TABLE OF CONTENTS

PHYSICAL FORCES …………………………………………………........……... p. 3

ECONOMIC & SOCIOECONOMIC FORCES ...………………………...........… p. 4

SOCIOCULTURAL FORCES …………………………………………........…..... p. 5

COMPETITIVE & DISTRIBUTIVE FORCES …………………………...........… p. 6

MARKETING & MANAGEMENT ASSESSMENT …………………….........… p. 8

APPENDIX ……………………………………………………………........…….. p.9-11

BIBLIOGRAPHY …………………………………………………………............ p. 12

PHYSICAL FORCES

Location: Next door neighbor to the huge market that will be created under the North American Free Trade Agreement: Mexico, United States, Canada (with 360 million consumers), and member of the Central American market (with 30 million consumers). This geographic proximity substantially lowers time and costs of communications and transportation and makes a "quick response " framework possible.
Political Relationship: Congressional, municipal, and first-round presidential elections took place on September 9, 2007. The final round of presidential elections took place on November 4, 2007. Inauguration for the new president and the new Congress took place on January 14, 2008. The next presidential elections are scheduled for September 2011. Common and violent crime, aggravated by a legacy of violence and vigilante justice, presents a serious challenge. Impunity remained a major problem, primarily because democratic institutions, including those responsible for the administration of justice, have developed only a limited capacity to cope with this legacy. Guatemala's judiciary is independent; however, it suffers from inefficiency, corruption, and intimidation.
Topography: The land is mostly mountains with narrow coastal plains and rolling limestone plateau.
Climate: tropical; hot, humid in lowlands; cooler in highlands. The country has a great variety of micro climates (over 300) and volcanic soil, allowing for year-round cultivation of a wide range of products, making agricultural production especially competitive in the winter markets of Europe and the United States.
Natural Resources: Guatemala has crude oil, nickel, rare woods, fish, chicle.

ECONOMIC & SOCIOECONOMIC FORCES

The economy is based on agriculture, which accounts for 25% of GDP, employs about 60% of the labor force, and supplies two-thirds of exports. Industry accounts for about 20% of GDP and 15% of the labor force. The economy has reentered a slow-growth phase, but is hampered by political uncertainty. In 1988 the economy grew by 3.7%, the third consecutive year of mild growth. Government economic reforms introduced since 1986 have stabilized exchange rates and have helped to stem inflationary pressures. The inflation rate has dropped from 36.9% in 1986 to 15% in 1989. GDP: $10.8 billion, per capita $1,185; real growth rate 1.3% (1989 est.)
Income: Guatemala wage information is based on a monthly basis; Q348/month for minimum wage with a required bonus of Q72/month which totals Q420/month. The money amount in US dollar equals (US$78/ month); they have three classes of workers.,
• Class A: Technical secondary school degree in specialized machine operations (such as lathes and pharmaceutical and milling machines). From US$7.50-10 per day;
• Class B: Non-technical secondary school studies: an expert in the area of work.: From US$5-6 per day
• Classes C and D: Assistant operator, with no experience and a maximum sixth grade education. From US$3-4 per day

LABOR FORCE: An abundant, young and stable labor force with wage rates that compete very

favorably with Mexico and other countries of the region. 2,500,000; 57.0% agriculture, 14.0% manufacturing, 13.0% services, 7.0% commerce, 4.0% construction, 3.0% transport, 0.8% utilities, 0.4% mining (1985).
POPULATION: The population of Guatemala is approximately 12,408,337. There are approximately 484 persons to every square kilometer of the country (1,253 persons per square mile), making Guatemala the second most densely populated nation in Central and South America.

SOCIOCULTURAL FORCES

Cultural Aspects: The national culture of Guatemala reflects strong Mayan and Spanish influences. The Mayan culture has remained as one of the largest cultures because of the people’s knowledge on sciences and astrology. Native crafts in a variety of forms are represented in colorful hand-woven textiles and costumes unique to individual communities. Religion: The majority of the Guatemalan population is Catholic (50% to 60%), 40% is Protestant and 1% follow the indigenous Mayan faith.
Education: Only 69.1% of the population aged 15 and over are literate, the lowest literacy rate in Central America. Although it has the lowest literacy rate, Guatemala is expected to change this within the next 10 years. These schools are free, though the cost of uniforms, books, supplies, and transportation makes them less accessible to the poorer segments of society and significant numbers of poor children do not attend school. Many middle and upper-class children go to private schools.
Attitudes and Beliefs: Many of the indigenous people believe in spirits of nature, especially of specific caves, mountains, and bodies of water, and their religious leaders regularly perform ceremonies connected with these sites.
Business Protocol: Consider enlisting the services of an interpreter if no one in your group speaks fluent Spanish, the official language. Many businesspeople speak English, but Spanish will be necessary in dealing with the government. To avoid offending, check with your Guatemalan business associates before bringing an interpreter to a business meeting. Wear a lightweight suit for men, a dress or skirt and blouse for women. It is illegal to wear military clothing or even bring it into the country. Arrive on time for meetings. Unlike many of their Latin American neighbors, Guatemalan business people are very punctual and will expect the same from you. Greet with a handshake, and it may please your host if you include a greeting of "mucho gusto," a proper salute. Make small talk before doing business, and keep to safe subjects, such as Guatemalan history, geography or culture. Speaking softly is considered polite. Use professional titles, such as "Doctor," "Professor," "Ingeniero" (engineer) or "Abogado" (lawyer), whenever appropriate. In the absence of a professional title, always use Mr., Mrs. or Miss, or Spanish equivalents Senor, Senora or Senorita, when addressing associates.
COMPETITIVE AND DISTRIBUTIVE FORCES

After the signing of the final peace accord in December 1996, Guatemala was well-positioned for rapid economic growth over the next several years, until a financial crisis in 1998 disrupted the course of improvement. The subsequent collapse of coffee prices left what was once the country's leading export sector in depression and had a severe impact on rural income. On a more positive note, Guatemala's macroeconomic management is sound, preserving stability and mitigating the slowdown in growth brought on by the global economic crisis in late 2008. While Guatemala’s foreign debt levels are modest, recent deficit spending and low tax collection have limited the space for further accumulation of debt. President Colom has continued programs initiated by prior governments to promote foreign investment, enhance competitiveness, and expand investment in the export and tourist sectors. These programs and the implementation of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) led to increases in foreign direct investment (FDI) inflows from $592 million in 2006 to $753 million in 2008. According to official projections, FDI inflows declined 25.8% in 2009 to $559 million as a result of the global economic crisis. Guatemala's economy is dominated by the private sector, which generates about 90% of GDP. Agriculture contributes 13.4% of GDP and accounts for 26% of exports. Most manufacturing is light assembly and food processing, geared to the domestic, U.S., and Central American markets. Over the past several years, tourism and exports of textiles, apparel, and nontraditional agricultural products such as winter vegetables, fruit, and cut flowers have boomed, while more traditional exports such as sugar, bananas, and coffee continue to represent a large share of the export market. The United States is the country's largest trading partner, providing 36.5% of Guatemala's imports and receiving 40.7% of its exports. The government's involvement is small, with its business activities limited to public utilities--some of which have been privatized--ports and airports, and several development-oriented financial institutions.
MARKETING AND MANAGEMENT ASSESSMENT

As Guatemala continues to increase the export of manufactured products, more industries are settling in the country to take advantage of the competitive edge that Guatemala has to offer.
They have incentive programs for investment and export with no limitations on foreign investment, foreign ownership by individuals or corporations, or restrictions on repatriation of capital. The Government of Guatemala has also taken steps to streamline procedures to encourage foreign investment by creating the "one stop investment window" to simplify the process of setting up a business in the country. Both the government and private sector are strong advocates of free market principles, and committed to attracting foreign investment and facilitating trade. Representatives from all state entities involved with forming a company are found at this office. Extensive air and sea routes, satellite and cellular telephone networks, a sophisticated financial sector with foreign representations, a strong and organized private sector, and active promotion abroad of commercial activity. The government is committed to lower tariffs and to eliminate the non-tariff trade barriers. A stable and sophisticated business environment with low inflation, low taxes, a stable currency, and a low incidence of litigation. With the approval of the North American Free Trade Agreement, Guatemala is now right next door to the world's largest economic block. The Government of Guatemala, anticipating passage of the agreement, initiated a series of reforms aimed at eliminating protectionism barriers. Signed an agreement establishing the Central American Economic Block. This agreement aligns the region's macroeconomic policies, reduces tariffs, promotes exports and helps to attract foreign investment. Additionally, Guatemala has signed agreements with international monetary institutions to strengthen government programs dealing with the Guatemalan economy and to carry out an economic modernization program. Private investment drives the Guatemalan economy. Investment prospects are especially promising in the textile and apparel sectors, non-traditional agricultural products, shrimp farming, and tourism. With the largest and fastest-growing GDP in Central America, at over 4% in 1993, Guatemala is firmly on the road to broadening its international markets and providing opportunities to worldwide investment. The United States remains Guatemala's major trading partner, providing 45% of Guatemalan imports. Guatemalan imports from the United States reached US$1,172 million in 1993. Although manufacturing continues to feature light industry geared towards domestic and Central American markets, exports to industrial countries of apparel, textiles and other items are growing by almost 30% a year.

APPENDIX

Table lists the overall "Ease of Doing Business" rank (out of 183 economies) and the rankings by each topic.

Ease of... Doing Business 2010 rank Doing Business 2009 rank Change in rank
Doing Business 110 117 +7
Starting a Business
156 147 -9
Dealing with Construction Permits
150 163 +13
Employing Workers
127 126 -1
Registering Property
24 25 +1
Getting Credit
4 27 +23
Protecting Investors
132 127 -5
Paying Taxes
108 133 +25
Trading Across Borders
119 119 0
Enforcing Contracts
103 106 +3
Closing a Business
93 93 0

Starting a Business
The challenges of launching a business are shown below. Included are: the number of steps entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and minimum capital required as a percentage of gross national income (GNI) per capita.
Indicator Guatemala Latin America & Caribbean OECD Average
Procedures (number) 11 9.5 5.7
Time (days) 29 61.7 13.0
Cost (% of income per capita) 45.4 36.4 4.7
Min. capital (% of income per capita) 23.5 2.9 15.5

Employing Workers
The difficulties that employers face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices.
Indicator Guatemala Latin America & Caribbean OECD Average
Difficulty of hiring index (0-100) 44 34.4 26.5
Rigidity of hours index (0-100) 40 21.2 30.1
Difficulty of redundancy index (0-100) 0 24.1 22.6
Rigidity of employment index (0-100) 28 26.6 26.4
Redundancy costs (weeks of salary) 101 53.0 26.6

Paying Taxes
The data below shows the tax that a medium-size company must pay or withhold in a given year, as well as measures of the administrative burden in paying taxes. These measures include the number of payments an entrepreneur must make; the number of hours spent preparing, filing, and paying; and the percentage of their profits they must pay in taxes.
Indicator Guatemala Latin America & Caribbean OECD Average
Payments (number per year) 24 33.2 12.8
Time (hours per year) 344 385.2 194.1
Profit tax (%) 25.9 20.4 16.8
Labor tax and contributions (%) 14.3 14.7 24.4
Other taxes (%) 0.7 13.2 3.3
Total tax rate (% profit) 40.9 48.3 44.5

TRADING ACROSS BORDERS

The costs and procedures involved in importing and exporting a standardized shipment of goods are detailed under this topic. Every official procedure involved is recorded - starting from the final contractual agreement between the two parties, and ending with the delivery of the goods.
Indicator Guatemala Latin America & Caribbean OECD Average
Documents to export (number) 10 6.8 4.3
Time to export (days) 17 18.6 10.5
Cost to export (US$ per container) 1,182 1,243.6 1,089.7
Documents to import (number) 10 7.3 4.9
Time to import (days) 17 20.9 11.0
Cost to import (US$ per container) 1,302 1,481.0 1,145.9

BIBLOGRAPHY

Doing Business in Guatemala, (2010). Retrieved from http://www.doingbusiness.org/exploreeconomies/?economyid=81 Guatemala - U.S. Department of State. Retrieved from http://www.state.gov/r/pa/ei/bgn/2045.htm http://en.wikipedia.org/wiki/Guatemala

How to Practice Business Etiquette in Guatemala. Retrieved from
How to Practice Business Etiquette in Guatemala | eHow.com http://www.ehow.com/how_2038678_practice-business-etiquette-guatemala.html#ixzz0yr9d2Uup