Airport and Ground Support Equipment in Peru: A Strategic Reference, 2007

Countries covered: Peru INTRODUCTION & METHODOLOGY What Does This Report Cover? The primary audience for this report is managers involved with the highest levels of the strategic planning process and consultants who help their clients with this task. The user will not only benefit from the hundreds of hours that went into the methodology and its application, but also from its alternative perspective on strategic planning relating to airport and ground support equipment in Peru. As the editor of this report, I am drawing on a methodology developed at INSEAD, an international business school (www.insead.edu). For any given industry or sector, including airport and ground support equipment, the methodology decomposes a country’s strategic potential along four key dimensions: (1) latent demand, (2) micro-accessibility, (3) proxy operating pro-forma financials, and (4) macro-accessibility. A country may have very high latent demand, yet have low accessibility, making it a less attractive market than many smaller potential countries having higher levels of accessibility. With this perspective, this report provides both a micro and a macro strategic profile of airport and ground support equipment in Peru. It does so by compiling published information that directly relates to latent demand and accessibility, either at the micro or macro level. The reader new to Peru can quickly understand where Peru fits into a firm’s strategic perspective. In Chapter 2, the report investigates latent demand and micro-accessibility for airport and ground support equipment in Peru. In Chapters 3 and 4, the report covers proxy operating pro-forma financials and macro-accessibility in Peru. Macro-accessibility is a general evaluation of investment and business conditions in Peru.

Additional Information

Product's ISBN number 0497823802. How to Strategically Evaluate Peru

Perhaps the most efficient way of evaluating Peru is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to airport and ground support equipment are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries

Demand/Market Potential Driven Firm





















Relative Accessibility



Accessibility/Supply Averse Firm























In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).

Latent Demand and Accessibility in Peru

This report provides a detailed overview of factors driving latent demand and accessibility for airport and ground support equipment in Peru. Latent demand is largely driven by economic fundamentals specific to airport and ground support equipment. This topic is discussed in Chapter 2 using work carried out in Peru on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for airport and ground support equipment in Peru. I use the term “micro” since the discussion is focused specifically on airport and ground support equipment.

Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Peru. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Peru. The numbers are only indicative of an average firm whose primary activity is in Peru. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Peru. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “airports, flying fields and airport terminal services”, as defined in Chapter 3. Again, while “airports, flying fields and airport terminal services” does not exactly equate to “airport and ground support equipment”, it nevertheless gives an indicator of how Peru compares to other countries for a proxy adjacent category along various dimensions.

Chapter 4 deals with macro-accessibility and covers factors that go beyond airport and ground support equipment. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Peru:
Openness to Trade in Peru
Openness to Direct Investment in Peru
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks

Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Peru. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Peru. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.

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