MGMT 80 Group

Long Le
MGMT 80
February 20, 2018

Part 1 Santa Clara University

Coffee is a very important part of life on a college campus and Santa Clara University is
no exception. There are more than 3 distinct places to buy coffee on campus. Most of the coffee
shops on campus provide compostable and recyclable cups, but these types of containers still
have their own costs on the environment. Santa Clara is a very eco-friendly campus and its
students strive to do their part to protect the environment. Many people bring their own metal or
plastic coffee thermoses when they get coffee. This is great for the environment, but the
thermoses can get hot, fast. This is why students need our silicon coffee sleeves, to keep from
burning their hands. Silicon is much more eco-friendly than plastic and it is better than using a
bunch of cardboard sleeves that have to be recycled. Silicon is also a better insulator than the
cardboard sleeves currently being used on campus. Students would also want to buy our products
because they like to show off their school spirit. Our coffee sleeves would have the SCU logo on
them and would be sold in the on-campus bookstore, along with the other school swag. We
would also advertise that the proceeds are going toward a micro-financing project, which would
make students more willing to buy our coffee sleeves.

1. Demographics

Total Population and Population Growth Rate

The target market for the eco-friendly reusable coffee sleeve is the Santa Clara University
graduate and undergraduate student population. Santa Clara University has a total enrollment of
about 9,015 students. The breakdown within this enrollment is about 5,438 students in the
undergraduate school and 3,577 students in the graduate school. By the nature of being an
educational institution, the university receives a new class of students at the beginning of each
school year which allows for a constant introduction of new people into our target market. Our
product will be accessed by the students through our physical presence in the campus bookstore.
Those who do not visit the campus bookstore regularly will be reached through our marketing
and advertising on social media. Because our target market is all relatively close in age and
share the support of the same institution, our marketing strategies on campus and social media
will work for both graduate and undergraduate students equally.

Age and Gender Structure

 The age structure of our target market ranges from about 17 years of age to about 23
years of age in the undergraduate population. In terms of the graduate student population,
anyone above the age of 23 pursuing a graduate degree could be included into our target market.
The majority of our target market falls in the age range between 23 years old and 28 years old.
The gender structure of the university is evenly distributed with females making up 50% of the
student population and males making up the other 50% of the student population. Our product
will appeal to students who fall anyone on this age or gender spectrum due to its universally
practical application and neutral nature in color and design.

Poverty/Middle Class Size/Employment, unemployment and underemployment

The student population of Santa Clara University is generally made up of students who
come from families of middle-class, middle-upper class, or upper class status. This will be
advantageous to the success of our product in sales because our product is a luxury good that
would require someone to have extra money to spend on a product that is not a necessity. The
product will be price at a competitive price in comparison to other products of the same sort
between $4 to $8. Given the economic demographic of the student population, this price tag will
not be a financial strain on our target market. There are over 3,000 students work on campus in
positions At Santa Clara University, there are over 3,000 students who work on campus in
various positions. Collectively student employees earn over $6M each year which helps support
their cost of a Santa Clara education. These students are earning a $13 per hour minimum wage
and working a maximum of 19 hours a week. If we price the product more toward the $8 end of
the spectrum, we will appeal to more graduate students who, more likely than an undergraduate
student, have a job and therefore are willing to spend more on luxury items. If we price the
product more toward the $4 end of the spectrum, we will appeal to both graduate and
undergraduate students who are willing to pay more on an eco-friendly luxury good. Santa Clara
University has encouraged students and other members of the university to adopt more “green”
and eco-friendly practices. Our eco-friendly coffee sleeve will appeal to students actively taking
this “go green” initiative over other products in the bookstore that do not embody this same
environmentally friendly appeal.

Urban/Rural Composition
Santa Clara University is an urban campus located in the heart of Silicon Valley in close
proximity to the major metropolitan cities like San Jose and San Francisco. Coffee is an integral
part of any high stress and fast paced urban community. This is advantageous to the success of
our product because our coffee sleeve design is trendy, unique, and eco-friendly which appeals to
the lifestyles of those in an urban population.

2. Social-cultural Components of Culture

Language
As Santa Clara University is a school located in the United States, the majority language
spoken is English. All product logos and packaging, if any, will be written in English. We do not
foresee any language barriers or conflicts arising as a result of selling our product on the campus.
Our reusable coffee sleeve will be easily accessible to people who speak any language.

Religion
Santa Clara University is a Jesuit university with many of its students following Jesuit
Catholic tradition and holding Jesuit Catholic values. The school emphasizes just, humane, and
sustainable methods in order to create a better world. There are many other religious beliefs
represented on campus such as Judaism, Islam, Hinduism, atheism, etc. According to the Pew
Research Center, millennials,who make up the majority student body at Santa Clara University,
are becoming less religious. However, our product will be marketable to religious and non-
religious individuals.

National Culture
The Santa Clara University student body is largely composed of liberal minded
individuals focused on environmental consciousness and social justice. The students also love to
drink coffee which is emphasized by the fact that there are four cafes on campus alone that serve
coffee. The concept of a reusable coffee sleeve appeals to both of these cultural values that
students have. According to Nielsen’s Global Corporate Sustainability Report, millennial
consumers are more inclined to spend more on a product that they view as green and sustainable.
Our coffee sleeves can succeed in a market of socially conscious, environmentally friendly
students.

A Culture’s Sense of beauty and good taste

California is known for its diverse population, enthusiasm for exploration, and unique
variance in beauty standards, which is emphasized in its high usage of social media. As social
media is also extremely common among college students, Santa Clara University coffee sleeves
would not only widen and strengthen the network for Santa Clara University through postings
and hashtags, but also allow students and graduates to promote school spirit in their own creative
ways.

Attitudes and beliefs towards time, achievement and work societal org
The state of California is home to not only some of the most competitive undergraduate
and post-graduate institutions (ie. UC Berkeley, UCLA, Stanford), but also the location of
thriving business capitals such as Los Angeles, San Francisco, and the Silicon Valley. With such
high caliber resources, there comes with it very high competition to gain access to these
opportunities. In a career-oriented work environment that encourages extended work hours,
coffee is very much utilized. As Santa Clara University prides itself on its alumni base and
community focus, “Santa Clara University” coffee sleeves would not only raise spirit on campus,
but also further the name of Santa Clara University off-campus. This will result in connecting
Santa Clara University students and alumni by offering a subtle point of commonality, further
building upon the community aspect that Santa Clara University as an institution emphasizes so
much. Moreover, Santa Clara University’s program, academic initiatives, and pathways engage
in the support of ethics, sustainability, and social justice. This baseline to microfinance as a
means to help those in poverty is the underscore of this project and embodies Santa Clara
University’s vision of encouraging students to be “men and women with and for others.”

3. Government Systems and Stability

Government Systems and Stability

The Associated Student Government (ASG) is the representative body for undergraduate
students addressing their needs, interests, and concerns. ASG is comprised of an Executive
Cabinet, Student Senate, Judicial Branch, Community Development Committee, and Public
Relations Committee. Student Senate meetings are held every Thursday evening and are open to
all students.

Openness
Our team will be forming a business in the making of coffee sleeves and selling them to Santa
Clara University Bookstore. Because regulations and laws are very open and free in the United
States government, as long as our team follows the laws we will easily be able to sell our
products. City of Santa Clara is very open and welcomes our business within the city. All
business are required to have a valid business license in order to transact our business with Santa
Clara University Bookstore. Our business will be able to legally conduct business with the
organization once the license has been approved through the city government.
Santa Clara University campus focuses on targeting college students by selling them
products that they need and use. A majority of students on campus drink coffee which means our
coffee sleeves will be supported by the Bookstore. However, it might be difficult to get our
product into the Bookstore, therefore we would have to talk to the Manager in charge.

Economic Freedom/Corruption
Santa Clara University's provides a humanistic education that leads toward an informed,
ethical engagement with the world. To engage with the world in meaningful ways, students need
opportunities to explore and refine self-knowledge in relation to others. The Jesuit tradition is
about educating the whole person—mind, body, and soul—and preparing students to create a
more just, humane, and sustainable world. The University is understanding and encouraging to
students who want to make an impact and difference within communities. Therefore, they are
open to assisting our team whom are selling the coffee sleeves in order to microfinance to
Francisco, a coffee farmer in Guatemala.

Legal System
Primarily, we must understand the influence of Federal and State law that we must abide
by. Constitutional law is the sovereign law of the land, followed by Federal law for situations
that are not covered by constitutional law. Under the 14th amendment, individual States are
reserved to their own rights and sovereign power under their own Statutory, Administrative and
Judiciary laws. In non-federal cases such as the selling of a product with trademarked property of
the university located in the state of California, this would fall under a State issue unless the
selling of our coffee sleeves were to expand and begin to be sold across state lines. Since our
target market is that of students, faculty and alumni, the legal system that we must abide by is
California State Law.
A specific trademark that we must abide by with regards to selling coffee sleeves is the
1995 patent made by Jay Sorensen under the trademark Java Jacket. Normally, design patents
last 15 years in the State of California. In special cases, this can either be extended or shortened
by the government. Thus, the 1995 patent should have ended in 2015, three years ago, but just in
case this is something that must be considered when worrying about legal implications. There are
many manufacturing companies that manufacture coffee cup sleeves, however, we must abide by
the Fair Packaging and Labeling Act because of this. This act pertains to the correct labeling of
consumer commodities with the manufacturer/distributor name and place of business.
Specifically with Santa Clara University, we could run into problems with the partnership
between Bon Appetit and Starbucks currently with them providing coffee cups and sleeves to sell
starbucks coffee. However, I believe with the current global initiative that Starbucks has taken
towards fighting for a more ‘sustainable world,’ it would be intelligent for them to not try to stop
our production of a reusable coffee sleeve. Starbucks is one of the largest global companies
across the world and small P.R. disasters such as promoting sustainability, then fighting it legally
can be a disaster. I believe that if we do take this product to Bon Appetit and the Bookstore, it
would be extremely intelligent for Starbucks to back our product and allow us to partner with the
school as well.

Currency Convertibility
With one of the world’s largest Gross Domestic Products and largest economies that
expands across the world, the United States Dollar is considered the baseline for many
currencies. While the US Dollar is known to be relatively strong even after it stepped away from
the gold standard to have more control of its fluctuation, it generally falls behind it’s close
comparison, the Euro. Currently, 1 Euro is worth $1.25 US dollars. Knowing how the US dollar
compares to that of other currencies around the world is important because we will be solely
using the dollar in our manufacturing process and selling to consumers. The fluctuation of the
dollar will not have direct effects on these areas of our business, but it will when using our
money abroad.

4. Economic Development

Product Markets
Our product is aimed specifically at Santa Clara University students and alumni. The
market for Santa Clara branded products exists, primarily in the bookstore and online. We have
all seen many students and alumni wearing and using Santa Clara branded paraphernalia, and we
ourselves have purchased Santa Clara branded paraphernalia in the past. This leads us to believe
that a market exists for our product.
According to Santa Clara University graduate statistics, 85% of students report being securely
employed within 6 months after graduation, furthermore, a vast majority of these students remain
in the bay area after graduation, ensuring their access to our market (the campus bookstore) or
faster shipping from the bookstore (if they choose to shop online).

SCU Culture of Sustainability

Coffee is a daily routine for many, especially busy college students, and the access to
coffee on campus for students is extremely easy and convenient. This is great because the
demand for coffee reflects a level of demand for our product, the reusable coffee sleeve. The
reusability of the product is appealing for the school to save money on buying cardboard sleeves
that will soon be thrown away. More than just the school, recyclable and reusable products are in
extremely high demand with the current mood of consumers wanting to find alternative ways to
have their products and produce less waste. This level of demand in both of these areas will help
drive up sales and be very appealing to all consumers, not just our target market of university
students.

Capital Markets
When we desire to expand the product, we have a few areas we could search for potential
increase in capital. First, we could directly interact with the school, particularly the bookstore,
with the possibility of a partnership to continue to sell the products with their logo and share the
profits. This would be a great option if SCU bookstore was on board because this would allow
the project to stay in house and potentially decrease interest costs. Outside of SCU, we could
seek either a personal loan from either an SCU alumni that wants to be a part of the project. I do
not believe that going to a large investment bank or committing to a large deal because this
would increase the amount of interest payments and we are not a company which we can put up
collateral to get an increase in loaned capital.

5. Technological Infrastructure
 Santa Clara University is a campus that has a lot of technology and allows students
access to that technology. The majority of students own their own computer and smartphone, and
even if they do not, they have access to computers in the campus library or various computer
labs. The campus also provides free Wi-Fi, so internet access would not be an issue if we
decided to sell our product on the Bookstore website. Overall there are no barriers to our
customer base when it comes to technology.

Technological Literacy
California is home to some of the most prestigious companies in the technology (ie.
Google, Intel, Facebook). More specifically, the Silicon Valley is where development of key
technologies took place. Accompanied with a large population of Start-ups and larger companies,
technological literacy is exceptionally high, as the Silicon Valley is a location for high work-
commitment and innovation. As technology is used to innovate, it is also highly utilized to
connect networks. The coffee sleeves used in tandem with social media will strengthen ties to the
Santa Clara Alumni base and continue to connect individuals of different life stages.

Part 2: Guatemala
We would like to help a coffee farmer in the town of Solola, Guatemala named
Francisco. He has requested microfinance to be able to buy chemical and organic fertilizers to be
able to render better production of his crops. He has a profile on kiva.org and has a field partner
ADILA, who is helping him raise the money. So far he only has reached 40% of his $1100 goal.
By selling our silicon coffee sleeves we could easily provide the other 60% of his goal and help
him increase the yield of his coffee crop. Due to the lack of data on rural populations in
Guatemala, we will be focusing on the data for Guatemala as a whole.

1. Demographics (Guatemala)
Total Population and Population Growth Rate
Currently, the population of Guatemala is about 17,119,690 people. On the list of
countries ranked by populations, the country ranks number 67. As of 2018, the population is
growing by 1.96%. A statistic to support the growing population in Guatemala is the current
birth rate of 3.13%. Roughly 9,246,101people make up the urban population of the country,
while the remainder of the population lives in more rural areas. Guatemala does, however, have
a negative net migration rate of -9,215 indicating that more people are leaving than entering the
country.

Age and Gender Structure

The age and gender structure of Guatemala is reflected in the graph below. The graph
shows that the age distribution within the country is broken down into 34.5% 0-14 years, 21.58%
15-24 years, 34.12% 25-54 years, 5.26% 55-64 years, and 4.54% 65 years and older. The gender
distribution is fairly even throughout the age spectrum, with the exception of a slightly higher
number of males from age 0-4.

Economic Class
Francisco, our microfinance recipient of choice, lives in southern Guatemala where the
statistics regarding poverty are staggeringly high. The poverty rate in Guatemala currently
represents one of the worst poverty rates in Central America. Approximately 75% of
Guatemala’s rural population is classified as living in impoverished conditions. Of this 75%,
58% of people live in extreme poverty as it is defined by the World Bank. The indigenous
population in Guatemala, that largely contribute to the agriculture industry in the country,
represent the majority of this impoverished population. There is a very small middle class in
Guatemala. One staggering statistic from the Nations Encyclopedia approximates the the
wealthiest 10% of the Guatemalan population own around 50% of national wealth. Since
monetary wealth is so unevenly distributed within the country’s population, it is very difficult for
poor farmers to improve their financial situation without outside help.

Urban/ Rural Environment

Although it is difficult to record data regarding the size of rural populations, particularly
in underdeveloped countries, the World Bank has reported that 47.97% of the Guatemalan
population belong to rural communities. Much of this rural population relies on agriculture,
particularly coffee farming, as a source of income. Second to Haiti, Guatemala has the one of
the lowest literacy rates in the entire Western Hemisphere. Literacy statistics are as low as 80%
for the average Guatemalan male and 69% for the average Guatemalan female. With a focus on
more indigenous and rural populations one can see these statistics drop even lower. The average
indigenous person in Guatemala has a literacy rate of about 58%. Indigenous women in specific,
however, have a literacy rate of about 30%.

Employment, Unemployment and Under employment

In Guatemala, the unemployment rate measures the number of people actively looking
for a job as a percentage of the labor force. Unemployment rate in Guatemala increased to 3.1%
in the second quarter of 2016 from 2.7% in the fourth quarter of 2015. The unemployment rate in
Guatemala average around 3.11% from 2002 to 2016. In 2017, the unemployment rate in 2017
is 2.6%, a decrease from the 3.1% in 2016 which meant there was an amount of people being
able to find jobs in the area which led to the decrease in the unemployment rate.

2. Socio-cultural Components of Culture

Language
The official language spoken in Guatemala is Spanish with 93% of people speaking
Spanish. The other 7% of the population speaks one of twenty-one Mayan languages and two
Amerindian languages. We will be focusing on Spanish as that is the majority language and there
is easy access to translation if necessary because many people in California can speak both
Spanish and English. Because of this fact, the language barrier will be minimal when offering
microfinance loans to Spanish speakers in Guatemala.

Religion
In Guatemala, 45% of the population is Roman Catholic, 42% is Protestant, 11% is
atheist/agnostic/non-religious, and the remaining 2% hold other religious beliefs. Protestantism is
also the fastest growing religious belief in Guatemala.

National Culture
Coffee is the number one export of Guatemala and also the most profitable crop to grow.
However, coffee farmers in Guatemala do not grow coffee for profit, but because they need to
survive and coffee farming is all their ancestors have left them. Coffee growing is a long,
painstaking process that takes two years to harvest from the first planting of the crop. Small
coffee farmers like the ones our microfinancing will target, do not make much money because
they lose out to large scale farmers who have better equipment and fertilizers available to them.
There is also a fair trade movement for Guatemalan coffee farmers, that small scale farmers will
receive a minimum amount of pay if the market price is lower than the minimum price.
Starting in 2000 when Vietnam took over as one of the major coffee suppliers in the
world, many farmers began to switch to other crops as they could not keep up with the exports of
Vietnam. However, Guatemalan coffee farmers decided to try to gain advantages in the coffee
market. Microfinance will have a profound effect on Guatemalan coffee farmers who try to
compete against larger farms in Guatemala, as well as in the national coffee export market.
In Guatemala, there is a large culture of uncertainty avoidance. There are many strict
rules and policies in place in order to have control over everything. There is a high power
distance in Guatemala in terms of both wealth and power. Guatemalan coffee farmers are on the
lower end of the power distance spectrum and do not have much wealth or power. Guatemala is a
very collectivist society that emphasizes loyalty, long term relationships, and commitment to the
“group”. Guatemala also has a moderately feminist culture, which is expressed through their
collectivist, nurturing society. All of these culture qualities are the opposite to the United States,
which has a low uncertainty avoidance, low power distance, individualist culture, and a
masculine society. However, microfinance is becoming more and more common in Guatemala,
and these cultural differences between the societies will not have a large impact on providing
loans.

Cultures sense of beauty and good taste

Guatemala homes a high amount of social stratification, prioritizing wealth, education,
and family prestige. As a result, a huge aspect of Guatemala’s beauty standards are in external
factors, such as clothing, ethnicity and reputation. A large population in the upper classes have
begun to take on Western fashion and style. Because the nation’s wealth is split so unevenly,
those who reside in poorer areas struggle in extreme living conditions lacking in sanitation,
quality clothing, and food.

Attitudes and beliefs toward time, achievement and work societal org
Achievement is outlined by wealth, race and education. Regardless, a lot of capital inflow
comes from agriculture and is spurred by a large farming population from lower class
individuals. Guatemala is either tied or the first-ranked Latin county in Uncertainty Avoidance
and Power Distance. As a result, not only does Guatemala have a low level of tolerance for
uncertainty, causing strict rules, laws and regulations, but also a high level of inequality of
wealth and power. In addition, Guatemala is ranked with below-average Masculinity and
extremely low Individualism, resulting in a more modest and caring culture, accompanied by an
integrated and cohesive team-mindset. All together, this position can cause problems in that the
country is structured, with most of the rule-setting coming from the top of the social classes. This
can issues of communicating with the lower-class farmers that we are microfinancing to, as the
government may not want that structure disrupted and might want to assist the lower class with
their own policies.

3. Government Systems and stability

Government System
 Guatemala is a representative democracy, a type of government founded on the principle
of elected officials who represent a group of people as opposed to direct democracy. Solola, is a
city within Guatemala. Representative democracy have become quite popular and are often seen
in regions that are home to a large number of citizens such as Guatemala. People are voted in to
serve as a representative and often times are chosen based on opinions and beliefs instead of their
education status. Guatemala’s political stability index in 2015 was -0.66 while 2016 was -0.54,
increasing by .012 within a year period.

Openness
Because Trade is moderately important to Guatemala’s economy, as the combined value
of exports and imports equal to 47% of the GDP. However, Guatemala’s openness to foreign
investment is below average at a 50% rate. Banking is highly concentrated in this country as well
as being relatively stable, and well capitalized, which leads to the number of nonperforming
loans declining. Therefore, our team who will be micro financing loans to a farmer in Guatemala
have to be more cautious as the the country is not as open to loans and the country is more prone
to theft and fraud.
Government is in support of microfinance however there is light regulations as
Microfinance Institutions are in charge of the microfinance loans from other countries. Between
2010 and 2011 the microfinance portfolio increased by 23%, going from $84 million to $104
million, averaging $529 per loan. Before entering the market, you have to set yourself up as a
Microfinance Institution in order to loan money out or would have to connect to a Microfinance
Institution in Guatemala in order to microfinance. Microfinance institutions in Guatemala
maintain a dynamic support for the development and growth of thousands of micro and small
businesses around the country, especially in rural areas.Guatemala also focuses on having a
usury limit interest rate that is capped on microfinance. Lending interest rate (%) in Guatemala
was reported at 13.1 % in 2016, according to the World Bank collection of development
indicators, compiled from officially recognized source
Economic development will allow the economy to be more market driven therefore
allowing farmers to be more efficient producers. It will benefit the farmers to get ahead in the
market as well as allow them to have a needed cushion when there is a lack of money. As
farmers become more market-driven, they should take into account the short term productivity as
well as their profitability and income. Farmers need to be able to adapt to the changing of the
market conditions and do so profitability. By loaning farmers money, they will be able to have an
income growth in the long term if they were to work efficiently focusing on their management
and agriculture skills.

Economic Freedom/Corruption
Guatemala is regarded as one of Latin America’s most corrupt countries but have been
appearing to be making progress toward accountability. Guatemala’s economic freedom score is
63.4, making its economy the 73rd freest in the 2018 Index. Its overall score has increased by 0.4
point, with significant improvements in judicial effectiveness and investment freedom offsetting
declines in property rights, monetary freedom, and business freedom. Guatemala is ranked 14th
among 32 countries in the Americas region, and its overall score is above the regional and world
averages.
Businesses dealing with the security structure face a high corruption risk. Police in
Guatemala is corrupt and lacks the resources to operate effectively. Impunity is reported high
and the government lacks the tools to investigate corruption. Businesses that deal with the
judiciary face a high corruption risk. Bribery and irregular payments are often exchanged to
obtain favorable results.

Legal System
The overall government structure of Guatemala reflects a similar structure to that of the
United States. Power is separated into three branches of government which are Legislative,
Executive and Judiciary branches of government. All three of these branches have power and are
have subsections that have been amended over recent years to delegate power. A large focus of
the legal system is the protection of Human rights. Congress and the government also reserve the
right to tax, implement duties, as well as special contributions to have control over the national
economy and ensure a more fair and equal distribution of wealth.
Since 2013, the Guatemalan government has pushed for economic growth and foreign
direct investment within Guatemala. The country accepts multiple forms of direct investment
including partnering with local companies or foreign companies purchasing local companies.
The Guatemalan government hopes that this will boost economic growth through more
investment in the country as well as hoping that foreign company knowledge will help them
grow as a country as well. Microfinance is apart of this foreign direct investment increase within
the country. While economic growth and investment is being pushed, “complex and confusing
laws and regulations, inconsistent judicial decisions, bureaucratic impediments and corruption
continue to constitute practical barriers to investment. Complex tax regulations meant to reduce
tax evasion result in foreign and domestic companies incurring high costs to comply with tax
laws,” (U.S. Gov).
On April 2016 the Guatemalan Congress passed the Microfinance and Non-profit
Microfinance Institutions Law, an initiative that had already been outlined in the 2000 Template
Program to strengthen the national financial system.The law regulates the microfinance sector:
how microfinance institutions are to be set up, authorised, merged and operated; what
transactions and services they will offer; and how they might be dissolved and liquidated. It also
covers the filing, risk management and information disclosure of non-profit microfinance
institutions.

Currency convertibility
The currency used in Guatemala is the Quetzal. The current exchange rate for 1 US
Dollar is 7.29 Guatemalan Quetzal. While this is not as bad compared to many other Latin
American countries, the US Dollar still has a much stronger value than that of Guatemalan
Quetzal. The US Dollar is accepted in some instances in Guatemala, however, for the most part
only the Quetzal will work for all possible transactions. By micro financing this area, this will
hopefully have an effect in improving the results and crops of the farm as well as assisting in the
economic practices of fair distribution of wealth and aid in decrease of political and economical
corruption.

4. Economic Development

GDP growth rate/per capita

Guatemala had a GDP of $68.76 Billion in 2016. Guatemala’s GDP per capita was
$4,146.74, and Guatemala's GDP growth rate was 3.1%. Guatemala’s GDP per capita is roughly
average among comparable countries in the region.

Trade as a share of GDP

In 2015, Guatemala had exports totaling $10.68 Billion (USD) and Imports totaling
$17.64 Billion. Which comes to total Trade of $28.32 Billion. That same year, Guatemala’s
GDP was $63.77 Billion (USD). Which means international trade makes up 44% of
Guatemala’s Gross Domestic Product. Remittances from migrants, mostly to the united states,
accounts for 10.4% of the Country’s GDP, or about $7.15 Billion.

Product Markets
The organization Friendship Bridge, which is a micro financing organization focusing on
Women entrepreneurs in Guatemala, observed success among its clients. While the national
poverty rate increased in Guatemala, from 2013 to 2016, poverty rates for clients of Friendship
Bridge decreased over the same period. According to Friendship Bridge’s 2014-2016 report,
89% of loan recipients were involved in management decisions within their business. This
statistic may be related to more loans being available (through organizations like Friendship
Bridge) to women than to men, so male entrepreneurs get loans through their female employees.
This suggests that the demand for micro financing in Guatemala among low-income
entrepreneurs is strong. Micro financing has also been effective towards the goal of decreasing
poverty in Guatemala, as shown by the above statistics.

Labor Markets
In 2018, Guatemalan government under the Morales administration is going to continue
to fund multiple sectors of the economy, particularly software and small investors through more
government bonds. In 2016, Guatemala saw a 3.1% increase in GDP across the country which is
extremely beneficial to the country’s prosperity when attempting to combat the poverty and
unequal distribution of wealth by growing a middle class. This increase has been sparked and
expected to continue with the increase in trade between the United States and Guatemala through
the US-Central America-Dominican Republic Free Trade Agreement.

5. Technological Infrastructure
Guatemalan farmers are very limited in the technology they have access to. 18/1000
people as of 2004 owned their own computer. Farmers, who are in rural areas generally, are even
less likely than the average person to own their own computer. This limits our ability to
communicate with them to set up and maintain microfinance. However, there are 126 mobile
phone subscriptions for every 100 people in Guatemala. This makes it likely that farmers we
would like to help with microfinance would be able to at least communicate over the telephone
and perhaps, depending on if the mobile phone is a smartphone or not, they could access email
and other forms of online communication. The lack of internet access also limits how they can
receive and pay back the microfinance loans. E-commerce is growing rapidly in the country,with
a 8.4% increase in internet penetration between 2015 and 2017. Field-partners on the ground in
Guatemala also have access to the internet and online money transfer, so it is not necessary for
Francisco to be able to access the internet on his own. In addition, due to a large social
stratification, technological literacy and access varies widely, leaving those on the lower end of
the spectrum to receive less help due to high inconvenience and risk, whether it be
internationally or domestically. With less flexibility and limited knowledge of different avenues
of providing loans, this could increase miscommunication and risk in the process of micro-
financing.

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