For this analysis, the PESTLE analysis has been used, (Political, Economic, Social and Technological analysis) in addition to the Cultural, Environmental and Legal analysis.
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Political:
Peru is a democratic and constitutional republic that has a strong and well established government, committed to lead the country successfully through the 21st century. The government involvement in the economy has been continuous. The current president is Ollanta Humala, whose focus is to continue the economic growth and focus on reducing the high level of poverty within the country. The government has been improving international relations in the 21st century. Peru has 20 Free Trade Agreements with different countries however the United States and China are the two major trading partners. The World Bank designated Peru the 9th safest country from political risk. However, some of the most problematic factors for doing business in Peru are the inefficient government bureaucracy, corruption and tax regulations.
The government, through the Ministry of Environment, has recently been involved in creating recycling campaigns such as “ReEduca” around the country. The purpose is to promote the importance of recycling and environmental care. The government is also organizing competitions between schools, where the school with the bigger amount of recollected waste and best initiatives of promoting environmental education are awarded.
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Economic:
Peru’s economy was the largest growing in the Latin American region during the last decade. It experienced an average annual GDP increase of 5.75%. Foreign Direct Investment is still developing in Peru; however, the country occupies the 5th place garnering more investment than Argentina, which is the third largest economy in the region. Peru has gained recognition for ease of business and safe investment, it is currently ranked 43rd in the World Bank’s 2013 Ease of Doing Business Index. This ranking makes it 2nd after Chile in the region. These rankings should only improve the outlook of investment in the country in the future. In addition, purchasing power in Peru has been increasing though the years and has caused an increase in the consumption of goods and services, thus the increase of waste accumulation.
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Social and Cultural:
Peru has had success with improving some of the social issues that affect the country. The strength of the government and the growth of the economy allowed combating the national poverty rate, which is down from 53% to 31% in the last decade and was 28% in 2011. As the government continues to drive economic growth and the economic stimulus focuses on infrastructure-heavy projects, poverty should continue to decrease in the decades to come. The country has a growing population that since 1950 has increased 200% and is now at 29.99 million people. These factors drive as well a high consumption of products, so an increment of waste accumulation for the incoming years.
Peruvian society is characterized as young and urban. However, most of the population living in rural areas are not well educated and don’t have a high standard of living. Peruvian consumer behavior has changed gradually over the past few decades. Today, Peruvians pay more attention to quality and are interested in trying new products and services, so any interesting offer providing newness and education improvement at the same time will be more than welcome.
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Technological:
Peru’s infrastructure is advancing at a rapid rate. With increased investment in the mining and gas industries already underway. Increasing the capacity of the existing infrastructure has been crucial to optimize mining and gas facilities. Peru already has an extensive transportation system of highways, ports, railroads, and airports to handle increased traffic. Peru is increasing its telecommunications capacity rapidly as well; in 2010 34.3% of the population was using internet. Regarding the technological readiness, Peru is ranked in the top 25 countries (out of 180) in FDI and Technology Transfer which is an advantage for high-tech foreign companies.
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Environmental and Legal:
Peru is one of the most biodiverse countries in the world. It has the third largest area of tropical rainforests which are some of the richest in the world, both in terms of biological diversity and natural resources. One of the biggest challenges globally is to protect and improve the environment and the climate, due to the climate changes caused by humanity and companies. The principal environmental issues in Peru are water pollution, soil erosion, pollution and deforestation. Given these issues, the Peruvian Environmental Ministry has been developing regulations and laws to decrease the amount of pollution created in major cities and has been making policies to decrease the present deforestation and ecourage sustainability. Many companies are becoming environmental responsible and are adapting their marketing strategies to protect the environment.
In 2009, Peru became the first country of Latin America who created the Law Nº 29419 to entice the population to recycle their waste. This also will encourage companies (local/foreign) to enter into the recycling business and to develop environmental strategies.
Macro Level