Transport to centrifuge ............................................................................................. 7

Centrifuged ............................................................................................................... 7

Transport to grinding machine ................................................................................. 7

Grinder Process ........................................................................................................ 7

Transport to drying ................................................................................................... 8

Drying process .......................................................................................................... 8

Transport to the mixer .............................................................................................. 8

Mixed ........................................................................................................................ 8

Inspection ................................................................................................................. 8

Packing ..................................................................................................................... 9

Transportation to warehouse .................................................................................... 9

Storage ...................................................................................................................... 9

Marketing ................................................................................................................. 9

Sales and service ..................................................................................................... 10

 III

Market ............................................................................................................................. 11

Country of origin: Ecuador ......................................................................................... 11

Market Destination ..................................................................................................... 11

Type of Client ............................................................................................................. 12

Orientation ...................................................................................................................... 12

The Nine Strategic Windows.......................................................................................... 13

Motives & Triggers for internationalization ................................................................... 15

Barriers for internationalization...................................................................................... 15

Recommendations .......................................................................................................... 16

Internationalization model .............................................................................................. 17

Distance in destination market ....................................................................................... 17

Psychic distance.......................................................................................................... 17

Bolivia .................................................................................................................... 17

Ecuador ................................................................................................................... 19

Physical distance ........................................................................................................ 21

Target Market characteristics ......................................................................................... 22

Quality of environment for the target market business .................................................. 23

Services of measurement of general quality of the environment for the businesses of

Bolivia ........................................................................................................................ 23

Consumer Lifestyles in Bolivia .................................................................................. 23

Market attractiveness analysis ........................................................................................ 24

Market size ................................................................................................................. 24

Market Grow .............................................................................................................. 26

Competitive conditions ............................................................................................... 27

Buying power of costumers ........................................................................................ 28

Economy and political stability .................................................................................. 29

Exercise of competitive strength analysis ...................................................................... 30

 IV

Exercise of competitive strength analysis ...................................................................... 31

Image .......................................................................................................................... 31

Technology position ................................................................................................... 32

Product quality............................................................................................................ 32

Products to fit market demands .................................................................................. 33

Financial resources ..................................................................................................... 33

Relative competitive strength ..................................................................................... 34

Define the type of market of the destination country ..................................................... 34

 V

Figure Index
Figure 1: Potential product. Source: Pronaca.com ........................................................... 2
Figure 2: Measuring indicators of the potential product, taken from PRONACA ........... 3
Figure 3: Value Chain. Made by authors ........................................................................ 10
Figure 4: The nine strategic windows Adapt from Solberg, 1997, p. 11. Reprinted with
kind permission. In the original article solberg has used the concept ‘globality’ rather
than ‘globalism’. ............................................................................................................. 14
Figure 5: Inflation chart - Inflation rate since 2010 to 2020 compared to the previous
year………………………………………………………………………………….… 26
Figure 6: Brands in Bolivia. Taken from gnb.com.bo………………………………... 28
 1

The Company
Procesadora Nacional de Alimentos (PRONACA) it’s an Ecuadorian company

that according to PRONACA (2016) It has worked since 1957 dedicated to the

manufacture of food generating development in the agricultural sector.

Based on El comercio (2017) The Company is 60 years old, and it has been

dedicated to agricultural activities, especially in poultry, livestock, pig, aquaculture and

livestock.

The company carries out activities in the country ranging from the acquisition of

raw material, produced by it or acquired from third parties, and the production and

marketing of goods nationwide. It is one of the largest companies in the country, which

in 2016 earned revenues of USD 922 million. Between 2017 and 2018, assets for USD

659 million and a gross profit of USD 194 million were recorded, according to the

Superintendence of Companies. The Ecuadorian firm currently has in the market brands

such as Mr. Pollo, Mr. Chancho, Mr. Pavo, Mr. Fish, Indaves, Liki, etc.

PRONACA Company is considered as a large company, because it has more

than 200 workers, as well as has incomes over $ 5,000,000, additional occupies the fifth

place of income of the industries of Ecuador with income of 868 million dollars in

2019.

The company is characterized by handling amounts considered, they also have

their own facilities in the country, the company also contains an administration system

and a very advanced operation system with all these characteristics, it is suitable for

obtaining loans and loans with financial institutions nations and international,
 2

PRONACA has an economy at scale from which it obtains a greater advantage towards

the rest of competitors.

According to Ecuador Corresponsables (2018) PRONACA it is a company

recognized as a company that cares about the care and preservation of the environment,

maintains a sustainability project over the years managing environmental challenges and

social responsibility. During 2016 and 2017, PRONACA take the second in this ranking

and have now been recognized as first.

The product

The potential product offered by the company is the whole turkey ready to bake,

which is a completely marinated product that provides the ease of just defrosting it and

putting it in the oven. The product sell in Ecuador 2019 is show in Figure 1.

Figure 1: Potential product. Source: Pronaca.com

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In Table 1 show the specifications of the turkey. The weight, the way of the

convervation, the time to be consumed and the use are detaile and in figure 2 the

nutritional table of Mr Pavo with its corresponding percentages is presented.

Table 1 Specifications

SPECIFICATIONS OF THE POTENTIAL PRODUCT

WEIGHT 6 to 8 Kg. Yield Approx.: 19 servings.

CONSERVATION MODE Frozen at -18 ° C.

USEFUL LIFE 12 months.

DIFFERENT USES Ideal for oven preparation.

Nota 1 Elaborated by authors

Figure 2: Measuring indicators of the potential product, taken from PRONACA

Value Chain

Given that the PRONACA Company is a company that contributes to health by

feeding people well in Ecuador, it provides an example of looking for value for

customers without neglecting their monetary objective.

The following measurements allow to process the operation of the company in a

better way, which means that it becomes more competitive within the market and

contributes positively to the company

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PRONACA looks for a constant improvement in the quality of processes and

products they offer. PRONACA (2016) This continues with the development of its

sustainability model through the establishment of concrete objectives in seven focal

aspects, of which four are related to environmental management. These objectives are

projected over the next five years and allow you to perform your management in a more

effective and focused way. Thus, his corporate philosophy is adding evidence of the

contribution to the generation of environmental, family and social well-being.

In order to contribute positively to the company by creating a competitive

strategy by performing the functions presented below.

Research and development

In the globalized world that allows us to act under technology, in the

PRONACA company farms with advanced technology are built using sophisticated

ventilation systems to maintain the good quality of the product there are two in the

province of Guayas, additionally they use modern technology for the techniques of

breeding based on animal welfare, variety of cuts and product.

PRONACA It has focused on its growth in the demand for chickens offering

opportunities for the development of new activities, such as the company that started

with an incubator that used the technological processes initially in Ecuador.

The product is the result of quality control at all stages in your production

process and uses the necessary machinery in turn handle quality ingredients handled

rigorously to achieve an ideal balance of lactation protein, vitamins and minerals,

maintain farms with technology and selection processes in order to guarantee the

welfare of the final consumer and keep the product in good condition.
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The difference between poultry activity and other products is the high level of

technological development, with continuous progress and better, showing growth to

increase their production, since research is a key tool for companies currently based on

skills, PRONACA, is a leading industry in the food line in the country, focus on studies

for the management of animal nutrition.

The process begins before the animal is born, the research to manage a genetic

improvement, the product that the chickens are nutritious, rich and healthy, this is a

basis of continuous monitoring of vaccine diseases and reduction of antibiotics to

improve health and Animal production.

The kind of warehouse or place of storage, temperature, amount of oxygen,

ventilation, luminosity, the type of light is a critical role since these details make a

difference in the behavior of animals, and future processing of the product.

Production

In PRONACA the quality control in all its phases from the sowing of certified

seeds, appropriate cultivation techniques and the industrial process through technology,

influence the behavior of guaranteeing the best product for sale.

The suppliers are of vital importance in the company, since through them they

obtain the implements and equipment for the installation of the machinery used in the

production of the chickens and eggs.

The company has a food distribution network within the market, has a careful

refrigeration that guarantees the freshness of the food, to the point of commercialization

in its different lines, therefore the products remain unchanged until they reach the final

consumer.

For all the above, the product process is presented below.

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Receipt and storage of raw material

The fundamental raw material for the process is constituted by the pulp of the

hen, which consists of the meat of the animal being free of feathers, head, legs and

bones. The pulp is received in polyethylene bags packed in aluminum plastic boxes

containing ice. The raw materials that are used additionally are iodized salt, potassium

sorbate and antioxidant, are received in bags of 50 Kg, which are stored in the

warehouse of raw materials.

Inspection

Once the chicken pulp is received, the physical inspection is carried out,

verifying the following properties:

• White color

• Characteristic smell

• Firm consistency

• Product No signs of decomposition

It is also verified by laboratory analysis that the meat is completely fresh, free of

any type of contamination and that its composition is approximately of:

• Proteins 21%

• Fat 20%

• Water 58%

• Cinder 1%

Transportation to the refrigeration area

Once the pulp inspection is carried out, the boxes are transported to the

refrigeration chamber, which is carried out by means of devils.

Refrigeration
 7

Stored chicken meat should be kept refrigerated for a maximum period of 2

days. The cooling chamber must have a temperature between 3 ° and 5 ° C.

Transportation to the cooking area

The boxes with the pulp are transferred to the cooking area by means of devils.

Cooking

The chicken pulp is poured into a kettle or saucepan, adding the same amount by

weight of water, letting it cook for 30 minutes after the water begins to boil. The kettle

should be covered during cooking, otherwise it will increase the cooking time.

Transport to centrifuge

Once the cooking cycle is finished, the mixture of the cooked pulp and broth is

transported by gravity in a pipe to a centrifuge machine.

Centrifuged

In the centrifuge machine, the broth is separated from the pulp by means of

rotation, obtaining a reasonably clarified fat-broth emulsion with a proportion of about

3% meat. The cooked pulp comes out of the pasta-shaped centrifuge with a humidity of

approximately 65% and is received in stainless steel trays.

Transport to grinding machine

Trays with wet chicken meat are transported manually to the meat or chicken

mill.

Grinder Process

Chicken meat is manually introduced into a wet meat mill, which produces pulp

and water noodles by discharging them separately. In this process the meat loses 15 %

moisture.
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Transport to drying

The pulp obtained from the shredder mill is transported manually in stainless

steel trays to a drying oven.

Drying process

Chicken meat is fed to the oven where it loses much of the water it contains,

leaving with approximately 3 % humidity.

The chicken meat that is obtained is unloaded in stainless steel trays. It should be

mentioned that before the meat comes out of the oven, it goes through a series of fans

that reduce its temperature.

Transport to the mixer

Trays with dried meat are transported manually to a mixing machine.

Mixed

Chicken meat obtained from the drying oven with a humidity of approximately

3% is mixed with salt, potassium sorbate and antioxidant.

Inspection

Once the mixture is made, it is verified that the dried meat of the chicken

contains the following proportions:

Table 2 Measures of Inspectios

Fat-free dried chicken meat 79.5 % Min.

Chicken fat 3.5 % Min.

Iodized salt 10 % Max.

Humidity 5 % Max.
 9

Antioxidant 2 % Max.

Nota 2 Elaborated by authors

Packing

The dried meat concentrate is packaged in aluminum foil with a maximum

capacity of a 10-gram bucket. The cubes are packed in boxes that contain 8 cubes per

box.

Transportation to warehouse

The boxes are transported in plastic pallets and with a refrigerated vehicle to the

warehouse.

Storage

The boxes are stored being ready for distribution.

Marketing

In the different distribution points located the chicken broths concentrated Mr.

Pollo and Mr. Pavo brand, the consumer first in the purchase of the product, then

informs and ends up evaluating it, In this way the advertising must be oriented to

persuade the consumer to buy this product of good quality, so that you know the

benefits of using Mr. Pollo and Mr Pavo concentrated broths in the preparation of

different dishes, in this way the consumer can make a positive evaluation and continue

buying the product.

Distribution is the marketing instrument, relating the path through which the

flow of products circulates from the manufacturer to the customer.

 10

Communication and advertising are not only to the mass market, but through

tools that promote the commercialization of the product between channels and sub

channels.

Sales and service

Although PRONACA it is not a service company, it offers its customers reliable

sales support through the sellers at the distribution points that offer a personalized

service, attend complaints and train providing information about the products. It also

has an improvement department responsible for providing information about orders and

credentials made to the customer (PRONACA, 2016).

The company has diversified its portfolio of products in order to meet the needs

of its consumers and reach homes in Ecuador with a wide variety of guaranteed and

quality products.

• The company maintains advanced technology in order to maintain the quality

Research • Increase production through technology and keep monitoring of the quality of raw material
and • The use of modern technology for breeding techniques based on animal welfare
developmen
t

• Suppliers are vital importance in the company, because through them company obtains the implements
and equipment for installation of machinery used in production of chickens and eggs.
• Quality control in all its phases: the sowing of certified seeds, appropriate cultivation techniques and
industrial process through technology, influence the behavior of guaranteeing the best product for sale.
Production • Company has a food distribution network within the market, has a careful refrigeration that guarantees
the freshness of food, for the commercialization.

• Advertising must be oriented to persuade the consumer to buy good quality product, to know the benefits of using
different brands, in this way the consumer makes a positive evaluation and keep buying the product.
• Distribution is the marketing instrument, relating the path through which the flow of products circulates from the
manufacturer to the customer.
Marketing • Communication and advertising is not only to the mass market, but through tools that promote the commercialization of
the product between channels and sub channels.

• Pronaca offers its customers reliable sales support through vendors at distribution points that offer personalized service,
respond to complaints and train by providing information about the products.
Sales and • It has an improvement department responsible for providing information about orders and credits made to the customer.
service

Figure 3: Value Chain. Made by authors

 11

Market

Country of origin: Ecuador

Ecuador is located in South America at the 0 ° 0'0 "parallel. With an area of

283,561 km2, the country has four bio geographical regions: Sierra, which is crossed by

Los Andes, the Pacific Coast, the Amazon and the Galapagos Islands. Its geography

contributes largely to the biodiversity present in the country.

Ecuador belongs to the group of 12 mega diverse countries that together

represent between 60 and 70% of the planet's biodiversity, meaning that the country has

an important and unique natural heritage, the basis of economic, social, cultural and

productive development.

More than 64% of the national agricultural production is in the hands of small

producers. Most of the food consumed in Ecuador comes from Peasant Family Farming

(60%). In the same way, this group of people contribute with the offer of export

products. There is a significant growth in shipments made by peasant exporters.

Market Destination

The turkey in its different presentations, smoked, baked, fried or grilled has

managed to position itself in an interesting place on the menu of Bolivian homes,

especially at Christmas time, which is when the main course is decided to taste the

Traditional Christmas Eve dinner. In the last three years, Bolivia only bought turkey

from Chile. This year, he entered a new supplier, the Supermarket Chain HIPERMAXI

in conjunction with the company COINSER, for the first time decided to bet on the

excellent taste and quality of the Ecuadorian turkey.

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The first container arrived through the Port of Iquique, is 18 thousand kilos of

weight since Monday November 26 is being distributed in all branches of La Paz and

Cochabamba , in the case of Santa Cruz, in the HIPERMAXI of Las Brisas (Vivado,

2018).

Type of Client

The Mr. Pavo brand enjoys a lot of prestige among its consumers in this case

Bolivian families. This product is slaughtered and packed under strict quality standards.

Mr. Turkey has been raised with the best care to offer a soft, tender and juicy.

Mr Pavo's main client will be the HIPERMAXI supermarket chain that will be

distributed at the La Paz and Cochabamba branches.

Orientation

According to (Hollensen, 2011), Geocentric global is the world is getting smaller

and smaller. The firm may offer global product concepts but with local adaptation

(‘think global, act local’).

Based on context Ethnocentric, Polycentric, Regiocentric, Geocentric (EPRG),

The company PRONACA is a geocentric company that is governed by the model of

Holling (2011), states that:

Basically, global marketing consists of finding and satisfying

global customer needs better than the competition, and of
coordinating marketing activities within the constraints of the global
environment. The form of the firm’s response to global market
opportunities depends greatly on the management’s assumption or
beliefs both conscious and unconscious, about the nature of doing
business around the world (Chakravarthy & Perlmutter, 1985).
 13

Food products in a global way although the way they act is in a local way. The

company considers the world as a single market. In 2018, negotiations with Bolivia

began to export Turkey Whole, although the distances between these countries are not

very large, the negotiations were, since they took about a year; because of the different

barriers that each country has for exports of food products.

According to (Mar) They have a fully organized marketing of their different

products since they have different departments in a hierarchical manner including a

planning department where no decision is made deliberately. On the other hand, this

company has an advantage in its costs since it produces in large quantities and does not

make any change between its different products. They know very well the global market

to which they are targeting, since they have a very full and duly regulated security of the

products, they offer regardless of the socio-cultural barriers that are placed on them

since it is a food product that is consumed worldwide.

The Nine Strategic Windows

According to Solberg (1997), cited by (Hollensen, The characteristics of LSE,

SME, 2008), explains the potential of the company for internationalization, and from

them you will obtain the Following three possible business behaviors:

The globally immature company performs limited activity exporter while

lacking a dominant position in the current market. It has great weakness in

international markets because of its limited experience and has an unfavorable

position in the market share.

The global adolescent company has already had some experience

international and has acquired some importance in the national market. Your success

in the global market will depend on its strength, knowledge and culture corporate
 14

The internationally mature global company is the most prepared for the

challenges of globalization. It has a dominant position in the markets national and

international, and also has extensive experience and culture corporate.

PRONACA is an Ecuadorian company that has been in the local market for

more than 60 years. In 2018 PRONACA made the decision to enter the international

market and in November of the same year it made its first export to the Bolivian

market of the Mr Pavo brand, which makes PRONACA a global and immature

company due to its short time, less than One year, he has in the international market

selling his product.

Industry Globalism

Local Potencially Global

Preparedness for internationalization

Mature Enter new Business Prepare for globalization Strengthen your global position

Consolidate your export Consider expansion in

Adolescent Seek global alliances
markets international markets

Seek niches in international

Inmature Stay at home Prepare for a buyout
markets

Figure 4: The nine strategic windows Adapt from Solberg, 1997, p. 11. Reprinted with kind permission. In the original article
solberg has used the concept ‘globality’ rather than ‘globalism’.
 15

Motives & Triggers for internationalization

Internationalization is a process through companies, like PRONACA, to

establish themselves in one or more foreign countries by establishing subsidiary

companies or acquisition of domestic companies (Bas, 2001).

PRONACA, thanks to the diversification of its products became a leading

company in the Ecuadorian market. However, they realized that the company's

growth was being affected by the limited population of the Ecuadorian market

Because of this reason and also in order to minimize the risk involved in producing

and marketing in a single market, PRONACA decided to diversify turkey production

and the target market. With the investigation carried out it was presented an

opportunity for the company to export to Bolivia.

PRONACA leaders, with excellent academic preparation abroad, developed a

business plan that allowed them to know the profitability of the production and

export of Mr Pavo. Consequently, they ventured to export to Bolivia with the aim of

reaching local markets. Once the company was formed, they decided to take the risk

of signing a contract with local producers in Ecuador to buy all their production for

10 years without still having many customers inside Bolivia.

They began with the development of advertising and marketing to publicize

the product. It is worth mentioning that PRONACA Ecuador provides the raw

material and the technical advice to the foreign market (Andrade, 2015).

Barriers for internationalization

Among the barriers that hinder the internationalization process are the general

market risks that affected the export process of Mr Pavo, among them mainly,
 16

comparative market risks competition of other companies in this case the country that

exported turkey to Bolivia was previously Chile and also there were many difficulties in

finding the right distributor.

However, the barriers that delayed this process the most were the restrictions of

the foreign government since according to Richard Cernadas COINSER commercial

manager, the process took approximately one and a half years to carry out the sanitary

governmental efforts of Bolivia as on the side of Ecuador, it was a long project and with

a good end.

Recommendations

PRONACA presents risks in the Market due to the fact that Chile had previously

sold the same product in the Bolivian Market, which means that PRONACA having

little time in the Market is handled competitively so that its product is more quoted,

PRONACA must have an Advantage Unique Competitive, it is necessary to identify the

characteristics they offer are unique or that stand out above what the competition offers,

they can create aggressive (temporary) offers to generate a customer attraction. On the

other hand, new distribution channels can be created and thus increase the impact to

reach more consumers.

It is necessary for PRONACA to ensure the certificates that allow it to export the

product of animal origin to the Bolivian Market and that the good complies with all the

governmental regulations of the destination country, since not complying with the

necessary could delay the customs compensation process and incur significant tax.
 17

Internationalization model

We believe that possibly the internationalization model that the company applied

was the Traditional Marketing Approach “The Penrosian tradition” that reflects the

traditional marketing approach in the core competencies of the company combined with

opportunities in the foreign environment, that is based on the costs that he suggested

that the company should have a compensatory advantage to exceed the cost of

foreigners. Therefore, technological and marketing skills became the key elements

necessary for a successful foreign entry.

Distance in destination market

Psychic distance

Bolivia
Spanish is the first official language of Bolivia, together with as many as 40

other indigenous languages spoken by the inhabitants of this country. Some of the most

important indigenous languages include Quechua, Aymara, Chiquitano and Tupi-

Guarani. While 44.80% Bolivians only speak Spanish, 25.08% inhabitants speak

Quechua and 16.77 % speak Aymara.

The Bolivian Government is known to use two languages in their day-to-day

operations: Spanish is one of them, and the other is usually the indigenous language

needed for the occasion (Academia Latinoamericana de Español, 2019).

The currency in Bolivia is the Boliviano. Bolivia has a total population of

11,540,078 people (69.1% urban and 30.9% rural) ( International Federation of Red

Cross And Red Crescent Societies, 2019).Bolivia´s population is equivalent to 0.15% of

the total population around the world, which means that one person in every 690 people
 18

on the planet is a resident of Bolivia. the total land area is 1,083,300 Km2 (418,264 sq.

miles), the median age is 24.4 years.

The gross domestic product (GDP) measures of national income and output for a

given country's economy. The GROSS DOMESTIC PRODUCT (GDP) is equal to the

total expenditures for all final goods and services produced within the country in a

stipulated period of time. The GDP in Bolivia was worth 40.29 billion US dollars in

2018. The GDP value of Bolivia represents 0.06 percent of the world economy. GDP in

Bolivia averaged 9.06 USD Billion from 1960 until 2018, reaching an all-time high of

40.29 USD Billion in 2018 and a record low of 0.37 USD Billion in 1960

Gross Domestic Product Per Capita

The GDP per capita is obtained by dividing the country’s gross domestic

product, adjusted by inflation, by the total population. The Gross Domestic Product per

capita in Bolivia was last recorded at 2559.51 US dollars in 2018. The GDP per Capita

in Bolivia is equivalent to 20 percent of the world's average. GDP per capita in Bolivia

averaged 1595.72 USD from 1960 until 2018, reaching an all-time high of 2559.51

USD in 2018 and a record low of 1005.41 USD in 1960 (Trading Economics, 2018).

Exports

In the last two decades Bolivia has become a major exporter of natural gas (43

percent of total exports). Other exports include: silver (12 percent of total exports), zinc

(10 percent) and soybeans and related products (7 percent). Main export partners are:

Brazil (33 percent of total exports), Argentina (12 percent) and United States (10

percent). Others include: Peru, South Korea, China and Belgium.

Exports in Bolivia decreased to 617.21 USD Million in April from 669.52 USD

Million in March of 2019. Exports in Bolivia averaged 435.40 USD Million from 1994
 19

until 2019, reaching an all-time high of 1197.23 USD Million in May of 2014 and a

record low of 98.20 USD Million in January of 1996.

Ecuador

The most widely spoken language in Ecuador is Spanish, more than 2.3 million

use it as their primary language. Besides Spanish, there are about 24 other indigenous

languages also in use here. Some of the important ones are, Awa-Cuaiquer, Cofan, the

Embera languages, Secoya, Siona, Tetete, Zaparo and Media Lengua.

Sign language is also on the official list of languages in both Bolivia and

Ecuador, closely resembling International Sign Language used in other countries of the

world (Academia Latinoamericana de Español, 2019).

The currency in Ecuador is the US dollar. Ecuador has a total population of

17,419,072 people (63.0 % urban and 27.9% rural) ( International Federation of Red

Cross And Red Crescent Societies, 2019).Ecuador´s population is equivalent

to 0.23% of the total population around the world, which means that one person in every

230 people on the planet is a resident of Ecuador. the total land area is 248,360 Km2

(95,892 sq. miles), the median age is 26.8 years.

The GROSS DOMESTIC PRODUCT (GDP) measures of national income and

output for a given country's economy. The gross domestic product (GDP) is equal to the

total expenditures for all final goods and services produced within the country in a

stipulated period of time. The GDP in Ecuador was worth 104,295 billion US dollars in

2017. The GDP value of Ecuador represented 2,37% percent of the world economy.

Gross Domestic Product Per Capita

The GDP per capita is obtained by dividing the country’s gross domestic

product, adjusted by inflation, by the total population. The Gross Domestic Product per

capita in Ecuador was last recorded at 5,206 US dollars in 2017. The GDP per Capita in
 20

Ecuador had an increase of $30 from $5,176 in 2016; this represents a change

of 0.6% in GDP per capita. (Trading Economics, 2018).

Exports

Ecuador is the 69th largest export economy in the world and the 102nd most

complex economy. In 2017, Ecuador exported $19.3B and imported $19.3B, resulting

in a negative trade balance of $18.4M.

The top exports of Ecuador are:

 Crude Petroleum that represents 5.63B dollars

 Bananas ($3.38B)

 Crustaceans ($3.06B)

 Processed Fish ($1.18B)

 Cut Flowers ($846M), using the revision of the HS (Harmonized System)

classification.

It´s top imports are:

 Refined Petroleum ($1.7B)

 Coal Tar Oil ($1.1B)

 Cars ($921M)

 Packaged Medicaments($653M)

 Broadcasting Equipment ($390M) (Observatory of Economic Complexity,

2018).

The top of exports destinations of Ecuador is: United States ($ 6.06B), Vietnam

($ 1.46B), Chile ($1.33B), Panama ($932M) and Russia ($912M).

 21

The top import origins are the United

States($3.72B), China ($3.62B), Colombia ($1.51B), Brazil ($865M)

and Panama ($848M).

Ecuador borders Colombia and Peru by land and Costa Rica by sea.

until 2019, reaching an all-time high of 1197.23 USD Million in May of 2014

and a record low of 98.20 USD Million in January of 1996

The currency in Ecuador is the USD. Ecuador’s population is 16,624,858 people

(63.7% urban and 36.3% rural)

Physical distance

The distance between Ecuador and Bolivia 2,264 Km (1,407 miles).

The time difference between Ecuador and Bolivia is 1 hour. This means that it is

now 16:29 in Ecuador and 17:29 in Bolivia (Distance Between cities and places, 2018).

Ecuador:

 GPS Coordinates: 1° 49´ 52.4640'' S

78° 11´ 0.2400'' W

 Latitude: -1.83124

 Longitude: -78.18340

 Altitude: 1394 m

Bolivia

 GPS Coordinates: 16° 17´ 24.5400'' S

63° 35´ 19.1400'' W

 Latitude: -16.29015
 22

 Longitude: -63.58865

 Altitude: 204 m

Target Market characteristics

PRONACA, made the first export of 18,000k of turkey to Bolivia, export that

arrived in the destination country on November 29.

The negotiation between the Ecuadorian company and the Bolivian importer

COINSER was carried out through the management of the Pro Ecuador commercial

office in Santa Cruz.

The product is currently sold in the supermarkets of the Hipermaxi chain,

through its 36 stores (El Universo, 2018).

The economic recession, smuggling and low prices are the factors that affect the

decrease of productive items such as poultry, paper, banana and palm tree that happened

in 2018 and still. The effect is also reflected in the stagnation of sectors such as

exporter, milkman, florist, pig farmer and small industry.

Although in 2018 until now there were specific problems, given the limited

public investment and climate change, sectors such as agriculture, livestock and

construction report slight growth rates in relation to previous years (El sitio avicola ,

2019).

Unfortunately, smuggling is the main reason for the breakdown of the poultry

industry since the prices of products that are smuggled in are not competitive within the

industry.

Given this situation, the Government should carry out greater control over the

entry of contraband products from Latin American countries, which does not contribute

to the strengthening of small national industries.

 23

The problem caused by smuggling also reaches turkey producers, who are

unable to compete with the illegal entry of these products

Quality of environment for the target market business

Services of measurement of general quality of the environment for the businesses

of Bolivia

The general election is scheduled for October 20th and president, Evo Morales,

of the left-wing Movement al Socialism who is seeking a fourth term, will face a close

contest. Growth will average 4.1% in 2019-23, with the business environment hindered

by interventionist policies and an overvalued currency. Higher public spending and a

substantial current-account deficit will weigh on the fiscal balance and the large stock of

foreign reserves, requiring some adjustments. (Economist Intelligence unit, 2019)

Consumer Lifestyles in Bolivia

With a population of over 10 million people in 2012, Bolivia is a predominantly

poor country and one of the least developed in Latin America. On the other hand, the

country has recently seen robust economic growth and this has helped boost consumer

income and spending despite wages still being the lowest in Latin America. A plethora

of government initiatives and income transfers have reduced income inequality and

brought a significant number of Bolivians out of extreme poverty.

In addition to covering important core topics like household disposable income,

consumer expenditure, savings and credit and housing and home ownership, this report

also contains hard-to-find statistics on more specific consumer-related topics like eating

and drinking habits, shopping habits, preferred types of stores and retail venues,

clothing and fashion trends and descriptions of how consumers spend their leisure and

recreation time. (Euromonitor international, 2006)

 24

A consumer segmentation section in the report breaks down the Bolivia’s

consumers by specific age groups, ranging from babies and infants to pensioners;

highlighting the factors that influence purchasing decisions and the products in greatest

demand for each segment.

For the last ten consecutive years, Bolivia experienced positive growth superior

to 4% of GDP. Growth in Bolivia is supported by commodity exports and increasing

natural gas exports. The country remains one of the leading South American economies,

recording an estimated 4.3% growth in 2018. According to the Bolivian Central Bank,

growth was driven by a series of factors, mainly the robust export of raw materials, and

public and private investment, which drove the domestic economy. Growth should

remain steady in 2019 and 2020, at 4.2% and 3.9%, respectively. Despite an adverse

external environment, growth remains sustained by a robust internal demand and very

high public spending (Societe Generale, 2017).

Market attractiveness analysis

The attractiveness of the market uses many factors to determine whether a

market can be profitable or not for investment. (Simonetti, 2018).

Based on information from (El Universo, 2018) PRONACA company began

exporting Turkey to Bolivia, so it is examined as limitations and the power of selling in

the target market with the potential product in a foreign market, so we have determined

that the five main dimensions of the market are:

Market size

With more than 11 million inhabitants and a rising economy, Bolivia is a

promising market.
 25

Bolivia has one of the lowest levels of GDP in Latin America and a high level of

inequality among its population, in recent years poverty levels have been reduced

considerably and its economy has grown steadily. In this sense, the growth expectation

for 2020 is in the order of + 4.8% and according to (Banco central de Bolivia , 2019)

Bolivia will be the country that will lead the growth in the region.

Therefore, Bolivia's demand for turkey consumption is maintained alongside its

potential brand that is Pavo Santa Claus and Avicola Santa Rosa, sales increase and

reflect its greatest potential on festive dates such as Christmas, and the end of the year,

Companies in Bolivia tend to diversify as they have different products within their

portfolio, and constantly carry out promotions to market and sell their products. Bolivia

has approximately 81,000 businesses, the traditional channel and, in agriculture is the

most important in the country. On average, within the channel, the points of sale handle

an assortment of between 16 and 30 product categories.

According to (Statista) Inflation in the economy of Bolivia remains and it is

expected to continue until 2020, the average inflation rate in Bolivia amounted to

around 5.77% compared to the previous year.

 26

Figure 5: Inflation chart - Inflation rate since 2010 to 2020 compared to the previous year

Market Grow

Bolivia is a market with great potential. In recent years the country has enjoyed

great economic stability and everything suggests that it will keep on the same path.

In the field of mass consumption, the key to success will lay, among other things, in

understanding the needs of a consumer who sees their living conditions improved, not

forgetting the diversity of this country, adapting the different commercial strategies to

the particularities of each market.

As the data of the International Monetary Fund show, it is expected that at the

end of 2019 the total economy of Bolivia will amount to 43.087 million dollars gross

domestic product.

Bolivia has the second largest natural gas reserves in South America, although

these still do not reach 1% of the total world reserves. These reservations are today a

source of a broad national debate regarding their future use. It is worth mentioning that

Bolivia is the fourth largest producer of natural gas in Latin America (only after

Mexico, Argentina and Venezuela), as well as Bolivia is the eighth largest producer of

oil in Latin America.

 27

In the agribusiness sector it has had an important impact on the Bolivian

economy, due to the technification and optimization of agricultural products such as:

Livestock, sugar production, rice production, etc. During 2015, 2017 and 2018, Bolivia

managed to become the first world producer and exporter country in Quinoa, being

shortly thereafter moved to second place by Peru. But Bolivia currently occupies the

second place in the production and export of this food worldwide in 93 countries. It

should also be noted that Bolivia is in tenth place worldwide in the production of Soya.

In early 2016, Bolivian poultry farming suffered a decline in chicken production

caused by the lack of corn, whose harvest was not good because of a drought. This

meant an increase in the price of chicken meat in Bolivia, which has remained until

autumn. The situation has not been stabilized until mid-October, since in late summer

the Bolivian government authorized the importation of feed for chickens, so that, little

by little, poultry production recovered and prices returned to their levels usual.

Actually, raw material is available to feed the birds, which guarantee the feeding

for all the birds of the Bolivian farms. In addition, in case of lack of grain the

government has committed to supply that food for the birds. The price of chicken meat

has been normalized and stabilized. Believes that in the markets the price of kg of

chicken should not exceed 14.50 Bolivians ($ 1.9) per kilo.

In the search for growth in the Market we also present it as the acceptance of the

market that chicken has in Bolivia and in turn considering the acceptance of the foreign

market, therefore, customers develop loyalty to the product and service with the purpose

that the company maintain its prices and increase the position of the brand.

Competitive conditions

According to the poultry sector, the consumption of chicken meat in Bolivia

reaches 15 million birds. Therefore, decreasing the import of baby chickens by 7%

 28

would imply that at least 2 million chickens would be reduced monthly, reducing the

current production from 20 million to 18 million per month.

There are a variety of brands of turkey and chicken sellers in Bolivia, however

the positioned brands are few, given that the most recognized are “Santa Claus” and

“Avícola Santa Rosa”, which are considered the healthiest products with the most sales

potential in Bolivia.

Different brands in Bolivia

Figure 6: Brands in Bolivia. Taken from gnb.com.bo

Buying power of costumers

The efficiency in its processes in the management of its market strategy and

always working with a human approach, worrying about the welfare of the health of

consumers, is what allows the product to be sold to the different distribution channels,

these between other factors are those that influence the customer's decision.

The product is sold in a certain way, since food is a necessity that occurs daily,

turkey in the food chain is a healthy product.

One of the requirements of the consumer is the quality of food for human

consumption, also a preventive strategy aimed at all factors of contamination, survival

 29

and growth of microorganisms, persistence of chemical products and presence of

physical elements.

Agricultural production is concentrated in the department of Santa Cruz, so this

unlike others, distributes 30% of its production to the eight departments of the country

for the supply of the family basket.

Economy and political stability

Bolivia's economy has its main base in the extraction and export of its natural

resources, mainly gas and mining to a lesser extent also oil, manufacturing and food,

The National Economic and Social Development Plan (PDES) 2016-2020 was

approved in 2016 with the aim of maintaining high growth, continuing to reduce

poverty and improve access to basic services. This plan includes an extensive program

of public investments, financed by the accumulated savings in the bonanza, external

indebtedness and credits of the Central Bank. Among other areas, investments in

infrastructure, hydrocarbon exploration, natural gas industrialization and hydroelectric

generation are contemplated. The plan also appeals to greater dynamism of the private

sector and of direct foreign investment.

Given the international context, this development agenda involves facing some

challenges such as: reducing macroeconomic balances, optimizing the efficiency and

progressivity of public spending and ensuring adequate returns on large public

investment projects. It is also important to join forces with the private sector to continue

developing the country's potential and attract private investments in sectors such as

mining, agriculture and manufacturing in order to generate new sources of growth and

ensure external balance.

One of the economic activities that has experienced an explosive growth and

development, in recent years is the poultry activity, which includes the production of
 30

poultry meat (chicken, duck, turkey, chicken) and the production of eggs for

consumption (chicken and quail).

In 2018 according to (Instituto Bolviano de Comercio Exterior, 2018) the

Imports also represent significant and good upward variations and can be easily

accessed, depending on the product you want to offer.

Figure 7: Bolivia Imports Taken from ibce.org.bo

Exercise of competitive strength analysis

Time of analysis: September 10

Analysis of product area: Turkey

In country: Bolivia

Origin Country: Ecuador

 31

Table 3: Market attractiveness analysis

1 2 3 4 5 % Result
Very Poor Medium Good Very Weight (Grading
poor Good Factor x
Weight)
Market size 2 15% 0,30

Market 4 20% 0,80

Grow
Competitive 2 5% 0,10
conditions
Buying 4 35% 1,40
power of
costumers
Economy 3 25% 0,75
and
political
stability
100 % 3,35
Note 2: Elaborated by authors

Market attractiveness result: 3, 35

Exercise of competitive strength analysis

Competitive analysis is a process that relates the company to its environment.

This analysis allows us to identify the strengths and weaknesses of the company, as well

as the opportunities and threats that harm within the target market. (Villavicencio, 2017)

Our main competitor is "Santa Claus" Poultry Farm, started raising chickens but

in turn with the export of turkeys from Peru. It is one of the companies of greater weight

in Bolivia in the sale of turkeys being its product one of the most quoted in

supermarkets.

Image
PRONACA is a large company that over time has managed to be recognized

locally for its presentation and quality as well as Poultry Santa Claus in Bolivia. In
 32

Bolivia there is not enough publicity for the final consumer at the same time that they

import turkeys; the opposite of PRONACA that recently exported to other countries

including Bolivia.

Technology position

PRONACA has advanced poultry production technology, the strong investment

that has been made throughout the creation of this company, given the demand has been

in Ecuador and the standard levels it has achieved for its good quality products since. It

has more capacity and a fast production unlike Poultry Santa Claus that for seasons are

limited to importing turkeys given the demand for the festive dates that are made every

year since they do not have enough poultry production resort to this method to supply

the market.

Product quality

At the level of product quality of PRONACA, the Ecuadorian agency of

quality assurance of Agro informed that the Zoo sanitary certification of the General

Health Coordination of Ecuador is backed and accepted so that the actions that Agro

Quality has carried out guarantee the quality of the animals that will have this

livestock merchandise.

On the other hand, the Bolivian daily “El deber” (Maldonado, 2015)

reported that Santa Claus Poultry reported that national producers of poultry meat are

preparing to meet the growing demand for these foods for the Christmas and New

Year celebrations. The Santa Claus Company, specializing in the breeding of turkeys

for sale this season, significantly increased the importation of turkey chickens from

Peru.

PRONACA has certifications that guarantee the quality of the product that

is recently exported to other countries such as:

 33

• Good Poultry Practices

• Animal health

• HACCP

• Good manufacturing practices

• 20 Green Points

Products to fit market demands

PRONACA like the Santa Claus Company offer a variety of products.

PRONACA for its part produces and offers: chickens, beef, turkey, shrimp, and recently

they are also trying to export food from canines and felines to several countries of short

physical distances. On the other hand, the Santa Claus Company only offers white meat

that is: chicken and turkey. PRONACA has a competitive advantage towards the Santa

Claus Company since it has a gamification of products given to its machinery that can

make several cuts of meat at the same time.

Figure 8: Product of pronaca, taken from pronaca.com

Financial resources

PRONACA is a private company that has more than 60 years in the local

market. Although they have not risked internationalization in all these years, they are

now applying it when importing turkeys to Bolivia. On the other hand, Avícola Santa

Claus has been in the local market for some time, but its production capacity is not
 34

enough to reach international markets, so when there are seasons of mass

consumption of turkeys, they resort to importing them into Peru.

In 2018, this change given that a good negotiation between the Ecuadorian

and Bolivian companies was achieved, thus being the constant export of turkey

throughout the year, especially in the months of November and December and not

sporadically as was being done with Peru.

Relative competitive strength

With regard to the stronger competitor: Poultry Santa Claus

Table 4: Relative competitive strength

1 2 3 4 5 % Result
Very Poor Medium Good Very Weight (Grading
poor Good Factor x
Weight)
Image 3 15% 0,45

Technology 2 10% 0,20

position
Products to 3 20% 0,60
fit markets
demands
Product 4 40% 1,60
quality
Financial 4 15% 0,60
Resources
100 % 3,45
Note 3: Elaborated by authors

Relative competitive strength result: 3, 45

Define the type of market of the destination country

Bolivia is a category B country to enter the PRONACA´s products, Mr. pavo.

According to the situation of the destination country, a joint venture occurs when two

or more firms pool a portion of their resources within a common legal organization.

This is done by selecting among alternative modes the ways by getting an alliance
 35

with a company with similar activities and with a good level of acceptance in the

destination country. Looking for a theory of what joint ventures must explain why a

particular mode of transacting is chosen over other alternatives such as acquisition,

supply contract, licensing, or spot market purchases.

 36

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pavos-pronaca-bolivia
 37

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 38

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