Introduction
Every business’s dream and primary goal is to have a considerable market share in their respective industry, both locally and internationally. As a result, most organizations strategize to expand their operations to different regions worldwide. However, these companies consider various factors related to their targeted market that can impact their activities. The elements may include political temperature, economy, environment, infrastructure, culture, population, and legal framework of a particular country. An analysis of these aspects helps firms to determine which nation they can prioritize to others. The National Food Product Company (NFPC), a UAE-based organization, plans to expand operations into one of Latin America Countries. This paper analyzes two countries in the region, Colombia and Costa Rica, and recommends one where NFPC can expand sales and production.
Company Profile and Products
The National Food Product Company (NFPC) is a UAE-based company that has been operating for more than 48 years. NFPC is a multi-million dollar organization with its headquarters in Dubai. The firm is well-known for its brands, consumed by the most significant percentage of UAE’s population. NFPC employs more than 4500 employees in the region, who help the company to produce and export its products to more than 40 countries globally. The business focuses on creating innovative products that meet the needs and lifestyle of its customers. NFPC’s mission is to be “the leading player in core categories by 2025 with focus on our people, processes, technology, and brands”(The National Food Product Company, n.d.). The organization’s core values are competitive innovation, trusted teamwork, passionate ownership, agile speed, and motivated people. Its corporate culture is the commitment to offering services to the community that makes lives better.
The company brands include Oasis, Lacnor, Blu, Laban Up, Gulf & Safa, Melco, Milco, Royal Bakers, and Aqua Fresh. Oasis and Aqua Fresh are water products packaged in different sizes(The National Food Product Company, n.d.). Laban Up, Gulf & Safa, and Milco brands comprise dairy products such as milk, yogurt, and cheese. Conversely, Lacnor and Malco provide a wide range of refreshing and tasty juices in different flavors and sizes to meet the tastes and preferences of various consumers.
Colombia
Physical Characteristics
Colombia is located in the northwestern region of South America and is bordered by Brazil, Panama, Peru, and Ecuador. Additionally, it has two coastlines, one on the north along the Caribbean Sea and the other along the Pacific sea in the west (McGreevey et al., 2021). The landscape is mainly characterized by Andean cordillera, the most incredible mountain ranges in the world. The climate is tropical and isothermal due to the country’s close proximity to the equator. While tropical rainforest and savanna climate prevails in the Amazon region and Atlantic lowlands, the Caribbean littoral and Gulf of Morrosquillo experience drier savanna climate (McGreevey et al., 2021). The temperature and rainfall in Colombia vary throughout the year.
The transportation network is another physical factor the influences business operations. Roads, railway lines, airports characterize the network, and ports facilitate the shipment of finished goods from industries to the consumers and raw materials from the producers to the factories. About an eighth of the road system in Colombia is paved, and total roadways are approximately 206,500 km (McGreevey et al., 2021). The country has two main roads that are parallel, extending from the Caribbean ports to the interior parts, though capital city, Santa Marta, Medellin, Cali, and Popayan. Numerous airfields are located in different parts of the country, with the major urban areas being home to international airports. Railways are about 2141 km, comprising 150km of standard gauge line and 1991 narrow-gauge line (Central Intelligence Agency, 2021a). Major ports along the Pacific Ocean and the Caribbean Sea include Cartagena, Santa Marta, Turbo, and Buenaventura.
Demographic Characteristics
Country’s demographic characteristic has significant impacts on businesses since they influence such factors as marketing strategies, employment, and product packaging. According to McGreevey et al. (2021), Colombia’s population growth rate is moderate, attributable to various aspects, including educational services, family planning, and emigration to different countries like the United States and Venezuela. According to the Central Intelligence Agency (2021a), the country’s population is approximately 50.3 million, comprised of different ethnic groups affiliated with diverse religions. About 87.6 % of the population is comprised of the White and Mestizo, 6.8 % Afro-Colombian, 4.3 % Amerindians, and the remaining percentage is unspecified. Conversely, the dominant religion is Roman Catholic at 79% followed protestants ate 14 %. While other religious groups are only 2 %, 5% of the population is not a member of any specific religion.
The age and education level of individuals influence their tastes and preferences. The Central Intelligence Agency (2021a) indicates that the 2020 population estimate in Colombia indicates that 42.04 % of residents are 25 to 54 years, 16.38 % 15 to 24 years, 9.93 % 55 to 64 years, 23.27 % 14 years and below, and 8.39 % are 65 years and above. 81.7 % of the total population lives in urban areas. The average literacy level is 95.1 %, with females being more literate than males at 95.3 % compared to 94.9%. The labor force is approximately 19.309 million, the unemployment rate 10.5 %, and 35.7 % of the population is below the poverty line.
Economic Characteristics
Colombia’s economy is mainly based on hydrocarbon fuel and different metals exploitation, manufacturing of goods for local consumption and export, and agricultural production. Private businesses comprised the largest percentage of the economy (McGreevey et al., 2021). The Colombian government has limited participation in the telecommunication, railways, and petroleum sector. According to McGreevey et al. (2021), the government has been adopting varying measures such as credit extension to new industries and favorable taxation regimes to foster economic growth and stability. As a result, the economic growth was substantial in the mid-20th century. However, the high rates of unemployment and inflation in the subsequent decades derailed the growth.
According to the Central Intelligence Agency (2021a), the economic growth rate is approximately 3.3 %, the real GDP (purchasing power parity) is $785.8 billion, and the real GDP per capita is $15,644. Additionally, the 5-year compounded annual economic growth is 2.4 %. The current rate of unemployment is 9.7 %, inflation 3.5 %, and interest rates 1.75 %. Colombia scores 68.1 in the economic freedom rank, making it position 49 in the 2021 index (Heritage, 2021a). Although the score dropped by 1.1 points, it is above regional and global averages.
Political Characteristics
The type of government in Colombia is a presidential republic, where the citizens directly elect the president. The elections are held after every four years, and the constitution limits presidents to serve for only one term. Colombia has numerous political parties and political movements that influence the country’s policies. According to Central Intelligence Agency (2021a), the major political parties include the Alternative Democratic Pole (PDA), Citizens Option (OC), Conservative Party (PC), Liberty Party (PL), Democratic Center Party (CD), and People’s Alternative Revolution Force (FARC).
Political stability and the level of corruption are important factors that impact business operations in any country. Colombia has been experiencing political instability for more than a decade following the government’s security operations against the FARC. McGreevey et al. (2021) indicate that several guerrilla attacks and kidnappings by the FARC were reported in the country until the two parties agreed to end the conflicts in 2016, and the FARC transformed into a political party. Cases of violence associated with drug trafficking are common in the country. According to Heritage (2021a), corruption and bribery have been significant issues in Colombia involving government agencies, and Catholic Church has weakened trust in public institutions and the judicial system.
Legal Characteristics
Colombian legal framework and business laws and regulations can influence investment decisions. According to Central Intelligence Agency (2021a), the country’s legal system is based on civil laws and influenced by France and Spanish civil codes. The regulations permit foreign investment in all areas of the economy (Montgomery et al., n.d.). However, no foreign business can establish operations related to national security and defense and the processing and disposal of dangerous and toxic waste generated from other countries. The laws allow foreign investors to start and own a company 100% but can provide specific restrictions on shareholding for certain activities (Montgomery et al., n.d.). Therefore, NPFC is viable to expand operations in Colombia.
Employment regulations in the country are defined by the constitution, labor code, and its amendments, and rules and guidelines issued by the ministry of labor and the labor courts. The country’s employment law regulates the working relationships of all workers within its borders. Article 53 of the Colombian constitution prohibits any form of discrimination in employment based on such factors as race, sex, physical ability, age, religion, language, and health condition (Montgomery et al., n.d.). The constitution also sets crucial labor and employment obligations, rights, and principles. Conversely, the labor code regulates such matters as days of rest, employment contracts, unionization, and collective bargaining, extra work, vacation, and mandatory social benefits.
Costa Rica
Physical Characteristics
Costa Rica is a Central America country considered to have the most stable and democratic government in the region. Costa Rica is bordered by only two countries, Nicaragua and Panama, to the north and southeast. The Pacific Ocean surrounds the other sides of the country along the southwestern coastline and the Caribbean Sea on the northeastern coast, where the distance between the water bodies is approximately 120 km (Stansifer et al., 2021). The terrain is characterized by rugged mountains that separate coastal plains, with the highest point being Cerro Chirripo at 3,819 meters (Stansifer et al., 2021). The climate is tropical and subtropical, where the rainy season occurs from May to November and the dry one from December to April. While Caribbean Seas’ northeasterly trade winds contribute to precipitation on the east coast, abundant rains in the Pacific Ocean are associated with onshore breezes and thermal convention. Temperatures vary with elevation, with the highest point being cooler than others. Stansifer et al. (2021) note that Costa Rica’s capital city, San Jose, records mean temperatures of 21 degrees Celsius and average annual rainfall of 1800 mm.
The transportation system in the country is comprised of roads, railways, airways, and ports. The road network is approximately 5035 km, encompassing highways that extend from the capital city to the Caribbean lowlands and beyond San Ramon and paved routes (Central Intelligence Agency, 2021b). The inter-American Highway connects the country with its neighboring nations. Although the rail line is about 278 km, it has not been operating effectively for the last few decades (Stansifer et al., 2021). Several airports are located in different parts of the country, some of which are paved and others unpaved. San Jose and Liberia are the homes of the international airports (Central Intelligence Agency, 2021b). The significant seaports that facilitate the import and export of goods are Puerto Limon along the Caribbean Sea and Caldera in the Pacific Ocean.
Demographic Characteristics
Like most countries globally, Costa Rica’s population growth rate has reduced, which is attributable to most families opting to have fewer children. Additionally, such factors as educational services, family planning, and emigration may have contributed to the issue. The population is about 5 million, comprising individuals from different ethnic groups and who are members of diverse religions in the country. According to the Central Intelligence Agency (2021b), 83.6 % of the inhabitants are Mestizo or white, and 6.7 % and 2.4 % Mulatto and indigenous, correspondingly. Additionally, 1.1% of the population are black of Africa descent, 2.2% unspecified, 1.1% others, and 2.9 % are not affiliated to any ethnic group. Roman Catholic is the dominant religion in the country at 71.8 %, followed by Pentecostal and Evangelical churches, other Protestants, and Jehovah’s Witness ate 12.3 %, 2.6 %, and 0.5 %, respectively. Other religions such as Muslim and Buddhism are 2.4 %, and 10.4 % of the population are not members of any religion.
The population per age group in the country varies significantly. According to the Central Intelligence Agency (2021b), 43.98 % of the population are individuals aging from 25 to 54 years, and 22.08 % are 14 years and below. Those who are 15 to 24, 55 to 64, and 65 years and above are 15.19 %, 9.99 %, and 8.76 %, in that order. About 81.4 % of the total population resides in urban centers, with the capital city being home to approximately one-fifth of the country’s inhabitants. 97.9 % of the total population is literate, with an insignificant difference between males’ and females’ literacy levels. The labor force is 1.843 million; the unemployment rate is about 11.9 %, and 21 % of the population lives below the poverty line.
Economic Characteristics
Costa Rica’s economy is mainly based on agricultural production and processing for local consumption and export. The main agricultural commodities exported to international markets include bananas, sugar, beef, and coffee (Stansifer et al., 2021). Although the government controls the most crucial utilities such as water, electricity, rail facilities, ports, fixed-line telephone, and healthcare, private businesses significantly influence making economic policies in the country. According to Stansifer et al. (2021), Costa Rican government has relentlessly focused on economic diversification succeeded in minimizing the country’s dependence on agricultural exports. As a result, its annual gross national product growth rate was twice the global average and above the mean in Central America by the time the 21st century started.
The country has been enjoying strong and stable economic growth for the last decade, except after Covid-19 affected all businesses worldwide. The average annual GDP growth for the last five years is approximately 3.3 %. The real GDP (purchasing power parity) and real GDP per capita are roughly $99.146 billion and $19,642, respectively (Central Intelligence Agency, 2021b). The prevailing unemployment rates, inflation, and interest rates in Costa Rica are about 11.9 %, 2.1 %, and 0.75 % in that order. According to Heritage (2021b), the country is ranked position 72 after scoring 64.2 in the 2021economic freedom index. This is a drop by about 1.6 points, attributable to a decline in fiscal health in recent years. Nevertheless, Costa Rica’s score is above the global and regional averages and is rated 14th among 32 nations in the American area.
Political Characteristics
Like in Colombia, the type of government in Costa Rica is a presidential republic. Elections in the country are held after every four years, where the citizens elect the president and vice president in the same ballot box. The winner has to accumulate 40 % of all casted votes (Central Intelligence Agency, 2021b). Costa Rica has numerous registered political parties such as Christian Democratic Alliance (ADC), Accessibility without Exclusion Party (PASE), Citizen Action Party (PAC), and National Liberation Party (PLN). The current ruling political party is the Center-left Citizen Action Party.
Political stability in Costa Rica has been instrumental in guaranteeing a better business environment. According to Central Intelligence Agency (2021b), the country’s lasting political stability and government incentives in the free-trade zones have been attracting foreign investors to Costa Rica. The country records low incidences of corruption and bribery compared with Colombia. According to Heritage (2021b), the country effectively enforces laws against corruption and the judicial system is impartial, and all institutions respect its authority.
Legal Characteristics
Like Colombia, Costa Rica’s legal system is based on civil law. Although the labor code is the primary law body responsible for employment relationships’ regulation, local law may also apply to foreign employees (Camacho et al., n.d). The law recognizes both written and unwritten employment contracts. The agreement must contain such components as names of involved parties, employee’s responsibilities, terms of remuneration and additional benefits, as well as the scope of the relationship. Costa Rica’s labor law was reformed in 2017 to integrate new regulations to protect employees by enhancing the anti-discrimination policies (Camacho et al., n.d). Any form of discrimination based on such factors as gender, race, age, ethnicity, and health status is prohibited by law.
Costa Rica’s law does not impose restriction terms of foreign investment. However, particular fields such as energy generation and maritime zone investment may be subjected to minor restrictions regardless of whether one is a citizen or a foreigner. The country offers incentives to investors, which can be up to 100 % tax exemption depending on the field of investment (Camacho et al., n.d). Foreign organizations can establish operations in Costa Rica as a private company or incorporate local firms. The law requires the companies to be registered as either limited liability or public limited firms. Additionally, they have to adhere to taxation policies and any other regulations that govern business operations in the country.
Preferred Country
The National Food Product Company (NFPC) should first expand its operations to Costa Rica before moving to Colombia and other countries in Latin America. The country’s economic policies and activities, demographics, transportation network, legal system, and political stability make it an attractive destination for foreign investors. As indicated earlier, agriculture is Costa Rica’s main economic activity, and interest rates are low. Therefore, NFPC will be embraced in the country since it will facilitate the expansion of agricultural production and exportation, and the cost of borrowing funds will be minimal. Although Costa Rica’s population and the labor force are smaller than that of Colombia, its health and skills are better than the latter. Costa Rica offers universal health care to all residents, guaranteeing a healthy workforce with high productivity. Equally, literacy level is high with insignificant disparities between males and females. Thus, NFPC will not have trouble acquiring adequate employees with the necessary skills and competencies.
Although rail lines are not in operation, a better road network, airports, and ports in the country will facilitate efficient transportation of raw materials from farmers and shipment of finished goods to the local and international markets. The political stability in Costa Rica guarantees the security of foreign businesses and investors. The respect of the judicial system and the rule of law by institutions and effective enforcement of anti-corruption legislation in the country give an assurance that NFPC will be given justice in case of any dispute with workers and other stakeholders.
Mode of Entry to Costa Rica Market
The best mode of entry that the NFPC can use to penetrate Costa Rica’s market is through partnership and strategic alliance with local firms. The approach is not only legally acceptable but is also associated with several advantages. For this approach to be successful, NFPC needs to choose companies with reputable and recognized brands in the region. The most significant advantage of this technique of entering a new market is that local firms understand better the culture, need, and way of operating than foreigners(Mariadoss, n.d.). For instance, business culture in Arabic countries differs from that found in western nations. Such businesses already have existing relationship customers whom the NFPC may want to access.
The popularity of joint ventures and strategic alliances is increasing worldwide as firms expand operations in different regions. According to Mariadoss (n.d.), this entry mode to new markets allows organizations to resources and risks and enhances flexibility than when a company goes alone through direct investment. Additionally, it allows easier entry to the market, sharing technologies, conforming to government rules and regulations, access to distribution channels, and joint product development.
Corporate Social Responsibilities (CSR) and Ethics Policy the NFPC Should Pursue In Costa Rica
The two crucial CSR programs that NFPC can pursue in the country are investingin farmers through sustainable farming educational programs and offeringa donation to the universal healthcare program. Notably, the company operationsdepend on agricultural products and the health of employees and farmers. Therefore, educating the farmers about sustainable farming practices will ensure increased production and prevent over-exploitation of the land. As a result, the techniques will guarantee the long-term productivity of the farming land. Equally, donating funds and healthcareequipment to the government will facilitate more accessibility of quality care services by all, leading to a healthy workforce and improved performance.
The ethics strategy that the company will pursue in Costa Rica is the integrity policy. This policy will allow the organization to outline the standards and values they want to convey in the new market. For instance, such standards and values may focus on the quality of products and customer satisfaction. The policy will also provide clear procedures of operations, define the way staff should relate with each other, and facilitate resolution in integrity dilemmas and conflicts within the company.
References
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Central Intelligence Agency. (2021) a. Facts about Colombia. Central Intelligence Agency. Web.
Central Intelligence Agency. (2021) b. Facts about Costa Rica. Central Intelligence Agency. Web.
Heritage. (2021) a. Colombia economy: Population, GDP, inflation, business, trade, FDI, corruption. Heritage. Web.
Heritage (2021) b. Costa Rica economy: Population, GDP, inflation, business, trade, FDI, corruption. Heritage. Web.
Mariadoss, B. Core Principles of international marketing. Pressbooks. Web.
McGreevey, W., Kline, H., Garavito, C., Parsons, J., & Gilmore, R. (2021). Colombia: History, culture, & facts. Encyclopedia Britannica. Web.
Montgomery, C., Combatt, A., & McKenzie, B. (n.d).Establishing a business in Colombia. Thomson Reuters. Web.
Stansifer, C., Parker, F., Karnes, T., & Elbow, G. (2021). Costa Rica: Location, geography, people, culture, economy, & history. Encyclopedia Britannica. Web.
The National Food Product Company. (n.d). About NFPC. Web.