Xerox

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Xerox


COUNTRY ISSUES
Culture, Social, and Demographics:
When examining any company and their possible expansion into new markets you must first
examine the culture, social, and demographic issues impacting foreign businesses. The
Colombian culture has begun to show a bias towards American products as recently as 1998.
As written in Carol Casper's New York Times article, 'There is a lot of interest in U.S.
concepts and products...'; in not only Colombia but also all of Latin America. The
interest has caused more American firms to begin to see these developing attitudes and
expand their businesses into Latin America. For Xerox to also take part in this expansion
they would be able to take advantage of the new interest.

Colombians, although, are not welcoming these companies with open arms. There is an
interest in the U.S. businesses but as Dianna Jean Schemo reports; it is not uncommon to
be threatened by the cartels of Colombia. These cartels want in on the inflow of money and
will get involved in kidnappings and murderer if they see it necessary. In 1996, the last
year these figures are available, the Federal Bureau of Investigation reported 19,645
homicides while in Colombia there were 26,627. For the fear of being on the wrong end of
such instances American businesses need to be extra careful when trying to penetrate the
Colombian marketplace. Xerox would not be as impacted by the threat of cartel
interference. The cartels become more involved with restaurants and oil companies that
have developed in Colombia. They have not developed any interest in the technology
industry as of yet.

Colombia has a population of 37 million Spanish-speaking people. The annual growth rate is
1.7% and 95% of the population is Roman Catholic. In the urban areas a 93% literacy rate
was found, as opposed to a 67% literacy rate in rural areas. This is due to the fact that
only five years of primary school are offered in rural areas. This information regarding
the population is encouraging. Although the rural population's literacy rate is low, the
urban rate is quite high for a Latin American country. This rate leads me to believe that
for Xerox to expand in this market with its technology/communication equipment would not
be a problem. The majority of the targeted population where Xerox would be selling their
products could understand the benefits of their product and would want to purchase Xerox
products.

Political/Governmental Concerns:
Colombia has both political and economic stability that is uncommon to Latin American
countries. Colombia also enjoys low inflation as compared to other South American
countries. The government of Colombia is a unitary republic, made up of an executive
branch, National Congress, and Constitutional Court.

The government creates economic and social development plans annually. The executive
branch of the government is responsible for forming the plans in detail. There is a trade
barrier that must be registered with Incomex (official foreign trade institution).
Payments of invisible imports such as acquisition of technology must be paid to them. The
interaction of the government with economic and social issues will help Xerox to expand
into this country. By Colombia having an Americanized government system in place that has
become stable, it will greatly help foreign countries to become interested and to invest
in this nation.

Colombia tries to also maintain and encourage foreign investment. The regulatory climate
consists of National Planning Department, Central Bank, Ministry of Mines and Energy,
Banking Superintendency, and Securities Superintendency. Foreign investment is permitted
in all economic activities except those related to defenses or national security, and
dangerous refuse. This lack of restrictions enables Xerox to freely move in and establish
itself in Colombia.

Restrictions on goods imported to Colombia are minimal. The process involves preparing a
pro forma invoice, effecting an import registration at Incomex, shipping the goods with a
final invoice, clearing customs, and remittance of payment on the currency of the exporter
or in U.S. dollars through an authorized exchange intermediary. Again the lack of
restrictions would allow Xerox to enter the Colombian market with few barriers.

Macroeconomic issues :
In Colombia there are macroeconomic conditions that could impact Xerox and our decision to
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