YearoftheStrengtheningofNationalSovereignty

BUSINESS CASE
IMPLEMENTATION OF A CENTELSA SUBSIDIARY MARKETING COMPANY IN PERU

COURSE: BUSINESS ANALYSIS AND REQUIREMENTS

PROFESSOR: ARMANDO ARTURO MEJIA GONZALES

PRESENTED BY GROUP 5
Brayam Camayo Perez
Jorge Luis Medina Tello
MYNDI ROSA LEON BRIZUELA
Luis Carlos Valeriano Pereyra

WORK SUBMISSION DATE: 1/02

LIMA-PERU
2022–I

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1. EXECUTIVE SUMMARY

CENTELSA is a manufacturing company for energy and communication cables.

which has been part of the industry since 1955, a time when it has maintained its
leadership as the first cable manufacturer in Colombia
MISSION:
Satisfy the needs of our clients by designing, manufacturing, and marketing
power transmission cables, communications, and integrated solutions for
the sector, allowing us to generate value for our clients, shareholders, and collaborators
and other stakeholders; additionally promoting continuous improvement, innovation, values
corporate and ethical principles in a safe environment and in harmony with the surroundings.

VISION:
To be the leaders in the market for the manufacturing of electrical and communication cables,
being recognized in the energy sector and related fields for providing high-value solutions
added and due to the growth of exports in America, managing to become references
in the quality and innovation of our products, services, and human talent,
ensuring the profitability required by the shareholders.
TECHNOLOGY AT CENTELSA
CENTELSA has cutting-edge technology in all manufacturing processes.
tests of its products acquired over 60 years of experience, in which
they have established agreements and qualified technical assistance with several renowned firms
global technological leadership.

Leveraging our technological potential in research and development, we promote

creativity, we continuously work on innovation and productivity to be more
competitive by offering our customers new solutions to their needs.
EXPORTS
CENTELSA exports to countries belonging to the Andean Group, United States of
America, Brazil, Central America and the Caribbean, in addition to exploring other markets
highly competitive world markets like Europe and the East.

Our leadership in the Colombian and regional market has allowed us to focus on
international market with specialized products according to specifications
from each country. CENTELSA's exports contribute to the development of the
Colombian economy.

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Currently, Centelsa has a market share of 55% in Colombia.
consolidating as a leader, however, this figure has been declining in recent
years, due to the entry into the Colombian market of mega factories of origin
Italian, American, French, and Chinese. In the current market, there is nowhere else to grow.
this need for expansion leads us to reach out to the other neighboring countries to
gain a fixed market share, for which Centelsa has bet on
creation of subsidiaries in South America. For this particular business case, we will focus on
in the creation of a subsidiary in Peru that we will call 'Centelsa Peru'.
The business of Centelsa Peru will be the marketing of Low Voltage Electric Cables.
Medium and High voltage Copper and Aluminum, the same that in turn are classified
in the following way:
HALOGEN-FREE CABLES
CABLES BUILDING WIRE
Flexible Cables
MEDIUM VOLTAGE CABLES
BARE COPPER CABLES
Control and instrumentation cables
According to the results of the market study conducted, there is a great opportunity to
market all families of cables, in turn the halogen-free cables will be
the 'battle horse' since prices are very competitive compared to the leader of
market (-10% approx), accompanied by the product certifications and the
international certifications in accredited laboratories will ensure quality
product and this will compete directly against the market leader INDECO, whose
market share is approximately 65%, GENERAL CABLE 9%, CELSA 7%
MIGUELEZ 6%, other importers and local manufacturers share 13%.
The market entry strategy will be a lower entry price than that of the leader.
very competitive and a product of excellent quality endorsed by laboratories
recognized worldwide.
For the fulfillment of the strategy, distribution chains by sector will be created.
looking for business partners who are committed to the brand and have the infrastructure of
sales and finance to penetrate the market
Utilities Sector: Public Sector, strategic direct care clients: Fonafe,
Distriluz, Enel and Luz del Sur.
Epecistas Sector: Private Sector Construction, strategic clients for attention in
direct: SAN MARTIN, FLUOR, COBRA, INARCO, JE, ACCIONA, COSAPI, etc.
Distribution Sector: B2C Retail Distribution Channels - Promart
B2B distribution channels
Mining and Industry Sector: Attention to Projects in the Main Mining Units
Attention through B2B channels materials for annual mine maintenance

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 Operating Costs and Initial Investment

No. DETAIL CURRENCY PERIOD Total/month

LOGISTIC OPERATOR COST 120,000 SOLES MES 12 TIMES A YEAR 120,000 1,440,000
COSTS COMMERCIAL REPRESENTATION 20,000 SOLES MES 12 TIMES A YEAR 20,000 240,000
PAYROLL COST
1 Commercial Director 15,000 SOLES MES 15 salaries per year 18,750 225,000
4 SALES ENGINEER 6,000 SOLES MES 15 salaries per year 30,000 1,440,000
2 Commercial Assistant 2,500 SOLES MES 15 salaries per year 6,250 150,000
1 IMPORTS EXECUTIVE 3,000 SOLES MES 15 salaries per year 3,750 45,000
1 LOGISTICS EXECUTIVE 3,500 SOLES MES 15 SALARIES PER YEAR 4,375 52,500
1 LOGISTICS ASSISTANT 1,500 SOLES MES 15 salaries per year 1,875 22,500
OFFICE COST
ELECTRICITY AND WATER EXPENSES 600 SOLES MES 12 TIMES A YEAR 600 7,200
PRIVATE INTERNET CHANNEL 800 SOLES MES 12 TIMES A YEAR 800 9,600
LEGAL ADVICE 12,000 Soles MES 12 TIMES A YEAR 12,000 144,000
MIRAFLORES OFFICE 14,000 SOLES MES 12 TIMES A YEAR 14,000 168,000
232,400 3,943,800

INVERSION INITIAL MONTH 0

STOCK 3 MONTHS OF INVENTORY 12,000,000 SOLES
OFFICE - 6 MONTHS ADVANCE 56,000 SOLES
OFFICE - REAL ESTATE DESIGN - TEAMS 70,000 SOLES
MARKET STUDY 50,000 SOLES
LOGISTIC OPERATOR 120,000 SOLES
SHEET - BRAND SPECIFICATION 65,000 SOLES
12,361,000

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2. SITUATION ANALYSIS:
Centelsa meets the demands and standards of the Peruvian electricity market, such as the
related to energy cabling efficiency, for which it is seeking
diversify your sources of income by leveraging them in the administrative structure and
business operation of the distribution and marketing of cables at very low prices
competitive through channels.

SWOT Analysis:
According to the results obtained from the application of the analysis tools
The strategic factors mentioned are detailed below.
identified:
STRENGTHS OPPORTUNITIES
Human capital expert in technical issues Expand the distribution branch network and
and commercials related to the CORE marketing.
of the business and with a service culture to
client. Business opportunities through exploitation
miner.
Operational deployment capability
efficient for executing activities Greater reach and massification of networks
social and digital communication media
Sufficient economic support to offer as axes of participation and information for
financing athe clients, the users.
especially in product sales and
value-added services Allows rapid and effective communication with the
clients.
Good management indicators.
Increase the marketing coverage
Disposition to align with electrical cables.
Peruvian regulations and laws.
Gain a share of the Peruvian market.
Human talent committed to the
company.
WEAKNESSES THREATS
High competitiveness. In a situation of slowdown
economic decreases energy consumption
Structure organizational global in all customer segments.
multinational slows down the processes
administrative and operational Possibility of arrival of new
competitors with low-cost products.
Product Delivery Times, Factory
is in another country. End users do not accept a brand
unknown alternative to the existing ones.

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3. BUSINESS OBJECTIVE

The objective of the business is to meet the needs of the cable market.
electric solutions providing high quality solutions, allowing us to generate value to our
clients, business partners, and shareholders

Value Proposition to the customer:

Supply electrical cables that transmit energy

electric with high quality standards guaranteed by
the quality certificates and high experience in markets
similar ones, providing a very close after-sales service
and diligent to the customers.

Quantitative Benefits:

It is estimated to raise through the subsidiary, Annual Net Benefits of

4.75M soles and subsequent growth of 3 to 5% annually

It is expected to market special products for the mining market that

they generate better profitability than conventional cables from other markets
It is estimated at 2USD/KG.

Qualitative Benefits:

Brand Recognition
To be recognized in the market as an alternative brand with very high standards.
quality standards and very competitive prices.

Strategic Alliances
Be strategic partners for our Distributor chain by generating synergy,
to thus be one of the main brands managed by a Distributor

Brand Specification:

To mark a specified brand in future construction projects, in order to be able to

standardize projects that from their conception are attended by our chain
of distribution

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4. COST-BENEFIT ANALYSIS

ESTIMATED CASH FLOW – NPV AND IRR ANALYSIS

MONTH 0 ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC TOTAL
INCOME
INVERSION SALES 1,894,000 2,459,000 2,688,000 2,512,000 1,068,000 1,432,000 1,914,000 1,908,000 1,743,000 2,875,000 1,436,000 2,338,000 24,267,000
-12,361,000
EXPENSES
OPERATION 1,481,000 2,007,000 2,102,000 1,855,000 955,000 1,092,000 1,581,000 1,582,000 1,446,000 2,295,000 1,150,000 1,971,000 19,517,000
NET FLOW
CASH FLOW 413,000 452,000 586,000 657,000 113,000 340,000 333,000 326,000 297,000 580,000 286,000 367,000 4,750,000

VAN
I0 -12,361,000 per year 0
YEAR 1 4,750,000 4,318,182
YEAR 2 4,900,000 4,454,545
YEAR 3 5,050,000
YEAR 4 5,200,000
YEAR 5 5,350,000
I% o COK 0.10 10%

<0 VAN 6,674,507

< I% TIR % 29%
ROI % 104% 5 years

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5. MARKET STUDY

For the present market study, the company IMAGO was hired.

The requested IMPUT information was:

Customer Profile
Brands in the Local Market
Main Competitor Brands
Targeted Care Sectors (potential market)
Requested Objectives:
Know the market size in tons of consumers of electrical cables
Know the strengths and weaknesses of the competition
Current customer satisfaction with the brands they use
According to results from the market study conducted, IMAGO reported that the size
the current market for electric cables is 2000 tons/month, of which
we aim to cover 180 tons/month (9%)
There is a great opportunity to market all families of cables, in turn the
halogen-free cables will be the 'workhorse' since the prices are
very competitive versus the market leader (approximately -10% prices), accompanied by
product certifications and international certifications in laboratories
accredited will ensure the quality of the product and it will compete directly against
the market leader INDECO, whose market share is approximately 65%,
There are other brands in the current market such as: GENERAL CABLE 9%, CELSA
(9%), MIGUELEZ 6%, other importers and local manufacturers share 11%.

The report also mentioned that not all customers feel satisfied with the
product, since they believe that they are not of such good quality except for the leader of the
market.

Currently, the only manufacturer that has a consolidated supply chain with
distributors are Indeco, while the others serve any user
generating discontent among wholesalers and distributors.

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6. RISK ASSESSMENT

The following risks have been identified for the project:

Description Probability
of the Risk
Lower High Carry out a
Not having Executive continuous tracking
the inventory Imports since the beginning of the
inside of the request of
date inventory and report
planned of possible delays.
Not having Lower Medium Plan the
the staff Director hiring of
qualified for Commercial agreement to the
the beginning of the operational need
operations of the business.
Media High Constant
Role of Executive communication with the
Boats Imports customs agent
from Colombia to regarding the dates
Peru of departure and arrival
of the material.
Constant
communication with the
Contagion of Media High Executive shipping company and discard
Covid - Possible contagion imports to
Vessel interior that delays
the delivery of
material to enter
quarantine.
Specify brand in
Clients no the projects and give
accept it Media High Sales Engineer technical support
brand deliver certificates
of quality and
post-follow-up
sale.

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7. RECOMMENDATIONS

It is recommended to open a new branch in Lima, Peru, due to the decline.

from the revenues in recent years in Colombia, due to the income of mega factories of
Italian, French, and Chinese origin, which is why a market study was conducted in Peru.
which shows a favorable scenario for the company that will allow improvement
our entry and positioning in a new market.

It is recommended to make the investment according to the Financial analyses NPV, IRR, and ROI.

3. It is recommended that the strategy be based on creating Distribution chains to

attend to the different sectors.

8. SCHEDULE
The project will have the following phases to have a market opening within
of the next 3 months.

Phase 1: Conditioning of the branch

Milestone 1: Logistics Operator Service Contract - AGUNZA

Milestone 2: Rental and fitting out of the office
Milestone 3: Municipal permit processing
Milestone 4: Purchase of office equipment.

Phase 2: Organization Formation

Milestone 5: Structuring the areas of the company
Milestone 6: Hiring of staff
Milestone 7: Staff Training
Milestone 8: Installation and configuration of the company's systems
Milestone 9: Brand activation - brand.

Phase 3: Inventory
Milestone 10: Plan the inventory order
Milestone 11: Store and receive inventory.

9. SCOPE AND DEPENDENCIES

The scope of the project is the opening of a new branch of CENTELSA in Lima.
Peru, which generates new market opportunities in the marketing of cables
stop energy and communications.

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10. PROJECT ORGANIZATION

The project has the following hierarchical structure.

Director
Commercial

Sales Engineer
Sales Engineer Sales Engineer Sales Engineer Executive Executive
Mining and
Utilities EPC Distribution Imports Logistics
Industry

Assistant Assistant Assistant

Commercial 1 Commercial 2 Logistics

Commercial Director: He is the legal representative, whose main role is to ensure

compliance with the Sales Estimates, approve the proposed prices
by the sales engineer.

Sales Engineer: It is the commercial executive responsible for securing with the
clients the tons in sales. They prepare the commercial offer, receive the POs,
They confirm the POs with the logistics area and manage the after-sales service with the
clients.

Commercial Assistant: Back office of the Sales Engineer assigned in the process of
the sale and monitoring of Purchase Orders.

Import Executive: Responsible for overseeing the import tracking,

unloading of the materials sent by the Factory to Peru, as well as
inform and control any unforeseen event that delays the importation time.

Logistics Executive: Responsible for ensuring compliance with deliveries of the

orders to customers, invoicing and generating the guides

Logistics Assistant: Back office of the logistics executive in operations

attention and deliveries of the material to customers.

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