On behalf of look intoing an appropriate market for fabricating and selling just trade cocoa, Spain is considered to hold attending of the confectionary companies. At the beginning of research, Spain seemed to be attractive because Spain was the 7th largest economic system among Organisation for Economic Cooperation and Development ( OECD ) states with GDP per capita of $ 31,831 in 2007 ( Bureau of European and Eurasian Affairs, 2008 ) . In this study, hazards and chances of fabrication and selling just trade cocoa in Spain will be considered by critically analyzing economic, political, legal, and socio-cultural fortunes. Entering into chocolate confectionery market in Spain will be a long-run investing. Thus, above factors should be carefully considered.
This study will get down by showing and analyzing growing in confectionery market, transparence of authorities and recognition of just trade merchandises that are the cardinal chances for fabrication and merchandising cocoa. After analyzing chances, hazards of economic recession, unemployment, fright from terrorist act, authorities financial policy and wellness issue will be considered afterwards. From the undermentioned research, it is recommended that at this phase of analysis, it is clear that come ining into Spanish cocoa market is yet to be established. However, farther research could be undertaken in the hereafter to look intoing just trade cocoa in Spain.
There are some economic conditions that show Spain is a possible market for our company. First, there has been growing in the confectionery market in Spain, even though recession by Global Financial Crisis ( GFC ) . Second, because long term position is to be considered, it shows promise that Spain economic system will retrieve from the recession. Last, low involvement rate might increase consumer outgo.
1.1 Growth in Confectionery Market
There are few economical chances for set uping new confectionery works in Spain. Gross Domestic Product ( GDP ) decreased by 3.8 per cent in 2009 ( Euromonitor international, 2010 ) because of planetary economic system recession in 2008 ( The Economist Intelligence Unit Limited, 2009 a ) . However, confectionery market in Spain has been turning continuously for the period from 2004 to 2008 with a intensifying growing rate at 1.8 per cent ( The Economist Intelligence Unit Limited, 2009 a ) . One tierce of aggregative market grosss were generated by cocoa gross revenues ( The Economist Intelligence Unit Limited, 2009 a ) . Market size for chocolate confectionery increased from ˆ739.6 manganese in 2004 to ˆ967.7 manganese in 2009 ( Euromonitor international, 2009 a ) . These statistics represent that cocoa confectionery market is non affected much by recession. Premise that can be made from this fact is that cocoa ingestion will stay the same changeless growing in the hereafter. Therefore there is the advantage for selling just trade cocoa in Spain.
Recovery from Recession in the hereafter
Second, Spain is expected to retrieve from the recession from 2010. Therefore, consumer assurance and private ingestion will increase ( The Economist Intelligence Unit Limited, 2009 a ) . As set uping just trade cocoa company in Spain will be a long term investing, non merely should the current economic status be considered but besides the future economic status. In the hereafter it seems Spain will be able to retrieve from the recession and will one time once more have stabilised economic system. Therefore, as a long term position, Spain is considered to be appropriate to put just trade cocoa company.
Low Interest Rate
Low involvement rate will ease the fiscal state of affairs of families in 2010, covering lessening in existent disposable income ensuing from high unemployment and increase in revenue enhancement rate ( OECD, 2009 ) . As a consequence, portion of autumn in consumer outgo will be covered.
In Spain, credence or having a payoff is a condemnable act. There are assortment of Torahs, ordinances, and punishments covering with corruptness in Spain. Punishments for corruptnesss and graft are set on both civil and condemnable jurisprudence. Furthermore, the Spain parliament passed a rigorous new jurisprudence against revenue enhancement equivocation that was made to extinguish corruptness. Furthermore, Spain is besides a signer of the OECD Convention on Combating Bribery. Spain enterprises for anti-corruption and it is obvious that it is non bias for or against foreign investors ( PRS Group Inc, 2009 ) .
These rigorous Torahs for corruptness represents that corruptness seems non to be an obstruction to put in Spain.
Spanish Torahs, ordinances and fundamental law protect foreign concern come ining into Spanish market.
3.1 Conversion and Transfer
Spanish jurisprudence allows 100 per centum equity foreign investing, and wholly liberalised capital motions. There are no controls on capital flows. In 1999, Spain besides established free motion of capital in and out of the state by taking all signifiers of portfolio mandate. As a consequence, Spanish jurisprudence prevents limitations of capital motions between provinces every bit good as states. The jurisprudence applies to payments, grosss, and transportations generated by foreign investings in Spain. This makes easy for geting and reassigning capital in Spain which is one of the advantages for set uping new company. ( PRS Group Inc, 2009 )
3.2 Right to Ownership and Establishment
The Spanish Constitution protects private ownership. Private ownership rights are clearly established in Spanish jurisprudence, and same legal intervention is applied to foreign houses. Furthermore, there is no favoritism against public or private houses with regard to local entree to markets, recognition, licences and supplies. ( PRS Group Inc, 2009 )
4.1 Household Budget on nutrient
The Spanish families devote most of their budget in nutrients. Compare to other states in Europe it is 3rd highest. Average of family ‘s nutrient budget are used for 25 per centum on meat, 25 per centum on fruit and veggies, 12.9 per centum on dairy merchandises, and 2.2 per centum on sugar confectionery of their nutrient budget went for sugar confectionery. The budget degrees went up because of the monetary value addition. Average growing for consumer outgo on confectionery increased somewhat from 1995, even though monetary value for chief nutrient has increased. ( Euromonitor International, 2009c )
4.2 Fair Trade
Harmonizing to the statistics in the first Fair Trade Year Book published in Spain, in the twelvemonth 2003 the entire gross revenues of just trade merchandises was 10 662 210 euros. This statistic meant an addition of 19 per centum from 8 975 817 euros in the twelvemonth 2002. In 2001, the entire volume of gross revenues of just trade merchandises in Spain represented 7 220 000 euros which is 1.9 per centum of entire volume of just trade in Europe. Among the just trade merchandises, nutrient gross revenues reached 5 256 720 euros. Coffee represented 21.2 per centum of entire gross revenues, imbibing cocoa 11.1 per centum and sugar 5.4 per centum ( Goig, 2007 ) .
Spanish consumers are good cognizant of just trade merchandises. 35.9 per centum of the Spanish population is cognizant of just trade as a consumer option and 16.1 per centum sometimes purchase just trade merchandises ( Goig, 2007 ) . Therefore, selling just trade cocoa has great advantage than normal cocoa.
First of wholly, diminution in universe economic system affected Spain more than any other EU states in 2009 ( Euromonitor international, 2009 B ) . Even though most of European Union states are retrieving from the recession, economic system of Spain decreased ( The economic expert, 2009 a ) . Real GDP growing was 0.6per cent in 2008 and -3.6 per cent in 2009 ( Euromonitor international, 2009 B ) . It is besides predicted to worsen until 2011 ( Euromonitor international, 2010 ) .
In add-on, unemployment in Spain reached the 2nd highest in the European Union with 18.1 per cent in 2009 and it is predicted that the unemployment degree to make 20.5 % by European Commission ( Euromonitor international, 2010 ) . Unemployed consumer is traveling to hold troubles in funding, taking to downgrade in life styles ( Euromonitor international, 2010 ) . Thus lessening disbursement in non indispensable classs particularly in chocolate confectionery ( Euromonitor international, 2009 a ) .
1.3 Private Consumption
Third, 5.1 per cent lessening in private ingestion is measured in 2009 and it is forecasted to fall 1.1 per cent in 2010. Consumer outgo on sugar and confectionery decreased from ˆ2524.9 manganese to ˆ2311.1mn ( Euromonitor international, 2009 a ) . Even though Spain economic system seems to retrieve from 2010, Spain is traveling to retrieve highly easy ( OECD, 2009 ) .
1.4 Cost of making concern
Furthermore, cost of making concern in Spain is really high because of low productiveness, inflexibleness of labour market and low degrees of research and invention. It is truly hard to engage and fire employees in Spain than other European Union states ( Euromonitor international, 2007 ) . Flexibility of finding labor, rigidness of employment and hiring and fire pattern is ranked 115, 116, and 122 among 133 states in planetary competitiveness study 2009-2010 ( Schwap, K. 2009 ) . Entire revenue enhancement rate in Spain is ranked 109 with around half of the net income and clip required to get down a concern is 47days ( Euromonitor international, 2010 ) ranked 108 ( Schwap, K. 2009 ) . Governments will maintain revenue enhancement rate high to cover budget shortage of 10 % of GDP and to do it down to 3 % in 2013 ( Oxford economic sciences, 2010 ) . Therefore it is hard to construct up cocoa fabrication company in Spain.
1.5 Supply Market
Conditionss of supply market for cocoa confectionery seem to be negative. Cadbury Plc, Nestle S.A, and Mars Inc holds 43.1 % of the entire cocoa confectionery market value ( The Economist Intelligence Unit Limited, 2009 a ) . Assorted and differentiated merchandises are produced in the market. Manufacturer has low power for the monetary value of input, sugar and chocolate merchandises, because they are sold in trade good market. To get down concern in this market, it extremely relies on economic growing and size of bing company ( The Economist Intelligence Unit Limited, 2009 a ) . These bing companies seek to bring forth new merchandise lines with low monetary value to pull consumers ( Euromonitor international, 2009 a ) . It seems it will be hard to carry retail merchants to include new merchandise from new concern ( The Economist Intelligence Unit Limited, 2009 a ) .
Serious terrorist bombardments occurred on railroad system in Spain in 2004. 200 people were killed and 500 were injured from the panic. This was the worst terrorist onslaught recorded in Spanish history. The bombardment had been the work of Euzkadi Ta Azktasuna Basque ( ETA ) ; Basque segregation organisation historically committed many terrorist Acts of the Apostless ( Country Watch In. , 2010 ) . The ETA besides attacked Madrid ‘s Barajas Airport in December 2006 ( The Economic Intelligence Unit Limited, 2009 degree Celsius ) . Menaces from both Islamist and Basque terrorist act remain in Spain. Terrorism could be risk for the concern as Spain is non safe from terrorist act ( Country Watch In. , 2010 ) .
2.2 Fiscal Policy
Spain is worried about frights of ‘Greekstyle ‘ debt crisis which is prostration of authorities because of high budget shortage ( Barnetson, 2010 ) . To cut down big authorities budget shortage, Spain Prime Minister Jose Luis Rodriguez Zapatero announced ‘austerity bundle ‘ ( Minder, 2010 ) . Austerity bundle includes public-sector wage cut, pension payment freezing, and more revenue enhancement on higher income ( The Economist Intelligent Unit, 2010 ) . This program could cut down authorities budget shortage, nevertheless, it might hold negative impact on economic activity ( The Economist, 2009 B ) . This asceticism bundle will cut down disbursement from consumer particularly on non-essential merchandise, just trade cocoa. Therefore, new authorities financial policy might be a hazard for the concern.
Tax government in Spain will rank ill because of high revenue enhancement rate ( The Economist Intelligent Unit Limited, 2009 degree Celsius ) . The Spanish authorities is implementing new series of revenue enhancement additions in 2010. First, the standard value-added revenue enhancement ( VAT ) rate will be increased from 16 per centum to 18 per centum. In add-on, revenue enhancement rate on capital income will besides be divided into two brackets. Tax rate of 19 per centum will be taxed to capital income up to 6,000ˆ . Above this degree would be taxed at a rate of 21 per centum. Furthermore, revenue enhancement discount introduced in 2008 to promote ingestion will be abolished in 2010 ( The Economist Intelligent Unit Limited, 2009 B ) . These series of new revenue enhancement systems will do lessening in ingestion.
In recent, important wellness issue has arose in Spain. The Spanish enjoy their nutrient by holding five repasts a twenty-four hours, including three chief repasts and two bites. For the breakfast, they usually it cakes and java ( hot cocoa for kids ) . Lunch could be anything from merely a bite to a proper repast. Spanish enjoy sandwich, biscuit and cocoa as a bite ( Euromonitor International, 2009c ) .
Traditionally, Spanish adult females took the clip for proper repast. Rise in adult females workforce caused addition in ingestion of frozen nutrient and packaged nutrient. Many Spanish adult females in the work topographic point prefers less clip devouring nutrient such as frozen french friess or beefburgers ( Euromonitor International, 2009 vitamin D ) . However, this caused an addition of fleshy kids and wellness jobs. Two tierce of kids eat bites every twenty-four hours. Eating cocoas and biscuits as a bite besides resulted in corpulence for kids. Heavy repasts with ready-made repasts and high fat and sugar nutrients have resulted 40 per centum of population being overweight. The kids particularly, are enduring from fleshiness, as they are the 1s who eat the most biscuits, Sweets and speedy repasts. Many Spanish kids really have a breakfast composed of biscuits, pastries and cocoa milk. Overweight Spanish population is higher than of all time before ( Euromonitor International, 2009c ) .
The fast and easy-to-cook nutrient tendency reached Spain, and is a important ground for fleshiness. Healthy nutrient and organic nutrient was non every bit popular as other states. However, in recent, fresh nutrient and healthy nutrient ingestion by wellness witting consumers has increased ( Euromonitor International, 2009c ) .
As Spain is going progressively cognizant of wellness issues that could take from eating unhealthy nutrient, for illustration, diabetes and fleshiness, Spanish are devouring healthy and non-sugar merchandises instead than oily merchandises. With fleshiness endangering the general wellness degrees in Spain, more and more people are turning to wellness nutrients ( Euromonitor International, 2009c ) . This will ensue in a lessening in cocoa ingestion. Furthermore, wellness issue will last for long clip. Therefore, puting new just trade cocoa concern in Spain seems hazardous.
In Spain, birth rate is lower than other Europe states. Population ripening is another hazard for cocoa concern. Population ageing affects nutrient merchandise concern. In 2050, Spanish population over 65 will be a 3rd of entire population. Expected life for adult females is 83.8 old ages which is the highest in Europe. For work forces, it is 77.2 old ages. Life anticipation keeps lifting in Spain. Spain will be one of the oldest population states in the universe. Many concerns in Spain are aiming seniors by bring forthing healthy merchandises ( Euromonitor International, 2009 vitamin D ) . However, chief consumer for cocoa is non the older coevals. Population ageing in Spain is hazard for cocoa market, as cocoa is a sugar merchandise which can be seen as unhealthy merchandise. If come ining into Spain confectionery market, sugar-free cocoa such as dark cocoa should be produced.
Decision and recommendation
While analyzing Spain ‘s economical, political, legal and socio-cultural factors, Spain seems to hold more hazardous factors than chances. From the economic factors, confectionery market has increased and Spain is retrieving from the recession. However, growing in confectionery market is modest, and it seems confectionery market will stay at a changeless degree because of wellness issue in Spain. Furthermore, low involvement rate is a short-run figure, therefore, it will non impact much for our investing which is for a long-run. Economic public presentation of Spain seems to worsen until 2011 because of high unemployment, budget shortage and revenue enhancement rate. Consumer demand and consumer confident will diminish because of autumn in existent disposable income. As a consequence of jutting addition in low involvement rate in 2011, recovery from recession will decelerate down and household income will diminish ( OECD, 2009 ) .
In political factors, menace from terrorist act and authorities asceticism financial policy seems more related than transparence of the authorities. Without warrant of safety, it would be hard to run in Spain. Furthermore, financial policy reduces ingestion and increase cost for the house which straight affect selling and fabrication. For the legal factor, it seems like an chance because Spain Torahs protect concerns in operating and attitudes toward foreign capital investing seems to be positive.
Consumer feeding wonts are traveling to healthy nutrient because of addition in diabetes and fleshiness. Acknowledgement of just trade has increased ; nevertheless, just trade does non intend healthy merchandises. Therefore, as cocoa is a sugar merchandise which causes diabetes and fleshiness, cocoa ingestion will fall.
In decision, economical, political, legal and socio-cultural factors both include timeserving and hazardous characteristics. However, merely legal characteristics seem to be weighted as an chance for fabrication, since others are weighted as hazards for both merchandising and fabrication. Therefore, from the research, Spain does non look to hold suited status for the concern. However, farther research can be made in the hereafter.