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Published on March 8, 2014

Author: albert.macia


Business plan for Catalan SMEs 2013-16 Business opportunities in an independent Catalonia Grup d’Estudis del CCN. February 2013

Index 1. Objectives of the business plan for Catalan SMEs 2. Environment Analysis i. ii. Demographic iii. 3. 4. 5. 6. Economic (macro) Legal Consumer-Customers-Markets Differential social features Catalan State SWOT and Executive summary Annexes The authors let others remix, tweak, and build upon this work even for commercial purposes, as long as they credit authors and license their new creations under the identical terms. 2

Index 1. Objectives of the business plan for Catalan SMEs 2. Environment Analysis i. ii. Demographic iii. 3. 4. 5. 6. Economic (macro) Legal Consumer-Customers-Markets Differential social features Catalan State SWOT and Executive summary Annexes 3

Catalan SMEs should prepare for the new situation in the short term that means having an independent state  Failing to prepare is preparing to fail.  Is very necessary to include the probable scenario of an independent state in the three-years strategic plans.  Entrepreneurs know how to manage the environment changes and transitions to new scenarios. Now we have to count on a new Catalan State that will defend our economic and social fabric.  Those who spread the discourse of fear among employers are those who, in parallel, are preparing their own “Plan B” to be the only ones to benefit when the separation arrives.  The CCN provides information, support ans advice to guarantee that all Catalan SMEs thake this scenario into consideration in their future business plans. 4

This document is meant to be the working base to make the most of new opportunities and overcome the challenges that Catalonia will provide in the short term  Anticipate the independence scenario.  Be well prepared to make the most of the big economic opportunities the new Catalan state will provide.  Having enough knowledge base to counter the discourse of fear that surrounds small entrepreneurs.  Avoid the risk of paralysis caused by lobbyists who want to keep the people from deciding their social and economic future.  Have a business strategy in the medium term (3-5 years) and a short-term action plan (1-2 years) with the foreseen data and trends for the new scenario. 5

Index 1. Objectives of the business plan for Catalan SMEs 2. Environment Analysis i. ii. Demographic iii. 3. 4. 5. 6. Economic (macro) Legal Consumer-Customers-Markets Differential social features Catalan State SWOT and Executive summary Annexes 6

i. Analysis of the macroeconomic environment with an independent state         GDP growth forecast Exports and tourism Quantification of a Spanish trade boycott Generalitat’s deficit or surplus and Catalan state budget Debt and Public deficit Financial capacity Tax burden reduction Unemployment evolution 7

The annual Catalan GDP is set above the 200,000 million Euros per year and represents between 1.4%and 1.5% of European GDP Source: Idescat / Eurostat 8

The volume of Catalan GDP is comparable to that of other Western Europe states 360.000 320.000 280.000 240.000 200.000 160.000 120.000 2.000 2.001 Norway 2.002 2.003 Austria 2.004 Denmark 2.005 2.006 Catalonia 2.007 Greece 2.008 2.009 Finland 2.010 2.011 Portugal Source: Eurostat 9

The main industries that generate Catalonia’s GDP show a diversified economy 1 INDUSTRIES 2.000 2.001 2.002 2.003 2.004 2.005 2.006 2.007 2.008 2.009 2.010 2 Agriculture, forestry and fishing 1.942 2.176 2.006 1.893 1.858 1.786 2.235 2.153 2.048 2.136 1.959 31.331 33.295 33.616 34.425 36.235 36.630 38.360 40.021 40.283 35.793 36.888 29.087 30.832 30.927 31.533 33.022 32.944 34.490 35.841 35.504 30.582 31.549 Construction 10.996 12.493 13.778 15.063 16.876 19.463 22.309 23.596 24.338 23.201 21.139 Services 70.774 75.876 82.241 89.642 96.092 104.536 112.626 122.177 129.109 129.136 128.759 13.166 13.945 15.050 16.494 17.850 19.290 21.007 23.266 57.608 61.930 67.190 73.148 78.242 85.247 91.618 98.912 103.540 102.031 101.386 Industry 3 4 Manufacturing Industry PPAA, education, healthcare and social services Trade, hospitality, finances and other services VAB Net taxes over products GDP 25.569 27.105 27.373 115.042 123.841 131.641 141.023 151.061 162.417 175.529 187.948 195.777 190.267 188.745 11.238 11.868 12.853 14.488 16.461 18.790 20.940 20.258 17.176 13.862 16.810 126.281 135.708 144.494 155.511 167.522 181.205 196.470 208.205 212.954 204.128 205.555 Source: Idescat ( 10

The main component comes from the services sector, as in other advanced economies, representing 130,000 million Euros per year 4 2 3 1 Font: Idescat 11

The value of the agriculture sector GDP remains around 2.000 million Euros per year. Its weight in the overall GDP falls steadily 1 2.500 1,8% 1,6% 2.000 1,4% 1,2% 1.500 1,0% 0,8% 1.000 0,6% 0,4% 500 0,2% 0 0,0% 2000 2001 2002 2003 2004 2005 2006 2007 Agricultura, ramaderia, silvicultura i pesca 2008 2009 2010 2011 % PIB Font: Idescat 12

The value of the industry sector GDP remains around 40.000 million Euros per year and its weight in the overall GDP remains around 20% 2 45.000 30,0% 40.000 25,0% 35.000 30.000 20,0% 25.000 15,0% 20.000 15.000 10,0% 10.000 5,0% 5.000 0 0,0% 2000 2001 2002 2003 2004 2005 Indústria 2006 2007 2008 2009 2010 2011 % PIB Source: Idescat 13

The value of the services sector GDP is around 130.000 million Euros per year. It weight in the overall GDP has reached 63% in the last years 3 140.000 64,0% 120.000 62,0% 100.000 60,0% 80.000 58,0% 60.000 56,0% 40.000 54,0% 20.000 0 52,0% 2000 2001 2002 2003 Serveis 2004 2005 % PIB 2006 2007 Serveis 2008 2009 2010 2011 % PIB Source: Idescat 14

The value of the construction sector GDP is around 20.000 million Euros per year. It’s weight in the overall GDP is 10% 4 30.000 14,0% 12,0% 25.000 10,0% 20.000 8,0% 15.000 6,0% 10.000 4,0% 5.000 2,0% 0 0,0% 2000 2001 2002 2003 2004 Construcció 2005 2006 2007 2008 2009 2010 2011 % PIB Source : Idescat 15

Catalan entrepreneurs have the world as a market, because they know that Spain will be in recession for many years    Catalan exports have experienced a year growth for 30 consecutive months Catalan exports surpass the 55,185 M € in 2011, breaking the record of 2008 before the crisis The growth of exports in 2011 was 13.5%, higher than that of France, Germany or Netherlands 16

Tourism provides opportunities for additional growth in business, cultural and historical tourism          Barcelona, is ranked number 8 in the Top-25 global destinations. Prestigious names: Pau Casals, Antoni Gaudí... Olympic Games 92, Barça, Salvador Dalí, Picasso, Ferran Adrià, Manuel Castells, Andreu Mas-Colell, Xavier Sala i Martin, Juan Ignacio Cirac... Barcelona is ranked number 5 in Top European Cities and Catalonia is ranked number in Top European Regions Modernism, Romanesque, Gothic, Medieval towns, Renaissance Climate, geography, Mediterranean, quality of life, food, sports Catalan cuisine recognized worldwide Congress and Business Tourism (Mobile World Congress...) Medical Tourism Barcelona’s Port, leading destination for cruises, and airports 17

Catalonia can accommodate professionals and high income residents with their professional activities when combined in a balanced way what we have and what we will have   There are great opportunities if take advantage of what we have: o Our climate o Quality of life o Geographic positioning With a new State that reverses the trend of relocation o attractive research and development o advantages promoted by the Catalan Public Administration o growth in incomes and the economy Business to develop:  Create better public safety in Europe  Plan to learn 4 languages  Program to empower the history of Catalonia  Program to restore cultural and historical assets  Promote the brands 'Catalonia' and 'Excellence from Catalonia' 18

The Catalan economy has a level of openness to foreign trade and a balance of trade much higher than Spain Economy’s level of openness in 2011 (exports+imports over GDP) Catalunya Espanya sense Catalunya Payments balance in relation to GDP, year 2011 94,0% 43,0% Source: Eurostat, Idescat 19

The economic viability of the Catalan State has been confirmed by renowned economists Kenneth Rogoff Former head of the International Monetary Fund, Professor of Economics at Harvard “An independent Catalonia would be one of the richest countries in the world" James Mackintosh Editor of Investment s at the Financial Times “An independent Catalonia would have the highest GDP per capita within the Mediterranean countries” Santiago Niño-Becerra Professor of Economics at the Ramon Llull University " An independent Catalonia is economically viable" "Europe will tell Spain to not bother Catalonia" Oriol Amat Professor of Financial Economics and Accounting at Univ. Pompeu Fabra " Catalonia is viable as an independent country and what is not viable is the current relationship model with Spain " Source: El Periódico, Expansión, Ara, La Vanguardia 20

The economic viability of the Catalan State has been confirmed by renowned economists Enrico Spolaore Professor of Economics at the Universitat de Tufts (Massachusetts, Estats Units). Co-author with Alberto Alesina, of The Size of Nations (2003) «An independent Catalonia would be as economically viable as any other country» Gary Stanley Becker Nobel Prize in Economics in 1992. Member of the National Bureau of Economic Research and professor at the universities of Chicago and Columbia “The independence of Catalonia from the rest of Spain would not mean economic disaster for the Catalan region” Erling Kydland Nobel Prize in Economics in 2004. Professor at the University of California “If Catalonia were independent it would create the same level of confidence that has allowed Ireland to grow so dramatically in the last 20 years” Source:,, 21

Among others, because of the diversified and value Catalan model versus the Spanish centralized and speculative model  At an economic level, a Catalan independent state will be able to develop strategies based on our strengths and weaknesses.  The Catalan model, very diversified, with thousands of small and medium enterprises, is clearly different from the centralist Spanish model focused on financial, construction and public utilities multinationals  The two models have nothing in common, and so, considering that there’s only one state to manage these so different realities (besides other communities), and that the Spanish mentality is so centralist, it is clear that the limited resources of the Spanish state will be invested in those strategies that promote the Spanish model.  To promote the Catalan model is essential to have their own State. With an independent State we can further enhance the areas in which we still maintain European leadership (food, biomedical, pharmaceutical) and lead new hubs from technology start-ups that are created continuously, but often can not grow due to lack of funding and support. 22

The Spanish economic model is not sustainable and sinks, even having Catalonia within Spain       Catalonia, with just over 7 million inhabitants, has more than 600,000 companies. The distribution of these firms by sector shows a modern economy, with an important weight of the services sectors and a good presence of industry and technology. Regarding the size of Catalan companies, should be noted the importance of SMEs, representing 99% of the total number, with a very significant presence of autonomous. Obviously the weight of SMEs in GDP is lower (52.9%) than large companies, but is a real economic grid that maintains the country and creates jobs. This structure is not similar overall Spain. Spanish governments are clearly in favor of big multinational companies, especially in regulated industries, banking and construction, and those are the ones lobbying and exercising real pressure on the government. In recent years there has been a clear collusion between the Spanish government and these large companies, many of which are included in the lobby called the Puente Aereo Forum. We could say that these companies had not noticed the crisis, often through government aid, while the SMEs are clearly unassisted. But Bankia and Iberia have highlighted the inconsistency of some of these companies that had to conquer the world. They were a great illusion. “Cap on s’encamina Espanya”, CCN, febrer 2013 23

European states that have recently become independent have grown more than twice the average of the European Union GDP Growth European countries that became independent recently (Czech Republic, Slovakia, Croatia, Latvia, Slovenia, Estonia) European Union countries average Source: Eurostat “… A hores d’ara a Catalunya aquest és un tema ja força estudiat per gent competent. Per exemple, per Jacint Ros Hombravella a La viabilitat econòmica de la independència de Catalunya, per Modest Guinjoan i Xavier Quadras a Balanç econòmic de la independència o a Les raons econòmiques de la independència del Cercle Català de Negocis. Estudis que no amaguen els problemes que en un primer moment hi podria haver –com n’hi va haver a Finlàndia, a Estònia, a Eslovènia o a Àustria mateix quan es va desfer l’Imperi austrohongarès–, però que es podrien superar com s’han superat en aquests casos. Per cert, brillantment…” 24

S’ha calculat l’increment del PIB i el pressupost de la Generalitat de la Catalunya independent a través dels multiplicadors fiscals Impact on Generalitat’s budget Considerations  The elimination of the fiscal deficit will allow the Catalan Government to significantly increase their income during the early years of the Catalan State.  It has been considered that after 5 years the effects of the lack of fiscal deficit will loose their impact on the Catalan Government income.  At the same time there may be a Spanish trade boycott to certain Catalan products.  A boycott has been considered:  These two factors have been considered in the calculation of the Catalan Government's Budget, calculations based on two studies:  Year 1: High  Year 2: Moderate  Year 3 and later: Residual   “Macroeconomic effects of catalan fiscal deficit with the spanish state (2002-2010)”, Tremosa i Pons  “Sense Espanya”, Guinjoan i Cuadras  Given the current economic crisis it has been considered that a part of the additional income will be used for nonproductive items. The overall result of the absence of fiscal deficit and the boycott on the income of the Catalan Government are:  Year 1: 5,1% of additional income  Year 2: 7,3% of additional income  Year 3: 8,4% of additional income  The effect of the boycott in a reduction in the VAT collection has also been considered:  Year 1: 4,0 %  Year 2: 2,5%  Year 3: 1,0% 25

The GDP growth is given by the largest investment in infrastructure by the increase in domestic demand and the increase the budget of the Catalan Government Catalonia’s GDP (thousand million Euros) +5,3% +6,0% -0,5% +1,2% +3,1% +4,8% In the next four years of being an independent state, the Catalan GDP growth will average 2.25% per year within the forecast of the EU and OECD (0,9%-2,2%) Source:,, estudi CCN: “Els països petits son viables econòmicament”, “El pressupost del Estat Català 2013-2016” 26

The Catalan State would be the 4th country with the highest GDP per capita in Europe European countries GDP per càpita 2011 (100 = European average) Noruega 189 Suïssa 151 Holanda 131 Catalunya Estat 129 Àustria 129 Suècia 126 Dinamarca 125 Bèlgica 118 Findlàndia 116 Sources: Eurostat GDP per capita in PPS, Anàlisi CCN 27

Trade balance: estimates of the effects of a possible boycott to exports to Spain Consumer Products (a) 16,7% 34% Sales to Spain 60% 50% Max. Impact of Recovery the boycott on other markets sales * 10,2% Effect on Catalan GDP 13,3% 3,06% GDP Loss Capital goods (b)  (a) importance 1/3 x 0,5)=16,7% consumer products  (b) importance 2/3 x 0,2)=13,3% capital goods  * Maximum probability: 100% exports SP - (40% Multinationals in Catalunya) = 60% Source: Pol Antràs i Jaume Ventura. 28

Income corresponding to the Catalan economy would increase from the beginning of independence No hi ha risc d’exclusió econòmica Net Profit with an independent State  Average yearly plundering of CAT - 8,5 % GDP + 8,5 % GDP 40% population 20% businesses - 4 % GDP + 4,5 % GDP 30% population 15% businesses - 3 % GDP + 5,5 % GDP 20% population 10% businesses - 2 % GDP + 6,5 % GDP ¿Trade boycott? The study of Modest Guinjoan i Xavier Stables (Sense Espanya, Ed. Pòrtic), analyzes several historical examples and the structure of trade in raw materials, semi-finished and finished, based on the input-output tables of 2005 and concludes that in the case of maximum boycott, we'll recover more than 4.5% of Catalan GDP. 29

Boycott scenarios foresee a boycott of short duration and compensable by the Catalan State   Even a direct survey done on the Spanish population shows that a boycott for political issues would not in any case be followed by the majority, it would reach 20% of the population. Generalized boycotts are not feasible:     The origin of many products is unknown. Not all the products we offer have alternatives with a similar price and quality manufactured outside of Catalan territory. The relationship of the consumer of the final product and the one with the raw materials buyer are different. For the later, the profitability criteria are more important than political. In short, the possible boycott can be inconvenient, especially in some areas, but in general it should not be a problem greater than the direct benefits of achieving an independent State. In the medium term, indirect effects will be even more important and the effect of a possible boycott may be reduced up until practically disappearing. 30

The capacity and financial soundness of the Catalan Government makes us a leading country in Europe After 7 years without fiscal plundering, there would be no debt but a surplus of 84,968 MMEUR  Catalonia generates enough wealth to become a net contributor to the EU, reduce debt faster and provide services and infrastructure for its citizens, not being permanently blocked by Spain. Banc d’Espanya, A.Castells, Departament d’Economia i Finances de la Generalitat de Catalunya 7.11.2009 - Generalitat de Catalunya Ecomomia i Coneixement 31

The Catalan State will be able to reduce the current high tax burden, reducing the average rate of social contributions, income tax and corporation tax by 10% in 3 years Income from direct taxes (million Euros) 7 points reduction of average rate Heritage, inheritance and donations Corporation taxes 3 points reduction of average rate 5 points reduction of average rate 5 points reduction of average rate 5 points reduction of average rate 2,5 points reduction of average rate Source: CCN: “Pressupost del estat català 2013-16” Social security contributions 2,5 points reduction of average rate Income Tax 32

During the first years, the public deficit would be higher than the one set by the European Union (3%), but would rapidly fall to 1,4% by 2018 Public Deficit on GDP of Catalonia  The deficit increases in the first 2-3 years because taxes are reduced and pensions are increased (3% of GDP) Source: CCN: “Pressupost del estat català 2013-16” 33

Catalonia will have a debt level of 80%, below the European average (85%)  Evaluation and guarantee of the Catalan State may vary dramatically. Over 16,000 million euros of the fiscal deficit with Spain would be counted as income, the multipliers would have a positive effect on the economy, higher than the initial impact of the tax gain, it might even reduce the tax burden with the expected increase in consumption and investment, affecting the economy and employment levels, as well as allowing the improvement of social policies.  During the first years, the public deficit would be higher than the one set by the European Union (3%), but would rapidly fall to 1,4% by 2018. Source: CCN: “Pressupost del estat català 2013-16” 34

Catalonia has favorable indicators to get a pretty good credit, among AA and AAA, when it becomes a state     Catalonia has favorable indicators to get a pretty high credit. The initial classification of the Catalan state can be between AA and AAA. Countries with a AA/AA+ rate had (by 15th August 2012) an interest rate between 2% and 3,5% and and average 2,44%. So Catalonia could see its interests to be paid reduced from the current +6% (and 4% average) to near 2,5 - 3% Figure represents only the relative position from best (1) to worst in the considered group for each economic variable analyzed Source: CCN: “La ratio del deute sobirà de Catalunya” 35

With this level of debt and deficit, the risk premium of the Catalan state will be low (about 140 points), similar to Belgium Country Suïssa Japó Dinamarca Suècia Alemanya Finlàndia Regne Unit EUA Holanda Canadà Àustria Noruega França Rep. Txeca Bèlgica Catalunya Xina Austràlia Malaisia Nova Zelanda Polònia Itàlia Espanya Hongria Portugal Grècia Source: Rate Interest S&P AAA AAAAA AAA AAA AAA AAA AA+ AAA AAA AA+ AAA AA+ AAAA AA/AAA AAAAA A- Fitch AAA A+ AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA A+ AA AA/AAA A+ AAA A- Moody's Aaa Aa3 Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa A1 Aa3 Aa3 Aa3 Aaa A3 AA AA Aaa 3,684 ABBB+ BBB+ BB+ BB SD AABBB BB+ BB+ CCC A2 Baa2 Baa3 Ba1 Ba3 C Risk premium 5,014 5,804 6,704 7,454 9,954 24,564 0,634 0,854 1,284 1,514 1,534 1,644 1,674 1,804 1,834 1,924 1,974 2,094 2,144 2,464 2,614 2,750 3,374 3,394 3,484 CCN: “La ratio del deute sobirà de Catalunya” 36

The Catalan financial system will contribute to the economic recovery by reactivating credit through the Catalan central bank  The Catalan financial system now controls a 19:24% of deposits and 17:22% of loans in Spain and two of the most creditworthy banks with core capital of> 10% (CaixaBank and Sabadell) are Catalan.  The M-3 money mass fell by 5% on average. The recovery of the fiscal deficit authorizes the Government to design systems to stimulate the economy and revive the credit through the public banking to recover the money supply to generate growth after a fall in the consumption of 4 points.  The money supply is linked to production and consumption. Growing economic activity would increase the money supply, the proof is that the M3 Eurozone fell by 0.9% between 10/11-2012. 37

The change in income and expenses will lead to a positive primary balance adjusted by the economic cycle (a) Primary balance (austerity reached) income tax modified public spending  Positive comparison of Catalonia with other countries , adjusted by the cycle, the generation of GDP and the allocation of total income and expenditure from Catalonia with its own state with the information contained in the projection of the Catalan State budget Catalan. (a) The tax increase is not attributed to the tax burden. Is attributed to the elimination of the fiscal deficit caused by the tax forfeiture of Spain. Source: Fiscal Monitor october 2012 I.M.F. 38

This will result in a tax burden lower than 35%, among the lowest in Europe Tax burden over Catalonia’s GDP Source: CCN: “Pressupost del estat català 2013-16” 39

The unemployment rate for the Catalan State has been calculated using three different methods 1  Mathematical method Applying statistical methods for the significant variables, we obtained a statistical model By applying this model on data from Catalonia, we obtain the unemployment rate for the Catalan State  2   Statistical Method Through statistical analysis of data from the OECD, we have determined the variables that influence the unemployment rate in a country There is a direct mathematical relationship between government spending and GDP of a country  In the Catalan State, the absence of plundering will allow greater spending  Applying Pons and Tremosa’s method of autoregressive values ​(2002) in a Catalan State not suffering plundering, we get the unemployment rate  From unemployment in countries with similar magnitudes in Catalonia, we deduce which would be the unemployment rate for the Catalan State 3 Comparative method Font: CCN: “L’atur a la Catalunya estat” 40

Comparing the three methods used to estimate the unemployment rate in the Catalan State we conclude that it would be around 12% for the 2013-16 period Unemployment rate in the Catalan State Unemployment rate in Catalonia If we continue being in Spain the unemployment rate will be over 25% 41

In conclusion, the Catalan state is viable, prosperous, and will improve quality of life and competitiveness of Catalan companies  Catalonia, as a sovereign state, will be one of the most prosperous and solvent countries in Europe  The national debt of the Catalan state will be less than the average for the European Union and the risk premium will be similar to that of Belgium  The Catalan Government will multiply its revenue by 2.3  This revenue will allow:         Cover costs associated with the infrastructures of state Increase the budget for all departments Cover unforeseen as a possible trade boycott Reduce the tax burden Develop the necessary infrastructure for the country Supporting innovation and internationalization of Catalan companies Contribute funds to the European Union Guarantee the payment of pensions 42

ii. Analysis of the demographic environment with an independent state     Population growth rates Life Expectancy Population pyramid Emigration abroad 43

Catalonia is part of a large group of nations which range between 8 and 12 million inhabitants Catalonia has a population similar to that of Sweden and Switzerland, and higher than that of Denmark, Finland and Norway Between 60 and 80 million Between 35 and 40 million Between 15 and 20 million Between 8 and 12 million Between 5 and 6 million Between 1 and 3 million Up to 1 million Source: Eurostat 44

Catalonia's population is estimated to exceed 8 million by 2020 and to reach almost 9 million by 2040 Source: Institut d’Estadística de Catalunya 45

Catalonia's population has a younger age component than the Spanish one   The weight of the 20-39 years range is higher than the European average. The overall percentage of younger age gives Catalonia more time to make changes to public and private programs to ensure the future pensions of Catalan people. Sources: Dades 2011, Institut d’Estadística de Catalunya, Instituto Nacional de Estadística Español, Eurostat 46

The growth rate of the population of Catalonia is higher than in Spain. This difference is much clearer when we compare it with the one of the European Union  Younger age components and higher growth rates generate less cash tensions on the Catalan pensions system Sources: Institut d’Estadística de Catalunya, Instituto Nacional de Estadística Español, Eurostat 47

The growth of migration (around 150,000 inhabitants / year) has stopped in recent years because of the crisis. In recent years, the migration balance was almost neutral.  Only one out of three immigrants came from Europe, two-thirds come from far away continents.  In the last three years this distribution has been very stable. Europa UE Amèrica Europa no UE Àsia/Oceania Àfrica Source: Institut d’Estadística de Catalunya 48

iii. Analysis of the legislative environment with an independent state. Changes to be expected.      New political system Labor Fiscal Civil Immigration 49

The first statement of the Catalan state must restore our sovereignty and international subject  An Independence Declaration  A statement on the will to reinstate Catalonia’s sovereignty  A declaration of the will to consider Catalonia as an heir and successor of the Spanish State, and a continuator of its monetary sovereignty.  A declaration in favor of Peace, Rule of Law, Democracy and Human Rights, specifically referencing the Letter of Human Rights, the UE Letter of Fundamental Rights and the European Council agreement to protect national minorities, among others 50

The independence declaration must be public and formal and has to include a set of statements       A statement on the pro-European will, and the guarantee that European law will be applied in Catalonia. Accession to Helsinki’s Final Act (1975), the Nuclear NonProliferation Treaty, the Purposes and Principles in the Charter of the United Nations: Chapter I, among other law rules. A call in favor of Catalonia’s readmission in the International Community. The opening of a constituent process and the drafting and adoption of the Catalan Constitution by referendum in Catalonia, where among others, it will be defined:     State organizations. Territorial organization. Rights and duties of Catalan people Language status 51

The full legislative capacity will allow to achieve the overall objectives of Catalan society  Pass a law of legal transience    New legislation    Ensure the functioning of the State Ensure energy supply Adapt EU directives Adapt Spanish legislation Legislative adaption to our social and economic model:        Reduce unemployment to European levels : Lower from 24% to 11%. Increase opportunities for young people. Go from 47% to 20% youth unemployment Reaching an R & D between 2% and 3% of GDP Reach 20% of GDP in the industrial and energy sectors Attracting and retaining multinationals Promote patents in universities and business Simplify the process of business creation. Minimize procedures and time needed to start a business 52

It will be possible to legislate to strengthen the priorities of the Catalan economic fabric for the benefit of all  Entrepreneurship Law  Training to adapt workers to new jobs  Collaboration Plans University mentoring, training students  Specific training in entrepreneurship at universities and business schools  Facilitate access to credit and markets  Setting up micro-financing for start-ups  Improve the taxation on investment and reduce and simplify taxes for SMEs  Establish a quota for public acquisitions to SMEs for all public bodies  Facilitate transfer of business (as Re-empresa of CECOT)  Reduce or eliminate penalties for failure (Second Chance Act)  Administrative simplification  Promote SMEs by reducing the size of contracts - Business (including microenterprises), 53

The public administration will change to a digital and agile 21st Century model with a modern labor legislation Public Administration The basis of legal regulation for public administrations and their public workers (...), the common administrative procedures, (...) and the responsability system of all public agencies.  21st century public workers statute  Simplify relations with the administration, reducing paperwork, bureaucracy and costs  Digitalization of administration Labor legislation     New work contract Insolvency Law Autonomous worker statute New unemployment insurance, community work according to the profile of the unemployed 54

The Catalan financial system will have direct access to ECB and will have liquidity to finance sales of Catalan exporters to the world Monetary system: Currency convertibility and exchange, basis of credit planning, banking and insurance.     Customs regime and foreign trade.  International agreements with other European countries to benefit on economies of scale and synergies (France, The Netherlands, Finland, Ireland...)  Catalan Agency for International Expansion  “Product of Catalunya”,“Made in Catalonia”: international quality brands Adequacy of the credit market ICF Catalan Public Bank Payment on account Law Outing of housing inventory  The largest Catalan banks (CaixaBank B.Sabadell) have been evaluated positively by the EU and are classified as systemic with CoreCapital> 10% assets. This involves direct liquidity through the Catalan Central Bank .  The consolidation of the network ACC1Ó abroad and the empowering of the “Catalonia” brand, leveraged on the famous "Barcelona“, will multiply our world trading capacity. 55

The Catalan State will enable to revive the economy with an overall reduction of taxes on the economic activity Treasury and Government debt  Corporate taxes, Income taxes  VAT  Taxes on fuel  Rates reduction  Minimum higher than the current one  Single rate applicable up to certain level of labor income  Deduction to self-employed for hiring Basic legislation and Social Security economic regulation  Reduce Social Security contributions  Create the Catalan Pension Reserve Fund  Catalonia, as an European country with the ability and willingness to reinvest the general surplus in their own economy, would produce huge economic and social benefits, being one of the best countries in the European Union for their benefit and for the benefit of its zone of influence. 56

The Catalan Government will be able to set up a plan to solve the infrastructures blocking generated by Spain (...); ports of general interest; airports of general interest, control of airspace, traffic and air transportion, meteorological services and aircraft registration.  Fourth runway at the El Prat Airport Railways and land transport; the general communications regulation; traffic and motor vehicle circulation; Post and telecommunications; aerial cables, submarine and radio communications.  Mediterranean Corridor to Europe  Improve motorway network  Medium distance trains linking the population centers of Catalonia 57

The Government will be able to take specific measures immediately to restore our competitiveness and solvency Competitiveness • Information society. • Science, R+D. • SMEs internationalization. • Education. English. • Reduction of administrative burdens. Environment • Energy and environmental policies. • CO2 Emission-reduction. • Efficient infrastructures and transportation. Fiscal measures: • Rental market: equal treatment with property. • Fiscal measures to reduce the deficit. • Lower taxes to R+D and environmental activities. Fiscal sustainability • The Catalan State reports quarterly to the EU Council of Tax Policy • Monitoring and correction of the deficits. • Debt / GDP with a deficit of 1, 5% to arrive at the figure of 23% in 2013. 58

Index 1. Objectives of the business plan for Catalan SMEs 2. Environment Analysis i. Economic (macro) ii. Demographic iii. Legal 3. Consumer-Customers-Markets 4. Differential social features 5. Catalan State SWOT and Executive summary 6. Annexes 59

3. Consumers. Clients-Markets: Consumption Variables  Attractiveness and competitiveness of the Catalan business sector to foreign direct investment Industry markets (B2B) Consumers markets (B2C) Types of consumer segmentation Public demand New opportunities for B2B markets from being an independent State New opportunities for B2C markets from being an independent State       60

Catalonia is a favorite destination for foreign direct investment (FDI)  Despite the current situation of Catalonia, the investment is ready for its potential growth, now conditioned by the current economic crisis and the stimulus associated with the dumping of Spain when granting public funds to locations in the capital of Spain.  But Catalonia has been able to maintain its GDP i is a magnet for foreign direct investment priority projects (FDI).  2013 presents an opportunity to invest at Catalonia, given the low labor costs, increased productivity and competitiveness of established companies with proven remarkable capacity for exports.  However, it is necessary to strengthen the development of non-bank financial products, needed in the necessary deleveraging of the financial system.. 61

Catalonia is a geostrategic region as a platform for multinationals  In the 2006-2010 period the number of foreign companies in Catalonia grew by 13% to reaching, by the end of 2010, a total of 3,381 companies, in a scenario where global flows of foreign direct investment are drawing a new international scene.  It is remarkable the concentration of foreign companies in Catalonia in relation to the implemented in Spain. This is particularly pronounced in the case of Japanese firms (85%), Italian (67%), American and French (63% and 62%, respectively). Foreign investment in Catalonia with a total of 3,381 companies and corporations 62

We have a logistics platform for international trade with a high growth potential  The geostrategic location of Catalonia, especially aimed at economic areas in Asia, with the ports of Barcelona and Tarragona in the Mediterranean and its access to the European logistics can attract investment and profits in the medium term for the whole area of economic influence that it generates.  Among other infrastructures it is important to consider the Hutchinson Port Holdings, which will be able to move up to 2.65 million TEUs, Barcelona's airport network (International Hub), Reus, Girona and Lleida Alguaire; High speed train connections and future connection for goods conducted by the EU that connects the major industrial centers of the EU's Mediterranean coast.  The Barcelona area concentrates the interest in the location of centers specializing in global business functions or lines and shared service centers. Logistics, technology of information and communications, biotechnology ... link to creativity, design and culture, tourism and service sectors for people with a high added value. 63

Investors especially appreciate the ability to service, the exporting vocation, training, branding and flexibility  Alba synchrotron, UPC o having the 4rt (IESE) and 7th (ESADE) Global MBA allows Catalonia to be very suitable for analytical services, development and testing.  Value factors are the ability to export, industrial development, specialized human capital, the level of infrastructures the location and the legal ease to invest. Along with the "Barcelona" brand, adding value and prestige to the investment.  Catalonia is an economy relatively well positioned within the EU. By their level of GDP per capita (PPS terms) it has already been 20% above the average for the EU-27.  Fira de Barcelona is a gateway to world trade. Innovative economic sectors such as telecommunications business can enjoy Mobile World Congress in Barcelona that makes of Barcelona the world capital of the sector. 64

Catalonia as a country will have the flexibility that now has not to position itself competitively and successfully in the world  International investors evaluate with a strategic vision the attractiveness and competitiveness of Catalonia, together with its transparency to foreign trade and its logistical potential.  The smaller states are more effective in a world without barriers, so the viability of an economy depends on the degree of financial transparency. Nowadays the ease of movement of people from one state to another state makes the size of a State less important.  Also, both economic theory and empirical evidence indicate that the size of a country does not have much influence on economic growth, as demonstrated by countries like Denmark, Austria, Norway, the Netherlands and Switzerland, for example. 65

Analysis of markets: consumers, companies and changes to come when becoming an independent State  All companies need to achieve a reliable and cost-effective demand for their products or services.  If the company sells products / services of final consumption, their demand comes from customers who are individuals (or families), we are in the Consumer Market.  If the company sells to other companies (products / services) and their demand comes from these other companies, within a given supply chain (supply chain), or even the product is, in essence, for final consumption (eg Flam), if the company produces for another that sells it under its own brand, we are in the Industrial Market.  Overall another distinction that affects business is the one between domestic market or exports.  In the current environment of economic globalization it is difficult for a company to know where’s the final consumption within the supply chain and under what criteria purchase decisions are made.  In the present case a significant status change would take place. 66

Customer of industrial markets value business efficiency and complete value offer  Industrial Products/Services companies depend on the supply decisions and industry agreements with their customers (other industry companies), that is within their supply chain and/or the overall relationships between industry companies.  They may also find that their relationship framework, trade agreements, technical standards, partnerships, etc ... vary.  And, therefore, every company must re-examine the advantages and disadvantages of a new situation.  In general, the client company is increasingly aware that their competitiveness is based on working with maximum efficiency (innovating and improving products, processes and marketing), and expects from their suppliers a relationship that adds value in the whole relationship, not just the mere transaction : Product received – Price paid. 67

Industrial markets integrate their distribution and export in a globalized world  Therefore, the aim should be to maintain and expand industrial relations and longterm partnerships that,, adding value to the buyer based on a complete "value proposition" (not just "product"), make it very difficult for the customer to change to another provider. Harnessing the power of the whole framework of industrial relations.  A fundamental aspect of a country is its industrial production capacity, the later distribution later in domestic sales and exports.  Catalonia generates more than 86,000 million within its expanded industrial sector. A més a més del volum de negoci agregat (que és superior a uns quants membres actuals de la EU), és molt important ser conscient té un conjunt ben diversificat i equilibrat de capacitats tecnològiques i productives que es complementen i un alt nivell d’internacionalització i d’exportació.  Catalonia has created a powerful network of contacts and relationships with customers and suppliers by the values ​of quality, reliability and appropriate prices. 68

Catalonia generates more than 86,000 million within its expanded industrial sector Catalunya C.N.A.E2009 10-11-12 13-14 15 16 17-18 19-20-21 22 23 24 25 26-27 28 29-30 31-32 33 35 Milers € % TOTAL Alimentació, begudes i tabac Textil i confecció Cuir i calçat Fusta i suro Paper, arts gràfiques i reproducció de suports gravats 86.035.898 100,0 17.919.482 20,8 2.896.498 3,4 372.244 0,4 566.029 0,7 4.271.206 5,0 Coqueríes, refi, químiques i productes farmaceutics Manufactures de cautxú i plàstics Productes minerals no metàlics Producció, 1ª transformació i fundició de metalls Productes metàlics 21.687.327 3.695.025 1.846.941 3.839.609 5.072.822 25,2 4,3 2,2 4,5 5,9 Productes informàtics, electrònics, òptics i elèctrics Maquinaria i equipament Material de transport Mobles i altres industries manufactureres Reparació e instal·lació de maquinaria i equipament Producció d’energía eléctrica, gas i vapor 3.525.320 3.703.011 11.198.299 1.435.689 1.622.670 2.383.725 4,1 4,3 13,0 1,7 1,9 2,8  In the field of Industrial Products Marketing, the existence for each company of a network of contacts, relationships, agreements with other institutions and companies has been confirmed for years as a critical factor in industrial competitiveness (as an outcome of various strategic decisions, level of costs, quality, innovation, trade capacity, product extension, etc ..) Vendes 2011 sectors industrials+la seva distribució 69

Globalization has pushed sales outside Catalonia and B2B trade Tendència 14,00% 12,69% 11,28% 12,00% 9,87% 10,00% 8,17% 8,00% 8,46% 2012 2013 6,99% 6,00% 4,73% 5,31% 4,00% 2,25% 2,00% 0,00% 2008 2009 2010 2011 2014 2015 2016 Saldo exterior/PIB   The trade balance includes total sales outside of Catalonia (Spain and the world). We have observed a consolitated trend to replace sales in Spain for sale in the rest of the world, leading our economy to the desired situation of selling less to a market in downturn who’s also a bad payer, and sell more to other countries with far more trade opportunities. The trend for 2013-2016 doesn’t take into account the fiscal multipliers of independence, which implies an increase in the projected numbers. 70

An independent Catalan State will dramatically improve the competitive environment for industrial markets The complete offer of value no longer depends only on companies. In the current context of a globalized economy increasingly based on knowledge, relationships between companies, clusters, logistics chains, the intelligent use of ICT, etc. ... the social, institutional and infrastructure framework is crucial. We are thinking on a Framework that provides companies with:  An approach to public investment decisions that favor the industrial fabric  A network of Catalan ports and airports truly managed according to the needs of our industry  The improvement of the general level of education  Universities endowed enough to be the first step of R & D  A Mediterranean rail corridor that opens all Mediterranean coast to agricultural and manufactured products  A tax system that helps companies to produce wealth and distribute it fairly  State support to the export industry  Reasonable administrative costs 71

Consumer markets can address local or global sales in a new framework of state support       The company that manufactures consumers good may find that its client changes the perception of the product because of its origin: in some markets positively, in others negatively. It can also find that their relationship framework, commercial agreements, technical rules, etc ... vary. Or that distribution behaves under global criteria and does not give the final costumer the chance to decide. Therefore, each company will have to re-examine the advantages and disadvantages of the new situation. But in any case, can a company remain only in its domestic market, it being Catalonia or the whole peninsula, even with a quality product and reasonable price? Usually not. It is necessary to open up to global markets. And, ¿success on those markets depends only on the copany and its efforts? No, it depends a lot on the context in which it works, that must provide a good reputation for the country, efficient and not costly logistic infrastructures, a cultural environment that promotes innovation, good communication networks, technical and information services that facilitate efficient supply chains, social and institutional structures that promote good work, etc... 72

The growth of consumer markets will be given by the increase of per capita GDP and decreased unemployment 70,0% 160.000 65,0% 60,0% 56,2% 55,8% 57,0% 57,0% 57,6% 58,9% 60,2% 61,5% 62,9% 64,3% 140.000 149.383 136.662 125.025 120.000 55,0% 100.000 50,0% 80.000 45,0% 60.000 40,0% 40.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % Despesa en consum de les llars /PIB   2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Despesa en consum de les llars (€) The forecast already takes into account possible effect of a change in the balance of trade with Spain on the demand increase according to the study about "the 2013-2016 Catalan State budget" carried out by CCN The effect of the average increase in GDP expected for the next 4 years (2.25%) in consumption, goes from 1, 3 to 1% in 2012, to 45% in 2017 73

The segmentation of the population into the different consumer types allows us to analyze buying trends    And all this to convince a future consumer which is more aware of the pairing Price / Quality, which tends to extends to Price / Quality / Utility / Sustainability, which promotes the concept of proximity (real or virtual), and values the product ​as much as the experience it provides. All the framework mentioned before is crucial: social, institutional and infrastructures. To learn the consumption methods of a society, we can describe and quantify the social groups that form it, according to their orientations, life goals or lifestyles. Noms Sigma Burgesia Establerta Tradicionals Populars precaris Escaladors Consumidors adaptats Vanguardistes Progressistes acomodats Rebels reactius Postmoderns Total Source: Sinus sociovision Catalunya 9% 15% 10% 10% 15% 7% 15% 9% 11% 100% 74

Catalonia is a particularly attractive market for products / services intended for a market inclined to purchase products with high added value     The measure of social status vs. the orientation of basic values ​has proven to be an optimal way of representing these groups :  The social axis makes a formal classification summarizing social objective characteristics: level of education, type of employment, income...  The values axis represents the classification of social groups according to different lifestyles, desires and goals, spirituality / religion, attitudes towards work, efficiency, and many others. In the next two maps we describe which is the distribution of Catalan and Spanish society according to these axes. The most notable is that Catalonia is a particularly attractive market for companies that offer products / services intended for customers who belong to more progressive and modern social groups and who have a higher purchasing power. A market predisposed to buy products with high added value. A particularly profitable market no company would want to renounce to. 75

The increase in incomes and falling of unemployment in an independent Catalonia would allow to recover the retail market Catalonia Trend Higher 1 Burgesia establerta 9% AB1 B12 BC2 Progressistes acomodats 15% Postmoderns Average 2 B2 AB23 A3 Lower 3 Tradicionals 15% 11% Escaladors 10% Vanguardistes 7% B23 Consumidors adaptats 15% B3 C2 Rebels reactius 9% Populars precaris 10% © Sinus sociovision Social Status A Basic Values B C Traditional Sense of duty, order Modernity Status / Possession / Pleasure “being” instead of “having” / Autorealització Post-modernity Subjectivisme “Jo” 76

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