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MEMBERS:
Cusihuaman, Enzzo
Fu, Elena
Rodriguez, Gustavo
Untiveros, Claudia
PROFESSOR:
Diaz, Dagoberto
Lima, 2017
Executive Summary
Cancer is one of the main causes of death worldwide; it is expected to growth by 70% in the
next two decades. The second most common type is the breast cancer, which represents
12% of all new cancer cases and 25% of all cancers in women. Unfortunately, there is no
cure, but scientist are searching for ways to prevent it.
From the market research Canada has been identified as the potential market, due to its
supplement consumption, breast cancer awareness, and educated demand. Besides, Ontario
is one of the states with the highest rates of breast cancer; and it is also a cluster for
supplements production. Hence, Organic Care´s target market are going to be Canadian
women from Ontario, between 30 to 60 years, from the middle to upper class, and has healthy
preferences. Results from survey shows that women from the target market are willing to
purchase “Made in Canada” supplements to prevent cancer.
Regards to the key strategic partners of Organic Care, organic avocados are obtained from
Omate Community; which are processed into organic avocado oil by CITE Agroindustrial
Moquegua in Ilo. Then, this will be exported from the international Port of Ilo, Peru to Toronto,
Canada. Production of the soft gel supplements will be by Optimal Nature, the manufacturing
company in Toronto. Afterwards, these supplements will be sold in Healthy Planet, a
specialized in organic supplements retail, with online and physical stores.
Financial results show that the project in 5 years (2018 - 2022) is profitable. The initial
investment is USD 356,249, with a capital structure of 20%, and a debt structure of 80% by
CITE Agroindustrial Moquegua (70%); and BCP (10%); and a payback period of 1 year and 27
days. The Net Present Value (NVP) of the project is USD 574’103 with an Internal Rate of
Return (IRR) of 85%, being the opportunity cost of shareholders (COK) 42%.
CONTENT
Cancer is one of the leading causes of death around the world; it is forecast that it will increase
by 50% in 2030 worldwide (National Cancer Institute, 2017). Furthermore, breast cancer is the
second most common cancer overall, apart from the non-melanoma skin cancer, and the most
common cancer in women worldwide – it represents 12% of all new cancer cases and 25% of
all cancers in women (World Cancer Research Fund International, 2016). However, scientists
are investigating different ways to help prevent cancer by medicines or supplements to keep
cancer from starting or to treat a precancerous condition (National Cancer Institute, 2017).
A natural cancer preventer is the Hass avocado. Studies has found that it contains a number
of bioactive phytochemicals, such as carotenoids, that inhibits the mammary cancer
proliferation (Mark et al, 2013; Thomson et al, 2015; Han et al, 2009; Sunil and Thiagarajan,
2015; Noha S. Khalifa et al, 2015; García-Solís et al, 2009). Also, Tamimi et al (2009) has
proven that women with higher intakes of carotenoids from Hass avocado may reduce breast
cancer risk by 30%, in comparison to women who consume it less regularly.
Organic Care´s vision is to prevent cancer by offering organic supplements and creating share
value with Peruvian communities. In the first 5 years of operation (2018 - 2022), the company
plans to offer only supplements for breast cancer prevention. In the long run, the company
plans to offer a wider portfolio of organic supplements to prevent other cancers. The present
business project focuses solely on offering organic avocado oil supplements for breast cancer
prevention, creating share value with Omate Community, Moquegua, Peru.
Organic Care points to attain the Canadian market, since Canada is one of the best markets
for this product based on profitability, competition level, market size and access. The target
market are Canadian women between 30 to 70 years. To do so, Organic Care integrates
strategically each part of its value chain.
Key Partners Key Activities Value Proposition Customer Relationship Customer Segment
Association of Avocados Producers (Omate, Moquegua, Peru) - Research and To offer organic avocado oil Direct Contact Canadian woman between 30 to 70
- Certified organic Hass avocados. development. supplements for breast cancer By e-mail, phone, and years.
- Marketing. prevention, creating share value interactive webpage 3.0.
CITE Agroindustrial Moquegua (Ilo, Moquegua, Peru) - Operation and with Omate Community, - She is from the middle and upper social
- Certified organic (and HACCAP) avocado oil. supervision. Moquegua, Peru. Social Networks class, and has a good education level.
- Research and development. - Human resource By Facebook.
management. - She is familiar with internet and social
Optimal Nature Manufacturing company (Toronto, Ontario, Canada) - Finance and media. She is aware of e-commerce
- Contract manufacturing of the final product: soft gel capsules – net weight: 90g. accounting. transactions.
- ‘Canada Organic’ ‘Good Manufacturing Practices’, ‘Made in Canada’ and
‘HACCAP’ certificates. - She cares about her health, as well as
the social and environmental issues.
Healthy Planet Supplement retail company (Toronto, Ontario, Canada)
- Product distribution and sales physical and e-shops. - She is conscious about breast cancer.
Karen del Catillo Commercial agent (Toronto, Ontario, Canada) - She is willing to consume supplements.
Human resources in Peru Healthy Planet: Initial investment: USD 356’249. Sales of supplements.
1. Headquarter in Ilo, Moquegua, Peru from 2018 to 2022. - Physical shops. Fixed costs: office maintenance, personnel
2. Headquarter in Lima, Lima, Peru from 2022, while the one in Ilo will be set as - E-commerce. payroll, internet, water, electricity and other
the operation office. services.
Variable costs: avocado, oils production,
supplement production, logistics, and other
services.
1
Macro-environment attractiveness categorized as follows: very attractive, attractive, moderately attractive, and not attractive.
Commercial PENX 2015 – 2025: Decreasing trade barriers and increasing trade agreements, promotion of international trade, Public support may ay help business to develop nationally and
Positive
Policy and business internationalization (Promperu, 2015). internationally.
Trade Nearly 95% of Peru´s exports are covered by Free Trade Agreements, such as The Trans-Pacific Partnership
Positive There are more potential markets with less tariff and non-tariff barriers.
Agreements Agreement, The United States Promotion Act, European Union Free Trade agreement (Mincetur, 2017).
Private and public programs: PromPeru, Peru Incuba, Peruvian Entrepreneurship Association, SwissContact,
Programs Positive More opportunities for financial support.
Innovate Peru, Lean Startup Machine, Emprende Up, and Emprende Ahora (Montero, 2017).
SOCIO-CULTURAL FACTOR
Social Main factor adversely affecting the agricultural sector: control of resources – lands, water, etc (Escobedo & Pimentel, Social conflicts in Moquegua may affect avocados/avocado oil transport
Negative
Conflicts 2013). The trend is to continue with this events. (blocking roads), and it will result in economic losses.
The new government plans to increase more than double outlay in education overall, and increasing professional
Education Positive More skilled workers for the company.
and technical education.
TECHNOLOGICAL FACTOR
There are better technological practices for sowing (irrigation), harvesting (pest control) and post-harvesting of
Agricultural CEDER NGO may help producers (suppliers) to obtain higher quality
avocado (processing practices) (Red Agrícola, 2017). CEDER NGO provides irrigation technology and post- Positive
Practices organic avocados.
harvesting practices (cutting and storage) for avocado producers in Omate (Bedoya J. E., 2017).
- Australia, 2016: a machine had been developed, which allows to extract the avocado pulp without losing its
properties, and increasing the days before its oxidation. It can be acquired by licensing (Naturo Company, 2017).
Positive More technological options to process avocado oil.
Processing - Tacna, 2010: the first avocado oil extractor machine was developed in Peru (CITE Agroindustrial Tacna, 2010).
- CITE Agroindustrial Moquegua, 2017: a new avocado oil extractor will be imported in September, 2017 from Italy.
Mexico, 2017: mapped avocado genetic structure to develop improvement programs: water use reduction,
Genetic
productivity, size, vitamins, minerals, and higher oil content (Centro de Investigación De Estudios Avanzados, 2017). Positive The organic certificates is a differentiation factor from genetic products.
Modifications
In the other hand, there is an increasing trend for avocado genetic modifications.
ENVIRONMENTAL FACTOR
Climate change is forecast to continue to adversely (Minagri, 2016). Tendency to yearly droughts in the high
Climate mountains and El Nino phenomenon in the costs affects the crop productivity. According to Juan Bedoya (2017), Impacts negatively on the avocado production in Omate Valley
Negative
Change President of Avocado Exporters in Omate Valley, higher temperatures induces to insect plagues. It affects avocado (decrease of productivity).
productivity.
In Omate, Moquegua avocados are harvested during all the year, but the production peak is from March to June,
Seasonality Positive Low seasonality for the production.
which represents 80% of total annual production (Feliciano, 2014; MINAGRI, 2015).
Higher pest control for the 4 types of avocado larvae, red spider mites, and mealybugs. It is prognosticated more
Pest Control Positive Less risk over the production, and better quality avocados.
pest control in the way the avocado industry becomes more competitive (Bedoya J. E., 2017).
Furthermore, the primary sources were obtained using qualitative methods: interviews to 40
experts in total from Peru - Lima, and traveling to Moquegua (Omate Valley), and Tacna;
Colombia - Manizales, and Caldas; and Mexico – Merida. As well as visits to potential selling
channels of avocado oil in Lima - shops, drugstores, supermarkets and organic fairs.
Also, a quantitative method was applied: a survey. It aims to test the target market in Canada
to seek for insights, perception and awareness of the product, price, and preferences from the
potential consumers. To have a representative sample, the respondents were contacted by
Question Pro, a crowdsourcing service company. A convenience non-probabilistic sample
method was applied; its results can’t be generalized to all the population of the target market.
Moreover, the tool to execute it was a questionnaire, from which 31 surveys (out of 190) were
effectively completed.
General Objective: To develop a viable project of organic avocado supplements for breast
cancer prevention.
Specific Objectives: The specific objectives are divided into four phases: (1) understanding
of the avocado industry; (2) understanding of the avocado oil industry; (3) understanding
Omate Valley, Moquegua; and (4) understanding of the international market.
Research results
Oil
Varieties Temperature Altitude Weight content
Kind: Antillana
Also, its critical analyze avocado real demand in order to avoid bias about the demand level.
The country with the highest demand of avocado is the United States (USD 3’262’467
thousands), France (USD 571’007 thousands), the United Kingdom (USD 549’026 thousands),
Germany (USD 537’170 thousands), Netherlands (USD 415’952 thousands), Canada (USD
396’155 thousands), and Japan (USD 331’350 thousands) (Trade Map, 2017; FAO, 2017).
On the other hand, the international prices per avocado ton are growing at 2% annual rate
since 2010. Netherlands is the country to get the best price (USD 3’116, 2016) per ton - 57%
more than the average of; and Mexico is the second country to obtain better prices (2’213
USD, 2016) - 11% more than the average countries (Trade Map, 2017).
The national production growth by 17% annually from 2008 to 2016; and its value is growing
at 4% annuallly (2011-2015), in the national market. Peruvian avocado exports are increasing
steadily since 2000, growing at 34% annual rate since 2010. According to Peruvian Ministry of
Agriculture (2016), the avocado is the 16th most important agricultural product based on its
annual production, from which 41% is exported USD 396’583’000 during 2016; Peru was
nominated the second largest avocado exporter in the world. The prices per ton are increasing
sustainably at 7.48% annual rate since 2010; the average price per ton was USD 1729 during
2016. However, its international price is lower than the world avocado prices by 18%.
Most of the avocado producer regions are in the Peruvian coast (98%), while the Inter-Andean
valleys represents only 2% (MINAGRI, 2015). The main producer regions are La Libertad
(21%), Lima (18%), Ica (15%), Junin, Ancash and other Inter-Andean valleys are spread in the
high mountains and jungle. On the other hand, the organic avocado industry is not developed
as much as coffee, cacao, and banana. The organic avocado production is only 3% of the total
national production (Diaz, 2008). In 2016, the exports of organic avocado was USD 3 million -
1’100 tons of avocado (SUNAT, 2016); most of this avocado came from Nepena Valley,
Ancash, exported by Fundos del Palto S.A.C (Fundos del Palto, 2017). Furthermore, the
organic production is mostly exported to United States and Europe.
Researchers found that the avocado oil has the same properties as the avocado fruit (Obregón,
2017; VidaNaturalia, 2017), and it maintains its property with a life of 2 years. It contains high
amounts of vitamins A (beta carotene), B, C, E, and other nutrients, which are beneficial
prevent cataracts, cancer, cardiovascular diseases, and to improve skin condition (see Exhibit
1) (Fianu, 2011). Also, it has high levels of monounsaturated fatty acids, low polyunsaturated
fatty acids, and relatively high levels of saturated fatty acid (Fonseca, Alves, Dellinghausen , &
Barboza, 2016).
Imports: Avocado oil is mainly imported from US, Mexico and Ecuador, and the quantity
imported is increasing at 70% annual rate since 2010. However, the average price (USD/liter)
is decreasing at 8% annual rate since 2010. The main importers in Peru are four companies:
Vantage Specialty Chemicals, Impex Group, Alimentos de Exportación, and Wibgus. None of
the imported avocado oil has organic certification – only Kosher and non-transgenic, and it is
mainly used for the cosmetic and food industry (see Exhibit 4). From the present analysis, it
can be concluded that there are two options to obtain the avocado: (1) by imports, or (2) to
identify potential production sources of organic avocado oil in Peru.
CITE Agroindustrial Tacna (2010) has developed the first thermodynamic avocado oil extractor
machine in Peru extractor (see Exhibit 5). At the same time, it was developed a pulp extractor
that separates the pulp from the shell and seed) (Agencia Iberoamericana para la Difusión De
La Ciencia y la Tecnología, 2010). The machine is still in the conditions to be use, it only needs
maintenance service that worth USD 2’140 (Daphne Castro, 2017). On the other hand, a new
high-tech oil extractor will be imported from Italy to Ilo, Moquegua by CITE Agroindustrial
Moquegua. Daphne Castro (2017), Director of CITE, offered (1) to finance the Organic Care
project in 70% through Innovate Peru Program, (2) to provide the outsourcing service of
avocado oil production, and (3) to perform a technological surveillance about avocado oil in
Latin America.
Omate is the main district of General Sanchez Cerro province of Moquegua region. This district
is located between 2’186 meters above sea level. Its location allow it interact with rivers and
mountain spring water (Kosaka, y otros, 2002; Rodríguez J. , 2009). The weather of Omate
varies from temperate to warm in the summer season, allowing the ideal condition for
agricultural activities.
Omate’s main economic sector is the agriculture: grapes (30%), limes (30%) and avocados
(40%) (Montes, 2014). According to the last National agricultural census (2012), Omate Valley
has 915 agricultural units with a total area of 1109 hectares; each agricultural unit has 1.21 he.
It is dedicated to fruits: avocados (388.29 he.), limes (64.81 he.) and grapes (77.81 he.); and
the rest to alfalfa and other products for self-consumption (Montes, 2014). On the other hand,
there is also a highway that connects Omate with Ilo (260 km 4 hours away), the capital of
Moquegua; which is strategic for the transformation the oil and its logistics from the
international port of Ilo.
Omate produces on average 5’228 tons of avocados each year 90% of the production has
organic certification, from which 10-15% of this production is second quality2. The kinds of
avocados are Hass (10%) and Fuerte (90%) (Saavedra, 2017). Wholesaler price (in Omate) of
Hass is on average USD 0.70 per kg, and USD 1.10 per kg of Fuerte. Avocados are harvested
during all the year, but the production peak is from March to June, which represents 80% of
the total annual production (Feliciano, 2014; MINAGRI, 2015).
Approximately, 90% of the avocado production is sold in the national market, mainly Arequipa
and Moquegua (Montes, 2014). There is not any value added to the organic avocado.
Moreover, Juan Efrain Bedoya (2017) is the unique exporter of avocados in Omate, and it is
the largest producer (10% of the total production). It is not exported directly to international
markets, but by Chilean intermediates that re-export it to the US.
Market selection: The selection of the market is based on the CBI criteria (Centre for the
Promotion of Imports from Developing Countries), which sets the variables to choose a
potential market by its (1) accessibility, (2) profitability, (3) size, and (4) competition level.
The process to choose the market starts from selecting the markets which comprise the 80%:
United States, Canada,.France, Germany, Netherlands, United Kingdom, Japan and Spain.
These are the top markets with a high educated demand to consume avocado based-
products such as avocado oil pills.
2
Second quality avocados refers to all the avocados that are beaten, ugly and small for exports or national
consumption: “decreased agricultural production” or “production loss”.
Accessibility: Five variables are considered for this analysis: (1) Political risk based on the
Doing Business 2017 raking, (2) cultural distance based on Hofstede´s cultural dimensions
2016, (3) Trade Barriers and (4) Non-Tariff barriers based on the Market Access Map 2017
ranking, and (5) Social Capital. From the group of countries analyzed, the results show that
Spain is the one with the highest access score, followed by Canada, and then by the
Netherlands (see Exhibit 6).
Profitability: Eight variables are considered for this analysis: (1) Tariff barriers applied to
natural oil trade, (2) Avocado valuation by citizens of each market, (3) Variation of avocado
valuation, (4) Natural oil valuation, (5) Cost of maritime transport (Peru – Country X), (6) GDP
and (7) GDP Growth), and (8) Inflation Rate. From the group of countries analyzed, the results
show that the United Kingdom is the country with better profitability score, followed by Canada,
and then by Germany (see Exhibit 7).
Size: Five variables are considered for this analysis: (1) Avocado real demand, (2) Natural oil
demand, (3) Cancer factor, (4) Breast cancer factor, and (5) Woman population. From the
group of countries analyzed, the results show that the United States is the country with larger
market size, followed by Japan, and then by Germany (see Exhibit 8).
Competition level: Three variables are considered as a proxy of competition level: (1) Amount
of natural oil country exports, (2) Strength of country export level of natural oil, (3) and
Competitiveness index. From the group of countries analyzed, the results show that the United
States is the country with better competition level, followed by the United Kingdom, and then
by Germany (see Exhibit 9).
As a result, the best countries to sell avocado soft gel pills for breast cancer prevention based
on the four analyzed variables are the (1st) United States, followed by the (2nd) United
Kingdom, and then by (3rd) Canada (see Exhibit 10). However, the United States is facing an
uncertain political and economic framework, given Donald Trump’s new governance. The risk
is higher than the previous year – 2016, under the governance of Obama. Indeed, formal data
base doesn’t incorporate this new paradigm; the recent publications are based on 2016
information. Furthermore, United Kingdom is experiencing Brexit policy – started on March
2017, might affect trading and access conditions, and be independent from the European
Union standards. This risk factor is not considered in the data bases from which the information
where taken - 2016. For these reasons, Canada seems to be the ideal market for the
present.business. Nevertheless, Germany may be considered as a contingency option, as it´s
placed on the fourth best market to sell this product, in case the product fails in the Canadian
market.
Macro-environment analysis of Canada
It can be concluded that the Canadian macro-environment is attractive3. The economy and politics in Canada are stable and suitable for investment. Canadians have very high incomes and strong levels of expenditure,
which have positive effect over the demand of Organic Care products. Also, Canada is one of the most transparent countries and its institutions are strong; which guaranty the private and intellectual property. Moreover,
Peru and Canada have a free trade agreement. Regards the social environment, Canadians have a strong sense of nationalism, which is positive for a “Made in Canada” product such as Organic Care supplements.
Furthermore, consumers prefer healthy options and it is correlated to the growth of the number of old people. This suggests to focus on aging people from an upper medium to high income level. On the technological
side, there are public support for the innovation of products, as well as giving opportunities for R&D. To add on, Canadian logistics are top in North America, because of its cost and time efficiency and the good conditions
of the infrastructure (highways, buildings, etc.). Finally, Canada is an eco-friendly country, educated about the environment protection; so the organic attribute of the product is valued. Table 4 shows the Canadian
environment analysis in detail:
3
Macro-environment attractiveness categorized as follows: very attractive, attractive, moderately attractive, and not attractive.
Corruption 9th with a score of 82. Also, strong both private (12/160) and public institutions (18/160), and government
Positive Institutions are strong, so there must not be high risk of copy or fraud.
Index instability is low (Transparency International, 2017; World Economic Forum, 2017).
Trade Canada has a free trade agreement with the UE, NAFTA, and some South American countries like Peru
Positive Tariffs doesn’t apply to the avocado oil.
Agreements (MINCETUR, 2009).
SOCIO-CULTURAL FACTOR
Canadians have strong sense of nationality. Consumers aim to buy more locally manufactured products.
Consumer (Goverment of Canada, 2016). Also, purchasing decisions are based on the desire for healthy, balanced Organic Care´s supplements are going to be a “Made in Canada” product. It
Positive
Lifestyles and holistic lifestyles. This is correlated with the aging of the population (by 2030 a quarter will be over 60 has higher probabilities on succeeding in the Canadian market.
years).
English is the official language; however, product information shall be both in English and French
Diversity Neutral It is a requirement that has to be fulfilled.
(Euromonitor, 2017).
By 2030 there will be 49% of men and 51% of woman, and 22.9% of total population will be over 65 years of
Distribution by Amount of men and woman is almost the same. However, due to the aging
age compared with 16.5% in 2016. Also, life expectancy lower in men (70) than woman (80) (Euromonitor, Depends
gender trend, health care expenditure will increase on the coming decades.
2017).
Socioeconomic Over the 2016-2030 period, social class A (highest) and E (lowest) will grow fast in Canada (Euromonitor, Income inequality will be raised by immigration, because immigrants have
Negative
distribution 2016). usually low incomes.
TECHNOLOGICAL FACTOR
14th country of 160 with the highest logistic performance index. After the US, it is the 2nd best in America The product will be distributed within Canada efficiently, avoiding then
Logistic Index Positive
(World Bank, 2016). extra time and cost.
Technological Grants to goods or services in the pre-commercialization stage that ranks 7.8 or 9 under the Build in
readiness Canada Innovation Program (Government of Canada, 2015). Positive High opportunities for innovation by public support.
Innovation Rank 15 under the criteria of the global innovation index; above the average.
ENVIRONMETAL FACTOR
Global Under the criteria of the Environmental Performance Index, Canada has achieved a change of 2.93% Consumers have willingness to choose among eco-friendly options such
Warming against pollution, and ranks 25 of 180. The country is eco-friendly and educated about environmental Positive
as natural and organic products.
protection.
Source: Own elaboration based on cited and consulted sources.
Micro-environment analysis of Canada and Peru: the industry of the avocado oil supplements to prevent breast cancer is mainly moderately attractive.
(1) The threat of existing competitors is very low. There are not any competitors that offer a supplement to prevent breast cancer. (2) Threat of new entrants is moderate since the product is differentiated and it focus
on a niche; it allows coexistence with potential competitors. However, Mexican companies have a cost advantage to enter in the industry given lower distance and transport cost. (3) The bargaining power of the suppliers
is moderate. Organic Care depends on the supplier of avocado, oil transformation and the Canadian manufactory company. (4) The threat of substitute products is moderately low in the Canadian market since there
are substitutes that do not focus on breast cancer prevention. In addition, substitutes do not offer the same value proposal as Organic Care. (5) The bargaining power of the buyer is moderate since Canadians are
willing to expend more for health and wellness. Furthermore, they are sensitive to cancer issues. However, it is difficult to have loyal customer in the short term. Table 5 shows the micro-environment analysis of Canada
and Peru in details:
Table 5: Micro-environment analysis of Canada and Peru
3. Bargaining power of suppliers is moderate: ₋ Avocado oil soft gel supplements of Organic Care are a differentiated product:
5. Bargaining Power of the Canadian buyers is moderate:
organic and share value with Omate community.
Association of Avocado Producers of Omate (Moquegua, Peru) ₋ High substitute availability since products like other oils (fish) or
₋ Be part of a specific niche allows the coexistence with potential competitors.
non-oil-based (i.e. fresh avocados) can satisfy the demand but
₋ Omate community will provide organic avocados for Organic ₋ Ease to access to the distribution channels, both physical and e-commerce in
they are generic, and does not offer the value proposition of breast
Care, which is the raw material for oil production. Canada and Peru.
cancer prevention.
₋ However, there is moderate supplier concentration; there are two ₋ Low entry barriers, because of the stipulated standards of the industry in Canada.
₋ There would be a low level of consumers since the product is new
other communities close to Omate: Quinistaquillas and ₋ Capital investment requirements are not high comparing with Mexican and
for the market and it is going to be niche-focused. It allows the
Matalaque. These will start to produce organic avocados in Colombian potential competitors (Obregón, 2017).
coexistence and differentiation of Organic Care from substitutes in
Moquegua in the next years (Ceder, 2017). ₋ Mexican companies have a cost advantage given their lower distance and transport
the industry.
₋ Low treat of forward integration given that they do not have the 1. Threat
cost to of existing competitors is very low:
Canada.
₋ Organic care offers an organic proposal and social impact, it is
resources and capabilities to use the avocado to produce oil and
₋ There aren’t any direct and indirect competitors in Canada; they don’t have a value by Canadians
supplements for the international market.
supplement to prevent breast cancer. ₋ Organic Care will do the manufacture in Canada, and Canadians
₋ High switching costs in terms of trust, and avocado cost.
₋ However, there are companies that can manufacture soft gel supplement oils in prefer “Made in Canada” products (Dumouchel, 2017). Only two
CITE Agroindustrial Moquegua (Ilo, Peru) Canada (Statistics Canada, 2015; Diario Mexico, 2017). companies offer this value.
₋ In addition, Canada´s law welcomes business from any part of the world (Health ₋ The switching cost of the buyer is high, because there aren´t any
₋ Critical supplier for the oil production. However, there is low treat
Canada, 2016). other supplements for breast cancer prevention in the Canadian
of forward integration given that it does not have the capabilities
₋ Vitamins and supplements is a fragmented industry in Canada (Euromonitor, 2017). market.
to use the avocado oil to produce supplements for the
₋ Moderate industry growth rate. Vitamins and supplements in Canada experiences ₋ It is difficult for the buyer to integrate backwards, due to the oil
international market.
2% of the current value growth in 2016 and the tendency will continue (Euromonitor extraction and the encapsulation technology.
₋ High switching costs in terms of trust and avocado oil costs.
2017). However, carcinogenic supplements are limited and valued by Canadians. ₋ The income of the Canadian buyer are high. Since the product is a
Manufacturing Companies in Canada ₋ Low exit barriers, because of the stipulated standards of the industry in Canada. new one for the Canadian market, it is important to focus on high
income segments.
₋ No supplier concentration: there are in total ten supplement 4. Threat of substitute products is moderately low in the Canadian market: ₋ Canadians are sensitive to cancer issues. Breast cancer is the third
manufacturing companies in Canada (see Exhibit 61).
most frequent cancer in Canada.
₋ These manufacturing companies offer differentiated services. ₋ There are 4 main cancer preventer supplement, but they do not focusing on breast
₋ According to Canadian Institute of Cancer, cancer will be the main
₋ The legal biding for the integration of manufacturing companies cancer: soursop, curcumin, noni, and cat´s claw.
cause of death in coming years.
set very low probabilities of threats. ₋ Their value proposition is to improve the immune system.
₋ However, it will be hard to obtain loyal customers in the short term,
₋ High switching costs (operational, logistics, trust and relationship) ₋ They positioning is not really developed in the Canadian market.
given it is a new product in the market.
if Organic Care changes the manufacturing company. ₋ These supplements are easy to find in the main retailers, physical stores and e-
commerce. Most of them are natural or organic stores.
₋ The avocado oil is commonly used as food or beauty product.
According to the World Health Organization (WHO) (2017), “cancer is a leading cause of death
worldwide, accounting for 8.8 million deaths in 2015”. WHO statistics show that “the number of
new cases is expected to rise about 70% over the next two decades”. As a result, the global
economy of health is focusing on cancer issues and its prevention.
People are more conscious about cancer. The awareness to cancer issues are increasing by
personal experiences – such as breast cancer experiences in friends and relatives (Urbina,
2017). As a result, people are getting more educated towards cancer prevention.
Canadians are very sensitive to cancer issues (Central America, 2015). The main kind of
cancer in Canada is lung cancer (10%); colon-rectum cancers (4%); breast cancer (3%);
pancreas cancer (2%); prostate cancer (2%); and other kinds of cancer represents 1% each
one (Canadian Cancer Society, 2015). On the other hand, breast cancer is the main one in
women in Canada - 25’700 new cases of breast cancers in Canada each year (13% of the total
cancer deaths) (Canadian Cancer Society, 2015). Furthermore, the first Canadian province
whose citizens suffer breast cancer is Ontario (38%); second, Quebec (25%); third, British
Columbia (14%); fourth, Alberta (9%), and other provinces have less than 4% each one (Breast
Cancer Society of Canada, 2016).
According to the Canadian Cancer Society (2016), women who are in the range of 40 - 80
years old, they have higher risk to suffer breast cancer. It is the most critical cluster of potential
customers since they are more conscious and educated to prevent cancer.
It is regulated by Health Canada (2017), and there is not strong regulations on the Canadian
non-prescribed remedy industry; it is regulated by minimum requirements (CBC NEWS, 2015).
In fact, one requirement is to test the product for 10 days; Health Canada statistics show that
only 10% of the applications fail (Health Canada, 2017).
Canadians are amongst the global leaders in vitamin and supplement consumption, to the point
that three of four Canadians take vitamins or supplements (Euromonitor, 2016; CBC NEWS,
2015) it´s found that woman is more educated to consume these products - “the incidence was
significantly higher in females than males” (Vantanparast, Adolphe & Whiting, 2004). In the
market, supplements are commonly offered in hard pills, but nowadays consumers demands
more interactive supplements formats such as soft gel pills (Euromonitor International, 2016).
Survey results
The sample selection criteria is as follows: (1) Canadian woman, (2) woman that already have
consumed nutritional supplements in pills, (3) 30 to 70 years old, (4) from Ontario, Quebec,
Alberta and British Columbia (cities in Canada with the highest rates of breast cancer), (5)
socio economic level 3, 4 and 5 (lowest income = 1, highest income = 5). To add on, the rate
of response was 100%, since the 31 matched the profile required.
From the analysis of the survey results (see Exhibit 11), some insights were found relevant:
- More than 70% of the sample considers that taking supplements is good for health, and that
pills are the preferred and considered the most practical way to take it. Also, it was found
that the majority has been consuming mineral and vitamins pills, while around 15% takes
oil-based pills. To add on, a minority consumes supplement pills to prevent cancer.
- The majority buys a bottle of pill supplements, takes it daily, and in a dose of 1 pill each day;
as well as buying 75 - 100 pills bottle is usual (one bottle each 3 months).
- 90% buys in physicals stores: 18% goes to naturist stores and 15% to specialized ones;
which goes along with the belief that natural supplements are easier to find in specialized
stores (more than 70%).
- 82.58% of the Canadian women considers has more willingness to consume supplements
with scientific support.
- In case of not finding a favorite brand, changing for a new products is accepted by 90%.
This means that they are open to try something new. Almost all the sample (94%) is willing
to try avocado oil in soft gel. Despite 65% do not know the health benefits of the avocado
oil, after showing them, the sample considered that preventing cancer and reducing hearth
problems are the most important reasons to consume avocado oil soft gels.
- Although it was find that the sample has a neutral opinion about the origin of the soft gels,
they prefer first to buy a national Canadian product, second a US product and third a UE
product, while the sample is neutral about pills coming from Peru and Mexico.
- Most of the sample pays between 15 - 30 CAD for nutritional supplements of 75 - 100 pills
a bottle, which is the same range of money and number of pills they would be dispose to
pay and get for a breast cancer preventer supplement. Only 42% disposes to pay 1 – 10
CAD more if the product is organic, which is supported by the belief that organic
supplements are more expensive that conventional ones.
Manufactory company selection, Canada
Ontario is a cluster of contract manufacturing supplements companies. It is characterized to
have the best supplement manufacturing companies in Canada (Supplement King, 2017;
Pharmaceutilcal Technology, 2017). Ten manufacturing companies were identified based on
its level of technology, the work period in the market, the knowledge and the work exclusivity
to protect the know-how; four of them were selected. Then, based on (1) production cost, (2)
product quality, (3) volume flexibility and (4) delivery lead time, Optimal Nature was chosen as
the best option overall.
Demand estimation
The demand is estimated in a 5 years period under the potential estimation method. The initial
point are the breast cancer cases of women in Ontario, which are growing monthly in 143 new
cases (Breast Cancer Society of Canada, 2016). It has been considered that from this group,
67% are the people who belongs to the target market of organic care. To add on, influence by
friends and family has been found that increase the awareness of preventing cancer within the
target market, in between 1 and 3 persons per individual (Canada Statistics, 2017; Montreal,
Quebec, Latin, 2017). This finding reinforces the potential consumption of nutritional
supplement for prevention purposes. Finally, according to Euromonitor (2017), 54% of
Canadian women are willing to purchase monthly nutritional supplements for prevention. As a
result, the demand estimation is detailed in the Table 6.
Considering the results from the survey to the Canadian women of the target market and the manufacture supplier of soft gels in Canada, Optimal Nature, the requirements to produce a bottle of pills are detailed in
the Table 8.
Finally, production of supplement bottles has been estimated for a period of 5 years. From 2019 and 2022, Organic Care is considering 40% of the production of oil in Omate, while in 2018, it is taken into account only
the 70% of the production in 2019. Considering the requirements to produce a bottle, bottles production is forecasted to be 42,933; 61,333; 81,778; 114,489; and 163,556 in 2018, 2019, 2020, 2021, and 2022
respectively. Details are shown in Table 9.
Liters of
KG of avocado # IBC (per KG of Mg of avocado
Year Description avocado oil # Soft-gels Bottles
required 1000 liters) avocado oil oil
required
2018 70% of the produced amount exported in 2019 42,000 4,200 4 3,864 3,864,000,000 3,864,000 42,933
2019 All production is purchased from the second half of April 60,000 6,000 6 5,520 5,520,000,000 5,520,000 61,333
2020 It is purchased the last week of April and the whole month of May 80,000 8,000 8 7,360 7,360,000,000 7,360,000 81,778
2021 It buys the whole month of April and May 112,000 11,200 11 10,304 10,304,000,000 10,304,000 114,489
2022 It is purchased all the month of March, April and May 160,000 16,000 16 14,720 14,720,000,000 14,720,000 163,556
Source: own elaboration
IV. INTERNATIONAL COMPETITIVE ENVIRONMENT
Based on (1) the value proposal, (2) competitive advantage, (3) goals, (4) strategy, (5) strength
and weakness, it had been found eight main substitutes in the Canadian supplement industry;
they are mainly focused on the immunology health, breast care, and cell degeneration
prevention (see Exhibit 13). All of them are Americans, and five of them are “Made in USA”,
which represents the major weakness of these companies: Paradise Herbs, Natrol, Life
Extension, 21st Century and Source Naturals. However, 21st Century is the only one who
invest on R&D for breast cancer issues. On the other hand, there are two companies which
offer “Product of Canada” supplements; it represents a strength for the companies: Thorne,
and Natural Factors. 50% of these companies offer organic supplements, but none of them
offers the creation of share value with a specific community.
Further analysis of the competitive position based on (1) marketing, (2) manufacturing, (3)
R&D, (4) and financial capabilities, (5) future growth of resources, (6) flexibility and (7)
sustainability, shows that Thorne has the best competitive position in the industry, flowed by
21ST Century as second, and Life Extension as third. Other companies are in the average
competitive position in the industry. On the other hand, the first capability in all these
companies is R&D, follow with financial capability, both capacities are creating synergies in
these companies.
V. STRATEGIC PLANNING AND FORMULATION
Analysis of Organic Care´s strengths, weakness, opportunities, and threats
Table 10: Analysis of Organic Care´s strengths, weakness, opportunities, and threats.
OPPORTUNITIES THREATS
- There is a good politic-economic environment for doing business ₋ The social conflicts can affect the highway to Omate Valley and
both in Peru and Canada. impacts negatively on the avocado supplier.
- Peru is the second most important avocado producer in the world. ₋ Mexican and Colombian companies are increasing the production of
- Public initiatives promotes value chain initiatives through economic value added avocado-based products.
and managerial support PromPeru, Canadian Government. ₋ Companies with more resources and capabilities can copy the product
EXTERNAL FACTORS - CITE Agroindustrial Moquegua offered to finance 70% of the project. in the short term.
- Studies on Hass avocado have found that its consumption reduces ₋ There is not R&D in the avocado/avocado oil industry and cancer
breast cancer risk; avocado oil has the same property. prevention in Peru.
INTERNAL FACTORS - Cancer is the second cause of dead in the world.
- There is not any supplement that prevents breast cancer in the
Canadian market.
- Canada is a good market for supplements to prevent breast cancer
in terms of access, profitability, market size and low competition.
- Canada is the first consumption supplement country. Canadian
women wills to purchase supplements to prevent breast cancer.
₋ Organic Care has the right social capital to execute the business plan: STRENGHTS AND OPPORTUNITIES STRATEGIES STRENGHTS AND THREATS STRATEGIES
Association of Avocado Producers of Omate, CITE Agroindustrial Moquegua,
and other local and international contacts.
₋ Members have cross-cultural experience and speaks/writes at least in two
S different languages: Spanish, English, Chinese, and Japanese.
T ₋ The company has an interest rate of 2.9% in Central Bank of Peru (BCP) to
R acquire long-term loans.
E - Execute Organic Care business plan in Canada. - Cooperation with Omate community, and relationship building based
₋ Members have experience in the organic industry worked in a NGO supporting
N - Use a niche strategy to compete in the industry. on trust.
agricultural activities and community management.
G - Design a specialist competitive position focusing on supplements that - Use differentiation strategy to compete in the industry.
₋ Members have experience in International Business Plans, participating in
H prevent different kinds of cancer. - R&D on activities or project development.
Innovator’s for the Americas Program in Miami University, USA.
T - Develop new kinds of supplements in long term.
₋ Members have experience in international contracts and international logistics
S
analytic competences and meticulousness.
₋ Members have experience in international business intelligence, specialized on
agricultural sector development and research analytic competences.
Mission
“Prevent cancer worldwide”.
Values
Transparency, fairness and compromise.
Strategic objectives
Table 11: Strategic objectives
Objectives Indicators
1. Maximize profitability over the initial investment. Internal Rate of Return (IRR).
Market penetration rate based on the number
of woman who use the supplement related to
2. Maximize market share in the target market.
total potential market (woman who have 30-60
years old).
3. Market diversification to Canada, US and Number of international markets where the
Europe. company offers the product.
4. Increase the product portfolio to supplements
Number of new products developed per two
that prevent other kinds of cancer based on
years.
Peruvian organic fruits and vegetables.
Source: Own elaboration.
Strategies
Competitive strategy
Organic Care will compete in the Canadian market by differentiation and specialization. The
differentiation factors are social factors (share value with Omate Community), product
performance (cancer prevention, and other health benefits), quality (Organic, HACCAP, “Made
in Canada”, “Good Manufacturing Practices”), and product characteristics (soft gel
presentation, bottle of 90 pills). Then, Organic Care must be a specialist in the industry on
breast cancer prevention. It allows the scalability to develop supplements that prevent other
kinds of cancer in the long term.
Competitive advantage
Based on Value (V), Rare (R), Difficult to imitate (I) and support all the Organization (O) VRIO
analysis (see Table 12), Organic Care´s competitive advantages are: (1) share value creation,
(2) “Made in Canada” product, and (3) supplement for breast cancer prevention.
Table 12: Organic Care’s VRIO analysis
Resource/Capability Value Rare Imitation Organizational
Organic inputs Yes No Yes Yes
Commitment of the employees Yes No Yes Yes
Strong relationship with the manufacture Yes No Yes Yes
company in Canada – Optimal Nature
CITE Agroindustrial Moquegua partnership Yes No No Yes
Operational facilities in Canada Yes No Yes Yes
Share Value Creation Yes Yes Yes Yes
“Made in Canada” country of origin Yes Yes Yes Yes
supplement.
Supplement focused exclusively on Yes Yes Yes Yes
prevent breast cancer.
Source: Own elaboration
In addition, any of the Peruvian institutions (such as Cayetano Heredia University, Agraria
University, Maes Heller Cancer Institute, Hersil Laboratories), research Peruvian fruits and
vegetables properties on cancer issues. Reason why Organic Care will initiate efforts to
elaborate joint researches with national or international institutions in long term, in order to
develop its own patents to create a new source of competitive advantage (Priale, 2017).
The internalization strategy is divided in two stages. First phase, Organic Care will export
directly avocado oil (non-equity strategy) to Canada using an Outsourcing Manufacturing (non-
equity) as an entry strategy. In fact, Optimal Nature Company (Ontario) will encapsulate
avocado oil in soft-gels presentation in Canada (Ontario). It allows produce a “made in Canada”
supplement, and cost efficiency (market and strategic assets seekers). To see all the
arguments relative to the Outsourcing manufacturing. In this phase, it’s needed keep working
with the agent who manage internal logistic in Canada. This strategy allows capitalize local
knowledge by Organic Care. Additionally, direct export strategy will bring in incomes and profits
that allows improve Organic Care’s financial capabilities to finance the second phase of the
internationalization strategy (strategic assets seekers). When Organic Care has profits and
financial success, it’s important to increase operations and production. It means penetrate
Canadian market. So, the second phase is based on open a subsidiary in Ontario, it means a
Foreing Direct Investment (FDI) strategy in long term (from fifth year). According to Dunning’s
Eclectic Framework, this phase can be analyzed using OLI framework analyzing ownership,
location and internalization advantages (see Exhibit 13).
VI. MARKETING PLAN
Marketing objectives
Positioning
Organic Care doesn´t have any direct and indirect competitors in the market (see Graph 1). In
this context, Organic Care is positioning as top quality and breast cancer preventer. However,
there are substitutes; Organic Care would be positioned as a high quality and moderately-high
priced (see Graph 2).
Market analysis
Target market: Canadian woman between 30 to 70 years, from middle and upper social,
and has a good education level. She is familiar with internet and social media (mainly
Facebook). She is aware of e-commerce transactions. She cares about her health, as well
as the social and environmental issues. Also, she is conscious about breast cancer, and she
is willing to prevent it by supplements consumption.
Market potential: Based on the demand estimation, the market potential is approximately
449’972 supplements from the target (on monthly ratio) (see Table 6)
Marketing mix
Based on Kotler and Lame (2012) framework
1. Product
2. Price
The price objective is maximizing the profitability of the sales of the supplement, since it is
focused on a niche (Kotler & Lane, 2016). Also, Organic Care uses a quality-price parity
approach. Survey results show that almost 80% of the target market is willing to pay USD
25 - 40 for each bottle of supplement of 75 – 100 pills. From the substitute side, prices are
USD 11- 70. As a result, after cost calculation (4.90 USD per bottle), the final price for
Organic Care supplements is USD 40.
3. Place
The selected strategy is defensive distribution distribution as good as competitors, but not
necessarily better than them, which allows more control over the distribution channel. Healthy
Planet was selected as the best option, based on (1) type of product, (2) target market of the
channel, (3) brand image, (5) distributor’s positioning, and (6) costs.
Healthy Planet is one of the main supplement retailers in Ontario, Canada. It has 16 physical
stores (Mon Fri 9:00 to 21:00; Sat Sun 9:00 to 18:00), and an online store. It also provides
customer service and after sale service.
4. Promotion
Organic Care will be introduced to the market with the promise of breast cancer prevention. In
order to create awareness and loyalty, it will be positioned as a high quality brand. Also, a
slogan will be included, to reinforce the vision and mission of Organic Care: “We care about
you”. This emotional message aims to create a link between the brand and the customers.
Also, it is important to communicate the share value creation between Organic Care and
Peruvian communities. Organic Care will use both physical and digital marketing channels.
Regards to the physical one, printed materials (such as flyers) will be distributed among the
consumers by Healthy Planet, in order to deliver important information (about the company,
brand, values, and cancer related issues). Also merchandising (such as banners and flags) will
be posted on Healthy Planet stores and close to the product exhibition, in order to catch the
attention of the customers and impact on its desire of purchase. As well, the labelling of the
product is another efficient way to promote it.
Regards the digital side, Organic Care will have its own web page 3.0. It is an interactive
platform, which allows consumer to find relevant information and special features (virtual
catalog, blog, tips, videos, news feed); it is linked to Healthy Planet web page, which also helps
to promote Organic Care. Additionally, Facebook is a low cost but high impact social media for
the word of mouth. It allows to limit the audience to the target market, and share content
relevant to it. Facebook provides tools and information, which might improve its performance.
Contents will be constantly updated. Besides, Google AdWords will allow Organic Care to have
a better position in the digital market; keywords (Search Engine Marketing SEM): “Organic
Care cancer prevention”, “cancer prevention supplement”, “organic supplement”.
5. People
6. Process
Key activities are related to the production (organic avocados, oil, supplements), distribution
(from Ilo, Peru to Ontario, Canada), and administrative processes (marketing, operations,
human resources, and financial). All activities and processes are standardized.
7. Physical evidence
Organic Care’s physical evidence is based on the following tangible parts of the firm:
Office: located in Ilo, Moquegua, Peru (50 𝑚2 ). Full equipped (furniture, internet connection,
and other services).
Contracts: (1) sales contract with Association of Avocado Producers of Omate, (2)
outsourcing contract with CITE Agroindustrial Moquegua based on service contract (3)
outsourcing manufacturing contract with Optimal Nature Company, (4) sales and distribution
contract with Healthy Planet.
Product: supplements.
Point of sale: 16 physical stores Healthy Planet in Ontario, Canada.
Financial account (for international payments from sales)
Digital assets: Organic Care web page 3.0 (blog included), Healthy Planet web page,
Facebook page, phone and e-mail.
Financial analysis
The potential demand is at 122 times greater than Organic Care’s offer (2018-2022). According
to Healthy Planet (2017), when a supplement is new, the sales of supplements are usually
about 3’000 units in the first month; then, sales growth vary according to the demand. However,
according to Euromonitor (2017), the supplement industry grows 3% a month in Canada; this
is the rate used to forecast Organic Care sales. Sales are expected to be USD 96’000 since
the first month.
Marketing budget
Table 14: Marketing budget
Pre-
Activity operative 2019 2020 2021 2022
(2018)
Trademark $1'450,00
Creation of a representative
logo, slogan and product $150,00 - - - -
design.
Professional photos of
$50,00 - - -
supplement.
Operations objectives
Table 15: Operations objectives
CRITERIA OBJECTIVES INDICATORS TOOL 2018 2019 2020 2021 2022
% of producers of the
Renew organic certificates Association of Avocado
Ceder NGO statistics 95% 98% 98% 98% 98%
in Omate yearly. Producers of Omate that
renew the certification
Quality
Offer a high quality
% of refusal of supplements Reports 8% 5% 3% 2% 2%
supplement.
Achieve zero observations (1) Reports on # of
Number of observations by
by Health Canada and observations from
Health Canada and Canada 0 0 0 0 0
Canada Border Service Karen Del Castillo.
Border Service Agency.
Agency. (2) Customs reports.
Maximize sources of
# of supplier communities. Data base 1 1 2 3 4
Flexibility organic avocado.
Cost Minimize operative costs. Ratio between operative and Income Statement, 15% 14% 13% 13% 12%
total costs. EBIT.
Source: own elaboration
Operations strategy
Table 16 shows the main insights of the operation strategy, classified value chain, and outsourcing strategies based on Krajewski, Malhotra, &
Ritzman (2008).
Export (Ilo-Ontario)
(Omate-Moquegua)
(Ontario - Canada)
(Ontario - Canada)
(Ilo-Moquegua)
Pre-operative
ofavocado oil
Supplements
(Producction
Procurement
Distribution
Punctuality
production
Flexibility
Quality
STRATEGIES
Process supervision x x x x x
Layout
In the first 3 years, it is planned to stablish an office in Ilo, Moquegua with the aim of
having greater control over operations in Omate, CITE Agroindustrial and internal
logistics. The dimensions of the office are 50 𝑚2 (5x10); it is 20 minutes from the Port
of Ilo, and 30 minutes from the CITE Agroindustrial. On the other hand, in 2022
Organic Care plans to open an office in Lima with the objective of attracting potential
clients, increasing company networks, seeking investors, joining exporters'
associations (ADEX) and coordinating trade promotion policies with Promperu and
the Canada Chamber of Commerce in Peru.
Process are divided in strategic, operative, and supportive. Regards to the (1) strategic
process, it is refer to marketing and commercial planning (demand estimation, product sales,
customer loyalty), production planning (production planning and estimation), and quality and
control planning (quality supervision). About the (2) operative process, it is going to be
described below. Related to the (3) supportive processes, it covers the administration planning,
HHRR planning, and financial planning.
Key operation processes
Graph 3: Organic Care operation flowchart
Pre-operative Organic Care will select its suppliers based on strategic criterias.
process Forecast and planning considering the demand and sales estimation, seasonality of the avocados and others.
Planning the purchase of the avocado, oil transformation, international logistics, encapsulation, and distribution of the supplements.
The collection of avocado (buy) is in the Main Square of Omate; usually Tuesdays and Thursdays.
Supply Request the organic certificate to each producer.
process Check that all avocados are Hass, meet the right quality (first or second), and weights. They are going to be set in boxes of 50 kg.
Organic Care will pay to the suppliers according to the contracts.
The avocados will be transported from Omate to Ilo CITE Agroindustrial Moquegua (222 km 4 hours approximately).
Avocado oil The merchandise will be discharged from the truck to the warehouses of CITE Agroindustrial Moquegua. Then, it will start the cleaning and transformation
production process of the avocado into oil.
process Organic Care will audit the transformation process and check the quality of the avocado through laboratory assays performed by SGS.
The avocado oil will be storage in IBCs of 1’000 liters, according to the standards required by SENASA.
Panalpina, an integrated logistics operator, will be in charge of the oil delivery from Ilo, Peru to Toronto, Canda – DDP (Shipping company: Hapag Lloyd;
Route: Ilo – Buenaventura - New York – Toronto; Time: 24 days). The logistic services includes customs service in Canada and Peru, load and discharge
services, import formalities (phytosanitary test in Canada Border Services Agency), and deliver the parcel from the Canadian customs to Optimal Nature.
Export During the process of customs management in Peru, Organic Care will inspect this logistics in Ilo, Moquegua.
process
Documentation in Peruvian and Canadian customs (B/L, commercial invoice, Canada custom invoice, organic certification, certification of origin, phytosanitary
certificate, import declaration, quality certified by SGS, packing list and technical data).
The date and time of pickup of the merchandise will be coordinated.
All logistics in Canada will be in charge of Karen Del Castillo, Organic Care’s commercial agent.
Supplement Optimal Nature will receive the load in its warehouse and its respective documentation. This company will encapsulate the avocado oil into soft gel pills for the
production supplements production.
process SGS will audit the process of encapsulation and the quality and performance of the soft gel supplements, by laboratory assays.
Optimal Nature will storage the supplement in carton boxes of 200 supplements in its warehouse, ready to deliver.
Distribution Healthy Planet will pick up the supplements from Optimal Nature warehouse and transport it to its warehouse. I will distribute the supplements in their physical
process and online stores, according to their policies, politics and processes.
Karen Del Castillo, Organic Care´s commercial agent will inspect Healthy Planet´s performance on sales, and customer satisfaction by surveys.
Healthy Planet profits 10% over the final price of sale of the supplements. It will transfer the money to the international bank account of Organic Care each two
weeks.
Source: Own elaboration.
Operations budget
Table 18: Operations budget
International Standard
4649 - Wholesale of other household goods*
Industrial Classification (ISIC)
HHRR
Criteria 2018 2019 2020 2021 Tools Indicator
Objective
Optimize the
Performance Performance
Performance workforce 90% 95% 98% 98%
sheets scores (%)
performance.
Optimize Post- % Post-
professional 25% 50% 75% 98% graduate graduated
development. studies participants
Training
Optimize hard
Evaluation Evaluation
and soft skills 85% 90% 95% 98%
Sheets scores (%)
development.
Maintain a
Employee
Organization satisfying % of
90% 95% 98% 98% satisfaction
al Climate organizational satisfaction
survey
climate.
Maintain a N° of
maximum Employees outgoings /
Commitment 25% 20% 15% 10%
turnover rate of data base N° of total
X%. employees
Workforce planning
Organic Care´s workforce planning is operational, subjected to an annual revision – every 12
months (Hudson RPO, 2017; Towers Watson, 2012). It defines and identifies the workforce,
analyses the demand and supply, set strategies to create an action plan, execute and measure
it. For each of these activities, the workforce plan determines who is going to be in charge of
the activities, what are going to be the activities, and the goals of each one.
Organization structure
The type of organizational structure of Organic Care is functional with horizontal linkages
(L.Daft, 2011). It reinforces the liaison roll between the deparments and the flow of information,
creating synergies and a more efficient performance of the organization.
Graph 4 shows the organizational structure of Organic Care. It has three levels: Board of
Directors, General Management, and four functional departments (Operations, Marketing,
Finance, Human Resources); accounting, legal, commercial agent serivces will be
outsourced. The Board of Directors will be initially composed by Claudia Untiveros, Enzzo
Cusihuaman, Elena Fu, and Gustavo Rodríguez (who will be also the General Manager of
Organic Care). The functions and responsibilities that correspond to it: Operations – Elena Fu,
Marketing – Gustavo Rodríguez, Finance – Claudia Untiveros, and Human Resources –
Enzzo Cusihuaman.
The Operational Department oversees the production, and the logistics, which services will be
outsourced. The Marketing Department is in charge of all related to business intelligence,
sales, and technology and information management. The Financial Department oversees the
finance management and strategies for decision taking of the company as a whole; and the
Human Resource Department is related to the human resource planning, attracting, retaining
and developing of employees.
Following the internationalization strategy, Karen Del Castillo will be the commercial agent in
Canada. Although it is an outsourced service, the commercial agent works exclusively for
Organic Care. It oversees the operations in Canada, and it is the link or contact between
Organic Care and Optimal Nature and Healthy Planet.
General
Manager
Accountant Lawyer
Commercial
agent
Recruitment
It generates a qualified pool of potential employees, by communicating job offers and
organizational attributes to convince them to apply for the available job position(s) in Organic
Care. For managerial positions, one source of recruitment will be the job boards of the main
business schools in Lima, Peru such as Universidad del Pacifico, Universidad Esan,
Universidad de Lima and some others related; where one can find the most skilled human
resource for business management and the international field.
For technical positions, which specific skills and knowledge are needed, job offers will be
shared to job boards of technical institutes such as ADEX, IPAE, IDAT and others related,
which have the accreditation of the Council for Evaluation, Accreditation and Certification of
the Quality of Non-University Higher Education in Peru.
Selection
2. Interview with
1. Filter by job the head of the 3. Interview with
requirements Human Resource the direct boss .*
Department.*
As part of the selection process, psycho-technical and personality, and additional tests will be
applied (language, specific knowledge). In addition, the resumes and other information and
references provided by the candidates will be verified.
Developing Employees
Employees will learn gradually from the learning curve. Organic Care will focus on reinforcing
and developing 3 main skills: strategic thinking for decision making, interpersonal skills, and
English for business. Also the training will be focused on informatics abilities, strengthen
leadership competences, and cross-cultural skills (specially focused on the Canadian mindset)
(Queensland Government, 2013). In the long term, Organic Care reinforces the knowledge
transfer; shaping leadership competences for work delegation, mentoring and motivating other
members; and building effective high-performance teams (physical and virtual). Additionally,
a guideline is going to be given to every employee according to their functional departments,
which contains an overall presentation of the company (mission, vision, values, objectives,
and situational context). This document gives to the employee the most relevant information
regarding to their specific functions: objectives of the department, general knowledge of
specific topics, indicators, and sources.
Performance management
It aims to an effective management of individuals and teams in order to achieve high levels of
organizational performance. The criteria for the performance management is divided in three
phases: (1) Design, (2) Implementation, and (3) Evaluation.
(1) Design: it is going to be designed to improve overall performance and identify high-potential
employees. Based on three main performance criteria: task orientation (technical skills,
experience, Organic Care´s objectives), result orientation (reinforcement and application of
newly gained skills and experiences), and interpersonal orientation (language and cross-
cultural skills, flexibility and openness to change, interpersonal and communication skills,
ability to cope with the stress).
(2) Implementation: the evaluation is done by all the parties involved: self-evaluation, peer
evaluation, and subordinate evaluation. The overall supervision of this process is in charge of
the Human Resource Department.
(3) Evaluation: the performance outcomes will be objectively analyzed in order to identify
improvement opportunities and provide feedback to the employees.
Retaining Employees
Also, regarding the employee’s wellbeing, Organic Care offer a private insurance that cover
the employee’s medical consults, emergencies, and breast cancer (women case) and prostate
cancer (men case) checking. The company will be paying this to the insurance company such
as Rimac or Pacifico, every six months.
On the other hand, Organic Care offers the opportunity to do commercial missions in Canada
to the employees with the most ranked performance. All the expenses will be cover by Organic
Care. This budget will be designed according to every single commercial mission (suspecting
to time, costs and further reasons to Organic Care).
HHRR budget
AFP Essalud
Position Salary Gratifications CTS Total
(13%) (9%)
General Manager $1,300 $108 $169 $117 $117 $1,812
Marketing Manager $750 $63 $98 $68 $68 $1,045
Operational Manager $750 $63 $98 $68 $68 $1,045
Financial Manager $750 $63 $98 $68 $68 $1,045
HHRR Manager $750 $63 $98 $68 $68 $1,045
Total $4,300 $358 $559 $388 $387 $5,993
TOTAL $0 $0 $435 $0 $0 $1,135 $0 $0 $435 $0 $0 $2,685 $5,190 $934 $5,756 $6,331 $7,598 $9,877
Avocado supply
₋ Avocado is bought in Omate at the price of USD 0.67 for first class, and 0.37 USD for
second class. This price is maintained for the 5 years of the evaluation.
₋ Avocado bought in April and May (2018-2021), and from March to May at 2022.
Avocado oil production
₋ CITE Agroindustrial Moquegua will finance the project by 70% of the initial investment. This
financing will be a loan with an interest rate taken from the BID of 2.9%.
₋ The production of the oil in the first year will be a final product, while from 2019, the avocado
oil will be an input for the supplements.
₋ The price of the oil, USD 15, is maintained in the 5 years of the project.
Soft gels productions
₋ The cost of the soft gel production maintains constant in the 5-year period of evaluation.
₋ The cost of doing 1 pill of 1000 mg is USD 0.01.
₋ The cost of doing 1 bottle with the labeling is USD 1.88. Extras of USD 0.38 are added per
bottle.
Sales
₋ The selling price to Healthy Planet is 31.64 USD, and it will maintain constant in the 5 years
of the project.
₋ Healthy Planet commission is 10% of the price.
₋ Selling quantity will increase in 3% each month.
₋ The salaries increase in 10% each year, starting in an increase of 20% in 2019.
₋ Commercial agent in Canada will receive a commission of 1.5% of the total sales
₋ In 2018, 70% of the production of oil from 2019 is going to be sold.
Logistics
₋ The quotation with the logistic operator was on a 20-ft. container. This cost is proportionally
divided by the liters of oils to be send to Canada.
₋ Prices are based on DDP incoterm. One container loads 15,000 lt. of oil (15 IBC).
Financing
₋ A loan from BCP and CITE will be asked with an interest rate of 5.66% and 2.90%
respectively.
₋ All products and services required by Organic Care includes IGV.
Policies
Inventories: are maintained to cover the requirements of the production of oil once a month.
Payment policies: the payment policies for suppliers and employees are detailed below:
₋ Avocado Suppliers: The suppliers will have the 100% cash payment.
₋ CITE: Payment directly to the credit account of this organization.
₋ Healthy Planet: Payment from the retail channel are placed 30 days after the selling of the
soft gels.
₋ Collaborators: The salary payment is made on the last day of each month. If day-off, the
previous day will have paid. In the case of the commercial agent, the commission is 1.5%
of the total sales in the specific period.
₋ Other third-party services: The payment will be through invoice for fees at the end of the
service.
Charges policies: the policy of charging customers will be made 30 days after the goods are
given.
Cash Flow
The method used is the discounted cash flow, which period of analysis goes between 2018
and 2022. In the pre-operational stage, a loan of USD 285,000 was asked to the Peruvian
Credit Bank (BCP in Spanish) and CITE to obtain money for working capital. To add on, the
capital structure is 20%, while the debt structure is 80%: 70% to CITE and 10% to BCP. See
details in Table 25.
Table 26: Organic Care Cash Flow
Pre Operational Operational
Cash Flow
(Jan-Apr 2018) 2018 2019 2020 2021 2022
Nutritional Supplements
Price 31.64 31.64 31.64 31.64 31.64
Quantity 16,061.05 49,939.95 69,187.85 94,014.78 132,844.12
Sales Income 508,113.22 1,579,918.34 2,188,852.07 2,974,285.89 4,202,704.74
Office materials and furniture 1,162.08
IBC containers -
Working capital 356,249.18 751,465.77 137,305.92 127,834.20 147,135.56 -
MD Cost 32,099.31 45,988.30 61,379.40 85,968.17 122,758.81
Administrative Cost 39,914.09 68,443.70 77,578.84 79,937.21 84,619.74
Sales Cost 178,064.43 276,670.94 362,179.33 504,589.62 701,328.09
Oil Outsourcing Cost 11,769.73 15,830.60 21,107.46 29550.44937 42214.92767
Encapsulation Outsourcing Cost 140,779.69 201,113.84 268,151.79 375412.5013 536303.5733
Inspection Cost 214.07 214.07 214.07 214.0672783 214.0672783
Personel Cost 16,723.33 30,102.00 32,610.50 35,119.00 37,627.50
Other cost 8,577.61 29,410.43 40,095.52 64,293.60 84,968.02
IGV (18%) tax credit 851.21 1,123.82 1,925.29 1,506.94 1,573.54
Cash flow before Tax -356,249.18 -492,579.18 1,189,939.22 1,689,639.79 2,305,297.84 3,295,571.64
Income tax Peru (28%) - 332,868.31 472,560.06 645,061.45 922,319.47
Economic Cash Flow -356,249.18 -492,579.18 719,764.98 1,089,245.53 1,513,100.83 2,373,252.17
Long-term loan
(A)
(+) CITE Agroindustrial Moquegua (70%) 249,374.43
(-) Amortization 21,853.43 22,487.18 23,139.31 23,810.35 24500.85109
(-) Interests (2.9%) 7,231.86 6,598.11 5,945.98 5,274.94 4584.440316
(+)Tax Shield 2,024.92 1,847.47 1,664.87 1,476.98 1,283.64
(B)
Credit Loan (10%) 35,624.92
(-) Amortization 6,362.78 6,722.92 7,103.43 7,505.49 7,930.30
(-) Interests (8.21%) 2,016.37 2,016.37 1,275.72 873.67 448.85
(+)Tax Shield 564.58 564.58 357.20 244.63 125.68
Financial Cash Flow -71,249.84 -527,454.12 684,352.46 1,053,803.16 1,477,358.00 2,337,197.05
Source: Own elaboration.
Income Statement
Valuation
In the first place, the initial investment of the project raises to the amount of 356,249 USD. This money will be recover within 1 year and 27 days.
To explain this payback, a COK of 42.05% has been used based on the beta of the industry of nutritional supplements, the country risk premium
in Canada, the market risk premium, the risk-free interest rate and the failure rate of start-ups. In this sense, the CAPM method is used to obtain
the WACC. This is 34.1% and is less than both the economic IRR and financial IRR of 85% and 132% respectively. The high FIRR is caused by
the debt from the first year of operations.
Finally, considering the discount rate (COK), the calculation of the economic NPV and financial NPV is positive, being 574,104 USD and 725,824
USD respectively. In relation, the economic and financial benefit/cost ratio is greater than one, being 2.14 and 9.80 respectively. This indicates
that the NPV of the project benefits over the NPV of the costs in both cases. For details, see Table 28:
Table 29: Financial Valuation for Organic Care 5 year period project
Simulation
For simulation, there is a pessimistic, optimistic and optimal scenario. In this sense, for the project a change in 30% for optimistic and pessimistic
scenario is made, maintaining everything else constant.
In the first scenario, economic and financial NPV are positive. However, EIRR is lower than WACC, so the project does not overweigh the
opportunity cost of the investor. In the case of the optimal scenario, the variables maintain equal as in the valuation part (see Table 29). Finally,
in the optimistic scenario, NPV is positive in both financial and economic cases. Also, both IRR are greater than WACC, being then a profitable
project. However, in this case both IRR are usually too high for a project.
Table 30: Financial Valuation for Organic Care 5 year period project
Pre
Pesimistic Scenario -30% 2018 2019 2020 2021 2022
Operational
Economic Cash Flow -356,249.18 -645,013.14 378,502.62 616,453.48 870,655.08 1,465,467.95
Economic Cash Flow in present -356,249.18 -454,063.10 187,570.35 215,051.88 213,814.29 253,346.30
Financial Cash Flow -71,249.84 -679,888.08 343,090.10 581,011.11 834,912.24 1,429,412.82
Financial Cash Flow in present -71,249.84 -478,613.65 170,021.36 202,687.69 205,036.61 247,113.18
COK 42%
ENPV 41,864.85
EIRR 27%
FNPV 193,585.59
FIRR 65%
Source: Own elaboration.
Table 31: Financial Valuation for Organic Care 5 year period project
Pre -
Optimal Scenario 2018 2019 2020 2021 2022
operational
Economic Cash Flow -356,249.18 -492,579.18 719,764.98 1,089,245.53 1,513,100.83 2,373,252.17
Economic Cash Flow in present -356,249.18 -346,755.77 356,685.96 379,986.99 371,585.25 410,281.68
Financial Cash Flow -71,249.84 -527,454.12 684,352.46 1,053,803.16 1,477,358.00 2,337,197.05
Financial Cash Flow in present -71,249.84 -371,306.31 339,136.96 367,622.80 362,807.57 404,048.57
COK 42%
ENPV 574,103.52
EIRR 85%
FNPV 725,824.26
FIRR 132%
Source: Own elaboration.
Table 32: Financial Valuation for Organic Care 5 year period project
Pre
Optimistic Scenario +30% 2018 2019 2020 2021 2022
Operational
Economic Cash Flow -356249.1804 -340145.2112 1061027.343 1562037.574 2155546.585 3281036.396
Economic Cash Flow in present -356,249.18 -239,448.44 525,801.56 544,922.10 529,356.20 567,217.07
Financial Cash Flow -71,249.84 -375,020.15 1,025,614.82 1,526,595.21 2,119,803.75 3,244,981.27
Financial Cash Flow in present -71,249.84 -263,998.98 508,252.57 532,557.91 520,578.53 560,983.95
COK 42%
ENPV 1,106,342.20
EIRR 122%
FNPV 1,258,062.94
FIRR 210%
Source: Own elaboration.
X. CONTINGENCY PLAN
XI. CONCLUSIONS
Conclusions and recommendations
Investigation: Hass Avocado Composition and Potential Health Effects. Author(s): Mark et al (2013).
Avocados contain a number of bioactive phytochemicals including carotenoids, terpenoids, D-mannoheptulose, persenone
A and B, phenols and glutathione that have been reported to have anti-carcinogenic properties. Dietary carotenoids show
potential protective biological activities of breast cancer, induction of apoptosis and inhibition of mammary cell proliferation.
Investigation: Plasma and dietary carotenoids are associated with reduced oxidative stress
in woman previously treated for breast cancer. Author(s): Thomson et al. (2015).
Increased avocado intake is associated with the reduction of oxidative stress, which leads to cancer cells development.
In a study of 28 woman evaluated as having a higher risk of breast cancer than the general population, Thompson et al.
(20) showed a significant inverse relation between carotene consumption and the spread of cancer cells.
Investigation: Selective induction of apoptosis of human oral cancer cell lines by avocado
extracts via a ROS-mediated mechanism. Author(s): Han et al (2009).
High content of phytochemicals with potential chemo-preventive activity.
Induces to apoptosis - natural death of cells, preventing cancer, which includes breast cancer.
Investigation: A Review on Persea Americana Mill. (Avocado) - Its Fruit and Oil. Author(s): Sunil and Thiagarajan (2015).
Avocado leaves have been used to carry out the induction of apoptosis in human breast cancer cells.
Hepato-protective capacity for breast cancer, due to its flavonoid and phenolic content.
Investigation: Circulating carotenoids, mammographic density, and subsequent risk of
breast cancer. Author(s): Tamimi; et al (2009).
Antioxidants play a role in carcinogenesis - development of a cancer. Oxidative stress has the potential to cause damage
to cellular DNA, lipid peroxidation and alteration of the state of the breasts.
Woman with higher intakes of total carotenoids had reduced risk by 30% of breast cancer compared to woman who
consumed less.
Investigation: Do cancer cells in human and meristematic cells in plant exhibit similar
responses toward plant extracts with cytotoxic activities? Author(s): Noha S. Khalifa et al (2015).
Treatment with P. Americana showed the greatest cytotoxic effect on cancer cells. The avocado causes apoptosis in
mammary cancer cells.
Investigation: Screening of antiproliferative effect of aqueous extracts of plant foods
consumed in México on the breast cancer cell line MCF-7. Author(s): Noha S. García-Solís et al (2009)
The anti-proliferative effect of aqueous extracts of 14 vegetable foods consumed in Mexico on the breast cancer cell line
was evaluated; among those, avocado.
Each aqueous extract, the total contents of phenols and gallic acid, and the antioxidant capacity, as measured by the ferric
reducing / antioxidant power, were analyzed. Each vegetable food extract has a unique combination of the amount and
quality of phytochemicals that could determine its biological activity. It´s proved that avocado has positive effects on breast
cancer prevention/treatment.
Exhibit 7: Profitability Variable Analysis for Market Selection for Avocado Dietary
Supplements
W M T W M T W M T W M T W M T
United States 4 5 25 5 1 5 4 6 24 5 8 40 4 7 28
Canada 4 5 25 5 4 20 4 5 20 5 7 35 4 2 8
France 4 5 25 5 5 25 4 1 4 5 4 20 4 5 20
Germany 4 5 25 5 8 40 4 3 12 5 3 15 4 4 16
Netherlands 4 5 25 5 3 15 4 4 16 5 1 5 4 8 32
United 4 5 25 5 7 35 4 8 28 5 6 30 4 1 4
Kingdom
Japan 4 5 25 5 6 30 4 2 8 5 5 25 4 6 24
Spain 4 5 25 5 2 10 4 7 28 5 2 10 4 3 12
W = weight; M= mark, T= Trade mark.
W M T W M T W M T
3 1 3 5 5 25 4 2 8 158
3 6 18 5 7 35 4 5 20 181
3 4 12 5 3 15 4 3 12 133
3 2 6 5 6 30 4 4 16 160
3 5 15 5 4 20 4 6 24 152
3 7 21 5 8 40 4 7 28 211
3 8 24 5 2 10 4 1 4 150
3 3 9 5 1 5 4 8 32 131
W = weight; M= mark, T= Trade mark.
Countries Avocados Real Natural Oils Cancer Factor Breast Cancer Woman Total
Demand Trade Factor Population
W M T W M T W M T W M T W M T
United States 4 8 32 5 8 40 4 7 28 5 8 40 5 8 40 180
Canada 4 3 12 5 1 5 4 8 32 5 7 35 5 2 10 94
France 4 7 28 5 7 35 4 6 24 5 4 20 5 5 25 132
Germany 4 5 20 5 5 25 4 3 12 5 5 25 5 6 30 112
Netherlands 4 4 16 5 6 30 4 1 4 5 6 30 5 1 5 85
United 4 6 24 5 3 15 4 4 16 5 3 15 5 4 20 90
Kingdom
Japan 4 2 8 5 4 20 4 5 20 5 2 10 5 7 35 93
Spain 4 1 4 5 2 10 4 2 8 5 1 5 5 3 15 42
W = weight; M= mark, T= Trade mark.
Source: Own elaboration.
Exhibit 9: Competition Level Variable Analysis for Market Selection for Avocado
Dietary Supplements
Criteria Weight
Amount of natural oils country exports 4
Strenght level of the natural oil country 5
exports
Competitiveness Index 4
Source: Own elaboration
Thorne Enhance the health and well-being Patents International growth in Strategic alliances with Pure Health Technologies partnership, Centralized operations
Research of people worldwide by providing Research and development. Europe, Asia, Africa and suppliers of natural and More know-how of Canada’s (USA).
innovative, high-quality, research- Brand Positioning in international South America. organic plants; joint accessibility.
based nutritional supplements, markets. researchers to study cancer Develop and research as Canadian
health diagnostics technology Wide variety of supplement in 16 with Helssing (Swiss global regulation.
platforms, and the latest in medical categories. pharmaceutical company).
education. Mergers & Acquisitions.
Life Offers revolutionary quality, purity Intensive research and development. Develop new Focus on a niche related to Quality Certifications (process and The production and the
extension and potential supplements to Experience in the market. supplements relative to life extension and heart production) assembled are in USA.
prevent aging (includes cancer High skilled scientist. aging and heart diseases. Develop and research.
prevention) and heart health. diseases.
21st Offer energy-based supplements Wide variety of vitamins, minerals, Develop new products. Research and development. Quality Certifies. The production is in
Century and herbal teas to weight loss aids specialty supplements and herbal teas International growth. International expansions Brest cancer research. USA
and herbal extracts in 100% (more than 1000). through exports.
vegetarian capsules.
Natrol Offer vitamins, minerals and Innovation Increase loyalty. Customer service. Quality Certifies The operations are in
supplements empowering Customer service International expansion. Exports strategy. Research and develop vitamins, USA and the company
consumers to “Own Your Health”. Cost effectiveness minerals and supplements only sells by internet
High skilled workers. and orders.
Continuous improvement.
Paradise Offer quality, purity, potency, Experience in Chinese, Ayurvedic and Develop new products. Exports. Quality Certifies. All of the products are
Herbs efficacy, sustainability and value EuroNative American herbalism. International growth. E-commerce Sustainable production. assembled in the USA
supplements based on organic Patents
herbs. Trademarks
High-skilled scientists
OLI Advantages
framework
Ownership Potential possibilities to work with Breast Cancer Society of Canada in R&D projects developing patents
and marketing campaigns.
Execute marketing strategies focusing on promotion the product.
Acquire more control over Optimal Nature company inspecting the production, quality and other
production issues; and over distribution channels.
Increase social capital, it means, new access points into networks of supplement industry.
Develop more distribution channels and seeking actively more clients.
Seek opportunities to export the supplements from Ontario (Canada) to United States and near countries.
Location Canada support FDI project through tax benefits (46% less than United States) (Stuart, 2017; Santander,
2017).
Canadian’s law protect FDI.
Canadian banks offer loans at lower interest rate than Latin America countries.
High systemic competitiveness to promote Organic Care’s competitiveness.
High skilled workers, managers and experts.
Good infrastructure system.
Well- worked Contracts.
No export tariffs are applied to companies.
Internalizati More control over international physical distribution.
on Total control over inventories in Canada.
Management and coordination the distribution channels in Canada.
Less transaction cost exporting directly avocado oil to HP and managing internal logistics.
Source: Own elaboration based on Santander (2017), Stuart (2017), market research chapter, macro analysis in
Canada and international competitive analysis (step 1 to 5).
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