1.

3 External Analysis (PESTE) – Opportunities and Threats

In this section, we would perform an analysis of PESTE which examines the external
environment that impact Amazona Chocolate through five different aspects: political,
economical, social, technological and environmental. Those external forces bring challenges
as well as opportunities and threats to the business. By analyzing and illustrating PESTE, it
gives a better understanding of the company and enables the company to achieve a better
performance.

1.3.1 Political Factors (P)

Peru as a constitutional and presidential representative democratic republic country, it
is based on a multiparty political system. The government powers are separated into three
branches which are the executive, the legislative and the judicial. The president is elected by
people as the head of state as well as head of government to serve for a five-year term. Peru
is divided into 25 regions and the capital province of Lima from 2002 regarding the
Regionalization Law (LimaEasy). Since the political power in Peru is decentralized, people
are more empowered and incentive to control own lives through stepping into the decision-
making process of the government. Besides, political parties might use the decentralization
style management as a tactic to gain support from people in favor of their election.
Decentralization is to bring the relationship between people and government closer
and to engender more trust. However, corruption is a big threat in Peru which could harm the
political system and stability that start from regions. “21 of 25 regional governors have been
indicted or are already in jail for corruption” (Jaquette, 2018), Vice president Martin Vizcarra
has replaced Pedro Pablo Kuczynski’s presidency in 2018 after his resignation and now
Kuczynski is arrested in jail due to corruption and bribery. According to Fitch Solutions,
political risk will be subsided in 2019 and public’s view to the government will be improved
(Fitchsolutions, 2019). Vizcarra is determined to fight corruption and his priority during his
service is to address and tackle the problems of corruption. He also has initiated a new anti-
corruption reform lately in order to achieve political trust and maintain political stability. By
the Peruvian law 30424 that introduces “corporate liability for existing criminal offenses
related to corruption, money laundering, and terrorist financing”, with a compliance program,
Peru has agreed to follow standards under OECD Country Program such as Anti-Bribery
Convention for reducing corruption nationally and internationally (Ellis, 2018).
In 2017, the ministry of Health has published “Warning Manual for Processed
Product Food Labels” under the law 30021 which is law to promote healthy diet for children
and adolescents. The warning sign would be displayed with the shape of octagon labels to
show whether the product is high in “sodium, sugar, saturated fats” or “contains trans fats”
(Quindimil, 2018). With the attention paid by government on public health concerns, through
complying regulations such as producing chocolate with healthy sugar level, Amazona
Chocolate has been performing well on its quality and tastes. With more consciousness of
choosing healthy food products, consumers definitely will be assured and happy to purchase
our Amazona Chocolate after looking at its health indicators.

1.3.2 Economical Factors (E)

The economy in Peru has been steadily growing over the years. As one of the largest
economies in Latin America, Peru has a good economic foundation and low level of public
debt which almost deceased half percentage of the GDP from year 2004 to 26.4% of the GDP
in 2018 (Nordea, 2019). Lowering public debt means the ability of the government to pay off
the borrowing and reveals the growth of economic development in the country. The Central
Bank of Peru has its own independence (Coface, 2019), which allows the market to float its
value of currency but also interferes and manages when huge fluctuation of exchange rate
occurs. The stability of exchange rate is the indicator of economic performance in the
country. It is critical for businesses making daily transactions to generate profit and gives
confidence for investors. The strong and stable economic position motivates people and
attracts more businesses into play.
As trading is essential for economic development, Peru is very open to international
trade with being a member of WTO, a member of Andean Community, Asia-Pacific
Economic Cooperation (APEC), MERCOSUR and negotiation with other trade agreements
across the world (export.gov, 2018). Those trade agreements include free-trade, tax and tariff
reduction, etc., they create opportunities for the country to export internationally and also
help lower our own market production cost by importing cheaper materials. Even though it
might harm domestic businesses because the need to compete with outside, competition
promotes production, quality of products as well as drives economic growth.
One important factor that the government wants to address on in order to keep the
growth and maintain competitiveness is to modernize the labor market (Nordea, 2019).
Because 70% of jobs in Peru is not formalized, to protect labor and reduce the informality,
Social Protection Commission has set up to improve social security system. Due to the
modernization, many improvements have been made that contribute to growth like reducing
labor taxes. By boosting the economy and investing from the government and businesses,
more jobs would be created for the people.

1.3.3 Social Factors (S)

1.3.4 Technological Factors (T)

1.3.5 Environmental Factors (E)