international expansion analysis 9 pages english

various economic factors including the GINI index, GDP per capita, country's exchange rate fluctuations as well as other characteristics in order to assess the extent to which it is desirable for Wellness Wave to enter Kazakhstani market space.

Wellness WaveK A Z A K H S T A N

FOREIGN MARKET OPPORTUNITYINTERNATIONAL EXPANSION ANALYSIS

The paper before you evaluates the extent to which it is opportune for Wellness Wave to expand internationally and introduce their products and services in Kazakhstan considering its level of environmental toxins and poor nutrition.

The research also aims to quantify the market in terms of age, income, and habitat considering

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Ecology of KazakhstanNuclear weapon testing, space launch site, general and industrial pollution, nutrition trends

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Kazakhstani MarketDemographics, household income, GINI coefficient, GDP per capita, exchange rate fluctuations

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Conclusion Evaluating the strategic importance of Kazakhstan to Wellness Wave considering its ecology and demographics

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WW International Expansion Spring 2014

Lorem Ipsum Dolor Spring 2016

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The paper before you evaluates the extent to which it is opportune for Wellness Wave to expand internationally and introduce their products and services in Kazakhstan considering its level of environmental toxins and poor nutrition.

DisclaimerI have taken great care and effort to rigorously analyse the Wellness Wave international expansion opportunity. However, given the limited timescale and poor data on income and demographics of Kazakhstan, as well as the comprehensive nature of this report, mistakes are inevitable. I therefore regret, that I cannot be held responsible for any loss that you may suffer as a result of any omissions or errors.

It is appropriate at this time to state that this is not a feasibility study of political-economical viability. The purpose of this research was merely to quantify the size of the potential market without paying any attention to the essential macro-environmental factors such as political, legislative and socio-cultural behaviours and characteristics and micro-environmental analysis such as the evaluation of the business model assumptions.

Please note that the existence of potential market does not necessitate that the international expansion would be commercially successful as it will require developing an effective way to enter the market. Please also note that the appropriateness of the market alone does not necessitate that the involved parties can benefit from it financially.


TABLE OF CONTENTS EXECUTIVE SUMMARY 2

Disclaimer 2

!ECOLOGY OF KAZAKHSTAN 3

Nuclear weapon testing facility 3

Kazakhstani space launch site 4

General pollution 4

Industrial pollution 4

Nutrition trends of Kazakhstan 5

!KAZAKHSTANI MARKET 6

Urban population statistics 6

Urban population age structure 7

Age-specific urban population’s income 7

Average wages of the urban population 7

GDP per capita 7

Gini coefficient 7

!CONCLUSION AND RECOMMENDATION 8

EXECUTIVE SUMMARY

The research also aims to quantify the market in terms of age, income, and habitat considering various economic factors including the GINI index, GDP per capita, country's exchange rate fluctuations as well as other characteristics in order to assess the extent to which it is desirable for Wellness Wave to enter Kazakhstani market space.


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ECOLOGY OF KAZAKHSTANNuclear weapon testing, space launch site, general and industrial pollution, nutrition trends

In this segment of the paper, I will evaluate the extent to which it is opportune for Wellness Wave to expand internationally and introduce their products and services in Kazakhstan considering its level of environmental toxins and poor nutrition — the primary causes of “silent inflammation” — as argued by Graham Simpson in his book, WellMan: Live Longer by Controlling Inflammation, published in 2009 by Basic Health.

It is appropriate at this time to note this is not a feasibility study of political-economical viability. The appropriateness of the market alone does not necessitate that the involved parties, namely the Wellness Wave and its Kazakhstani partners can benefit from the international expansion financially.


! Nuclear weapon testing facilities!!The Semipalatinsk Test Site (commonly

referred to as the STS) is the very first Soviet Union’s nuclear weapon testing facility. It is located in the northeast Kazakhstan nearby the Irtysh river (the sixth longest river in the world.) The STS had been one of the USSR largest primary venues for testing nuclear bombs since 1949. Throughout the 50 years of site operation, the Soviet Union had conducted the very first atomic and hydrogen bomb based tests. There were over 450 environmental testing varying from atmospheric, surface, and underground nuclear tests of low, medium and high power. The spectrum size of tests ranged from 22.4 kiloton to 400 kiloton (up to 30 times more powerful than Hiroshima).


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Atomic Testing is known to have significantly exposed the population to cytotoxic and carcinogenic material. There is also a direct environmental impact on the ecology of Kazakhstan, water supply, livestock and health demographics of around 200,000 local residents who subsequently suffered from cancer, thyroid abnormalities and other diseases induced by radiation exposure. This includes second – and third generation descendants.

The STS was not the only nuclear weapon testing venue in Kazakhstan. Galit (Caspian sea lowlands, northwest Kazakhstan), Lira (west Kazakhstan), Sai Utes (southwest Kazakhstan), and Kapustin Yar (partly situated in Russia and west Kazakhstan) sites had also been used for testing numerous nuclear and thermonuclear bombs.!! Kazakhstani space launch site!!

Baikonur is the world’s largest and oldest space launch facility that has been operating for nearly 60 years launching 1237 rockets and spacecrafts in the period from 1957 to 2001. It has incurred over 70 rocket- and spacecraft- related accidents including the Nedelin catastrophe, the most disastrous rocket crash in the history.

The detached first (usually the largest) and second stage rocket segments carrying a large amount of unused rocket fuel explode and shower Kazakhstan lands and water supply with toxic amyl and heptyl rocket fuel as well as other pieces of radioactive debris posing serious public health issues for local residents. Amyl fuel is a very toxic compound and can cause serious injury even with short term exposure. Furthermore heptyl is a cytotoxic compound and dangerous for the environment carrying a large impact on farming and livestock.

In the Ulytau region of Kazakhstan, 30 multistage rocket pieces fell back to Earth in 2000 alone. Every such piece may carry up to three

tonnes of unused toxic fuel. The above mentioned toxic elements are known to be carcinogenic. Such elements also cause cancer, stroke, chronic weakness, kidney and liver damage as well as other diseases. The life-expectancy in Ulytau is 15 years shorter than the average figure for Kazakhstan; 70. Infant mortality rate in the region is 40 per 1000, which is 2.2 fold higher than the country’s average. !

General pollution!!Almaty (Alma-Ata, Kazakhstan) is one of the

potential business locations for Wellness Wave. According to the Mercer Human Resource Consulting - the international consulting company - Almaty is ranked among the top ten most polluted cities in the world showing high levels of air pollution and poor quality of drinking water.

Almaty is the largest city of Kazakhstan with population of around 1.5m people with over 700,000 vehicles on roads, 80% of which are ten years or older and subject to poor maintenance. 90% of vehicles use gasoline that contains benzene, which is a carcinogenic and clastogenic, whose main method of absorption in to the body is via vapour. Although motor vehicle emissions account for most of the air pollution, thermal (coal) power plants and traditional biomass burning in the old parts of the city, as well as the rapid urbanisation are also worsening the environment.

Almaty is situated at the foot of the mountains trapping the smog over the city. The temperature inversion also traps the polluted air towards the ground.

!Industrial pollution!!

Kazakhstan is the world’s biggest uranium producer. It is one of the world’s top 10 producers and exporters of oil and gas, ferrous and non-ferrous metals and it also tops the CIS countries in the coal production per person.

Uranium, coal as well as oil and gas production is rich in NORM and TENORM

Overall, the ecological situation in Kazakhstan is quite problematic. High level of environmental toxins poses serious health concerns for the local population in terms of chronic diseases, overweight and obesity issues. (The two main causes of death in Kazakhstan are coronary heart disease and stroke.) Thus, it could be argued that the time is opportune for Wellness Wave to introduce its innovative services.


radionuclides such as U-238, Ra-226, Rn-220, Pb-210, Po-210 some of which may cause bone and other types of cancer, bone abnormalities, as well as other diseases. 60,5% of the total Kazakhstani uranium reserve is located in the Chu-Sarysu district of South Kazakhstan. Suzak Administrative area of the Chu-Sarysu district has the highest infant mortality rate of 75 per 1,000.

Kashagan field (Caspian Sea, West Kazakhstan) - the largest oil and gas reserve discovered in the past four decades - has a very high sulphur content of gas oil which results in serious environmental hazards for Atyrau city. The total oil pollution (including oil spills) cover an area of 2,000 squared kilometres of West Kazakhstan.

Caspian Mining and Metallurgical Plant influences the water supply quality of Aktau, a seaside city in the West Kazakhstan. The Mangyshlak Atomic Energy Combine — the world’s first fast-breeder nuclear reactor — was built near Aktau in mid-1970s.

!! Nutrition trends in Kazakhstan!!

Following the agricultural and industrial revolution, the population of Kazakhstan has adopted pro-inflammatory diets with an increased intake of processed grains and sugar and lower intake of vegetables and meat. However, fruits, vegetables, grain, dairy, egg, and

meat products are of a decent quality since there is no mass factory production as the agriculture of Kazakhstan is mostly formed by small private farms with low cost to public health and animal welfare.

However, the fast food industry is becoming increasingly popular in the major cities of Kazakhstan. The global fast food chains such as the Burger King and KFC import meat from the suppliers approved by each chain. The low-cost production influences the quality and healthiness of poultry and meat.

Airborne dust in mass factory farms contains waste matter, viruses, moulds, bacteria, bacterial toxins, discharges, skin debris, particulate matter and antibiotics. That coupled with the GMO corn, growth hormones and decreased ability of animals to resist disease due to animal crowding, CAFO hygiene, anti-sanitary conditions, poor temperature and ventilation control, stress, and injuries акщь debeaking, dehorning, tail amputation, and castration (all done without anaesthesia) influence the meat quality.

It is appropriate at this time to note this is not a feasibility study of political-economical viability. The appropriateness of the market alone does not necessitate that the involved parties, namely the Wellness Wave and its Kazakhstani partners can benefit from the international expansion financially.


KAZAKHSTANI MARKETDemographics, household income, GINI index, GDP per capita, exchange rate

Here I will attempt to quantify the market in terms of age, income, and habitat considering various economic factors including the GINI index, GDP per capita, country's exchange rate fluctuations as well as other characteristics in order to assess the extent to which it is desirable for Wellness Wave to enter Kazakhstani market space.

Please note that some of the findings in this section may not be an accurately portrayal of reality due to poor data for age and income statistics.

Please also note that the existence of potential market does not necessitate that the international expansion would be commercially successful as it will require developing an effective way to enter the market.

Urban population statistics!!Despite that Kazakhstan is the ninth largest

country in the world and is 2.2 times bigger than the whole of Western Europe, its total population - as of March, 2014 - is 17,165,239 (ranked #61) with population density as low as #227 worldwide.

As of September 2013, nearly half of the population (45%) live in rural parts of the country, leaving only 9,38m of urban population 37% of which is spread between Almaty (1.5m), Astana (0.82m), Shymkent (0.68m) and Karaganda (0.5m) cities. Most populated city of Kazakhstan is less than that of Manhattan in terms of the population size and the entire urban population of Kazakhstan is similar to that of New York City.

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Ilyas Mussin


Urban population age structure!!Kazakhstan has a very young populationwith

over 84% younger than 55 and the total median age of 29.5 years (with male median age of 28 years) as opposed to 37.2 in the US.

The younger population mostly resides in urban parts of the country with only 0.83m (8.9%) aged between 55-64 in cities such as Almaty (0.13m), Astana (0.07m), Shymkent (0.06m), and Karaganda (0.04m.)

!Income of the urban population

aged between 55-64!!Assuming 10% unemployment rate in the

above specified age group and salary over $1,800pm (8.4%, 4.2%, 4.1%, 0.4% in Atyrau, Almaty, Astana, and Karaganda respectively) it would narrow down the potential market to 4,971 in Almaty, 2,675 in Astana, and 1,462 in Atyrau.

There is no official information on how many people earn over $10,000pcm. It is said that only 2 to 3 highest-ranking corporate officers of the largest oil and gas companies in Kazakhstan used to earn $10,000pcm (not adjusted to pension and income taxes) before domestic currency 20% devaluation and now earn $8,000.

According to Forbes, out of fifty richest people of Kazakhstan only 14 people are aged 50 and over. These upper class businesspeople are very difficult to obtain and each of them would still account for a single person with income over $10,000pcm. Most of them prefer medical tourism in Germany, Israel, Italy, and other places that would match their status, as they perceive foreign (especially Western) medicine as more advanced and having more qualified personnel than that of Kazakhstan.

Furthermore, it is very difficult to efficiently target the wealthy people of Kazakhstan as they do not reside in one city but rather are spread out

all over the country due to the recent change of capital city from Almaty to Astana and increase in the oil and gas production in Atyrau city and Mangistau district. !

Average wages of the urban population!!According to Headhunter.kz, over one third

of the citizens that reside in cities earn between $333-$555pcm. Compared with the USA $4587pcm (OECD 2012) and Qatar (another potential market for Wellness Wave) — the world’s richest nation (IMF) — with $1,690pcm (CIA) including both nationals and expatriates.

!GDP per capita!!

Although somewhat controversial, the GDP per capita could be used to indicate the standards of living in a particular country.

According to World Bank, the GDP per capita of Kazakhstan ($13,672) is 7.5 and 4 times smaller than that of Qatar and the USA respectively. This in turn indicates a comparatively low standards of living.

!GINI coefficient!!

The GINI index for Kazakhstan is 28.6 (2010) with a global rank of 139 that shows that income distribution is fairly equal in Kazakhstan when compared to the USA and Qatar with income disparity of 40.8 (#62 worldwide, 2007) and 41.1 (#60 worldwide, 2000) respectively.

The lower the GINI coefficient the narrower the gap between rich and poor which in the case of Kazakhstan suggests a relatively equal distribution of poverty.

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Potential market opportunity analysis

Overall, the ecological situation in Kazakhstan is quite problematic. High level of environmental toxins poses serious health concerns for the local population in terms of chronic diseases, overweight and obesity issues. (The two main causes of death in Kazakhstan are coronary heart disease and stroke.) Thus, it could be argued that the time is opportune for Wellness Wave to introduce its innovative services.

CONCLUSION AND RECOMMENDATION

% of overweight adults Average % of overweight adults in central Asia (excl. Kazakhstan)

The diagram below compares the percentage of overweight adults in Tajikistan, Turkmenistan, Kyrgizstan, Uzbekistan, and Kazakhstan (in blue) against the average figure per region (in gold) excluding Kazakhstan and is based on the 2013 report from the Food and Agriculture Organisation of the United Nations.

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On the other side of the spectrum however, there is a very narrow market for Wellness Wave in Kazakhstan due to the small population size of only 17m people. Nearly half of the population live in rural parts of the country. The urban population is spread out all over the country in cities such as Almaty, Astana, Shymkent, Karaganda and other cities making it very difficult to efficiently obtain the potential target customers.

Most populated city of Kazakhstan is less than that of Manhattan in terms of the population size and the entire urban population of Kazakhstan is similar to that of New York City. Consider the demographics pie-chart below:

In addition to that, a low GINI index for the country suggests a relatively equal distribution of poverty. The number of people who earn more than $10,000pcm (adjusted for the Kazakhstani currency devaluation as well as the pension and income taxes) is a lot less than 500 people. The wealthy people are located in the South, North and West Kazakhstan. Consider the following age- and income- specific diagram for the urban population of Kazakhstan:

On the basis of the above information it can be said that Kazakhstan is not strategically important to Wellness Wave. Hence, it would be counter-productive to enter Kazakhstani market while simultaneously attempting to establish a customer base in the local market; the USA.

If however, WW and its Kazakhstani partners decide to proceed with the business proposal, a more extensive analysis will have to be made. Kazakhstan is a culturally-different market that requires a unique international expansion programme and further research covering various aspects, including but not limited to: vision evaluation, business model as well as price and promotion strategy development, technical and financial competency analysis of the Kazakhstani partners, competition and supplier analysis, macro-environmental analysis, as well as conducting a personnel search and various surveys to estimate the public awareness/misinformation of the product and its effects.

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international expansion analysis 9 pages english

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