Wild Coyote Tequila Inc 1 Final

WildWild Coyote Tequila, Inc. Coyote Tequila, Inc.

Rinu VargheseRinu Varghese

Wild Coyote TequilaWild Coyote Tequila

• A) The country overviewA) The country overview

• B) The Culture B) The Culture

• C) The institutional frameworkC) The institutional framework

• D) The marketing strategy D) The marketing strategy

• E) Financial management E) Financial management

• F) F) The Management Scene

GeographyGeography

• Total area is 1,972,550 sq kmTotal area is 1,972,550 sq km • 2.5% water2.5% water • Boarder: Boarder:

– North: North: United StatesUnited States– Southeast: Southeast: Belize and GuatemalaBelize and Guatemala– East: Caribbean Sea & the Gulf of East: Caribbean Sea & the Gulf of

MexicoMexico– West & Southwest: Pacific Ocean West & Southwest: Pacific Ocean

• Climate: Tropical to desert Climate: Tropical to desert • Terrain: High, rugged mountains, Terrain: High, rugged mountains,

low coastal plains, high plateaus low coastal plains, high plateaus &deserts. &deserts.

• Majority of Mexicans live in the Majority of Mexicans live in the densely populated waist of the densely populated waist of the countrycountry

• The location of Mexico is The location of Mexico is convenient for businesses such convenient for businesses such as Wild Coyote Tequila for as Wild Coyote Tequila for export into the US. export into the US.

Mexican FactsMexican Facts

• Official language-Spanish Official language-Spanish – (millions speak indigenous languages southeast) (millions speak indigenous languages southeast)

• Currency-Peso. Currency-Peso. – (U.S. dollar is widely used in Mexico)(U.S. dollar is widely used in Mexico)

• Population- 108,700,000. Population- 108,700,000. • Age structure is composed of: Age structure is composed of:

– 30.6 % 0-14 years old30.6 % 0-14 years old– 63.6% 15-64 years old63.6% 15-64 years old– 5.8% 65 years and older5.8% 65 years and older

• Median age- 26 years oldMedian age- 26 years old• Life expectance rate-75 years old. Life expectance rate-75 years old. • Ethnicities- Mainly mixed Spanish and Indian descentEthnicities- Mainly mixed Spanish and Indian descent

– (30 percent are Indian)(30 percent are Indian)• Religion- Roman CatholicReligion- Roman Catholic• Literacy rate- 92% Literacy rate- 92%

Government & PoliticsGovernment & Politics

• Government: Federal RepublicGovernment: Federal Republic• Constitution Established: Feb 5, Constitution Established: Feb 5,

19171917• Levels of Government:Levels of Government:

– Federal UnionFederal Union– State governments State governments – Municipal governmentsMunicipal governments

• All officials at the three levels are All officials at the three levels are elected by voters. elected by voters.

• The capital of Mexico is Mexico The capital of Mexico is Mexico City City

• There are thirty-one states in the There are thirty-one states in the country country

• The voting age qualification in The voting age qualification in Mexico is 18years old. Mexico is 18years old.

• The federal government is constituted The federal government is constituted by the Powers of the Union, the three by the Powers of the Union, the three separate branches of government: separate branches of government: – 11) Executive- controlled by the ) Executive- controlled by the

President (chief of state and the head President (chief of state and the head of government)of government)

• Felipe Calderon is the current Felipe Calderon is the current president. president.

– 2) Legislative- bicameral 2) Legislative- bicameral Congress of the UnionCongress of the Union

• SenateSenate and a and a Chamber of DeputiesChamber of Deputies– 3) Judiciary - Supreme Court of Justice. 3) Judiciary - Supreme Court of Justice.

• Three major Three major political partiespolitical parties in Mexico in Mexico include:include:– PAN: the National Action Party (Partido PAN: the National Action Party (Partido

Acción Nacional). Acción Nacional). ConservativeConservative party. party. – PRI: the Institutional Revolutionary PRI: the Institutional Revolutionary

Party (Partido Revolucionario Party (Partido Revolucionario Institucional). CInstitucional). Centristentrist party. party.

– PRD: the Party of the Democratic PRD: the Party of the Democratic Revolution (Partido de la Revolución Revolution (Partido de la Revolución Democrática). Democrática). Left wingLeft wing party with party with socialistsocialist tendencies. tendencies.

EconomyEconomy• Mexico has a free market economy that recently entered the trillion Mexico has a free market economy that recently entered the trillion

dollar class. dollar class. • GDP per capita - $10, 600 GDP per capita - $10, 600

– Highest and fourth largest Highest and fourth largest Latin AmericaLatin America– 13th largest economy in the world 13th largest economy in the world – The income distribution remains highly unequal. The income distribution remains highly unequal.

• Recent administrations have made improvementsRecent administrations have made improvements• Influence of NAFTA and free trade agreements. Influence of NAFTA and free trade agreements. • Minerals- including silver, copper, sulfur, lead, and zincMinerals- including silver, copper, sulfur, lead, and zinc• Advanced technologyAdvanced technology• Huge workforce. Huge workforce. • It profits from its maquiladora border industry. It profits from its maquiladora border industry. • Main industries-food and beverages, tobacco, chemicals, iron and Main industries-food and beverages, tobacco, chemicals, iron and

steel. steel. • Staple agricultural items- corn, wheat, soybeans, rice; beef; wood Staple agricultural items- corn, wheat, soybeans, rice; beef; wood

products. products. • Major exports-manufactured goods, oil and oil products, silver, fruits, Major exports-manufactured goods, oil and oil products, silver, fruits,

vegetables. vegetables. • Mexico is one of the world's largest oilMexico is one of the world's largest oil• Agriculture remains an important employer. Agriculture remains an important employer. • Tourism in Mexico is a large industry, the third in importance. Tourism in Mexico is a large industry, the third in importance.

Transportation & Transportation & CommunicationCommunication

• The growth of Mexico’s trucking industry has put pressure The growth of Mexico’s trucking industry has put pressure on the government to improve the highway system. on the government to improve the highway system.

• Well-developed airline system.Well-developed airline system.• Long-standing urban transportation problems, especially in Long-standing urban transportation problems, especially in

the Federal District, are gridlock and air pollution. the Federal District, are gridlock and air pollution. – Modern, efficient bus and subway system in the capital, cars Modern, efficient bus and subway system in the capital, cars

remain the most popular form of transportation.remain the most popular form of transportation.• Business and governments experience adequate telephone Business and governments experience adequate telephone

serviceservice– Majority of the population is poorly served. Majority of the population is poorly served.

• Cellular subscribers outnumber fixed line subscribers at the Cellular subscribers outnumber fixed line subscribers at the moment.moment.

Social SystemSocial System

• Mexican society is sharply divided by income & educational level. Mexican society is sharply divided by income & educational level. • The principal division is between the wealthy, well-educated elite and the The principal division is between the wealthy, well-educated elite and the

urban and rural poor. urban and rural poor. • Agrarian reform has institutionalized much of the rural peasantry with Agrarian reform has institutionalized much of the rural peasantry with

limited opportunities for economic or social advancement. limited opportunities for economic or social advancement. • An increasing proportion of the rural population depends on day labor, An increasing proportion of the rural population depends on day labor,

often at less than minimum wages, for survival. often at less than minimum wages, for survival. • Large landholders form agricultural elite which control nearly half of the Large landholders form agricultural elite which control nearly half of the

income generated by agriculture. income generated by agriculture. • A rural middle class has evolved, but it represents only a small percentage A rural middle class has evolved, but it represents only a small percentage

of total agriculturalists.of total agriculturalists.• It is estimated that at least 40 percent of city dwellers have incomes below It is estimated that at least 40 percent of city dwellers have incomes below

the official poverty level, including a significant percentage of workers who the official poverty level, including a significant percentage of workers who are government employees. are government employees.

• In contrast, the relatively affluent middle and upper-income groups enjoy In contrast, the relatively affluent middle and upper-income groups enjoy the amenities of urban life and control most of the social, political, and the amenities of urban life and control most of the social, political, and economic activity of the country. Compared to the United States, Mexico’s economic activity of the country. Compared to the United States, Mexico’s middle class is relatively small.middle class is relatively small.

Mexico- Cultural BriefingMexico- Cultural Briefing

PopulationPopulation

• Estimated 107.5 million people in Estimated 107.5 million people in MexicoMexico

• 60% - Mestizo (mixture of Indian and 60% - Mestizo (mixture of Indian and european)european)

• 30 %- American Indian30 %- American Indian

• 9% - white9% - white

• 1% - other 1% - other

Religion in MexicoReligion in Mexico

• Roman Catholic Roman Catholic (89%)(89%)

• Protestant (6%) Protestant (6%)

• Other (5%)Other (5%)

* WORLD FACTBOOK 2002 * WORLD FACTBOOK 2002

LanguageLanguage

• Spanish is the official language Spanish is the official language spoken; however, there are over 50 spoken; however, there are over 50 other language spoken including other language spoken including English especially in the corporate English especially in the corporate world.world.

Do’sDo’s

• Learn SpanishLearn Spanish

• Stand close to each otherStand close to each other

• When doing business abroad, it is When doing business abroad, it is appreciated for you to give a small giftappreciated for you to give a small gift

• Use Senor or Senora plus family name Use Senor or Senora plus family name when addressing someonewhen addressing someone

• Get to know family before doing Get to know family before doing business business

StandardStandard

• Kissing is a standard greeting when any Kissing is a standard greeting when any type of relationship is establishedtype of relationship is established

• Mexicans are generally not on time, you Mexicans are generally not on time, you can expect them to be at least 1 hour can expect them to be at least 1 hour latelate

• Strong family bondStrong family bond

• Expect collective bargaining from touristExpect collective bargaining from tourist

Don’tDon’t

• Use the U.S.“OK” sign, Mexican view Use the U.S.“OK” sign, Mexican view this as something vulgarthis as something vulgar

• Back up when a Mexican gets close Back up when a Mexican gets close to youto you

• Use first name unless invited to do soUse first name unless invited to do so

• Make extended eye contact when Make extended eye contact when talkingtalking

The Institutional FrameworkThe Institutional Framework

Wild Coyote Tequila Wild Coyote Tequila

• Government Federal Republic Government Federal Republic

• BureaucracyBureaucracy- Many levels of government - Many levels of government and countless entities without justification. and countless entities without justification. There are many secretariats, commission There are many secretariats, commission agencies, and institutes often these group agencies, and institutes often these group duplicate work and are not results duplicate work and are not results orientated. Therefore there is a lot of red orientated. Therefore there is a lot of red tape that needs to be cut to get anything tape that needs to be cut to get anything accomplished when dealing with their accomplished when dealing with their governmentgovernment

The Institutional FrameworkThe Institutional Framework

• TariffsTariffs- Mexico is a part of NAFTA the North - Mexico is a part of NAFTA the North American Free Trade Act. This allows goods American Free Trade Act. This allows goods to move freely across the boards of Canada, to move freely across the boards of Canada, United States and Mexico that are produced United States and Mexico that are produced with in one of those national. All other with in one of those national. All other material is taxed according to the country material is taxed according to the country of origin. All imports and exports must go of origin. All imports and exports must go through customs before entering or leaving through customs before entering or leaving the nation thus ensuring that tax revenues the nation thus ensuring that tax revenues are collected and the local economy is are collected and the local economy is protected. protected.

Livingston International Livingston International

• Commercial Commercial Invoices Invoices

• Par Par

• Bonded Bonded warehouses warehouses

• NAFTA forms NAFTA forms

Revenue Mexico Revenu Mexico Customs and Excise Douanes et Accise

7. Country of Origin of Goods

ETA

11. No. of 13. Quantity

Pkgs (State Unit) 14. Unit Price

N bre de Quantite Prix unitaire

colis (Preciser l'unite)

Weight

1. Vendor (Name and Address)/Vandeur (Nom et adresse)

Wild Coyote Tequila Holding CO.

2. Date of Direct Shipment to Canada/Date d'expedition directe vers le Canada

3. Other References (Include Purchaser's Order No.)

Autres references (Include le n" de commande de I'acheteur

3005 5th AVE New York, NY

4. Consignee (Name and Address)/Destinataire (Nom et adresse)

Conditions de vente et modalites de paiement

(p. ex. vente, expedition en consignation, locaton de marchandises, etc.)

10. Currency of Settlement/Devises du paiement

USD

Net 30 Days

9. Condiitions of Sale and Terms of Payment

6. Country of Transhipment/Pays de transbordement

ENTER ORIGINS AGAINS ITEMS IN 12

SI L'EXPEDITION COMPRENO DES MARCHANDISES D ORI-

3005th AVE New York, NY 072111

UCT

Broker: Livingston

32oz tequila MX

Origin

et caracteristiques, p. ex. classe, qualite)

Sellling Price/Pric de vente

0

Designation des articles (Nature des colis, marques et numeros, description generale

IF SHIPMENT INCULDES GOODS OF DIFFERENT ORIGINS

GINES DIFFERENTES. PRECISER LEUR PROVENANCE EN 12

(i.e. Sale, Consignment Shipment, Leased Goods, etc.)

21.25

HS Code

9405999090

MEXICO CUSTOMS INVOICE

FACTURE DES DOUANES CANADIENNES

Description and Characteristics, i.e. Grade, Quality)

8. Transportation: Give Mode and Place of Direct Shipment to Canada

Transport: Preciser mode et point d'expedition directe vers le Canada

12. Specification of Commodities (Kind of Packages, Marks and Numbers, General

5. Purchaser's Name and Address (if other than Consignee)

Nom et adresse de l'acheteur (S'il differe du destinataire)

Wild Coyote Tequila

6.70

7.40

32.10

9.25

Wild Coyote Tequila Wild Coyote Tequila

• TaxationTaxation- The income tax rate on business - The income tax rate on business legal entity resident income earners legal entity resident income earners (companies and possibly individuals) is 35%(companies and possibly individuals) is 35% of of the net income. Additional reduction is the net income. Additional reduction is permitted if the legal entity is solely in the permitted if the legal entity is solely in the agriculture, livestock or fishing activities (50% agriculture, livestock or fishing activities (50% reduction), if it is in the preceding businesses reduction), if it is in the preceding businesses but also in the industrialization thereof or it but also in the industrialization thereof or it combines them, where the commercial or combines them, where the commercial or industrial activities do not exceed 50% of its industrial activities do not exceed 50% of its gross income, then it is permitted a 25% gross income, then it is permitted a 25% reduction.reduction.

Wild Coyote Tequila Wild Coyote Tequila

• Tequila Tequila

• 100% Blue Agave!100% Blue Agave!

• Agriculture product Agriculture product

Wild Coyote Tequila Wild Coyote Tequila

• CorruptionCorruption-Due the structure of the -Due the structure of the government Mexico is full of corruption. government Mexico is full of corruption. With all the red tape that is created by the With all the red tape that is created by the endless layers of government it make is endless layers of government it make is very easy for the corrupt to infiltrate very easy for the corrupt to infiltrate through the boarders and influence officials. through the boarders and influence officials. Mexico being a poorer country struggling to Mexico being a poorer country struggling to make advances in the world is being make advances in the world is being hindered by these criminals that pay off hindered by these criminals that pay off officials to look the other way while they officials to look the other way while they conduct their businessconduct their business

Wild Coyote Tequila Wild Coyote Tequila

• 9.5 percent of its 9.5 percent of its G.D.P. -- twice the G.D.P. -- twice the education budget education budget

• Foreign Corrupt Foreign Corrupt Policies Act (1977)Policies Act (1977)

Marketing strategyMarketing strategy

Rinu R VargheseRinu R Varghese

Wild Coyote TequilaWild Coyote Tequila

Company mission: Company mission:

CCreate and serve unique, colorful, great tasting, authentic 100% high end tequilareate and serve unique, colorful, great tasting, authentic 100% high end tequila Product description:Product description:

Tequila is made from 100% blue agave, a product of vast contrasts in geographic, climate Tequila is made from 100% blue agave, a product of vast contrasts in geographic, climate and social environments across the continents.and social environments across the continents.

We plan to differentiate ourselves from existing tequila market by using 100% blue agave.We plan to differentiate ourselves from existing tequila market by using 100% blue agave.

Location of our company:Location of our company: Our company is located in New York .Our company is located in New York .Famous for its nightlife and serving upscale quality drinks.Famous for its nightlife and serving upscale quality drinks.We sell them nation wide too.We sell them nation wide too.

MARKET ANALYSISMARKET ANALYSIS

SWOT ANALYSISSWOT ANALYSIS::• STRENGHTSSTRENGHTS• WEEKNESSWEEKNESS• OPPORTUNITYOPPORTUNITY• THREATSTHREATS

• Our company identified our target Our company identified our target market with the wants and needs of our market with the wants and needs of our customers.customers.

• It helped us to identify opportunities and It helped us to identify opportunities and plan strategies for marketing mixplan strategies for marketing mix

Market SegmentationMarket Segmentation

Target customers:Target customers:2 segments of our market2 segments of our market• 80% of our business is from professionals 80% of our business is from professionals

working in the area and college going students.working in the area and college going students.• On weekends: we have our business from city On weekends: we have our business from city

residents and tourists .residents and tourists .New York city is consolidated metropolitan New York city is consolidated metropolitan

statistical area consisting of 8 million statistical area consisting of 8 million people .Hence our marketing opportunities are people .Hence our marketing opportunities are diversediverse

JOINT VENTURE WITH MEXICOJOINT VENTURE WITH MEXICO

1.1. Leading tequila producer and has returned 100% Mexican control .Leading tequila producer and has returned 100% Mexican control .

2.2. They make the top selling ,super premium 100% blue agave tequila. They make the top selling ,super premium 100% blue agave tequila. Hence we obtain a high end wild coyote tequila.Hence we obtain a high end wild coyote tequila.

33.. We could improve our access toWe could improve our access to

• Financial resources Financial resources • New technologies and New customers New technologies and New customers

44.. Moderate investmentsModerate investments Reduced expenditure to riskReduced expenditure to risk

55.. When doing joint venture with leading existing firm in Mexico we When doing joint venture with leading existing firm in Mexico we could put our products and services in the the hands of 100s of could put our products and services in the the hands of 100s of customers without promoting themcustomers without promoting them

Market opportunitiesMarket opportunities

• Mexico Is the only exporter of tequila .Mexico Is the only exporter of tequila . • 80% of Mexico's tequila goes to U.S.A.80% of Mexico's tequila goes to U.S.A.

• Since 1986, Tequilas consumption in U.S has increased by 900% making it Since 1986, Tequilas consumption in U.S has increased by 900% making it the fastest growing spirit in U.S.A.the fastest growing spirit in U.S.A.

• The rapid growth of mixed population in U.S (American’s, African’s, The rapid growth of mixed population in U.S (American’s, African’s, Mexican’s, Indian’s) represents a great opportunity for our company to Mexican’s, Indian’s) represents a great opportunity for our company to target.target.

• Large amount of money entering the company has elevated the per capita Large amount of money entering the company has elevated the per capita income of Mexico.income of Mexico.

• Mexico has a good share of business in its economy, from Petroleum Mexico has a good share of business in its economy, from Petroleum (PEMEX), AEROMEXICO, MEXICANA, CFE (Federal Commission of Electricity), (PEMEX), AEROMEXICO, MEXICANA, CFE (Federal Commission of Electricity), CNA (National Water Commission), as well as many concessions like CNA (National Water Commission), as well as many concessions like TELEVISA, METRO, BOSQUE DE CHAPULTEPEC, TELEVISA, METRO, BOSQUE DE CHAPULTEPEC,

StrategicStrategic marketing plans (4 P)marketing plans (4 P)

• ProductProduct

• PromotionPromotion

• PricePrice

• Place Place

How do we promote Wild Coyote How do we promote Wild Coyote Tequila ?Tequila ?

Advertising:Advertising:

• Media, newspaper adds, air commercials on local radio stations, company Media, newspaper adds, air commercials on local radio stations, company websites .websites .

• We also obtain customers email address by coupon method where they can We also obtain customers email address by coupon method where they can voluntarily fill and win free bottle of tequilavoluntarily fill and win free bottle of tequila

• We also pass business cards.We also pass business cards.

Personal selling:Personal selling:

Our servers are the source of our personal selling.Our servers are the source of our personal selling.

Publicity:Publicity:News papers, televisions, and banners on subways ,trains and buses.News papers, televisions, and banners on subways ,trains and buses.

Sales promotions:Sales promotions:We promote sales with coupons available on our website for discounts on drinksWe promote sales with coupons available on our website for discounts on drinks

Price and distributionPrice and distribution

PRICEPRICE• Our prices are primarily cost based .Our prices are primarily cost based .• We take into consideration the cost of similar items in our competitors We take into consideration the cost of similar items in our competitors

market.market.• We price items to reflect our image, freshness and quality.We price items to reflect our image, freshness and quality.

Place and DistributionPlace and DistributionTequila from Mexico is exported to US by Livingstone Tequila from Mexico is exported to US by Livingstone brokers.brokers.

• North Americas most innovative and knowledgeable North Americas most innovative and knowledgeable brokerbroker

• Offers advanced technology to help manage our imports .Offers advanced technology to help manage our imports .• Helps in material management, inventory management, Helps in material management, inventory management,

and transportation managementand transportation management

Packaging and Grades Packaging and Grades

• We want to reflect the modern side of We want to reflect the modern side of Mexican design .Mexican design .

• We ensure that our brand is fully We ensure that our brand is fully controlled by Mexican governmentcontrolled by Mexican government

• We ensure that our production comply We ensure that our production comply with strict regulations set forth by CRT.with strict regulations set forth by CRT.

MARKETING PROMISEMARKETING PROMISE

• We promise to devour the freshest We promise to devour the freshest high quality tequila and provide the high quality tequila and provide the best memorable experience.best memorable experience.

Financial ManagementFinancial Management

Financial Environment Financial Environment In MexicoIn Mexico• Mexico Currency : Peso ( MXN, $)Mexico Currency : Peso ( MXN, $)• Exchange rate : Exchange rate : 1 US$ = 11 Mex$1 US$ = 11 Mex$• GDP (2006) : $1.134 trillion (13th) GDP (2006) : $1.134 trillion (13th) • Per Capita : $10,600 (64th), fourth largest per Per Capita : $10,600 (64th), fourth largest per

capital income in Latin America capital income in Latin America • Inflation rate (2006) : 3.4%.Inflation rate (2006) : 3.4%.• Average Growth Rate ( GDP) : 4.8 %Average Growth Rate ( GDP) : 4.8 %• Unemployment (2006) : 3.2 %Unemployment (2006) : 3.2 %• Labor force : 38.09 millionLabor force : 38.09 million• Trade Organization : NAFTA, WTO , OEC DTrade Organization : NAFTA, WTO , OEC D• Central Bank : Banco de MexicoCentral Bank : Banco de Mexico

Financial Environment Financial Environment In MexicoIn Mexico

• Reserves including gold : Reserves including gold : 85.01 85.01 billion USD (2006)billion USD (2006)

• Government budget : Government budget : 196.5 billion 196.5 billion USD (revenues)USD (revenues)

• Public debt : Public debt : 20.7% of GDP (2006)20.7% of GDP (2006)

• External debt : External debt : 178.3 billion USD 178.3 billion USD (2006)(2006)

• Bank funding rate : Bank funding rate : 7% (2/2007)7% (2/2007)

Financial Environment Financial Environment In Mexico In Mexico

• Mexico is firmly established as an upper middle-income country, but Mexico is firmly established as an upper middle-income country, but it still faces the problems like inequality in the distribution of wealth it still faces the problems like inequality in the distribution of wealth and Income and huge gaps between rich and poor, north and south, and Income and huge gaps between rich and poor, north and south, urban and ruralurban and rural..

• Mexico has a free market economy with a mixture of modern and Mexico has a free market economy with a mixture of modern and

outmoded industry and agriculture, increasingly dominated by the outmoded industry and agriculture, increasingly dominated by the private sector. private sector.

• Mexico has signed 12 trade agreements with 40 nations, out of which Mexico has signed 12 trade agreements with 40 nations, out of which 90% of its trade under free trade regulations.90% of its trade under free trade regulations.

• Mexico is highly dependent on exports to the U.S., which account for Mexico is highly dependent on exports to the U.S., which account for almost a quarter of the country’s GDP. almost a quarter of the country’s GDP.

• 90% of Mexico's exports go to the United States and Canada, and 90% of Mexico's exports go to the United States and Canada, and close to 55% from its imports come from these two countries.close to 55% from its imports come from these two countries.

Wild Coyote Tequila Wild Coyote Tequila Joint Venture vs. Foreign Direct Joint Venture vs. Foreign Direct InvestmentInvestment

• Foreign direct investment is more expensive way to Foreign direct investment is more expensive way to enter into international business than joint venture. enter into international business than joint venture.

• Joint Venture Joint Venture – Requires less capital Requires less capital – Provides economic of scaleProvides economic of scale– Low production CostLow production Cost– Saves time which is require for trade sanction Saves time which is require for trade sanction

and getting license etc. and getting license etc. – Low associated cost that is required to do Low associated cost that is required to do

business in foreign country.business in foreign country.

Wild Coyote Tequila Wild Coyote Tequila Financial factsFinancial facts

• Total capital requirement : 9 Million US Total capital requirement : 9 Million US $$– Financing by : Financing by :

•Bank loanBank loan : 5 million US $ from United : 5 million US $ from United commercial bank located at New York with the commercial bank located at New York with the interest rate of interest rate of 10%10% per annum. per annum.

• Partner’s capitalPartner’s capital• We prefer to take loan from US bank because it is more We prefer to take loan from US bank because it is more

beneficial for our company to take loan in US dollar and used beneficial for our company to take loan in US dollar and used the some part of loan in Mexico for financing our outsourcing the some part of loan in Mexico for financing our outsourcing activities. activities.

Directo a MexicoDirecto a Mexico

• We will decide to use "Directo a Mexico” a new We will decide to use "Directo a Mexico” a new program which is jointly publicized by The Federal program which is jointly publicized by The Federal Reserve Bank and Banco de Mexico, that will allow U.S. Reserve Bank and Banco de Mexico, that will allow U.S. commercial banks and financial institutions to transfer commercial banks and financial institutions to transfer money more easily to bank accounts in Mexico. money more easily to bank accounts in Mexico.

• "Directo a Mexico," the remittance program enables "Directo a Mexico," the remittance program enables U.S. commercial banks to make money transfers for U.S. commercial banks to make money transfers for Mexican workers through the Federal Reserve's own Mexican workers through the Federal Reserve's own automated clearinghouse, which is linked to Banco de automated clearinghouse, which is linked to Banco de Mexico, the Mexican central bank. Mexico, the Mexican central bank.

• By using this program, we can also avoid the problem By using this program, we can also avoid the problem of conversion of US $ in Mexican pesoof conversion of US $ in Mexican peso

Wild Coyote TequilaWild Coyote TequilaEstimated Income StatementEstimated Income StatementFor the year ended on 31st Dec, 2007For the year ended on 31st Dec, 2007

– In US Dollar In US Dollar

($) ($)

In thousandsIn thousands

In Mexican In Mexican PesoPeso

((Mex$)Mex$)

In thousands In thousands

1 US$ = 11 1 US$ = 11

PesoPeso Income from Sales Income from Sales 6,8006,800 7480074800

LessLess Manufacturing Manufacturing expenses expenses

3,0003,000 3,0003,000 33,00033,000 33,0033,0000

Gross MarginGross Margin 3,8003,800 41,8041,8000

LessLess Selling expenses Selling expenses 540540 5,9405,940

Administrative Administrative expenses expenses

1,9801,980 2,5202,520 21,780 21,780 27,7227,7200

Net operating Net operating incomeincome

1,2801,280 14,0814,0800

Wild Coyote TequilaWild Coyote TequilaFinancial factsFinancial facts

• In this Income statement, manufacturing expenses includes amount In this Income statement, manufacturing expenses includes amount payable to our co-venture company encompassing production costs, payable to our co-venture company encompassing production costs, (subset: plant costs, local salary costs, bonus pools and incidentals) (subset: plant costs, local salary costs, bonus pools and incidentals) salary of those employees which are migrated from US for taking care salary of those employees which are migrated from US for taking care of onsite production operation, cost of hiring the domestic of onsite production operation, cost of hiring the domestic representative and other outsourcing related expenses.representative and other outsourcing related expenses.

• Administrative expenses include the amount of interest paid on bank Administrative expenses include the amount of interest paid on bank loan to United Commercial Bank about $ 5,000,00 (5 million @ 10%) loan to United Commercial Bank about $ 5,000,00 (5 million @ 10%) per annum.per annum.

• The amount of net operating income is still the subject of exchange The amount of net operating income is still the subject of exchange adjustment (due to change in exchange rate).adjustment (due to change in exchange rate).

• We will create a reserve for exchange adjustment from this net We will create a reserve for exchange adjustment from this net operating income for future requirement.operating income for future requirement.

How a joint venture will affects How a joint venture will affects

company’s profit company’s profit

• Profit of Wild Coyote Tequila will increase because:Profit of Wild Coyote Tequila will increase because:

• It will allow the company to carry out business with low capital requirement. As a It will allow the company to carry out business with low capital requirement. As a result of this, the requirement of bank loan amount is also decreased and result of this, the requirement of bank loan amount is also decreased and company need to pay low interest on it.company need to pay low interest on it.

• Company can avoid import taxes because in this case, company manufactures its Company can avoid import taxes because in this case, company manufactures its product in Mexico that’s why not subject to any tariffs on importing its own product in Mexico that’s why not subject to any tariffs on importing its own product.product.

• Company can avoid associated cost that is required to do business in foreign Company can avoid associated cost that is required to do business in foreign country.country.

• It will also provide benefits of economic of scale, cheap labor by using existing It will also provide benefits of economic of scale, cheap labor by using existing manufacturing plant of our co- venture company. As a result of this production manufacturing plant of our co- venture company. As a result of this production cost is low. This will helps company to take competitive advantage in market by cost is low. This will helps company to take competitive advantage in market by selling high quality tequila at comparatively low price than our competitors. As a selling high quality tequila at comparatively low price than our competitors. As a result of this, increase in sales and profit of the company for considerable amount.result of this, increase in sales and profit of the company for considerable amount.

Joint VentureAvoid typical pitfalls in employee management

- cultural issues- religious issues- human resource issues, et al

Utilize existing management structure of hostcompany

U.S. Strategic Management Team sent to host company Comprised of:

- Legal Counsel- Quality Control- Comptroller

Management sceneManagement scene

The Management Scene continued

Profitability - Worked with host company management to

develop an incentive program to target two areas that we deem critical to our profitability:

A) Quality ControlB) Time to market – specifically production turnaround time

Conclusion Conclusion