Global & Cultural Environment of Business

Final Report

Colombia

Santa Clara University

Le Long

Alex, Kimmy, Lauren, Thomas, Yash

Table of Contents

Global & Cultural Environment of Business 1

Table of Contents 2

Microfinance Project-Market Intelligence Report (MIR) 3

Introduction 3
Colombia 4
Demographics 4
Socio-cultural Components of Culture 5
Economic Development 8
Technological Infrastructure 9
Conclusion 11
Santa Clara University/SF Bay Area 12
Demographics 12
Socio-cultural Components of Culture 13
Economic Development 14
Technological Infrastructure 15
Conclusion 17

Market Entry Strategy Analysis Report (MESA) 18

Introduction 18
Marketing 19
Business Operations 19
Channels for Sales 21
Conclusion 24
Loan and Service Expansion 25
Operative Partners 25
Joint Partnerships 27
Microfinance Loans and Services 30
Loans 31
Conclusion 33

Work Cited for MIR 35

Works Cited for MESA 39

 Microfinance Project-Market Intelligence Report
(MIR)

Introduction
For the past decade, Colombian Farmers have been going through tough times within
battling between protesting groups and the government. Alongside this in-fighting, there have
been massive changes in the climate resulting in flooding and severe droughts that have very
much affected crop patterns and in turn profits for the farmers. In order to help farmers during
this tough time period, our group has decided to create a product in an effort to raise funds for
these farmers through the National Federation of Coffee Growers of Colombia (FNC). By doing
so, we’ll be able to help farmers secure better partnerships between the farms themselves and the
end distributors to allow the farmers to have a better cut of the profit, removing expensive
middlemen.

Our product is a coffee roast originating directly from the farmers themselves, allowing
us to help them cut their middleman out for higher profits. This product, named ​Tinto​, was
named after the colloquial term used by the Colombians. This same name is also used by the cart
vendors when they advertise their coffee! In this paper, we aim to breakdown the various layers
of both Colombia and Santa Clara University to breakdown our understanding of the
demographics, socio-cultural components, economic development, and technological
infrastructure of each region. We hope to help the reader understand how to approach each
region and what global perspectives are needed to have a fruitful partnership between the two
regions.
Colombia

Demographics
The total population in Colombia is currently 50.6 billion. Population growth is expected
to decline, and eventually decline by 2050. Colombia’s median age is 27 with 22.5% of the total
population between the ages of 15-64, showing an even age distribution among the population.
There is an even split among males and females in each age group, as seen in image 1 below.
50% of Colombians are considered lower class. In Colombia, the lower class is mainly
regarded as the rural population as there is a highly unequal “urban biased” income distribution.
The largest city in Colombia is Bogota with a population of 7.9 million and a greater
metropolitan area of 12 million.
It can be extremely difficult for lower-class citizens to find housing in urban areas. In fact, the
housing index in Colombia has increased from 10 to 140 in the past 20 years. With an
employment rate of only 57% and the average wage of a low skilled person at almost 900,000
COP per month while the average living wage for a family is 1,095,100 per month, it is clear that
pulling the rural class out of poverty has proven extremely difficult.
Rural areas in Colombia are specifically struggling right now due to climate change.
Coffee is typically grown in the Colombian mountain region which is currently “warming by .3
degrees celsius” per decade, and the “hours of sunlight has declined by 19% since the middle of
last century due to increased cloud cover” (Schiffman). This has caused many small coffee farms
to shut down as the change in climate no longer promotes high levels of coffee production. Long
term climate predictions are anticipating that this problem will only get worse. Small to
medium-sized coffee farms have shut down as their levels of coffee production are no longer
sustainable. Micro Financing loans could help curb the cost of production of coffee beans for
smaller farms while they invest in finding new farming techniques to stimulate the rapid growth
of coffee beans.

Image 1-
Socio-cultural Components of Culture
Language:
In Colombia, Spanish is the most commonly spoken language, as it was imposed during
the colonial period. There are many different dialects, varying by region and social classes.
Additionally, the Spanish spoken in Colombia is marked by numerous cultural expressions. In
major cities, English is spoken, but mostly by the upper class. A vast majority of the population,
however, belongs to the ‘marginal’ class, including local farmers. This will affect our business’
relationship with the Colombian farmers who are growing and providing the coffee beans for our
product and receiving the profits that will be sent back to them. We will undoubtedly have to
overcome communication barriers, so we will have to hire someone as a liaison for
communication between us and the farmers.

Religion:
In Colombia, approximately 90% of people practice Christianity, with 75% identifying as
Roman Catholics (worldatlas). Since our zero-interest-rate loans are compatible with most
religious beliefs about financing and interest rates, we would be able to give these loans to
farmers successfully. Many religious beliefs, especially those influenced by older ideas, follow
that it is immoral to charge interest rates on loans, and those that do allow interest rates believe it
is immoral to charge such rates upon the poor. Zero-interest rate loans will allow the local
farmers, who are of lower social classes and wealth, to accept our financing with ease.

National Culture and Distribution of Wealth/Power:

Although Colombia is an independent country, taking pride in its independence from
Spain, colonialism has influenced much of the country’s development over time. There are
many distinct regional cultures that developed from colonial Spanish culture. Consequently,
there is also a large amount of political instability within the country due to the unequal
distribution of wealth. Colombia’s high level of inequality is marked by its Power Distance
Index of 67, which contrasts greatly with the United States (Hofstede-Insights). When doing
business with local farmers, we must be prepared to deal with someone who will likely hold
more power over other people, or perhaps communicate on behalf of the farmers as a whole.
Since coffee is a labor-intensive crop that demands a lot of manual or semi-skilled labor, we
must also be prepared to work with people who do not necessarily understand business logistics.
Local farmers also tend to sell to local markets, with the hopes of keeping control over their land.
While conducting business, we must demonstrate the benefits of expanding their market and
selling their coffee in the United States and dismiss any fears they may have about losing their
assets. It will be beneficial for us to express our desire to also help the farmers as a means of
keeping their businesses running and support their families, as family pride is valued greatly
(Parsons).
A Culture’s Sense of Beauty and Good Taste:
Our zero-interest-rate loans do not contradict beliefs in Colombia about foreign financial
services. Local farmers do not need to be wary of receiving microfinancing from SCU, as our
goal is not to exploit people. Rather, we are striving to serve and provide microfinance loans as
a means of meeting the needs of rural communities (i.e. supporting small businesses and
financially aiding families).

Attitudes and Beliefs Toward Time, Achievement, and Work

Colombia has an Uncertainty Avoidance Index of 80, which is high relative to other
countries (Hofstede-Insights). Consequently, people may feel threatened by the ambiguity
associated with receiving microfinance loans from SCU, as this would be an unfamiliar situation
with unfamiliar lenders. Local coffee farmers, therefore, need exact, explicit details about our
loans in order to understand how these loans will help them. It would be beneficial for us to
communicate such conditions with an authoritative figure or liaison for the farmers to align with
the more rule-orientated aspects of Colombian culture and assure the positive intentions behind
our loans.

Government System & Stability

Colombia is a republic consisting of a strict separation of powers between legislative,
judicial, and executive branches. It is the oldest democracy in Latin America and the third-largest
economy. Though it may seem as if the government is organized and unified, the country has
faced a great amount of political instability throughout its life. More specifically, the country’s
political and economic climate discouraged trade until the economic liberalization reforms in the
1990s. These reforms removed controls on remittance of capital and profits and began to
encourage foreign direct investment. An even greater change came about in the 21​st​ century as
the republic gradually found its grounding in the past decade due to trade agreement reforms.

In terms of government influence on foreign investment, Colombia seems to encourage a

variety of foreign influences. This is shown through the U.S. Columbia Open Skies Agreement
as of January 2013. This agreement strengthens and develops trade and tourism between both
countries while encouraging investment. To add to this, Colombia is currently our 27​th​ largest
trading partner with ​$28.9 billion traded in total during 2018. In fact, the U.S. had a trade surplus
with Colombia of $1.4 billion in 2018. The only downside to the government’s influence lies in
its handling of environmental issues surrounding deforestation, soil erosion, illicit drug crops,
water pollution, and corporate dumping. These unregulated policies cause great unrest between
the government and its people, adding to the already existent issues of drug and human
trafficking that have been looming over the country for decades.

Though the country may seem quite open to trade, it is important to understand its
economic policies and their influences. To start, Colombia is ranked as the 49​th​ economically
free country in the world as of 2019. Since June 2018, Colombia has 149 nontariff measures in
force, which according to the WTO is not acting as a major deterrent for investment. Though
some foreign investment in various sectors is subject to registration and concession agreements,
this certainly does not reflect in the fact that foreign investors may own 100% of financial
institutions. This shows various investors such as those working in Microfinance that it is quite
common and viable to invest in Colombia, especially in areas such as coffee farming, which
contributes $2.45 billion (8.1% of total) of Colombia’s 2019 exports.

These government policies encouraging investment make it possible for foreign investors
and business owners to work with Colombians in industries such as coffee farming. Though this
may be true coffee importers generally control the price of coffee as the price is said to be set in
large coffee consuming cities such as New York. Therefore, making U.S. monetary policy and
market decisions heavily impactful on the price and cost of coffee rather than Colombian
production costs. To add to this, external factors such as climate change, coffee leaf rust (fungi),
and black beetles help make coffee bean growing extremely difficult, driving costs higher. The
Colombian government has attempted to combat this inconsistency by subsidizing coffee
shipments of up to 30,000 pesos per 125kg when the domestic price per shipment drops below
715,000 pesos. Colombia has also challenged this issue during the UN General Assembly in
September 2019 by arguing for change and more supportive policies such as the lowering of
coffee import tariffs and duties of all trading partners.

Though Colombia’s openness and economic freedom may encourage foreign investment,
corruption also plays an important factor that limits many from investing capital. Though the
justice system exists independently from the executive, corruption, and bribery still persist. The
low-wage conditions for many Colombians are a major factor that contributes to low government
revenue as the total tax burden amounts to 19.9% of total domestic income. While this may be
true, the top income and corporate tax rates are 33%, a figure that would be considered low for
any country. The codependence of various government officials with drug traffickers has long
caused corruption in the country as reforms are slow to pass.

The lack of enforcement from the government has caused an unethical norm to persist
within the country for years, allowing for trafficking, territorial conflicts, and weak institutional
surveillance. Corruption has a detrimental impact on foreign market opportunities for Colombia
and this has been publicly addressed by President Santos when he signed the Anti-Corruption
Statute, allowing for the crackdown of such officials. In addition to this, the government is
attempting to discourage drug trafficking and promote other sectors of the economy by offering
subsidies to farmers who agree to shift away from growing coca, the primary ingredient of
cocaine. Though investment may seem risky, institutions such as BANCOLDEX, a foreign bank
try to encourage investors by providing funds for Colombians to use in order to produce and
export goods. They do this by providing discount loan rates to foreign importers of Colombian
goods.

Another major factor surrounding foreign investment is Colombia’s currency, the

Colombian peso which amounts to an exchange rate of .00030 USD. With a consistent inflation
rate of 3-4% yearly, it has been declining against the dollar rapidly, losing its value of 20% in
just one year (2019) against the dollar. The peso serves as a long-term liability and its people
agree as a large majority prefer the greenback and would rather use the dollar as adopted by its
neighbors, Ecuador, El Salvador, and Panama. The decisions of banks to deploy their liquidity
evenly within domestic and foreign markets have also contributed to its loss of power. In
conclusion, it is quite easy to exchange the Colombian peso for the U.S. dollar but it is not wise
to exchange dollars for pesos because of its risk of instability and redenomination.

Economic Development
Colombia’s current GDP sits at $352.81 Billion with a per capita GDP of $6,301.59,
positioning itself at 40th in world rankings according to World Population Review. However,
this past quarter Colombia had a GDP growth rate of 3.3% which marks its strongest growth rate
since 2015. This growth rate was largely driven by sparks in areas such as retail & wholesale
trade, finance/insurance, transportation/hotels/restaurants, manufacturing, and agriculture. Of the
sectors mentioned, finance & insurance had the largest growth rate of 8.2%, while agriculture
only had a growth rate of 2.6%. Agriculture also only contributes to 6.28% of Colombia’s most
recent reported GDP. The biggest players in Colombia’s trade production are its oil, coal, coffee,
and cut flower exports. In 2017, Colombia exported $2.7 Billion worth of coffee. This
dependence on commodities, that have little value-added, make Colombia’s economy risky due
to possible price fluctuations of these commodities. On top of this, Colombia’s economic
development is subject to inadequate infrastructure, poverty, and narcotrafficking. Regarding
trade, Colombia is the 55th largest export economy in the world, and its exports constitute
15.93% of its GDP. The biggest partner in this export economy is the United States.
In terms of unemployment, Colombia’s rate is at 10.5%, which is a rather large number
compared to the unemployment rate in the United States which is 3.6%. On average for
Colombians 24 and under, only one in four are employed. There are also minimal opportunities
for women in the workforce as the unemployment rate is 70% for women than men in 2019. A
large factor in this unemployment is Colombia’s mass displacement and consequent urbanization
at the beginning of the century which caused a major disparity in unemployment between the
country’s 13th largest cities and the countryside (Colombia Reports).
Economic mobility is the ability of someone to affect their income/wealth in an economy;
countries with advanced education systems are typically those with high economic mobility. One
of the biggest blocks to economic mobility is the wealth gaps that exist in many economies. In
the rural Colombian farmers’ case, the education system is far less substantial than many other
countries. A statistic shows that the average years of schooling of adults in Colombia is 5.3,
placing them at 62nd in the world. The average for the United States is 12 years. Based on this,
it’s evident that the education system in Colombia isn’t a source of economic mobility. This is
where microfinance plays an important role. The role of microfinance institutions is to provide
low-income individuals, such as those in Colombia (per their per capita GDP and unemployment
rate), with opportunities to become economically sustainable.
Colombia Reports explains that only 35% of the population actually has a bank account
and that the poor have no option but to seek loans from loan sharks. These loan sharks are illegal
creditors that charge very high-interest rates and often resort to violence if they aren’t paid back.
It’s also reported that many farmers who struggle to provide for themselves through the
cultivation of legal crops, opt to grow coca, the raw material for making Cocaine, ultimately
damaging the trajectory of Colombia’s economy. According to MFTransparancey, Colombia’s
microfinance sector is the largest in Latin America in terms of active borrowers served and total
outstanding gross loans disbursed. The reason why these rural coffee farmers would consider
zero interest microfinance loans is that it would provide them employment opportunities, as well
as protect them against the risk to their economic sustainability. An example of such a risk could
be severe weather implications that wipe out the farmers’ crops. Such insurance would inspire
more to enter the industry as well as giving them the financial means to do so.
Colombia’s GDP growth rate (which is the strongest growth rate since 2015) shows that
people are becoming more motivated/inspired to participate in their economy’s output. This
could definitely correlate to many more individuals, such as the rural Colombia farmers, to seek
out various microfinance institutions to kick start their production. One major microfinance
institution, Bancamia, charges 33% on its loans annually. Although this may seem relatively high
for an interest rate, it’s about average for microfinance institutions. The role that our
microfinance could play is providing these farmers with more options than pre-existing
microfinance institutions, giving them more flexibility.

Technological Infrastructure
With the peace treaty between the Colombian government and the Revolutionary Armed
Forces of Colombia (FARC) largely settled, many rebels could finally return to the small farms
they grew up on. The disappearance of fighting within the country has also led to a few small
developments for the Colombian rural farmers. As farmers are forced to contend with changing
weather patterns such as extreme droughts and floods they have often had to use data and models
created by Data Scientists to help fix their crop production. These models were particularly
important due to the poverty level at which the coffee farmers lived. One bad batch of crops one
year could cause the farmer’s family to become bankrupt and homeless. Being able to understand
when to grow and pick crops based on the weather conditions and patterns for the year was huge
for these Colombians. By having their crops analyzed as part of a larger community of rural
Colombia, these farmers had a better idea of how to better grow their crops in the changing
conditions.

Another interesting development in recent years for Colombians has been the increase in
internet connectivity. 3G covers nearly 90% of citizens and 4G quickly catching up with its own
66% of the country. This is great to hear, as having internet connectivity is a huge boon in
driving your own business (which farmers need to help cut out expensive middlemen). However,
this connection is not cheap. For $30 per month, you get a measly 30 Mbit landline in the capital
city Bogota. For the same price, a small town may only get 2 Mbit. So for farmers, this landline
internet connectivity really has meant much to them as of now. Focusing on mobile network
connectivity, there is a significantly larger uptick in usage. As Sebastian Erb notes in his article,
(​1 GB of data, for example, costs around $6.50. In comparison, the minimum wage in Colombia
is about $260 per month). This offers much cheaper access to the internet which is great for a
country with such great poverty.

Even with the developments the country has gone through in terms of mobile
infrastructure, it is still difficult for rural farmers to access said networks. Colombia’s geography
is an obstacle for any company, no matter its size as networks would have to travel through
sparsely populated mountains, plateaus, rainforests, and marshlands. For MNOs, the cost simply
isn’t worth it. And for politicians representing their constituents, they tend not to focus on the
farmers (tiny voter block and was a huge part of the FARCs longevity).

Due to mobile being the way for many Colombians to interact, Whatsapp has become the
best way for the citizens to communicate with one another. In fact, Erb notes that most MNOs
offer Whatsapp and Facebook for free, providing greater connectivity. This is great for the
farmers to communicate in their local regions to aid in the growth and care of their crops by
learning from one another through discussions. I think the prevalence of a standardized
communication tool will help bridge gaps between rural and urban areas of the country uniting
the two parts for a stronger economy of Colombia as now-connected parts work to create new
solutions and products.

There have been steps taken as recently as 2018 to push a new digital age across
Colombia. The government has been setting up network kiosks in the rural countryside to limited
success while also pushing for greater connectivity (nearly 98%!) in the past year. I’m confident
that within the next five years, Colombia will finally be able to create a large enough network to
include the farmers properly allowing them to have better resources to improve their economic
status. This is the very same reason we intend to work with the National Federation of Coffee
Growers of Colombia (FNC). The NGO was created to represent the best interests of the coffee
growers in international markets and economically within Colombia to ensure the farmers
increase their income levels and stay profitable.

One fascinating turn of events in the development and adoption of mobile phone usage
has been the ease of banking provided through such connectivity. Colombia has increasingly
recognized the power of financial tech software and its major banks are beginning to develop
their own software to cater to the people’s needs. This is fantastic for farmers to help digitize
their expenses and revenues to gain a better understanding of their own bottom line. It also
provides a secure way for the farmers to store their money, access loans, and lift them out of the
poverty levels quickly. One app, in particular, is Daviplata, created by the Davivienda bank,
allows its customers to quickly pay bills and receive international payments (something that
would greatly benefit the farmers with FNC).

Conclusion
Colombia continues to struggle with growth although in recent years it has caught some
sparks in finance and insurance as business boomed post-war. The battles with the FARC had
truly put a stop-gap in the government’s ability to invest in various sectors of its country but with
a new peace treaty, they can continue their campaign promises. One example is the expansion of
digital-related goals as the current government aims to encompass most if not all of the country
in 4G mobile in the next few years. The biggest concern in regards to this project is the obstacles
coffee farmers currently face in the economy. We saw in the demographics that employment is at
a very low 57% and more concerning was the stark divide in wealth between the rural farmers
and the urban population with 900,000 COP per year vs 1,095,100 COP per month for the urban
residents. This clear split in wealth creates unfair barriers for farmers trying to improve their
socio-economic conditions and sets them up for failure with upward mobility. The government
seems to be similar to the United States with decreasing concerns for corruption, painting a very
positive light for the future of the country and hopefully a future with a stronger interest in its
rural farmers as an avenue for growth.
The largest concerns for the coffee farmers as well as the country come from two areas:
trade and infrastructure. Colombia relies on a small select group of items for a vast majority of
its trade (including coffee) resulting in great sensitivity to price changes in coffee that farmers
cannot sustain in the long term. In terms of infrastructure, Colombia suffers from a lack of
connection between different regions as well as massive trafficking and poverty to recover from
as they move forward. This makes it difficult to support many industries at once, resulting in a
lack of assistance for the coffee farmers. We hope that through a variety of zero-interest
microloans and the work with FNC, we can provide better aid to these farmers to help develop
economic stability and improve their economic status.
Santa Clara University/SF Bay Area
Tinto Coffee is unique and will stimulate demand in the market of Santa Clara
undergraduates and faculty because Tinto is grown on small rural Colombian farms that use
sustainable farming practices. Colombian coffee farmers are a group suffering economically
from the effects of climate change on their farms. By purchasing Tinto coffee, consumers are
contributing to a greater effort to create a more sustainable and just world. Sustainability and
social justice are two of Santa Clara’s main initiatives as a Jesuit university and illustrate the
vocation of the business leader in action.

Demographics
The focus of our MIR is on two main customer groups- SCU students and commuting
faculty. Both of these groups are willing to pay higher prices for the convenience of easily
accessible, fast coffee. We would sell the coffee directly to distributors such as Whole Foods,
locally-owned coffee shops, Benson Marketplace, and SCU departments to put in staff lounges.
Santa Clara University has a total undergraduate population of 5,571 and a full-time
faculty population of 564. Undergraduate students, specifically those with school dining plans,
and full-time faculty are our main target groups. In regards to the full-time faculty population at
Santa Clara University, 43.9% are female. Of the faculty population, the percentage of females
that are non-tenured is 56%, and of tenured faculty, 37% are female. 75% of the student
population have an age range of 18-24. The current population of Santa Clara students are from
25 different countries and 43 different states. 73% of these students receive some form of
financial aid to help bear the burden of the $70,000 full-priced tuition at SCU. There is a near
50-50 split of male to female students that attend Santa Clara, and of SCU graduates, 87%
typically have secured a full-time job (if seeking for it) directly following graduation.
According to the bay area census, there were over 7 million people living in the bay area
in 2010. The total housing units in the bay area increased from 2,552,402 to 2,762,364 from the
year 2000 - 2010. That being said, the median value of owner-occupied housing units nearly
doubled during the same time period. The population that is able to afford housing in the bay
area has decreased as the middle-class gap (the 30th percentile to the 80th percentile) has risen
from $12,800 to $85,200 in the past 3 years. As the bay area housing market becomes
increasingly competitive, it is no surprise that it is one of the most densely populated urban areas
in the US. The housing market is so competitive that 120,000 people that work in the bay area
commute more than 3 hours every day to get to work. This population is known as “super
commuters”. While the majority of SCU faculty does not have a commute this extreme, many
faculty members do commute every day. Due to long days on campus with a commute on the
bookends of their days, free coffee provided by their department would be in high demand from
SCU faculty.
Socio-cultural Components of Culture
Santa Clara University–Santa Clara, CA
Language:
English and Spanish are the most spoken languages in the United States, as well as in California.
Within California and the Santa Clara community, there is a large representation of the two
languages, in addition to a variety of other languages and cultures. It is important for us to adjust
the packaging of our product so that it reaches a larger amount of people. We will package our
coffee with English text that also has a Spanish translation. We could also include a phrase or
saying in Spanish that is unique to Colombian culture.

National Culture and Distribution of Power/Wealth:

In the United States, the Power Distribution Index is 40, meaning that equality is viewed
as a right that everyone has and an ideal that everyone strives to achieve (Hofstede-Insights).
Within business, people are comfortable attempting to obtain more power and to also help those
below them. In addition to hard work, the concept of a strong work-life balance is something
that is of high value. By helping local farmers with the progression of their small businesses, we
could share our value of this balance, rather than one that focuses primarily on work.

A Culture’s Sense of Beauty and Good Taste:

Santa Clara University was founded upon Jesuit values, meaning that such values are
regarded highly and both taught and expressed throughout the university in every way possible.
A core value of the university is to work toward promoting service to others by building a more
humane, faith-filled, and sustainable world and to focus on the betterment of society. Students
and faculty have a commitment to social justice community engagement. It is essential that we
promote our product by catering to these values. We will focus on the fact that all proceeds of
coffee purchases will be sent back to local farmers in Colombia so that they can support their
families and eventually live comfortably.

Additionally, there are organizations at SCU that would support and promote our coffee
product. The Santa Clara Community Action Program (SCAAP) promotes social engagement
and awareness. Primarily, SCAAP gives students volunteer opportunities, allowing us to
delegate some opportunities for students to sell our product off-campus or educate students and
departments on campus about the social justice components of our product. Another
organization that would increase awareness of our product is the Office of Multicultural
Learning which also promotes social justice and aims to help underrepresented populations.
Through events, the Multicultural Center can not only educate people, but it also has the
potential to sell/sample the product on campus. The support of these organizations adds value to
our product because they educate customers on the product's benefits and make the purchase
seem impactful. These organizations can also focus on the low imitability of our product, as the
coffee beans are unique to small farms in Colombia, varying in taste and difficult to replicate.

Government System & Stability

 The United States is a federal republic that consists of numerous unified states.
Businesses are regulated on a federal and state level and are taxed in the same manner. The
republic is separated into legislative, judicial, and executive branches. During the current
presidency of Donald Trump, the executive branch has had a large influence on international
trade and the restrictions associated with the U.S. 's imposed tariffs. While there exist numerous
tariffs on imports to the United States, it is important to more closely analyze the restrictions
surrounding the imports of coffee. While there are no limits on how much can be imported, the
FDA must be noticed prior to admission.

In addition to this, the U.S. Customs and Border Protection (CBP) must clear the imports
five days before the coffee arrives and an entry form must be filled out. Currently, most coffee
bean imports are duty-free, excluding syrup or sauce containing variants. In addition to meeting
the requirements for governmental procedures, there exists a few items that must be filled out.
These include a commercial invoice (listing the purchase price, tariff classification, and origin of
imports), a packaging list detailing the imports, a bill of lading in receipt form, and an arrival
notice from the U.S. agent of record. After meeting the requirements for the CBP and FDA for
assurance and testing, one needs to meet with the USDA for inspection of the product in order to
obtain a permit. After the requirements from these three agencies have been satisfied, one is able
to import coffee into the United States.

In regard to openness, the U.S. has no restrictions or tariffs on coffee from South
America as President Trump was just recently urged in late January to remove his imposed
tariffs on coffee in his trade war with the United Nations. Though these tariffs may affect
Americans importing coffee from Europe, it is beneficial for those importing elsewhere such as
from South America because rising prices will cause a market shift to coffee producers such as
the ones in Colombia. Though politics may be an influential factor in importing coffee, it does
not seem like corruption is a major factor in the U.S. as economic freedom is widely promoted
both in the U.S. as well as Santa Clara’s campus. This freedom is a major reason why
microfinance is promoted in Santa Clara University.

Though the United States may be open to trade coffee, it is important to address the
campus of Santa Clara University in order to analyze its openness to selling a product. If a
vendor wants to sell a product such as coffee on the campus, they must converse with the center
of student involvement and fill out all the necessary application forms to sell their product. It is
easier to sell the product in association with a club or student-run association in order to follow
guidelines with less regulation. The university has a system of processing a vendor’s request
after they submit all the necessary forms and are approved. The vendor will then be allowed to
sell the product at a tabled event on a specified date during a specified time slot. The institution
seems quite open to the idea as they attempt to motivate students to run their own businesses and
work together towards a common goal. Selling coffee on campus would be an easy process

Economic Development
In contrast to Colombia, the United States has a current GDP of $21.44 Trillion and a per
capita GDP of $​59,531.66, positioning itself as the leading economy of the world. The United
States had a growth rate of 2.1% which was largely influenced by net trade. In regards to coffee
imports, the United States imports the second most coffee beans in the world. This year the
forecast predicts the U.S. to import 26.2 million bags of coffee beans. Colombia is their
second-largest importer of coffee beans (22%), only slightly behind the leader of U.S. coffee
bean imports, Brazil (24%). This upcoming year, Colombia is also expected to import more as
they suffered a drought-related loss in the previous year which set them back in international
trade.
Everyone in the United States knows how big of a commodity coffee is. Having one of
the busiest economies in the world requires the caffeine-induced energy to sustain it. The same
goes for universities across the country. A study shows that 78% of college students in the
United States consume over the recommended daily dose of caffeine (200 mg). The study also
goes on to show that this leads to average monthly spending of $21.63 - $92.70 per month at
coffee shops such as Starbucks. At Santa Clara University it’s no different. All throughout
campus, you can see the demand for coffee as students trudge to their 8 am’s or crowd the cafes
throughout campus. Imported coffee from Colombia would be in demand for students/faculty
relative to existing coffee products since students don’t just want coffee, they want good coffee.
According to the SCU Dining Services, the coffee provided at the mission bakery and cafe is
Starbucks.
With the existing product market on campus being Starbucks, a brand that many people
are sworn to, it may appear to be difficult to penetrate. However, imported coffee from Colombia
that is marketed as such, will draw the eyes of many coffee-craving students who seek to spice
up their everyday coffee consumption. An additional marketing tactic could be to emphasize the
positive effect that their purchase of the imported coffee has. Demonstrating the provided
support to rural Colombian farmers would accomplish this. Although imported coffee may be
slightly more expensive, a large majority of students at SCU come from middle-class to
upper-middle-class families which allow them to have a greater purchasing power. Looking
forward, SCU admissions are increasing as the school looks to increase its undergraduate
population. With this population growth comes more coffee consumers, particularly those in the
middle to the upper-middle class who have a large budget to allocate towards coffee and other
commodities at the school. On top of this, meal points are a sunk-cost, and many students find
themselves looking for ways to get the most utility out of their unspent meal points. Paying for
more premium coffee would accomplish this as well as provide for a great cause.

Technological Infrastructure
In contrast to the technology available to the rural farmers of Colombia, Santa Clara
University (SCU) offers a plethora of technological infrastructures. First, comparing the
similarities between the two different regions, we both offer machine learning data for advanced
models. Using high-performance machines and computational devices, the students at the
university can easily calculate predictions in weather, sales, and other factors affecting the
farmers’ businesses. Following this line of discussion, we can also focus on the
high-performance machines that farmers would lack. These devices (whether macs, PCs, laptops,
etc) allow for more powerful and creative solutions than the farmers can rely on in their lower
levels of income.

Now focusing on internet speeds, SCU is far superior than anything Colombia offers.
Students access the WiFi for free with speeds at roughly 40 Mbits, nearly 10x faster than what is
offered in the urban areas of the country. Additionally, this WiFi works relatively uniform across
the entirety of campus ensuring a constant free connection no matter where you are in SCU. This
is something Colombia’s connectivity fails to offer as they hope to stay better connected in the
various regions. If a mobile network is ever needed in SCU, most if not all students have access
to a mobile network they can reliably connect to in case of emergencies.

Lastly, I wanted to address the tools offered to residents of SCU as a result of having
such a powerful internet connectivity. Much like Colombia used Whatsapp for a vast amount of
information, SCU members can use apps such as iMessage, Facebook Messenger, Whatsapp,
Gmail, and Advertisements to communicate with the student body. In fact, the large variety of
communication formats allows for a greater transfer of information between individuals and
groups. This helps the students and faculty of SCU better communicate and learn from one
another allowing for a better educational environment to thrive in. This same technology powers
the systems SCU runs on, such as the Benson order screens handling customer management,
Workday which manages employment, and Camino that helps handle grades and academic
information necessary for learning.

Overall, the technologies available to SCU far outstrip Colombia and offer a great
situation in which to sell our product: ​Tinto​. Whether its email campaigns, word-of-mouth
through social media, or even just advertising at the various cafes on campus, the university
offers our team a plethora of options to get consumers to get our product and in turn contribute to
the funding of the FNC. I believe that the social media aspect in particular will be very beneficial
when trying to sell our coffee to students and faculty on campus. Through promotional
advertisements (that can very easily be free!), we can quickly share the concept to all 5,571
students present on campus. For faculty, we can use Gmail to quickly communicate with them
and request their assistance in reaching our microloan goal for the project. Social media also
provides us a digital platform through which to sell our goods as users can also quickly buy it
online for shipping to their residence. In the end, I’m sure we’ll use a mix of the word-of-mouth,
social media campaigns, and Gmail contacts to help promote and sell ​Tinto​.
Conclusion
While farmers in Colombia made about $266 USD on average per year, US residents
have a significantly higher income. In fact, when focusing on students attending Santa Clara
University, that income average spikes sharply up. With a tuition cost of about $70,000, many
students pay more in 4 years than farmers would make in roughly 1,051 years. This provides us
with a promising target market to help the farmers as well. For a USD dollar amount that may
seem immaterial to us, it could create a huge impact on the Colombia farmers. SCU is also a
huge proponent of social justice in their community creating a ripe opportunity to exploit this
demand with our product allowing for a great market. The biggest concern with selling our
coffee at SCU would be the necessary legal tape to get over in order to be able to have our
products in the country and in this university. For positive notes, the US government has been
quite stable so there won’t be any very serious changes in trades and exports in the short-term
allowing us to focus on simply selling and exporting. Our last challenge would be the high
competition barrier that exists on campus with the bakeries and cafe’s relationship with
Starbucks. We imagine that it would be difficult to originally switch coffee roasts but our
exclusive Colombian roast can catch the eye of many students. We intend on using social media
and email campaigns to reach out to students and faculty and get them interested in the product.
This has proven successful for a variety of clubs on campus and we’re confident the same will
happen for us.
 Market Entry Strategy Analysis Report (MESA)

Introduction
In order to execute an effective transition of loans from ZIM to our Colombian
Coffee farmers, and a profitable introduction of Tinto to market, we have created a
market entry strategy analysis. This market entry strategy analysis discusses product
development, - how Tinto will be marketed and distributed - and loan and service
expansion, detailing the partnership between Fintrac and ZIM.
Our overall goal is to improve the lives of Colombian coffee farmers by supplying
them with the funds they need to overcome issues presented by climate change and
large competitors to become profitable, and then sell their product back to consumers at
Santa Clara University and the SF Bay area.
Our product is a sustainably sourced coffee beans from small family owned
farms in rural Colombia. With biodegradable packaging and use of environmentally
friendly farming practices, we are aiming to support sustainable farms, and brand
ourselves as a waste free business. The sustainable product along with benefiting the
struggling population of rural Colombian farmers, our product aligns with the value of
our main customer - Santa Clara University. As a Jesuit institution, Santa Clara prides
itself on educating leaders of conscience, competence, and compassion. As explained
in our MIR, SCU can demonstrate its values of creating a more just and sustainable
world by purchasing Tinto coffee beans for its staff break rooms and benson
marketplace.
Our previous research of the Santa Clara University and Bay area population
supports the marketing and price point we have chosen as the population of the bay
area and Santa Clara University as an institution generally has the means to spend
more on a product if it supports it is for a good cause. Our product will cater to
consumers that value sustainability, and global wealth inequality. Our product design
will convey these messages with pictures of the families that sourced the beans, and
their stories on the packaging. Additionally, our brand name “Tinto” - meaning “working
class coffee” in Colombia - further conveys the message that buying our coffee supports
struggling rural coffee farmers, and reinforces consumers that they can use the “power
of their pocket” to make a difference in struggling communities internationally.
We have chosen the partner Fintrac in order to achieve our financing goals
because of our shared values and initiatives, as well as its experience in agriculture in
developing countries. One of Fintrac’s initiatives is to focus on investing in people rather
than just products as they work to develop a close relationship with their clients, and
train them in sustainable farming practices so that their income generation will
perpetuate. Additionally, Fintrac focuses on sustainable farming practices, and food
security - two focuses of Santa Clara University’s mission as well as aligning with jesuit
values. Furthermore, Fintrac is an extremely credible consulting company that
specializes in agricultural solutions working to help solve poverty and world hunger.
Fintrac focuses specifically on increasing the competitiveness of smallholder farms -
perfect for our initiative of creating a coffee bean brand with an emphasis on the source
of the beans and the farm they were sourced from.

Marketing
Product Design
Our product design will be simple, yet personable. We want to keep our design
relatively simple as to not spend an excessive amount of money on packaging or
designers for our product. We want to draw consumers in with the personalized
packaging that tells the story of the producers of Tinto. Small coffee farmers are usually
owned by families; we want to use the idea of a family produced product in our
packaging. Our labels will be designed by children living in the villages where the
product is produced, and printed in the children’s own handwriting. Although we will let
the children create what they think fits their family’s product best, the label just include
the words “ Tinto - Working Colombian’s Coffee”. Tinto literally means “inky water”, and
is known as the coffee of the working class in Colombia. The idea of “working class
coffee” will become a part of our product’s tagline. Inside each of the packages, we will
include a biography of the family that produced the beans about their coffee farm, and
their description of the beans. Again, this will connect the consumer to the producers of
the beans, and show the social impact of the product, incentivising those that agree with
the message to purchase it.
Additionally, the packaging on our product will be minimal as to make it as waste
free as possible. Sustainability is a main initiative of all partners involved in this project,
so it is only fitting that Tinto is a sustainable product. The packaging will be 100%
compostable, and this will be stated on the label provided so that consumers are aware
that our product is both socially, and environmentally responsible.

Business Operations
Given that our product is coffee beans imported from Colombia, the “production”
of the product will be done by the rural coffee farmers that will be the heart of the
business operations. Agriculture is generally a straightforward industry, so the
operational concerns regarding the production of the coffee beans are relatively few.
One concern that could arise would be an issue of productivity regarding the harvesting
and maintenance of the coffee crops. However, it is likely that most farmers will be
devoted to harvesting and maintaining the crops as this is how they make a living.
Another possible concern, although less likely, are weather/climate concerns that could
damage the coffee crops, or provide difficulty in harvesting them. Failure to
produce/harvest the crops would be detrimental to the profitability of the business. The
only part(s) of our product that will be outsourced will be the coffee itself, as the rural
Colombian farmers will be responsible for the planting/harvesting of the coffee beans
before they are exported to the United States for packaging/branding. Once imported to
the United States, the coffee can then be packaged and branded before distributed to
consumers. The Bay Area and more specifically, San Jose, is home to numerous
commercial warehouses which could serve as possible locations for the storage of the
imported coffee both before and after it is branded to get ready for distribution to
consumers.
According to “Buy Organic Coffee,” the wholesale price of highest quality green
organic coffee of origin in Colombia will run around $7 per pound. We want to provide
our consumers with true Colombian coffee that also tastes great, so this is likely the
type of coffee that we will be importing. The website didn’t provide any specific farmers
who we could import from, but it did provide a location of where to find the best coffee in
Colombia. This location is Manizales, Colombia which has the perfect conditions for
coffee crops (a great way to avoid any operational concerns). Another piece of
information provided was the costs of air freight. It only provided the cost from Bogota to
Houston which is about $1.25 per pound. Using ratio analysis, given that Houston is
2,218 miles from Bogota and San Francisco (a likely air freight destination), is 3,796
miles from Bogota; the estimated cost per pound for air freight would be about $2.14.
This amounts to a total of $9.14 per pound of coffee after imports. With this information
we would most likely mark the price up to $15-20 per pound to make a profit and
eventually cover any overhead, as well as remain competitive in the imported coffee
industry. The quality of the coffee product will be promoted as organic, imported coffee
from Colombia which is generally better than basic coffee products found in coffee
shops around the United States. The extent of monitoring this quality is mainly making
sure that the coffee is truly organic and not subject to any imperfections which would
diminish the product’s genuineness. The brand will also promote the Colombian farmers
that grow them. This can be accomplished by emphasizing the origin of the coffee itself
on the packaging of the product that is sold to consumers. The knowledge of this origin
provided to consumers in our target market will result in higher sales as it’s a common
trend for consumers in the middle to upper-middle class to want to spend slightly more
money if it goes to a great cause.
Channels for Sales
Marketing Campaign
Our marketing campaign will be primarily centered on the Santa Clara University
campus, as well as on social media platforms. The campaign relies heavily on reaching SCU
students and staff directly, as they are the primary target markets for our product. In effect, we
will also be able to reach SCU parents and locals in the area in/surrounding campus.
We will sell our product on campus and create product awareness by tabling. We will
have free samples available for distribution in and outside of benson (near the library), as a
means of encouraging people to try the new coffee at the cafe. Additionally, flyers placed at
on-campus cafés and on the TV screens in benson will be an informational and effective form of
advertising. These flyers will play a large role in swaying students’ decisions while ordering
coffee. By designing the flyers with photos that are personal and specific to our product, such
as photos of the Colombian farmers and their farms, students will feel an emotional motive to
purchase this coffee rather than coffee from BonAppetit.
Social media will also play a huge role in increasing our product awareness and
promoting our prouduct’s mission, which is to improve the lives of small business farmers in
Colombia. Informational graphics as attachments in club emails and as posts on Instagram and
Facebook will be the quickest way to reach students. These posts will serve as encouragement
to seek out and purchase our product when students want coffee–either out of desire to help the
cause or out of curiosity.

Sample Flyer:
Channels for Sales
As previously mentioned, our channels for sales include Santa Clara University cafés,
and social media in addition to SCU Departments and campus organizations and local coffee
shops.
The campus on cafés include Benson’s Mission Café, the SCU Library’s Sunstream
Café, and the cafés in Lucas Hall, Guadalupe Hall, and Charney Hall. In order to partner with
these cafés, a potential compromise can be to allow a portion of sales to be given to the café,
while the majority of profit will be put aside for the Colombian farmers. Otherwise, with the
university’s support, all proceeds will be sent directly back to the farmers. We will also work
directly with the university to not only sell to teachers but also to different academic
departments. These departments can purchase our coffee for use in various offices and
kitchens in different buildings on campus, which as a result, may spark teachers’ interest in
purchasing packages of coffee for personal use. For example, the modern language
department may choose to support and purchase our product for disbursement to faculty in
Kenna Hall.
Within the Santa Clara University community, on-campus clubs and organizations will be
potential channels for sales. We will work with SCAAP, the Multicultural Center, and the
Student Government. These clubs can advertise our product in their newsletters by attaching
our social media graphics and saying where our coffee will be sold on campus. We can also
provide coffee samples at these organizations’ tabling sessions or on campus events as an
incentive for them to support our product and endorse its mission.
 Lastly, we will utilize local coffee shops as additional channels for sales. We can work
with these shops so that they can either brew our product at their cafes or keep our packages of
coffee out for sale on shelves– also potentially keeping a small portion of profits, if any. If these
cafés allow all proceeds to go towards our company, back to local farmers, these businesses
will receive good press in return by showing their support for sustainability. By expanding our
channels to off-campus locations, we will be able to reach people in the Santa Clara community
that do not go to SCU or spend time off campus.

Projected Sales
Our product’s projected sales will be based on the sales that the cafes on campus
currently [presumably] make from selling BonAppetit coffee, and estimated, in addition to sales
from local coffee shops.

If roughly 30-40 pounds of coffee are used per week,

30*$15 = $450/week for sales from one shop (use random site) note: 30 is just
our bean; doesn’t include other brands

If our coffee is sold at 5 cafes on campus, each selling a total of roughly 150 lbs per
week (30 pounds each, we can project sales of $2250/week.

$450/week * 5 cafes = $2,250/week for all cafes

Then, estimating one quarter’s worth of coffee to be 13 weeks, we will generate roughly
$29,250 in projected sales on campus.
13 weeks * $2,250/week on campus =​ $29,250

Since local coffee shops will more than likely sell more of their own brand coffees than
our Tinto Coffee, we can project less off-campus generated sales. Assuming we get 4
off-campus locations to sell our coffee, such as Starbucks, Peets, Academic Coffee, and
Voyager Craft Coffee Company, we can predict a low-end estimate of about half of our
on-campus generated sales [i.e. each of these coffee shops selling 10-20lbs of our coffee per
week]. If all four of these shops sell 15lbs of our coffee per week, for $15/lb, for 13 weeks, we
can project a quarter’s worth of off-campus sales as follows:
15lbs/week * $15/lb = $225/week per shop
4 shops * $225/week per shop = $900/week for 4 shops
$900/week for 4 shops * 13 weeks = ​$11,700 ​for 13 weeks

Totaling both on and off campus sales for a quarter, we can project sales to be $40,950.

$29,950 + $11,700 = ​$40,950 ​per quarter

$49,950/quarter * 3 quarters = ​$122,850 d

​ uring the school year
Constraints
Utilizing these channels for sales has some economic and socio-cultural constraints.
Our coffee must be priced at a fair price level compared to the Bon Appetit coffee, which is
currently sold at cafes on campus, and the coffees which are sold at local coffee shops. People
may be willing to pay a slight amount more than what they are used to paying in support of our
product’s mission, but they are unlikely to try something new if it is more expensive than their
usual coffee. In regards to socio-cultural restraints, there is always a chance that students may
not be interested in supporting our product’s cause. Although chances of gaining student
support is likely to be higher on a Jesuit campus, students often seek convenience and
affordability, so they may be uninterested in where their money is going. It may also be difficult
for our product to gain attention on social media other than via email. We can likely overcome
this constraint by promoting posts and following as many students as possible.

Conclusion
We will be selling the coffee bean sourced by the Colombian coffee farmers that we work
with back in the Bay Area, specifically at Santa Clara University (targeting students and faculty)
for $15-20 per lb. This is slightly above market price for coffee beans in the bay area, but we will
add value to our product as marketing it as sustainable, organic, and supportive to the
impoverished population of rural Colombian farmers. Our targeted market will be likely to
purchase our product, as students at SCU are taught Jesuit values, with some of these being
social justice and sustainability. Faculty at this university also promote these values. We will
promote our product via social media, emails, and tabling on campus. Our marketing will largely
focus on the social and environmental responsibility of our product, and how it connects to the
values associated with Santa Clara University. Through our marketing efforts, we will
emphasize our product’s mission to support small businesses and rural farmers in Colombia.
Our estimated sales per quarter at Santa Clara University, just from selling our coffee at five
campus cafes, is ​$29,250.
The agricultural production of the coffee beans will be outsourced to Colombia, but the
marketing, branding, packaging, sales, and storage of the product will all occur locally in San
Jose. Local coffee shops will also be used as distributors of our product in addition to Santa
Clara University. The coffee shops can serve as a marketing tool, as local coffee shops can use
our beans for their own coffee, and if people enjoy it, they are more likely to buy a pound of
beans to make the coffee at home. Our estimated sales in coffee shops in the same amount of
time as a SCU quarter is ​$11,700.
Combining sales from SCU and local coffee shops, we can project to make at least
$40,950 per quarter in sales. Therefore, we will make approximately $122,850 over three
quarters.
Loan and Service Expansion

Operative Partners
Identified Partners:
Fintrac Inc is a woman-owned and US-based consulting company that develops
agricultural solutions to end hunger and poverty. It does this by focusing on increasing
export sales through market linkages, increasing producer sales by responding to
market demand, and investing in rural infrastructure. In doing so, Fintrac is increasing
competitiveness in underdeveloped areas with high rates of crime and corruption. Since
2000, it has delivered training and assistance to nearly 2 million farmers and leverage
$2 billion in sales.

Potential Partners:
Tetra Tech Inc. is helping the Colombian government resolve land issues
regarding climate change in an effort to support peace and stability in the country. Tetra
is also working closely with the government to aid in the restitution of land rights to
victims of conflict through proper allocation of property rights. They are also working
closely with rural farmers to deliver resources for business growth and information
availability.
Chemonics International is improving the financial stability of rural farmers and
individuals in Colombia by making financial services more accessible, especially for
women and disadvantaged groups. The Rural Finance Initiative (RFI) will help banks
expand services to rural areas, provide grants to financial institutions to reach these
areas, and work with financial organizations to educate these marginalized people.

Fintrac SWOT Analysis:

Strengths:
Fintrac is very organized with laid out objectives in sectors such as food
analytics, gender education gap reduction, ethical agricultural practices and
technologies, and the integration of small and local farmers into the supply chain to help
meet demand. It is also extremely credible as it has existed for three decades and is
effective in making local service providers treat farming as a commercial enterprise.
Fintrac is able to deliver technical training in agriculture technologies that immensely
help lessen the technology gap between Colombia and more developed countries. With
SCU’s zero interest loans, Fintrac will be able to direct their funds and efforts in training
and development rather than operations and financing for equipment and crops.
Weaknesses:
 Fintrac boasts a large variety of ongoing campaigns and projects that spread the
company thin in terms of financial resources and human capital. If Fintrac is not able to
provide such microfinance loans to these farmers, they will most likely have a more
difficult time developing the necessary business knowledge useful in driving success.
Opportunities:
Fintrac has already expanded numerous projects worldwide. The only
opportunity available for them is to develop and expand a financial network of currency
(could be cryptic) for which its hundreds of projects in numerous countries could link
and conduct business together. Furthermore, the combined efforts of SCU and Fintrac
on providing zero interest loans could allure business interest from a few of the other
potential partners or even ZiM, developing a network of funding and business
infrastructure. This can potentially develop into cryptocurrency microfinancing
throughout Latin America, creating more opportunities for funding and growth.
Threats:
Political and economic instability in various countries could drain this partner of
their resources, hindering them from expanding or continuing their initiative. Also, these
political and economic instabilities can force Fintrac to pull out at any time as they may
see the market as extremely volatile and risky.

VRIO Analysis:
Value:
This resource of financial capital investment is valuable because it provides rural
farmers with the financial backing necessary to progress their businesses in a slow
economy where they can meet demand both domestically and abroad. The zero interest
aspect of this loan may prove extremely useful as they are able to invest this money
and grow their business without the high interest rate pressure from a bank that many
companies are unable to return.
Rarity:
Though it is not entirely proprietary, this initiative and project is quite unique in
that it is very rare for such institutions to invest capital abroad in third world countries to
aid in microfinancing businesses and more specifically local farmers. The rarity of such
zero interest loans is confined to companies such as Fintrac and lending from
institutions such as SCU, a powerful agent that many start-up companies are unable to
have, therefore hindering their success.
Imitability:
It is very difficult to imitate the operations of Fintrac as it is such a large scale
initiative spread throughout hundreds of countries that it would be nearly impossible to
imitate for any new entrant because it would require an immense amount of financial
capital.
Organization:
The company and its strategic plans set to meet their specific goals is very
organized as it is essential to carry out these microfinance operations in the most
optimal way possible to ensure that underprivileged countries and businesses receive
the adequate support they need to become competitive in global markets.

Joint Partnerships
Mutual Benefits/Incentives to Collaborate
There are many benefits to a collaboration between ZiM, and Fintrac - mainly
because of their similar goals and mission. Zim aims to find a “sustainable solution to
poverty” in order to create a unified world, both “socially and economically” (scu.edu).
By providing zero interest loans, ZiM gives entrepreneurs in the developing world a
chance at profits without digging them into a hole of debt from high interest rates. With
normal loans, new businesses are often drowned in a pool of debt that makes it nearly
impossible for them to every dig themselves out, and even harder for them to positively
impact their local economy. In addition to giving new business leaders in developing
nations a chance to make a profit, ZiM aims to empower them to fight against poverty.
By empowering business leaders in developing nations, ZiM hopes to find a
“sustainable ot poverty” by building the economy of these nations up rather than
financial handouts.
ZiM specifically takes on the greater vocation of the business leader - taking a
mission centered approach to business by giving out small loans to risky businesses
that traditionally banks would not want to hand out in fear of losing money. ZiM’s
mission centered approach sees the massive benefit that entrepreneurs gain from small
loans without interest rates. For the financial institution handing out the loan, it is a small
monetary value loan with a small return on investment, but for the recipients of the loan,
it provides the funds for a chance at a viable business.

General Jesuit Mission of Santa Clara University - The Customer

ZiM is connected to the larger institution - Santa Clara University Leavey School
of Business. The values of ZiM are therefore connected to the Jesuit values of Santa
Clara University. Additionally, SCU students and faculty are two of the major target
consumers of the Tinto Coffee bean product. The overarching Jesuit mission of SCU is
education of the “whole person”, to create leaders of competence, conscience, and
compassion. As this theme runs throughout students and faculty of the University - it is
fitting to educate the Santa Clara Community of the mission of ZiM, Fintrac, and Tinto
as a product in order to incentivise them to buy it over large conglomerate brand coffee
that largely has a shareholder focused view of doing business. By educating
consumers of ZiM’s mission centered way of doing business, Santa Clara University
affiliates may be willing to pay an increased price for coffee as it aligns with their Jesuit
mission
SCU as an institution should support the microfinancing project of students as
one of their missions is engaged learning - integrating “direct experience in the
classroom and the community” (scu.edu/aboutscu). ZiM is a student run organization
that directly applies the business concepts Leavey students learn in the classroom, and
Jesuit values they gain from the SCU community toward a projet that exemplifies the
vocation of the business leader. Another one of SCU’s goals stated in its online mission
statement is to promote a culture of service to “society in general and to its most
disadvantaged members” (scu.edu/aboutscu). Colombian coffee farmers that produce
Tinto are a prime example of this population. In order to carry out its own mission, and
what the institution is trying to teach its students, Santa Clara should purchase Tinto for
its break rooms, and Benson marketplace rather than a highly commercialized product
that goes to a large company focused mainly on profits rather than the struggling people
at the root of the product. The Tinto project could also be expanded to eventually
collaborate with SCU Global Fellows. The Global Fellows program could send a Santa
Clara Student to Colombia to work with the Tinto production, and bring the knowledge
they gained from learning about Tinto’s source back to ZiM to further improve allocation
of finances/see if a change needs to be made.

Partnering with Fintrac

Our main operative partner - Fintrac - not only shares similar goals to ZiM such
as creating a sustainable solution to poverty, but they also have the experience
necessary in the agriculture industry to successfully carry out this project. Overall goal
of Fintrac is to improve the lives of those working in small scale agriculture in
developing countries. Fintrac works specifically to find agricultural solutions to increase
“smallholder yield” and ultimately “fuel local economies and drastically improve
healthcare, education, and overall quality of life for entire communities”
(fintrac.com/whoweare). Fintrac’s core belief is that “sustainable food security is
inherently linked to income generation”, that instead of simply handing out money, it is
essential to train members of developing economies to produce the most profitable
product through sustainable practices (fintrac.com/whoweare). Training workers yields a
more profitable future, and thus increases the likelihood that ZiM is paid back in full.
ZiM and Fintrac would collaborate well together as their joint goals include
sustainability, and focusing on the people creating Tinto rather than just bringing the
end product to market. Fintrac and ZiM have the same overarching goals, so if resource
allocation and responsibilities of each institution are carefully laid out, the two financing
groups should be able to work well together to help uplift the economy of rural
Colombia. Fintrac values the relationship that is created between partners. They have
shown success in creating a successful partnership with international loan recipients in
the past - so this responsibility will be allocated to Fintrac. The company will help
facilitate the training of new farming practices, and oversee coffee farms in Colombia,
mainly via their international offices and employees. This will benefit ZIM as there will be
constant communication between financial institutions and loan recipients to track
progress, and make changes if necessary.
Furthermore, Fintrac will be especially useful to Colombian coffee farmers as
they are experienced in facilitating “natural resource management and weather
variability while reinforcing economically sound business practices” in their projects
(fintrac.com/whoweare).
Colombian coffee farmers are experiencing a weather variability issue, so Fintrac can
help them to find a profitable solution. Additionally, Fintrac has access to the tools and
knowledge that rural Colombian farmers would not otherwise have. The knowledge,
experience, and tools of Fintrac will provide rural coffee farmers with an abundance of
resources to help them better their farming practices and create a more profitable
business model using sustainable farming methods.

Allocating Finance, Agreement Contract, and Strategic Responsibilities

The overarching goal of the ZiM loan is to help farmers invest in new technology
that allows them to mass produce coffee despite climate change. Examples of this
include purchasing all natural fertilizer, and new sustainable farmer equipment to
increase productivity.
Subsidies will also be provided so that farmers do not have to shut down their small
farms due to the fear of not being able to feed their family that month because of a poor
coffee harvest.
The combination of these two financial resources try to alleviate the damages of climate
change for farmers, connecting to the environmental sustainability initiative of Santa
Clara, and social sustainability initiative of the Fintrac.
A contract between all parties (ZiM, Fintrac, and Coffee Farmers) will explicitly
lay out where the money of the loan will go and in what percentages in order to provide
financing guidance to the borrowers. Finances will be distributed in quarterly increments
so that if the money is not utilized effectively, the borrower can change their strategy
before a large loss occurs. A mentorship with Professionals associated with ZIM will be
available to borrowers in order to assist them with allocating finances. In order to hold
both parties accountable in the case of zero profit, losses will be split by all parties. The
partnership will be terminated in the case of a misallocation of money, failure of
borrower to generate profit after 3 years, or in the event of a breach of contract.​ ​Finally,
as ZIM is a student run group that gains its funds mostly through fundraising initiatives,
no legal action will be taken against Fintac or colombian coffee farmers in the case of a
fault.

Microfinance Loans and Services

Our main operating partner, FinTrac, has done an exceptional join in the various
countries they have worked in. However, when partnering with them to provide our
funds to rural farmers there are three main issues to recognize: the duration of FinTrac’s
project in Colombia, the thin spread of capital in the region, and the administrative
structures that FinTrac has to be such a large organization.

FinTrac’s Project in Colombia is expected to be from 2017 to 2021. This does

pose a small problem for us and for ZiM as we expected this new partnership to help
forge bonds for, potentially, the next decade. This expected timeline of essentially one
year is too short of a length for what we want to have as an ongoing, continuous
process. Introducing the situation where we need to buy the goods and be prepared to
sell and grow our business for the microfinance, a year is too short of a time period.
We’ll do our very best to sell the product but with such a small window of opportunity, it
may be better to reach out to smaller, more permanent, more affordable organizations.
However, there is a possibility of the project being renewed due its success in the
region removing our concerns in the first place. An alternative usage of the short
timeline could also be to work with FinTrac to connect with their partners and work with
those partners in the region in the future.

The organization is also spread quite thin as they focus on projects in at least five
countries. This multi-focus initiative by the company allows it to have great diversity in
problem-solving but comes with the added concern of having support and staff for every
country and creating varying partners for those countries. The one downside to this is
that it detracts from our main focus of the colombian farmers. However, this diverse
array of experience and problem solving may be just what we need in our efforts to
support the Colombian Farmers. Through their frameworks developed from years of
support, FinTrac is in a position to help us be more effective with our money by
connecting us to the best partners in the area. Lastly, FinTrac also has their own
microfinance structure and since they are familiar with how it operates, they can help us
set up our continual funds.

Administrative Structure:
 As for administrative structure, there are some interesting ideas at play. The first
is in regards to FinTrac. The cost of supporting staff and overhead in each country is
expensive and may lessen the impact our money has on our farmers. This makes our
loans weaker and net a lower payment back if we are required to help FinTrac with their
own funding. This is expensive and may require us to support them in their assistance
in connecting us with staff resulting in a more costly endeavour than anticipated.
However, as I mentioned earlier this helps us in terms of frameworks and processes in
working with the farmers (essential middleman in beginning) as we figure out more
effective tools and partners to use for our funds (if FinTrac ends the project in 2021).
Another idea we had was the creation of a ZiM scholarship to help fund a GlobalFellows
initiative to work on the partnership between the Coffee Farmer’s plus their groups and
us, as ZiM. This allows SCU students hands on experience in making an impact through
strategy and consulting while also pushing the vocation of the business leader by
applying their business skills for good social impact.

Overall, we also have to evaluate how effective the funding truly would be for the
farmers. I expect our funding to help exponentially develop farmer’s resources and
technology, allowing them to have better and bigger harvests generating more revenue
for their families. Having this sense of higher revenues and hopefully higher profits
provides relief for well-being and security for the farming communities. I believe working
with FinTrac yields more than just a connection to the farmers. In fact, working with
FinTrac allows for a cross-sectionality in terms of goals we reach: 1) Employment for
younger generation for the future of coffee, 2) Adapt the farmers to climate change, 3)
Empower women to have their own farms and businesses, 4) Allow farmers to achieve
prices to push them out of poverty. This makes for a very effective use of our funds and
can help inspire more demographics in the rural areas to step up.

Loans
Loan Definition:
Our group would sell Colombia coffee to raise money. This coffee would originate
from the colombian coffee farmers and sold in the United States. This money would be
provided as an 80-20 loan, where we would provide our money (making up 80% of the
loan) and FinTrac provides up the other 20%. We came upon this number as we will
have to rely on a lot of our money due to FinTrac’s other obligations. FinTrac has
dozens of projects so having us provide 80% of the loan is beneficial to support our
targeted groups. The loan would be provided specifically towards initiatives to develop
the farms and technology of coffee farmers in rural Colombia such as sensors and
robotic systems. It would also be used to help find premium prices offered by
international buyers to increase revenue, profit, and profit margins for our farmers to lift
them out of poverty and secure financial stability. Reiterating the point about agricultural
technology, we want to bring rural farmers to the 21st century in terms of farming
allowing them to achieve that financial stability by handling greater harvests than they
used to.

Loan Amounts:
We intend on providing loans in increments of $200 for every time they return the
zero-interest loan with a structure of $200 → $400 → $600 → $800 → $1000. This cost
structure allows us to begin with small amounts to gain confidence in the farmers'
handling and build our trust and relationship from there that we can create a cyclical
loaning system with them. The USD amounts we noted in the structure above would
equate to a Colombian Peso structure of about 703,532.97 → 1,407,065.93 →
2,110,598.90 → 2,814,131.87 → 3,517,664.83. This will be more than enough to
provide adequate resources and training funds for the farmers and the youth to be
ready for their harvests and future development. If they are able to return the amounts
we provide them with higher funds at a cap of $1000. If there are more advanced
needs, we can consider higher tiered loans as long as FinTrac verifies the project. We
are confident in this loaning structure as FinTrac is great at these projects and has a
few years of relevant experience

Service Definition:
FinTrac already has established infrastructure in the region as they work with
farmer groups, gov’t agencies, research institutions and banks. In fact, they work with
one of the biggest services we were interested in, the Coffee Quality Institute. This
organization provides a number of services including but not limited to:
● helped incorporate youth into coffee value chain process
● Increased Coffee Quality scores for students allowing the coffee to be sold at
more premium tiers
● Facilitate higher tier earnings with better processing

Service Cost:
In terms of Service Cost, FinTrac is a microfinance service consulting company
and as such makes money off their interest loans to farmers to help them develop. This
means they would have rather expensive loans for farmers potentially and this is
something to consider in our partnership with their company. We wouldn’t have
additional costs outside of what FinTrac may charge for their fees and as a small
microloan organization, we’re confident we can work with to help have small projects
where farmers’ do get zero-interest loans from ZiM.
Admin Cost:
We can work with FinTrac on the Colombia side of things and use their
established network to ensure the money reaches the right hands. FinTrac has also
already established communications with the rural farmers cutting out the need for an
expensive middleman allowing our dollars to stretch farther and more effectively. Due to
FinTrac’s extensive infrastructure and frameworks for the area, we don’t need much in
the way of admin except someone accountable for the project at ZiM. However, one
concern may be that due to such an infrastructure and framework there may be heavy
costs associated with that benefit which as we had mentioned in service costs, can
potentially lower or cancel to fund our mini-projects.

Conclusion
Between changing harvest patterns due to climate change in the Colombian
mountain regions, and widespread poverty in rural Colombia, it is imperative to provide
microfinance loans to Colombian coffee farmers through ZIM and Fintrac in order to
stimulate class mobility, and give coffee farmers a chance at an economically
sustainable lifestyle. Funds to retrain farmers in sustainable ways will benefit the overall
rural population and help create a promising future for the agriculture sector in
Colombia. Furthermore, Fintrac will stimulate initiative, as they have previous
experience in overcoming agriculture road bumps like weather variability and climate
change. Fintrac has the human resources, technology, tools and credibility to help
implement sustainable solutions to Colombian coffee farms. The goals of ZIM and
Fintrac will fuse to create a great partnership as they share values of sustainability, and
focus on investing in people (the farmers in this case), rather than simply focusing on
the end product.

With a detailed contract that illustrates a plan of action and allocation of

resources to specific initiatives, Fintrac and ZIM will be able to make substantial
economic and environmental change to rural Colombian region by developing a close
partnership with its major source of income generation - its coffee farmers.
‘
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