Country Risk Analysis - Peru Essay Example for Free

Country Risk Analysis Peru Essay SWOT analysis Strengths: Peru is a country blessed with natural resources. In 2010 its exports reached some 23 billion GBP, which was mainly made out of minerals, petroleum and agricultural products. Its mining industry is the largest in Latin America, accounting for 7,7 billion GBP of its total exports in 2010. The climate is also favourable for agriculture, representing 13% of GDP, and employing 30% of the population. In addition, sites like Machu Picchu, Cuscu and Sacsayhuaman make Peru a popular tourist destination for millions of people every year. Weaknesses: Although an advantage when the business climate is favourable, Peru’s heavy dependence upon natural resources and agriculture can prove to be an Achilles heel. Volatile commodity prices and low productivity and fragmented land ownership in agriculture makes the economy susceptible to economic fluctuations. What’s more the country lacks vital infrastructure such as high quality roadways, bridges and flight routes. And as with so many other Latin American countries, high unemployment* threatens the economic and political stability, which in turn affects investor confidence. *Despite a fairly low unemployment rate of 7,9%, the underemployment rate is above 40%, which causes similar effects. Opportunities: In the period between 2000 and 2005 the number of visiting tourists to Peru doubled, and the figure has grown by approximately 11% annually, a trend that is expected to continue. Enforcing the rise in tourism is the announcement that there will be eight long weekends in Peru in 2012, generating some 500 million GBP in extra tourism revenue this year. In 2005, the US and Peru signed a free trade agreement enabling a non-barrier trading relationship between the two countries, which is a huge opportunity as the U.S accounts for 16.3% of Peru’s exports, and 19.5% of its imports annually. Threats: Almost 50% of Peru’s population is poor. This is mainly caused by the extraction industry, where people are oppressed in mining villages and remote communities. Income distribution is extremely skewed, as the richest 10% controls 35.4% of the wealth, and the poorest 10% only control 1.6%. PESTLE analysis Political: Peru is a quite democratic country, after the election of Fernando Belaà ºnde in 1980. However the political environment has been troublesome at best, with several attempts on overthrowing the government, last in October 2000. Alan Garcia, the same man who ran the country into the ditch with four-figure inflation rates in the 1990s, has in his second reign as president (2006-2011) witnessed an amazing economic recovery and growth. Corruption has long been a big problem in Peru, but counteraction was taken in February of 2010 when a dedicated commission was created to deal with the problem, which is especially brought on by the drug cartels. Peru also has a stable relationship with most of its neighbour countries, although their ongoing border conflict with Chile keeps that relationship tense. Economical: The economic environment in Peru has gone from hyperinflation (1991) to deflation (2002) to what appears to be stable growth since 2006. Being an exporting nation they where hit hard by the financial crisis, but kept the growth figure above 0, unlike many other Latin American countries. It regained GDP growth of 8.8% in 2010. In 2011 the credit rating agency Standard Poor raised Peru’s credit rating from BBB- to BBB. In general, Peru has one of the most prosperous economies in Latin America, having tripled in size in the past 11 years. In addition of being a member of the WTO, they also have a non-tariff trade agreement with the US, which has proven most advantageous as the US represents some 30% of both imports and exports. It is worth mentioning that Peru’s economic growth is very much aided by growth in private investment of 13% annually. This is acknowledged by the government, and has led to minor barriers to entry for foreign firms. Social: Since the early 21th century the conditions for Peruvians has improved in many measures. Life expectancy has increased by 4 years to 73 since 2004, and the literacy rate is stable at 90%. However, there is a big split between the rural areas and big cities such as Lima, with 8.5 million people. While people in the cities are lifted out of poverty due to the economic growth, the people living in the rural areas are subject to underemployment and bad infrastructure. The main language used is Spanish. Although some speak Quechua or Aymara, these are mainly spoken by people living in the Andes Mountains. Technological: Peru is known for its substantial bureaucracy and inefficiency, much of which is due to its low amount of technology available. However, more and more people now possess a mobile phone, and Internet usage is increasing steadily. This said these number should be growing as only 10% owns a personal computer, and there are only 3,7 internet subscriptions per 100 people. (http://devdata.worldbank.org/ict/per_ict.pdf) Legal: Although the legal system in Peru appears to lack both independence and efficiency, it has been severely altered to attract foreign investors and aid business. Through removing the requirement for small enterprises to deposit start-up capital in a bank before registration they have made it easier to start a business, and investors are protected through a new law that allows minority shareholders to request access to non-confidential corporate documents. The tax-system has been made electronic, which not only makes it work more efficient, it also makes taxing a lot easier for both parts. It is also legislated that eight-hour days and 48-hour weeks are the maximum working hours, with a minimum wage of $128 a month. Environmental: In August 2010 Peru obtained the Third Programmatic Environmental Development Policy Loan. This money is dedicated to â€Å"strengthen environmental governance, including regulation enforcement, and mainstreaming of environmental sustainability in the mining, fisheries, urban transport and energy sectors.† The funds will also be used to improve parts of the health sector, especially for those exposed to health risks from environmental degradation. This illustrates Peru’s awareness and concern about the environmental issues and their ability to handle them in a way that draws the World Bank’s attention.

Adam Smith :: Political Economist Adam Smith Biographies Essays

Adam Smith Adam Smith, a brilliant eighteenth-century Scottish political economist, had the advantage of judging the significance ol colonies by a rigorous examination based on the colonial experience of 300 years. His overview has a built-in bias: he strongly disapproved of excessive regulation of colonial trade by parent countries. But his analysis is rich with insight and remarkably dispassionate in its argument. Adam Smith recognized that the discovery of the New World not only brought wealth and prosperity to the Old World, but that it also marked a divide in the history of mankind. The passage that follows is the work of this economic theorist who discusses problems in a language readily understandable by everyone. Adam Smith had retired from a professorship at Glasgow University and Was living in France in 1764-5 when he began his great work, The Wealth of Nations. The book was being written all during the years of strife between Britain and her colonies, but it was not published until 1776. In the passages which follow, Smith points to the impossibility of monopolizing the benefits of colonies, and pessimistically calculates the cost of empire, but the book appeared too late to have any effect upon British policy. Because the Declaration of Independence and The Wealth of Nations, the political and economic reliations of empire and mercantilism, appeared in the same year, historians have often designated 1776 as one of the turning points in modern history. The text On the cost of Empire, the eloquent exhortation to the rulers of Britain to awaken from their grandiose dreams of empire, is the closing passage of Smith's book. Adam Smith was a Scottish political economist and philosopher. He has become famous by his influential book The Wealth of Nations (1776). Smith was the son of the comptroller of the customs at Kirkcaldy, Fife, Scotland. The exact date of his birth is unknown. However, he was baptized at Kirkcaldy on June 5, 1723, his father having died some six months previously. At the age of about fifteen, Smith proceeded to Glasgow university, studying moral philosophy under "the never-to-be-forgotten" Francis Hutcheson (as Smith called him). In 1740 he entered Balliol college, Oxford, but as William Robert Scott has said, "the Oxford of his time gave little if any help towards what was to be his lifework," and he relinquished his exhibition in 1746. In 1748 he began delivering public lectures in Edinburgh under the patronage of Lord Kames. Some of these dealt with rhetoric and belles-lettres, but later he took up the subject of "the progress of opulence," and it was then, in his middle or late

Coca Cola in India

Cultural Impact on Business: A Case Study on Coca Cola’s Cultural Issues in India admin August 20, 2012 Blog No comments Socio Cultural barriers faced by coca cola in India Coca – cola, the world’s largest selling soft drink company had established its strong presence in the world since 1886. Coca-Cola is the first international soft drink brand to enter the Indian market in the early 1970’s. Till 1977 Coca-Cola was the leading brand in India; later, due to FERA (Foreign Exchange Regulation Act), they left India and didn’t return till 1993.Coca-Cola had to face many issues regarding its quality, resource exploitation and market exploitation along with price-quality trade-offs. People all over India are challenging Coca-Cola for its abuse of water resource. Coca-Cola had affected both quality and quantity of ground water. Due to its waste extracts, Coca-Cola was criticized for polluting the nearby fresh water and ground water and soil; because of thi s issue, farmers are suffering from water scarcity. Despite all these social and cultural issues, customers are using Coca-Cola due to its strong brand reputation all over the world.This is because Indians are now using more soft drinks and the youngsters are more in this category. However, with many studies and policy changes, Coca-Cola will be able to establish its brand reputation and increase its market share in the near future. This report is prepared from an organizational point of view. The point here is to prepare a report from a consultant point of view, as Coca-Cola has hired us to do a market study and analysis on the cultural factors the company is envisaged to face in the Indian Market.Read further to gain better understanding about the impact of culture on business processes and activities, and also on the business performance. 2. TERMS OF REFERENCE? Our company is the leading consultant in India which focuses on Indian market studies. We conduct market surveys on comp anies and their products. We do market survey based on the present and future market situations. We help our client to have a proper stand in Indian market against their competitors, and help them with strategies to enter the market, market segmentation, product segmentation and sales techniques.It is possible by analyzing the past and present conditions of the company, and by learning their past actions in the society and the economy.? Our client is of United States origin which is a leading soft drink company in entire world. Coca-Cola has got a strong brand image through out the world. Our client is the first company which introduced soft drinks in the world. Public has already accepted its taste and quality all over the world.? Our client would like to know about the present condition of Indian market so tat they can start their business according to that.They also want to know about the culture of the Indian people to know about their consuming nature. The client needs to know whether they can survive in Indian market and what are the drawbacks that they may envisage during their operations in India and that they should consider before starting up the business in India. 3. CURRENT SCENARIO? There has been a great competition between refreshment drinks in Indian market. Coca-Cola is the world’s largest and first soft drink manufacturer. As part of the Globalization program, India has made it easy for multinational companies to enter the Indian market.Globalization has made the whole world into one market by reducing the trade barriers and minimizing the risk. It is noticeable that many multinational companies had failed in Indian market. This failure is mainly due to improper knowledge about the country and the national culture. It is very important to know about the people and their consuming behavior. Culture plays an important role in consuming behavior. Coca-Cola is mainly associated to the issues related to the brand, reputation and Corporate S ocial Responsibility (CSR).?Present situation of the country is favorable for multinational companies to start their business in India. As we had already seen that Coca-Cola is the largest selling soft drink in the world, they do have direct opportunities in the Indian market. Even though it is facing some social problem in India, Coca-Cola has got good market in India. The main target customers are youth who has already accepted the taste of the drink.? Coca-Cola should give more importance for the culture of the people because culture is a major element which decides the consumer behavior and purchasing patterns.India is a country where people are keener towards the culture. Considering Geert Hofsted’s cultural dimensions here in this case, it is clear that, uncertainty avoidance India is less and people are not so flexible to adopt the sudden changes. In India uncertainty avoidance is indexed at 50, which shows that people are sensitive and emotional towards exploitation a nd invasions from other people or culture; so that before entering to the Indian market, it would be a good strategy to avoid such issues by planning the re-entry as a step by step process.According to Geert Hofstede (2001), â€Å"culture is the collective programming of human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values. † It is quite understood from the bellow given chart that the US and Indian culture had got vast difference. So it is not easy to cop up with the Indian market. Therefore, it is important to have a detailed analysis on Indian market so that they can initiate a fail proof and systematic market entry.Source: Geert Hofstede’s Cultural Dimensions? 4. ANALYSIS OF THE SITUATION? The present situation can be analyzed by SWOT analysis which clearly shows the strengths, weaknesses, opportunities and threats which the client is envisaged to meet. India is a country wh ere the cultural diversity and linguistic differences make it difficult to identify how the company is going to be traded while they enter the Indian market. Indians are those who give more value to trust , value, quality and so on.Therefore, it is very important that they should give importance for Price, Quality and Quantity; which means, Indian consumers have more purchasing power for products like high level of quality with less price; therefore, it is clearly states that the company should not entertain any price quality trade-offs in Indian market.? The below section explains the SWOT analysis of the company. The analysis shows where the company is more powerful in the market compared to its competitors and where it is week and how to improvise them to get more market share in present market.? 4. 1. STRENGTH? †¢ Reputed brand? Global brand recognition? †¢ Bottling system? †¢ Technological advancement? †¢ Efficient management system? †¢ Good marketing k nowledge 4. 2. WEEKNESS? †¢ Lack of knowledge about Indian culture in detail? †¢ Uncertainty avoidance? †¢ Lack of marketing expertise in the Indian conditions? †¢ Hazardous by products and health issues? †¢ Facing issues with water exploitation and resource exploitation all over the world 4. 3. OPPORTUNITIES? †¢ Huge market? †¢ Advancement in technology? †¢ Growing Indian market? †¢ Good brand name? †¢ International trade barriers has been reduced? †¢ Youngsters’ tendency to adapt to the western culture 4. . THREATS? †¢ Threat of substitutes? †¢ Health consciousness of Indian consumers? †¢ Cultural habits? †¢ Price war? †¢ Unstable political condition? †¢ Uncertainty avoidance? †¢ Difference in management styles? †¢ Indian tendency to avoid foreign products The above mentioned are the strengths, weaknesses, Opportunities and threats of Coca-Cola’s operations in India. It is very clear from this SWOT analysis that there is good opportunity for Coca-Cola in Indian market because most Indians have accepted the taste, so that it is very easy to penetrate the market and to earn more market share in the Indian market.However, this needs to have clear cut ideas about promotion techniques and public relation activities since the competitors have strong grounds in India market and needs to overcome the pressure raised by socio-cultural barriers.? 5. SOLUTIONS AND RECOMMENDATIONS? Coca-Cola need to concentrate in many aspects so that they can grab more market share and earn respect from the community members. The company’s brand reputation and brand recognition is not enough for them to grow in the Indian soil. Indians take business so seriously and their approach is entirely different when it comes to purchasing patterns and habits.Therefore, Coca-Cola has to adopt alternate branding and promotion strategies to develop its fan base in India.? 5. 1. PUBLI C RELATIONS? The main and foremost solution is that to communicate openly with the key constituents; including the public, media, employees, trade channels, state and national government and suppliers. They should do an open and honest communication to resolve the problems so that issues can be identified and resolved. An honest and open approach is always appreciated in the Indian society. Communication is the best method through which consumers can have proper and clear picture about the company and its product.Efficient public relation is very much equivalent to a smart and efficient promotion, which eventually make the consumers to buy our products. Communication has its roots in a person’s behavioral aspects. Behavior is directly linked with culture. As Smith et al. , (2002), states, a person’s behavior, cultural values and personality can directly affect a business and the managerial behavior. Therefore it is important to communicate with the customers in accorda nce with their cultural status and values. Without proper public elations and communication there are chances that public may not get good knowledge about products and they may be left unnoticed.? 5. 2. ENHANCE RELATIONSHIP WITH GOVERNMENT? In India, it is widely known that the government systems and procedure lack transparency in its operations. Therefore it is very important to have very close relation with the government. This can be done by actively participating in Government driven charity operations and government initiated infrastructure development. Indian people and government always appreciate any true effort towards the development of the country.This also helps in building reputation among the people. India is a country, where reputation and relationships are valued to the core. They believe in qualitative elements than quantitative elements. (Lothar Katz, 2008). Therefore it is important to keep good relationship with the government. Ethical issues like water resource exploitation etc. are believed to be hyped by the media and not the general public. However, it is important for the company to generate and implement a corporate social responsibility system in India, and operate within the guidelines of that system, which will prevent any such unwanted situations.? . 3. LAUNCH MARKETING CAMPAIGNS? Marketing campaigns are the best way to push a product into Indian market. This will create awareness among the general public which makes the sales easy. Indians would like to have more details on everything they choose; let it be soap, or even a television, they would like to know more about the product. If the product is of optimum value in terms of price and quality, they would definitely go for it.? 5. 4. LISTEN TO THE CUSTOMERS? Consumer behavior is an important part in any business. In order to find the differences and their demands, it is very imp0ortant to listen to the consumers.This can be done by initiating a survey or a feedback system. List ening means, the identification of areas and aspects where the company is lagging. If the company can make the customers feel that they are valued and considered, then they would come back to those particular products. Therefore, it is very important to listen to their comments, make necessary adjustments on service and products and creating a strong customer base. 5. 5. MANAGING STYLE? Management style and its efficiency decide the quality of management in a particular country.Multinational companies are believed to have many managing styles and organizational culture. However, t is important to have a management style tailored to the hosting country’s cultural and social value. Having an alien management style may create issues with the domestic employees in the long run. Also, developing a country specific management style will help in delivering quality and on demand services to consumers and general public; which will eventually help the company in the future. This will also make the employees feel that they are considered and their opinions are welcomed.? 5. 6.PULL BACK PRICE- QUALITY TRADE –OFF PLANS? Indians are those who give more importance for quality and trust. It is practiced in India for many long years. Indians rely more upon quality of the product with lower prices. So India is not a place to follow up with Price – Quality Trade – Off. Even if the prices are higher, Indians may consider this product due to its quality. Indian society and the culture are very much vulnerable to quality tradeoffs.? The above mentioned are the important solutions and suggestions that company should concentrate more in Indian market in order to sustaining in this competitive market.It is too important for a company to have a long life in market; so to attain this they should study the market at first in detail and the culture and purchasing power of the public. 6. SUGGESTIONS? According to Robert Tannenbaum and Warren H Schmidt â€Å"ma nagement styles are characteristic ways of making decision and relation to subordinates†. Different management styles can be applied based on the nature and culture of business, the nature of task, the nature of work force and skills of the leader. This definition is given to understand management style in general.Every country has got its own style of management. It is necessary that they should have a correct view about the management style of particular country. As seen in definition, management varies from business and their task; so it is very important to understand the task and the business at the most and then decide the appropriate method of management. As Elenkov and Manev (2005) suggests, it is the responsibility of top managers to coordinate with the subordinate and innovate in management styles and thereby improving the efficiency of the system.?India is the country where people give more importance to culture. Based on Geert Hofstede’s cultural dimension i n India uncertainty avoidance and long – term orientation is more. Uncertainty avoidance means Indians are too slow in accepting the sudden changes and they follow up with traditional styles so it is more important for the company to do a proper analysis on the consumer behavior and product requirement. Another important factor which should be taken into consideration is Long- Term Orientation. India is the place where this is followed more because Indians are more towards tradition and their customs.It is not easy to make them accept the sudden changes. So there should properly take consideration of long – term orientation also (Geert Hofstede, 2001).? They should also give more importance for Price – Quality Trade- Off issues. Indians are those give more value for trust, value and quality. They are keener towards more quality with fewer prices. They give more value for quality rather price. So it is more important for the company to give more importance for th e quality and their pricing strategy which need to be favorable for their business too.?In business it is not enough to keep present condition safe to have a long life and they need to study the market properly in every moment because the nature of market changes as new competitors come in. So to overcome these fluctuating conditions, they should always keep an open eye on how the market goes in next moment. For this the company needs to establish a market analysis team who can conduct on demand analysis of the market or outsource the task to us.? These are all the solutions and recommendations for the company which should be followed.It is not easy for a company to run business smoothly without considering the issues, especially if the company is of foreign origin. Therefore they need to understand the market and key trends in order to sustain in the market.? 7. FORECASTS AND PREDICTIONS? The company can definitely establish their presence in Indian market once again, because it ha s already got a strong good brand image for long years. As Indians are those who give more importance for trust and quality, this brand image from past will help for its sustainability in Indian market. As India’s population is high, they can get a good customer base.Apart from this, in Indian customers include large number of youngsters who is adopting the modern cultural values and supporting westernization. Thus, it is easy for the company to make them as target customers. Due to globalization, many multinational companies had entered Indian market and Indians had accepted many of those companies which clearly say Coca-Cola still have large potential and scope in the Indian market. As India is in the stage of modernization and economic reform, the consumption of soft drinks has been increased so it is a good opportunity for Coca-Cola to make a proper stand in Indian market.After considering the above mentioned solutions and recommendations it is sure that the company can m ake a proper stand in Indian market and re-establish their operations for ever. 8. CONCLUSION? Conclusion is the important part of a case study. After doing a detailed study on socio-cultural barriers of Coca-Cola in India, the most noticeable factor is the company is not following and considering the social and cultural trend and factors. The main drawback which Coca-Cola is facing is it is going against environment or exploiting environment.The company is using fresh water in such a large quantity where there is a crisis for fresh drinking water; apart from that, due to its waste discharge they have been spoiling the water and soil. Therefore farmers are facing numerous problems with their crops. Because of these reasons Coca-Cola is facing problems in India. These problems are indirectly affecting the life of the people staying near by to the manufacturing plant. Apart from this culture is the most important factor which company should keep in mind for further development.?From t he above given recommendation, suggestions and analysis, it is clear that the cultural and economic conditions in India is stable and favorable for the company, but the environmental problems are making g issues among the public and government. Therefore, as suggested, the company should employ an efficient corporate social responsibility team to monitor their operations in the Indian sub-continent and make policies to overcome any such instances. With the help of these suggestions, Coca-Cola can make a brilliant come back to the market. . REFERENCES? 1. Robert Tannenbaum and Warren H. Schmidt, The continuum of Leadership Behavior. [online] Available at: http://www. stewart-associates. co. uk/leadership-models. aspx Accessed on 11th January 2011? 2. PETER B. SMITH, MARK F. PETERSON and SHALOM H. SCHWARTZ, 2002. CULTURAL VALUES, SOURCES OF GUIDANCE, AND THEIR RELEVANCE TO MANAGERIAL BEHAVIOR – A 47-Nation Study. JOURNAL OF CROSS-CULTURAL PSYCHOLOGY, Vol. 33 No. 2, pp. 188-208? 3. Lothar Katz, 2008. Negotiating International Business – India. [online] Available at: http://www. lobalnegotiationresources. com/cou/India. pdf Accessed on: 11th January 2011? 4. Detelin S. Elenkov and Ivan M. Manev, 2005. Top Management Leadership and Influence on Innovation: The Role of Sociocultural Context. Journal of Management, Vol. 31 No. 3, pp. 381-402? 5. Hofstede, G. , 2001. Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations. Thousand Oaks, CA: Sage.? 6. Geert Hofstede, Cultural Dimensions of India, [online] Available at: http://www. geert-hofstede. com/hofstede_india. html Accessed on 11th January 2011? 7. Casestudy. co. in, New Coke: A Classic Brand Failure, [online] Available at: http://casestudy. co. in/wp-content/uploads/2009/11/Classic_Failure_Coke. pdf Accessed on: 10th January 2011? 8. SWAMINATHAN S ANKLESARIA AIYAR, 2001. What makes MNCs quit India. The Times of India, Published on: 4th November 20 01, [online] Available at: http://timesofindia. indiatimes. com/business/india-business/What-makes-MNCs-quit-India/articleshow/1602986123. cms Accessed on: 11th January 2011

Failing School Systems Are Students to Blame Essay

The United States educational system is failing. This topic is in the news repeatedly. Failing schools are a problem that must fixed. However, it cannot be fixed until we figure out its real cause. Many people put the blame on the government, school officials, and teachers. Critics such as Geoffrey Canada, the founder of the Harlem Children’s Zone, say that the problem lies within the public schools. He states, â€Å"Public schools are bad, privately managed charter schools are good† (Ravitch 1). This may be a true statement but there must also be an underlying cause for low school performance. Nobody ever thinks the students may have something to do with this problem. The students are the ones who are taking the tests, paying attention in†¦show more content†¦He had bad grades, and according to his teachers an unwillingness to learn. However, soon after a wealthy Caucasian family took him in. As soon as he began to get the love and support that he needed, he b egan to transform into the teenager that he knew he could always be. His grades, attitude, and abilities improved. On top of that, he became one of the star football players on his high school team. This goes to show that a little love and support can take a person a long way. There are various reasons why a student cannot succeed or perform to their full potential. Some reasons they have control over such as the amount of effort put into school and homework. Many students do not want to put in the necessary effort needed to succeed in school. They may not have the willingness to learn. This could be because they do not have the focus for school. Even if they have the focus, some choose not come or participate in class. This can be because students feel like it is not cool to join into class discussions. The students need to be willing to complete all their homework in a timely fashion and turn it in. They must also study and be able to take all tests given. If the students take the responsibility to do these things, they can have a chance to succeed despite other problems. Financial limitations can put a significant strain on a student’s achievement. These financial limitations can come from the government.Show MoreRelated‚Äà ²Discuss How Far Sociologists Would Agree That Teenage Criminal and Deviant Behaviour Results from Parents Failing to Socialise Their Children Correctly‚Äà ´977 Words   |  4 Pagesâ €˜Discuss how far sociologists would agree that teenage criminal and deviant behaviour results from parents failing to socialise their children correctly’ In this essay I will be discussing how far sociologists would agree that teenage criminal and deviant behaviour results from parents failing to socialise their children correctly. 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