Research Proposal

Research question:

Should Mi Comisariato of Garzota enter online selling and home delivery to later expand this service to other subsidiaries?
Theoretical Framework: Today, people are being busier on their jobs that they do not have time to go to a grocery store and buy their necessities. As a result, grocery stores should consider if they begin to retail online. The target market is young-adults and adults that have a busy work schedule and do not have time for going to the grocery store. Mi Comisariato should consider expanding its online since it will make them be the pioneer compared its potential competitor, Supermaxi, and it will gain brand loyalty from customers. In addition, this type of service will provide Mi Comisariato an extra revenue since the delivery service will be charged separately. However, this project will act as a pilot project since if it becomes successful, it can be applied to other Mi Comisariatos subsidiaries. Nevertheless, there are certain limitations. A major limitation is that costs from delivery service which include gas, staff and website maintenance cant be known with exact values. Another limitation is that Mi Comisariato financial staff does not want to provide the percentages of their increase on sales during the last three years. These percentages are needed since it will provide support to my project and credibility. A second limitation is that my survey will be limited since I will do it on Mi Comisariato Garzota and Mi Comisariato Urdesa. Finally, a third potential limitation is the lack of internet access in Ecuador since only 24% has it. . In addition, the acceptance of online purchase has a low percentage since there is low trust on this kind of service. Methodology: I plan to analyze about the advantages and disadvantages that Mi Comisariato will have by implementing the online and home delivery service. The project includes costs as creation of maintenance of web page, delivery service and credit card transaction costs. Techniques as SWOT, PEST, cost-benefit analysis and Ansoff Matrix are considered in order to know the potential opportunities, threats and feasibility of project. PEST analysis is going to be done in order to know the opportunities and threats from the macro environment. SWOT analysis is going to be executed with the purpose of showing the strengths and weaknesses from the company, Mi Comisariato. Ansoff Matrix is going to be made to determine the type of strategies that should be applied in order for

the execution of this project. Finally, cost-benefit analysis will complete all the analysis by determining the costs and benefits Mi Comisariato will face with the implementation of this new service.

Primary research: Have an interview with Mi Comisariatos Sale Department of Guayaquil in order to get information about their annual sales, strategies that can be applied, evaluate costs and how much interest will develop this idea between consumers. Survey for Mi Comisariatos customers in order to know if they are interested or not on this service.

Secondary research: Investigate about companies that provide cars with drivers in order to do the delivery service to customers. Research how much will cost the creation and maintenance of the web page

Possible Problems Solutions Questions that may not be Ask open and uncomplicated answered by Mi questions in order to get at Comisariatos Sales Dept least estimate on annual sales. because of confidentiality. Limited info since I will Get opinions about other Mi interview only one manager. Comisariatos managers. Difficulty to determine how Make accurate decisions on the many delivers can be done questionnaire in order to have per day. an exact estimate. Difficulty on knowing Get info from internet related or exactly Mi Comisariatos make a survey about Mi market share Comisariatos market share. Table 1. Problems encounted and possible solutions.

Dates June 17 June 20

July 1 July 5 July 24

Activities Modifications Do a sample of rough draft for my survey. Call Lucy Lazo in order to set an appointment with Mi Comisariatos Sales Manager Show if my survey is correct in order to do it. Search info about costs of web page Interview with Mi Comisariatos Sales Manager, Bruno Sadun Surveys are done to customers Midterm break Beginning of first draft Give Mr. Evans my first rough draft Beginning of second draft Give Mr. Evans my Correct mistake second draft Final draft is done Three copies are given of my final research proposal Preparation for IB exams and Research Proposal Presentation Thesis presentation

July 25 August 7-23 September 1 September 7 September 11 September 18 September 21 October November January 4-5

any

Table 2. Action plan for my research proposal

Business and Management Higher Level Research Project

Should Mi Comisariato of Garzota enter online selling and home delivery to later expand this service to other subsidiaries? November, 2009
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Acknowledgments
This project is dedicated to my family, friends and teachers who have helped me on the execution of it.

Contents Page
PAGE # Executive Summary 4 Introduction ..5 Methodology Main Analysis 13-14 Conclusions Appendix .. 17-22 Bibliography References..23 and and Recommendations.15-16 and Results Information and and Collection.....6 Findings..7-12 Discussions

Executive Summary
The goal of this study is to find out if online selling can increase Mi Comisariatos revenues and if it will have a good receipt among customers. Any company of this market has started to sell by online and if Mi Comisariato does, it will be the pioneer. To start the project, a survey was done to customers in order to find if they will use it or not. The survey contained questions about what they think about online selling, if they trust or no on the service or on how many days they will like to receive their purchase. Also, an interview with El Rosados Manager of Purchases was done in order to know what this corporation has thought about online service and why they have not implemented yet on society. Once having the results, mostly of the customers prefer to choose the product than buying them by online. Also, there is a lack of security that customers have about purchasing online. These two reasons are the main ones why customers still prefer to go to the grocery store and not buying by online. The recommendation for the company is that this type of selling should not be implemented until three or five years. The reason of this conclusion is because Ecuadorian society is not prepared for this type of selling and there is a high risk that the project may fail. Also, the lack of access to internet gives disadvantage to Mi Comisariato because they might lose purchases because customers do not have access to it. In addition, the uncertainly on the acceptance of this project on society creates doubt about investing or not. As a result, in order to have a successful project, Mi Comisariato should implement it when perception among society about this service changes.

Introduction
In 1936, Alfredo Czarninski opened a small bakery in Guayaquils downtown called El Rosado. As years passed, he and his wife Ruth thought on changing their bakery into a restaurant. So, they changed the appearance of the bakery and made it into a restaurant. The store had such success that Mr. Czarninski decided to purchase in front of its restaurant a store in order to have a grocery store. Because the grocery store was having such a success, Mr. Czarninski decided to close the restaurant and just stay with its new successful business. This store was the first in Ecuador to offer the auto-service and was called El Rosado Supermarket. As the business began to be more successful, Mr. Czarninski opened other stores as toy stores, movies, retail stores and ironmongers. These stores are part of EL ROSADO CORPORATION S.A. In 1970, the grocery stores name changed to Mi Comisariato. Actually, there are more than 80 Mi Comisariato stores in Ecuador.

Procedure or method
Online selling is a service which has not been exploded by local companies and not often used on society. None local grocery store has started to sell by online, so it can be concluded that the company that starts offering that service will have a huge success or a total failure. In order to determine if the online selling will benefit Mi Comisariato and create brand loyalty, as it is expected, I had to make some important research in order to have a specific answer to my doubt. My primary research is based on having an interview with Mi Comisariatos Sales Manager and a survey to Mi Comisariatos customers. First, I have to set an appointment with Mi Comisariatos Sale Manager, Bruno Sadun. This interview will help me by knowing if Mi Comisariato has ever thought to enter on the online selling and if it yes, why they have not done yet. The survey will be done to Mi Comisariatos customer in order to know what they think about this project and if they are willing to purchase online. In order to know how many surveys I had to make, I applied the sample size estimation formula which result was 41 surveys to do. Secondary information will include the all the costs (variable and fixed) for the implementation and operation of the project. One cost is the creation and maintenance of the web page, which the values are provided by a company that works at Guayaquil. Also, the costs of the home delivery are given by a company that offers this type of service and will charge per each delivery they do. The costs of credit card transactions are also included since there will be customers that may prefer to purchase online with credit card and that cost should be known according the bank. Lastly, investigate about retail stores websites in order to know what kind of strategies Mi Comisariato can apply for its webpage.

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Main Results and Findings

Primary data obtained through surveys

Figure 1. Average income per month

Figure 2. How frequently do customers purchase at Mi Comisariato

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Figure 3. Reasons why customers couldnt shop at Mi Comisariato

Figure 4. Customers willingness to purchase online

Figure

5%

Whyyou will not purchase by online? No complete knowledge

16% 32% about Internet usage No trust on this type of service Prefer to choose the product Includes an extra value to the purchase

5.

47%

Reasons why customers will not purchase by online

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Figure 6. Reasons why customers will purchase by online

Figure 7. Days customers desire their purchase be delivered

Figure 8. Reasons why customers will purchase by online

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Figure 9. Average of bills when customers buy at Mi Comisariato

Figure 10. How much do customers usually pay for home delivery service

Figure 11.Goods that will be usually bought by online

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Figure 12. Customers preferences on payment

Secondary Research - Costs:

Cost of creation and maintenance of web page

Creation of web page Cost of maintenance of web page per month Total cost of web pages maintenance per year Web page description $1850 $410

$4920

The web page will mainly include every single product detailed with its ingredients or nutrition facts, picture of it, price and its manufacturer. Also, it will have a brief description of Mi Comisariato.

Table 1. Costs of web pages creation and maintenance during one year.

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Cost of transportation Cost per each motorcycle, staff and gas rented for one home delivery Expected home delivery per month (based on surveys) Cost per month of home delivery service $ 3.25

29 $94.25

Table 2. Costs of transportation per month

Comparison between cost and price of home delivery service Cost $3.25

Price $2.50

Gain/Loss -(0.75)

Table 3. Comparison between cost and price of each home delivery service

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SPECIFIC Customers

Socio-Cultural
Ecuadorian society is not used to purchase online and no trust on service By home delivering the purchases, they should demonstrate that online purchase is an effective service. They will demand for a safe service

Technologic al
Only 24% of Ecuadors population has access to internet Deliver purchases as fast as possible

Economical
Purchasing power has increased throughout years No issue

Political
There is no restriction that forbidden the online sell No issue

Suppliers

Pressure group

No issue

Owners

Know that online sell is not used on almost every retail store in Ecuador

Have the necessary tools to initiate this project

Even though they are groups, they cant damage the project on economic terms Have the economic power to invest on this type of service

May include politic characters if they have any issue with the online selling Deal with laws to ensure the protection of customers data

Table 4. Macro & Micro scenario analysis

Analysis and discussion

After knowing what do Mi Comisariatos clientele think about this project by the survey, the next step is to analyze the data collected in order to determine if this project can be executed. The first analysis done was the PEST analysis. About any political issue, there is no actual restriction on Ecuador that forbidden the online sale. So, the online sell by Mi Comisariato may not have any political or legal issue. About the economic scenario, the opportunity cost that Mi Comisariato is huge since it will have to offer a service which is not frequently used by society and hasnt been explored by Ecuadorian retail stores. As regards to social segmentation, the project is directed for customers of a medium to high social class between ages of 24-40 since they have higher incomes, an active social lifestyle and are in a frequent use of internet. Therefore, this type of service will benefit them
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since it will be a practical service for them. Last but not least, the technological scenario is about comparing the advantages and disadvantages of e-commerce. The main advantage is that customers can purchase their goods from the conformability of their houses. Nevertheless, the issues that e-commerce may have are greater compared to its benefits. Web pages may be hacked or get saturated from received sales, so the service may turn inefficient and the customer satisfaction may be at risk. However, there is a holding truth that leads for none or few usage of e-commerce: only 24% of Ecuadorian population has reach of internet at their houses. This fact will lead to a small acceptance of online selling since there will be not enough population to explore about this type of service. The second analysis executed was SWOT analysis. The main strength is that Mi Comisariato has the financial power to start the project and be the pioneer of offering this type of service on its market. Regards the weaknesses, the most important is the lack of knowledge that Mi Comisariato will have about this type selling. If the web site gets saturated of purchases, then the delivery service for each of it wont reach the time limit of delivering. About the opportunities, if Mi Comisariato makes this project successful, this will let them expansion to other stores on other cities. Finally, there some threats that should be considered. The first one is the lack of trust on online services from customers. According to the survey, one third of the customers will not purchase online because exists the doubt the credit card number may be copied by hackers. The second important threat is the limited internet diffusion in Ecuador once the project is expanded to other cities. Only 24% of Ecuadorian population has access to internet, so the purchases may be affected negatively of it. The third analysis was based on Ansoff Matrix. This project is categorized as product development since it is offering new type of service on an existing market. It is a medium risk project since Mi Comisariato will have to offer this service on a market which is not used to purchase online. So, Mi Comisariato will have to set up strategies in order to show that this type of service is safe, practical and convenient. However, these objectives wont be easy to achieve since Ecuadorian society is not used to purchase online. So, Mi Comisariato will have to convince to its customers that this service will be effective and safety. The implementation of strategies will require a high investment from Mi

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Comisariato since practically they will have to change societys perception about online selling. As a final analysis, there is the cost-benefit. This analysis was done in order to determine if this project was convenient or not to Mi Comisariato to execute. Concerning the costs, Mi Comisariato will have to face a main fixed, which is the web page maintenance and the variable costs is the cost of home delivery plus since it is done according to the number of purchases done per month. So, Mi Comisariato must have a continuous following of online purchases in order to provide an on-time home delivery service. Also, Mi Comisariato will have to face a society which is not used to use the online media for purchasing. So, the purchases will be affected on that manner since customers may prefer to go to the store and purchase by themselves. Nevertheless, the main cost that Mi Comisariato will face is that they will lose almost 0.75 from every home delivery they do. In order to avoid this loss, Mi Comisariato must buy their own assets and hire their own staff, which represents a high cost of investment that Mi Comisariato can afford. However, there are some benefits that Mi Comisariato will experience if it executes the project. The main benefit is that will gain brand loyalty from its customers by being the first retail store of its market by offering this service. Customers will perceive that Mi Comisariato has worried about its customers by providing them a practical and convenient service. Also, if this project is successful, it can be done on other Mi Comisariato retail stores of Guayaquil.

Conclusions and Recommendations

Implementing the online selling and home delivery is a great idea for Mi Comisariato since it will offer them a service which is convenient and time saver. Nevertheless, the cost of investment can be afforded by Mi Comisariato but there is a major doubt. The investment includes
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creation and maintenance of web page and home delivery service payment. However, there is a main issue that can let to failure this project. Ecuadorian society is not prepared for the usage of online media. If Mi Comisariato decides to execute this project, it will have to implement several marketing strategies at least during a year in order to prove that online purchasing is a practical service that must be used. Based on the survey, customers think about this service as untruthful and that there is preference for choosing the product in order to see its conditions. As a result, Mi Comisariato will have to demonstrate that it service has a legal support that confirms its safety of usage. This legal documentation will represent an extra cost for Mi Comisariato since it will have to hire legal companies that will have to ensure that its service is totally safe in order to protect customers data. However, changing societys perception is not the only problem that appears. Only 24% of Ecuadorian population has access to internet. So, Mi Comisariato online sells will be affected by this percentage since they can sell more if more citizens have access to it. This issue cant be handled by Mi Comisariato since the lack of access is Ecuadors government problem since the price of it on Ecuador is the highest against any Latin-American country. In addition, there are some topics that should be considered before executing this project. The main benefit that Mi Comisariato might get is the creation of brand loyalty from customers and will be a platform for implementing this type of service on its other stores. So, the doubt is that all the investment will be worth it for getting brand loyalty. Also, if the project does not success, what will Mi Comisariato decide to do when investment was already done? These doubts are the ones that create more uncertainly on executing the project because of the risk of how well accepted will be. About the goods that will be bought by online, the majority of them are for personal hygiene and home cleaning. These products have higher prices compared to other goods, so the bills from customers will be higher. So, Mi Comisariato will be having higher revenues. However, the frequency of online purchase is once two weeks based on the survey. This frequency should increase in order to cover the costs of investment. As a conclusion, Mi Comisariato should not implement the online selling and home delivery service because of several reasons. First,
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society is not used on the usage of web pages for online purchasing. Mi Comisariato will have to implement some marketing strategies that will have to change the perception about this service. The strategies will definitively represent a high cost since at least should be done for more than a year. Another barrier for the success of this project is that only 24% of Ecuadorian population has access to internet. This lack of access may lead to Mi Comisariato with a decrease of online sales since there might be customers that want to purchase online but they do not have the access. Also, the lack of knowledge from Mi Comisariato of how does the online selling works will affect the performance of their project because as they being the pioneer, they will have to deal with several legal and social issues.

Appendix
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1. Interview with Eng. Bruno Sadun, El Rosados Manager of Purchases Date: Friday 24 July 2009, 4:30 pm. Address: Mi Comisariatos headquarters. Av. 9 de Octubre 729 y Boyac Mi Comisariato has experienced any increase on their sales during the last three years? Yes, Mi Comisariato has experienced a growth of sales but also it grew as corporation. During last years, the number of retail stores as Hipermarket and Mini Comisariato has increased. Any percentage that shows the increase of sales? Right now I dont have the percentages. I can ask to a colleague and then give it to you. Do you think online sales will affect on a great proportion Mi Comisariatos sales? I really believe that our society is not ready for online sales since there is no culture of it. If the project has a good acceptance in Guayaquil, Mi Comisariato is economically capable of investing on it since costs as maintenance and creation of a web page, transportation or gas will be included? Yes, Mi Comisariato is working on this project but on a medium or long term because right now customers prefer to chose and see what products they are buying. What are the most sold products? The most sold products are vital goods as sugar, milk, bread and vegetable oil. Then, the second most sold products are soaps, tuna, noodle and detergent. What is your competitive competitor, Supermaxi? advantage against your main

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Mi Comisariato has better prices and better reach on some areas that Supermaxi is not located. Entrevista con el Ing. Bruno Sadun Gerente de Compras de Importadora El Rosado Fecha: Viernes 24 Julio 2009, 4:30 pm. Direccin: Matriz de Mi Comisariato - Av. 9 de Octubre 729 y Boyac Mi Comisariato ha experimentado algn incremento de ganancias durante los ltimos tres aos? S, Mi Comisariato ha crecido pero tambin como Corporacion El Rosado. El nmero de tiendas de Mi Comisariato y Mini-Comisariato han incrementado durante el ltimo ao. Algn porcentaje que demuestre ese incremento? Por el momento no tengo porcentajes. Le puedo preguntar a un colega y te puedo dar los valores. Cree que la venta por internet afectar en gran proporcin a las ganancias de Mi Comisariato? Creo que no porque en nuestra sociedad no hay cultura acerca la compra por internet. Si el proyecto tuviese buena acogida, Mi Comisariato se encontrara (econmicamente) disponible para invertir en dicho proyecto pues costos como creacin y mantenimiento de pagina web, transporte, gasolinas entre otros involucraran? S, Mi Comisariato si tiene la disponibilidad econmica pero por el momento tenemos ese proyecto de mediano a largo plazo ya que nuestros clientes prefieren escoger y ver el producto. Cules son los productos con mayor venta? Los productos que ms se venden son el aceite, azcar, leche. De ah, detergente, jabn, fideo y atn.

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Cul es la ventaja competitiva que tiene sobre su mayor competidor, Supermaxi? Mi Comisariato ofrece mejores precios y tiene mayor alcance en pueblos que Supermaxi no tiene tiendas.

Survey done to Mi Comisariatos customers. Date: Saturday 25 July 2009 Location: Mi Comisariato Garzota & Urdesa
1. Gender: o
o Femenine Masculine

2. Age:

3. Your average Income per month is:

o o o o o o o $180 - $400 $400 - $620 $620 - $840 $840 - $1060 $1060 - $1280 $1280 - $1500 Mayor a $1500

4. Usually, you purchase at:

o o o Supermaxi Mi Comisariato Other (determine)

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5. How frequent do you purchase at Mi Comisariato? :

o o o o Once a week Twice per week Once two weeks Once three weeks

6. You missed going to the grocery store because:

o o Lack of time Work events Unexpected event happened

7. Are you willing to purchase online?

o o In case of answering no, answer this last question Yes No

8. Why you will not purchase by online?

o o No complete knowledge about Internet usage No trust on this type of service Prefer to choose the product Includes an extra value to the purchase

o o

In case of answering yes, continue the survey. 9. Why you will purchase by online? o o o Saves time More practical Agility of payment

10. You will be likely to receive your purchase by... o Immediately

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o o o o 11. How often will you purchase online? o o o o

1 day 2 days 3 days 4-5 days

Once a week Twice per week Once two weeks Once three weeks

12. How much your bill does when you purchase at Mi Comisariato?
o o o o o o o $10 - $20 $20 - $30 $30 - $40 $40 - $50 $50 -$60 $60 - $70 $70 - $80 Higher than $80

13. How much do you usually pay for home delivery service? o o o o o o $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 More than $4 First necessity goods Personal Hygiene Home cleaning goods Fruits-Vegetables Meat-chicken

o
14. Which products will you buy online?

o
o o o o

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o o 15. How will you prefer to pay for this service? o o

DessertsIce creams Can good Cash Check Credit Card

Encuestas a clientes de Mi Comisariato Fecha: Sbado 25 Julio 2009 Lugares: Mi Comisariato Garzota & Urdesa
1. Sexo: o o 2. Edad: Femenino Masculino

3. Su ingreso promedio por mes: o o o o o o o $180 - $400 $400 - $620 $620 - $840 $840 - $1060 $1060 - $1280 $1280 - $1500 Mayor a $1500

4. Usted hace sus compras de hogar en: o o o Supermaxi Mi Comisariato Otro (especifique)

5. Qu tan frecuente hace sus compras: o Una vez por semana

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o o o

Dos veces por semana Una vez cada dos semanas Una vez cada tres semanas

6. Hay casos en el que no logra ir al supermercado porque: o o o No tuvo tiempo de ir Algn evento de trabajo Algn inconveniente

7. Estara dispuesto a realizar sus compras por internet? o o Si No

En caso de responder no, responder esta ltima pregunta. 8. Razones por las cuales no comprara por internet

o
o o

No tiene conocimiento completo acerca el manejo de internet No confa en dicho tipo de servicio Prefiere escoger el producto y revisar sus condiciones Incluye un valor agregado a la factura

De haber respondido si, contine la encuesta. 9. Razones por las cuales comprara por internet: o o Ahorra tiempo Ms prctico Agilidad de pago

10. En cuntos das (mximo) quisiera que su pedido por internet llegue a su domicilio? o o o Inmediatamente 1 da 2 das

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o o

3 das 4-5 das

11. Si el servicio fuese de su agrado, qu tan frecuente usara ste? o o o o Una vez por semana Dos veces por semana Una vez cada dos semanas Una vez cada tres semanas

12. En promedio, a cunto asciende su factura cada vez que compra en el supermercado? o o o o o o o o $10 - $20 $20 - $30 $30 - $40 $40 - $50 $50 -$60 $60 - $70 $70 - $80 Mayor a $80

13. Cuando hace pedidos a domicilio, Cunto generalmente paga por ellos? o o o o o o o 14. Qu artculos comprara por internet? o o o o o o o Productos de necesidad bsica Productos de higiene personal Utensilios de limpieza del hogar Frutas y vegetales Carne-pollo-embutidos Dulces-Helados Otros:______________________ $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Ms de $4

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15. Cmo pagara por este servicio? o o o Efectivo Cheque Tarjeta de crdito

Bibliography and References

El Rosado. Historia http://www.elrosado.com/sitio/Historia.jsp Hoang, Paul. Business and Management. IBID Press. Victoria, Australia. 20007.

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