Scenario Planning to Achieve UNDP's MDG for Honduras

Exploring International Business Environment TABLE OF CONTENTS PAGE 1. Record of Investigation: Diary of thought, discussion and decision Diary 02 - 09 2. Honduras: An Overview verview 10 - 12 3. Identification of Uncertainties 13 - 16 4. Plausible Alternative Outcomes 17 - 25 5. Clustering of Uncertainties 26 - 28 6. Validating Clusters 29 - 39 7. Remarkable Person 40 - 41 8. Impact/ Predictability Analysis 42 9. Framing and Scoping Scenario End States 43 10. Stakeholder Analysis 44 11. Iceberg Analysis 45 12. Scenarios vs. achievement of Millennium Development Goals 46 13. Scenario Stories 47 - 61 14. Identification of Key Indicators (for each of the scenarios) ndicators 62 15. Bibliography 63 - 64 Scenario Investigation & Analysis – Iteration 2 2

Exploring International Business Environment 1. Record of Investigation: Diary of thought, discussion and decision (Sheet 1) iary Day/ Date EIBE Subject – What actions do we take to address? Action by? What do we not know? Friday, 2nd Getting In evening we meet to discuss what should be the plan By All October started for iteration 2. We questioned with each other to about 2009 which country to choose. We came to a conclusion that none of us has any knowledge about country in central America. So we opted for Honduras as country for iteration 2 by our rando choice. random Then we discussed what should be the approach to do the research. We divided the whole research into 7 different topic which are as follows: follows:- ⇒ Cultural ⇒ Economic ⇒ Environmental ⇒ Ethical ⇒ Legal ⇒ Political ⇒ Technological We discussed within the members that we should have holistic view of all the topics that we are doing for Honduras. To get that holistic view we decided that same topic should be studied and researched by more than one person to get a multi dimensional view of the subject mentioned abov in context of Honduras. above We divide the topics as follows in the team: team:- ⇒ Mr. James Mckenna, Mr. Narayanan Vishwanathan and Mr. Shashwat Sood are doing research on Economic, Environmental and Ethical aspects of Honduras. ⇒ Mr. Chandra Shekhar, Mr. Vaibhav Mehta and ta Mr. Sanil Subhash Chandra Bose are doing research on Legal, Political and Technological aspects of Honduras. We decided that Cultural part will be studied by all members to get better insight of the country. Simultaneously, we decided that we will complete our research within next two days i.e. 3rd and 4th October 2009. We also decided that we will do our research from home and we will meet on Monday 5th, 2009 at 9.30 a.m. with our individual presentations to be discussed presentations, within the group. Over the weekend the group e mailed each other with e-mailed salient research points to ensure we did not go down the same dead ends. This was useful and constructive. Scenario Investigation & Analysis – Iteration 2 3

Exploring International Business Environment Monday, Analysis of We met in the morning and started our presentation to 5th the research the group. October 2009 Our first hurdle was that the presentation requirement had been interpreted differently by different members of the group this was discussed and put down to experience. The presentation were given by following sequence: ⇒ Mr. James Mckenna ⇒ Mr. Shashwat Sood ⇒ Mr. Chandra Shekhar ⇒ Mr. Vaibhav Mehta ⇒ Mr. Sanil Subhash Chandra Bose ⇒ Mr. Narayanan Viswanathan The group noted down the points to be challenged and those that required more data to support them, while each member of the team presented. After completion of the presentation we all discussed the various factors and analyzed with our individual knowledge of the subject. This took long time up until the afternoon when we finally had a very clear picture of the past and pre present situation of the Honduras. We noted down some questions that needs to be answered through more research to get a clearer picture of the country. Simultaneously, we checked our questions with regard to Millennium Development Goal (MDG) of UNDP to align our research in right direction. ign We continued to research till 4.30 PM and then started to write our uncertainties. At 6.30 we had almost completed the uncertainties. We discussed how we should validate the uncertainties so that we would have no ambiguambiguous ones. It took close to one hour to recheck the uncertainties individually. After this self checking that we thought we self-checking should refine our uncertainties tomorrow. Simultaneously, we searched for remarkable people (RP). Everybody was doing individual eff effort for RP. 1. Mr. James Mckenna contacted following organizations for RP: ⇒ Amnesty International ⇒ Save the Children ⇒ Medicine Sans Frontier ⇒ Jesiut Mission in London ⇒ Jesiut Mission in Minnesota ⇒ Overseas Development Institute Scenario Investigation & Analysis – Iteration 2 4

Exploring International Business Environment 2. Mr. Shashwat Sood contacted following person lowing and organization: ⇒ Mrs. Margret English ⇒ Mr. Jim Wilson-International Office, University fice, of Strathclyde ⇒ Mr. Francisco Galeano-Country direct Country director, FINCA-small loans, Honduras ⇒ Mr. Miguel Giron-The Children’s rescue The Mission, 3 Papp Street, Norwalk CT 06854 T 3. Mr. Narayanan Viswanathan contacted following person and organization for RP: ⇒ The Ford Foundation, New York ⇒ Dr. Anne Stafford, University of Glasgow. Director University of Edinburgh, Deputy dinburgh, Director CREID 4. Mr. Vaibhav Mehta contacted Honduras student group alumni Ms. Melissa Sabillon. She responded by emails, providing deeper insights on the current socio-economic situation in economic Honduras and about the the education system in country. 5. Mr. Thomas Brian from University of Baylor who was involved with th the Village Green Incorporation in Honduran rural areas. He had established small hydroelectric power generators so that village houses could have electricity for daily use. Tuesday, Defining and The group met at 9:30 AM and started defining all 6th, validating uncertainties. We decided to do self assessment for our October uncertainties uncertainties and it should not be ambiguous and must 2009 be uncertain. By the afternoon we made uncertainties and their outcomes. Post lunch we started with making clusters. While making clusters, we realized something is going wrong in our clusters. We stepped back for a moment and saw that our uncertainties were ambiguous. The self-checking on ambiguity of uncertainties had not checking been successful. We started validating our uncertainties as a group and considered whether they were actually uncertain and were driving forces for change. We rewrote the ambiguous uncertainties and made new blue post it’s for the same. Scenario Investigation & Analysis – Iteration 2 5

Exploring International Business Environment Validating As soon as we completed validating uncertainties, we and naming started making clusters. Based on 1st iteration of clusters experience, we decided that each member of the team would work on separate clusters and will present on the connections to the group. Each member contributed in making cluster and validating them. making Every member presented his cluster and storyline to the team and, based on team decision, cluster was finalized. Wednesd Are we right We met up at 8:45 to built Impact and Predictability ay, 7th in naming the Matrix. In the mean time we realized to call Dr. Burt for October clusters? his comments on cluster names as this is critical for next 2009 stage. The team asked Dr. Burt for his views on the new clusters and their names. Dr. Burt reviewed the clusters and asked the team what are the driving forces in each the clusters. He asked the team to rework on names and get it rechecked by him in the afternoon. Based on Dr. Burt’s feedback, the team decided to rework on the cluster names. There was long discussion among the team members about the name for each team and every cluster. Impact and Post naming of the clusters, we started making the Predictability impact and predictability matrix Matrix- The team used voting method to reach on the Ranking the consensus for the rankings of each of the clusters clusters After completing impact and predictability matrix, we decided to call Dr. Burt for his feedback on final cluster names & how we had used our impact and Predictability Matrix. Dr. Burt encouraged us to use all our blue post-its when its we had framed our scenarios to ensure a rich storyline. Remarkable Concurrent with the impact and predictability matrix Person work, James McKenna contacted the Remarkable person. He interviewed Professor Sally Humphries discussing where we had reached in our research and our view of Honduran society with regard to the Millennium Development Goal’s, consolidated her feedback and discussed with the team. Scenario Investigation & Analysis – Iteration 2 6

Exploring International Business Environment Scenario For the Scenario Matrix we considered following Matrix clusters: Influence of US Policy on International trade of Honduras Role of judiciary in dealing with corruption and gang culture Reviewing both the clusters, each member of the team contributed at least 2 future outcomes for each scenario to start as a base for fr framing the scenarios scenarios. While making Scenario Matrix, Dr. Burt came to see our progress. He told us that the Scenario Matrix we built did not frame the information we have adequately. He told us to include the driving forces which lead to change in framing our scenario matrix. After this feedback we reviewed and changed our framing statements to ensure they covered the driving forces we had identified. Naming the The team came together and based on consensus Scenario naming was decided for all four scenarios Matrix The name of four scenarios are as follows: ⇒ Brown Field Development ⇒ Level Playing Field ⇒ Recipe for Revolution ⇒ Green Shoot in Shades Making The next task was to develop storyline for 4 scenarios. In Storylines order to do so team picked the outcomes resembling the statements of the scenario and included them in scenario. The team divided itself in making 4 storylines keeping the MDG goals of UNDP as a fixed point of reference. The team focused on making connections in the storyline and included Virtuous and vicious circles at the same time. Stakeholder The team appointed Chandra Shekhar and Sanil Narayanan Analysis Subash to carry out Stakeholder Analysis. Post his Viswanathan, analysis Narayanan, Viswanathan reviewed and Chandra included few missing links in the s same – which the team Shekhar and subsequently ratified ratified. Sanil Subash Scenario Investigation & Analysis – Iteration 2 7

Exploring International Business Environment Impact of The team created a matrix to give an overview to all Scenario’s on four scenarios and their impact in MDG goals. The MDG Goals matrix included 3 coding which are as follows: of UNDP Red- MDG goal not achieved Yellow- Yellow Probably Achieved Green- Green Achieved MDG goal In this matrix we showcased current scenario of the country and impact of MDG goals on of the country and impact of all scenarios on MD goals. MDG Thanks to the Venezuelan team for their idea. (All Rights Reserved) Presentation The Soft copy of every process was recorded by Narayanan Narayanan Viswanathan (NV). After discussing the Viswanathan impact of each scenario on MDG goals, NV started with final presentation. Audio-Visual The team contributed their views on building the Sanil & representatio presentation and formatting of the same. Vaibhav n of Sanil Subhash Chandra Bose and Vaibhav Mehta were Honduras involved in making Audio visual for the current scenario Audio-visual current of Honduras. The teams gave their feedback on the scenario audio-visual audio visual and were included in final presentation. Wednesd Final The team collated final Audio Video and final Audio-Video All ay, Presentation presentation and received feedback from all team 7th members October 2009 Thursday, The team appointed Narayanan Viswanathan and Narayanan, 8th James McKenna to present on Thursday 8th Oct’09. Viswanathan & October James 2009 McKenna Scenario Investigation & Analysis – Iteration 2 8

Exploring International Business Environment Day/ Date EIBE Subject - What What actions do we take to address? Action by? do we not know? Points of General Reflection After the iteration-1 we decide to have an open 1 critical feedback session among the members of the group. reflection on Lesson from This feedback is for each member by other members EIBE Process Iteration-1: from the group. This shown a new picture of our self. Because there was big difference of what we think of our self and how we are perceived in the group. Each of us noted down our feedback and kept in mind to change our self for second iteration. The beautiful thing was each of us has accepted the feedback without giving any explanation o “if’s or of but’s”. We accepted it as a gift and promised to . bring necessary changes so that we can really value add in second iteration. Lessons from Group management of learning styles was a key Iteration-2: factor. Having an open feedback session after iteration 1 helped us to come together as a group All members of group being assertive are necessary for a healthy discussion. It’s more important to judge when to step back than to step ahead. Taking timely breaks for refreshing the thought process is important for new idea generation as well as for letting off some steam. Listening to others is the key for introspection. Self management is more important than time management. No idea is good or bad It’s important at times to challenge your assumptions from your research. It is better to include a person who has better experience may be like 10 or more years the way they approach the problem is entirely different. If the team contain more than 2 activist try to be a reflector or pragmatist even if you are activist. u Have we utilized Frankly speaking No. From the day 1 onwards we with our time had timetable for each & every process that we had effectively? to do. But unfortunately we were not able to meet e the deadlines time-and-again. Consequently, we . extended our working time – of working from 9 a.m. till late at night. We have 2 people who had to leave by 10 p.m. since they are staying far away from Glasgow. We used technology to overcome this issue by getting in touch with each other and enable virtual group working by using Skype. Scenario Investigation & Analysis – Iteration 2 9

Exploring International Business Environment 2. Honduras – An Overview verview Data Source(s) http://www.unsiap.or.jp http://www.ifad.org http://www.wri.org http://www.hondurastips.honduras.com History Honduras was originally inhabited by indigenous tribes, the most powerful of which were the Mayans. The western-central part of Honduras was inhabited by the Lencas. These autonomous central groups had their conflicts but maintained their commercial relationships with each other and with other populations as distant as Panama and Mexico. On July 30, 1502, Christopher Columbus first saw Honduran soil and he claimed the territory in the name of his sovereigns, Ferdinand of Aragon and Isabella of Castile. He named the area "Honduras" (meaning "depths") for the deep water off the coast. Honduras, which was colonized by Spain, gained independence in 1821. The country was then briefly annexed to the Mexican Empire. In 1823, Honduras joined the newly formed United n Provinces of Central America federation, which collapsed in 1838. The country has been in and out of Democratic and Military rule in succession, and not necessarily iin any particular order. n Political Scenario Organized labor represents approximately 8% of the work force and its economic and political influence continues to decline. Honduras held its seventh consecutive democratic general elections in 2005 to elect a new president, unicameral Congress, and mayors. For the first time, as a result of ew the newly reformed Electoral Law, voters were able to vote for individual members of Congress, with photos of each candidate on the ballot, rather than party lists. For the electoral period 2006-2010, 31 women were elected to Congress. Additionally, 27 of these 31 2010, congresswomen chose women as their alternates. In November 2008, successful primaries were held to select the candidates from the Liberal and National parties who will compete for the presidency in November 2009. The two major parties are the slightly left left-of-centre Liberal Party and the slightly centre slightly-right-of-center National Party. The three much smaller registered parties the Christian Democratic Party, the parties--the Innovation and National Unity Party, and the Democratic Unification Party hold a few seats each in n Party--hold the Congress, but have never come close to winning the presidency. Government ⇒ Type: Democratic constitutional republic Independence: September 15, 1821 ocratic ⇒ Head of State: President, directly elected to 4 resident, 4-year term ⇒ Political parties: Partido Nacional Partido Liberal, Innovation and National Unity Party, Nacional, , Christian Democratic Party, and the Democratic Unification Party. The following is the list of Head of the State of Honduras from 1933 to date. ⇒ Chairman of the Military Junta PN: National Party PLH: Honduran Liberal Party ⇒ Tiburcio Carías Andino 1933 1933-1949 (+1969) PN ⇒ Juan Manuel Gálvez Durón 1949 1949-1954 (+1955) PN ⇒ Juan Lozano Díaz 1954-1956 (+1957) PN 1956 ⇒ Roque Jacinto Rodríguez Herrera 1956 ríguez 1956-1957 C.MJ, military (1) ⇒ Ramón Villeda Morales 1957 1957-1963 (+1971) PLH ⇒ Oswaldo López Arellano 1963 1963-1965 C.MJ, military Scenario Investigation & Analysis – Iteration 2 10

Exploring International Business Environment ⇒ Oswaldo López Arellano 1965 1965-1971 PN ⇒ Ramón Ernesto Cruz Uclés 1971 1971-1972 (+1985) PN ⇒ Oswaldo López Arellano 1972 1972-1975 military ⇒ Juan Alberto Melgar Castro 1975 1975-1978 (+1987) military ⇒ Policarpo Paz García 1978 1978-1980 C.MJ, military (2) ⇒ Policarpo Paz García 1980 1980-1982 civilian (caretaker) ⇒ Roberto Suazo Córdova 1982 1982-1986 PLH ⇒ José Azcona Hoyo 1986-1990 PLH 1990 ⇒ Rafael Leonardo Callejas Romero 1990 1990-1994 PN ⇒ Carlos Roberto Reina Idiáquez 1994 1994-1998 PLH ⇒ Carlos Roberto Flores Facussé 1998 1998-2002 PLH ⇒ Ricardo Maduro Joest 2002 2002-2006 PN ⇒ José Manuel Zelaya Rosales of the PL 2006-2009 o Has been ousted in a coup supported by Military 1956-1957 Military Junta members: Roberto Gálvez, Roque Jacinto Rodríguez Herrera, Héctor Carraccioli 1957 1978-1980 Military Junta members: Policarpo Paz García, Amílcar Zelaya Rodríguez, Domingo Álvarez Cruz 1980 Economy Honduras, with a per capita gross national income of $1,635, is one of the poorest countries in the Western Hemisphere. Historically dependent on exports of agricultural goods, the Honduran economy has diversified in recent decades and now has a strong export export-processing (maquila) industry, primarily focused on assembling textile and apparel goods for re re-export to the United States, as well as automobile wiring harnesses and similar products. These industries employ about 130,000 Hondurans, out of an economically active population of 2.8 million. Despite the recent population economic diversification, there continues to be a large subsistence farmer population with few economic opportunities. Honduras also has extensive forest, marine, and mineral resources, although widespread slash-and-burn agricultural methods and illegal logging continue to destroy burn Honduran forests. Remittances from Hondurans living abroad, record for more than one-fifth of GDP fifth GDP--but the annual rate of growth of remittances has been slowing down consistently from 2006 and is expected to turn negative in 2009. Meanwhile, Honduras's fuel import bill rose sharply with the surge in world oil prices (Honduras produces no petroleum), and foreign reserves of the Central Bank fell by nearly $98 million--about 4%. Reserves continued to decline during 2008 and by November equalled just over about three months worth of imports. Since 2005, Honduras has received nearly $4 billion in debt relief from bilateral and multilateral donors. The Government of Honduras has committed to apply these funds to poverty alleviation, as rnment laid out in the existing Poverty Reduction Strategy. However, much of the ensuing rise in government spending has gone to public sector salaries and fuel subsidies. Fuel subsidies were phased out and subsidies electricity subsidies reduced and targeted more tightly to the poor in 2008. But salaries, especially for teachers, continue to claim an increasing share of public spending. Economy (2007 estimate) ⇒ GDP: $12.3 billion o Manufacturing (19.7% of GDP) o Services (54.2% of GDP) o Agriculture (13.8% of GDP) Scenario Investigation & Analysis – Iteration 2 11

Exploring International Business Environment ⇒ Growth rate: 6.3% ⇒ Per capita GDP: $1,635 (official exchange rate) $3,130 (PPP, IMF) ⇒ Trade – Exports: $5.59 billion o Major market--U.S. (70%) U.S. ⇒ Trade Imports: $8.56 billion o Major source--U.S. (52%) U.S. Geography & Topography ⇒ Area: 112,090 sq. km. (43,278 sq. mi.); slightly larger than Virginia. ⇒ Cities: Capital--Tegucigalpa ( Tegucigalpa (population 1,150,000); San Pedro Sula (population 900,000) an ⇒ Climate: Tropical to subtropical, depending on elevation ropical, ⇒ Population: 2006 est.: 7.3 million Growth rate (2006 est.): 2.16%. ⇒ Ethnic groups: 90% Mestizo (mixed Indian and European) estizo ⇒ Religions: Roman Catholic, Protestant minority – Language: Spanish n ⇒ Education: Attendance-88% overall, 31% at junior high level. Literacy--76.2% 88% 76.2% ⇒ Health: Infant mortality rate rate--29.64/ 1,000. ⇒ Life expectancy: 66.2 years ⇒ Work force: o Services - 42.2% o Natural resources/agriculture - 35.9% atural o Manufacturing - 16.3% o Construction/ Housing - 5.6% ousing Population living with under $1 a day (%) 23.8 Population living with under $2 a day (%) 44.4 Undernourished people (% or population) 21.0 Children under 5, underweight for their age (%) 25.0 Children under 5, under height for their age (%) 39.0 Probability of not surviving to age 40 (% of cohort) 13.8 Population without sustainable access to an improved water source (%) 12.0 Foreign Relations Honduras is a member of the United Nations, the World Trade Organization (WTO), the Organization of American States (OAS), the Central American Parliament (PARLACEN), the Central American Integration System (SICA), the Conference of Central American Armed Forces (CFAC), and the Central American Security Commission (CASC). Honduras is also a signatory to the Rio Pact and a member of the Central American Defence Council (CONDECA). Honduras is a strong proponent of Central American cooperation and integratio and continues to integration, work towards the implementation of a regional customs union and Central American passport, which would ease border controls and tariffs among Honduras, Guatemala, Nicaragua and El Salvador. Scenario Investigation & Analysis – Iteration 2 12

Exploring International Business Environment 3. Identification of Uncertainties (Sheet 2) Areas of investigation & the corresponding Uncertainties Cultural ⇒ Access of hospitals in rural areas areas. ⇒ Change in Garifuna culture by tourism tourism. ⇒ Effects of Cultural value system on Education Education. ⇒ How does the Catholic Church change the Human Rights record of Honduras? ⇒ Impact of awareness of condoms on male prostitutes prostitutes. ⇒ Impact of awareness on conservation of treestrees. ⇒ Impact of cultural attitudes on women’s employment and empowerment empowerment. ⇒ Impact of free health check up’s of pregnant woman on infant mortality rate rate. ⇒ Impact of legalized prostitution on HIV HIV. ⇒ Influence of women for decision making regarding the use of condoms condoms. ⇒ Is working environment equal for men and women in private sector sector. ⇒ Role of catholic churches in politics politics. ⇒ Role of rural society towards modern maternity centre ural centre. ⇒ Women employability in private sector sector. Ecological ⇒ Ability of Honduras to develop eco eco-friendly tourism. ⇒ Efficiency of the Honduran government in chalking out an ecological policy on mining mining. ⇒ Impact of forest conservative law on new crop sustainability sustainability. ⇒ Impact of growing rate of urbanization on the eco system and natural resources eco-system resources. ⇒ Impact of new ecological act on Shrimp farming farming. ⇒ Role of wheat and rice farming on malnutrition of children in rural area. area. Economic ⇒ Competition of Maquila products with Asian products in USA USA. ⇒ Creation of special economic zones and providing short term Tax rebates short-term rebates. ⇒ Does corruption lead to decline in GDPGDP? ⇒ Does microfinance contribute to the economy? ⇒ High interest rate on loans, affecting child education. ⇒ Impact of tourism on child education education. ⇒ Increase in tourism affecting real estate price price. ⇒ Role of microfinance on entrepreneurs in urban population population. ⇒ Strategic alliance with gold companies to dig gold in Honduras Honduras. ⇒ What will Honduras do if oil is found in territorial waters waters. ⇒ Will the fishing Industry on the East Coast of Honduras continue to be a net exporter? Environmental ⇒ Effectiveness in the flood management between Honduras & Nicaragua Nicaragua. ⇒ Government’s stance on environmental conservation. ⇒ If Hydro electric dams are not built, how will rural community’s energy needs be met? ⇒ What effects would a renewed mining industry have on the environment? ⇒ Will focus on preventative health campaigns have an impact on Changes disease? Scenario Investigation & Analysis – Iteration 2 13

Exploring International Business Environment Ethics ⇒ Does increase in tourism leads to increase in prostitution prostitution. ⇒ If judicial system not influenced by executive body what impact would there be on corruption. ⇒ Impact of Censorship on the Honduran TV and News papers. ⇒ Impact of impunity before the legal system for the social elites on the human rights index index. ⇒ What will the Catholic Church do to affect the lives of under nourished children? Geo-Politics ⇒ Does World Bank project for energy alleviate energy crisis in Honduras? ⇒ Feasibility of strategic alliance with foreign universities to create skilled manpower ⇒ Impact of development of trade relations with countries outside US and Latin America ⇒ Impact on Honduran government with removal of US army from Solvano airbase ⇒ Nature and impact of the decrease in military forces ⇒ Political impact of Honduras joining ALBA ⇒ Political instability can lead to loss of investment by US companies ⇒ The rigid rule by US for Illegal immigrants from Honduras ⇒ What effect will Central American Free Trade talks have on Honduras? ⇒ What will be the consequences on oil supply due to Honduras’s political stance? ⇒ What will be the impact of the oil oil-deal with Venezuela ⇒ What will be the USA policy on convicted Hondurans in the USA illegally? ⇒ What will Honduras Governments foreign policy be towards its nearest neighbours? be ⇒ What would be the effect of the re re-formation of the “Coffee Cartel”? ⇒ Will the UN intervene in the current political unrest? Law ⇒ Does government labelling of trees reduce illegal timber production? ⇒ Does minimum wages of children curb child labour? ⇒ Effectiveness of the enforcement of judicial systems and the rule of law law. ⇒ Implementation of anti-gang law on freedom of youth gang youth. ⇒ Is judiciary influenced by politics? ⇒ Will the Judiciary continue to be linked t the Political systems? to Macro-Economical ⇒ Exploration of minerals to increase GDP GDP. ⇒ Feasibility of having separate quota for women in public sector jobs who complete primary education. ⇒ How could the EU trade Negotiations affect Honduras agricultural policy? ⇒ Impact of change in USA free trade policy on Honduras export export. ⇒ Impact of EU trade agreement on Honduras export export. ⇒ Impact of global credit crunch on the Tourism industry industry. ⇒ Impact of implementation and adaptation of CAFTA DR on foreign direct investments CAFTA-DR investments. ⇒ Impact of industrialist buying property on beaches beaches. ⇒ Impact of promotion of inland railways for transportation of goods and people, by improving the current infrastructure. ⇒ Impact of strategic alliances and partnerships between dependent industries on dom domestic market scenario. ⇒ Impact of transmission of Maquila sector to manufacturing sector on economy economy. ⇒ Impact on unskilled labours due to minimum wage standard standard. Scenario Investigation & Analysis – Iteration 2 14

Exploring International Business Environment Macro-Economic ⇒ Is increase in child mortality an impact of de centralized hospital system? de-centralized ⇒ Opening up Puerto Corte’s port for handling merchandize beyond El Salvador and Nicaragua. ⇒ PL regaining power in General elections elections. ⇒ Role of gangs in slowdown of economy economy. ⇒ What effects will textile import policy of the USA have on the Honduran economy? ⇒ What will be the impact of credit crunch in US on Honduran economy? ill credit-crunch ⇒ What will happen to Power supplies if State companies are sold to the private sector? ⇒ Will the Maquila business model develop to cope with recession in the USA? Political ⇒ Ability of the government to procure more drugs for HIV through negotiation with pharmaceutical companies companies. ⇒ Ability of the Honduran government to improve the road infrastructure infrastructure. ⇒ Ability to generate adequate professionals dedicated to manage HIV HIV. ⇒ Effect of the coup on the democratic set set-up of the country. ⇒ How effective is water sanitation project in rural areas? ⇒ If unemployment rates stay at historical levels, what effects will this have on primary education? ⇒ Impact of labour unions in providing quality education education. ⇒ Partido Nacional party coming to power, in the next general election ido election. ⇒ Prioritizing the allocation of funds towards infrastructural development development. ⇒ Utilization of health care budget in research and technology of new medicines medicines. ⇒ Impact of introduction of monitoring of HIV status of Legal sex workers on HIV prevention ⇒ Impact of trade union on domestic politics politics. ⇒ Role of small parties in general election in November 9 9. ⇒ Will the government provide free primary health care in the rural areas? health-care Social ⇒ Ability of existing education system in producing skilled labour. ⇒ Ability of the local News paper and TV to impact Political Change Change. ⇒ Ability of the UN AIDS to collaborate with NGOs working on HIV prevention. ⇒ Change in Attitude of religious groups to providing sex education in schools providing schools. ⇒ Feasibility of giving free mosquito net by government to prevent malaria malaria. ⇒ How effective is role of NGO’s in spreading the message “Feed a child in Honduras”? ⇒ Impact of cooperation between regional municipalities on Health resources / learning resources learning. ⇒ Impact of cultural diversity on acceptance health care delivery delivery. ⇒ Impact of literacy on women empowerment empowerment. ⇒ Impact of NGO in creating awareness regarding HIV prevention prevention. ⇒ Impact of training Nursing Auxiliaries on infant mortality mortality. ⇒ Role of NGO’s in improving standard of living in rural areas O’s areas. ⇒ Stance of the Poor towards government providing free education. ⇒ What will happen to remittance incomes? ⇒ Will Changes in agricultural policy be influenced by companies like Wal Wal-Mart? ⇒ Will Gangs (MARAS) impact national Security? ⇒ Will population demographics continue to move to an urban setting? ⇒ Will the level of Maternal Care stay at current levels? ⇒ Women headed business sustain sustaining family!? Scenario Investigation & Analysis – Iteration 2 15

Exploring International Business Environment Technological ⇒ Ability of government to curb loss of energy in transmission and distribution distribution. ⇒ Ability of Honduras to develop BioBio-fuel. ⇒ Adaptation of latest techniques and technologies for agricultural development across the country. ⇒ Change in agricultural crop type – diversifying/ growing new crops. ⇒ Exploration of alternative sources of energy energy. ⇒ Possibility of exploring highly precious metal like zinc, silver in Honduras Honduras. ⇒ Internet connection facility impact on child education in rural area area. ⇒ Role of female condom on HIV/AIDS spread spread. Scenario Investigation & Analysis – Iteration 2 16

Exploring International Business Environment 4. Plausible Alternative Outcomes (Sheet 3) Uncertainties Plausible Outcome A Plausible Outcome B Effect of the coup on the Lack of public faith on There will be an increased democratic set-up of the democratically elected national and international focus country. government decrease their on free and fairness of the next confidence on democracy as a general election in the country whole Effectiveness of the Ineffective enforcement may Unchecked authority for law enforcement of judicial result in devolution of law & order enforcement may result in systems and the rule of law. situation in the country human rights violation committed by police and other inland security agencies Adaptation of latest Improved agricultural Excessive usage may result in techniques and productivity resulting in reduction infertile land or contamination of technologies for agricultural in food scarcity and promotion of agricultural produce development across the rural development country. Prioritizing the allocation of Allocation of funds towards Higher % of fund allocation on funds towards infrastructural domestic infrastructure infrastructure development development. development promotes trade, means less fund available for resulting in economic providing education and p public development health Creation of special Promotes entrepreneurship and Adversely impacts the inflow of economic zones and reduces brain drain revenue in the form of direct providing short-term Tax taxes for a short term rebates. Government’s stance on Effective environment policy will Stringent environmental policies environmental positively impact growth and may stunt the growth of tourism conservation. sustenance of economic and other similar sectors or will development increase their operational cost costs Change in agricultural crop Growing staple crops (such as Farmers currently growing cash type – diversifying/ growing Rice/ Wheat), will result in self self- crops such as Coffee, will need new crops sufficiency and reduce imports help and training to help th them diversify in staple crops Role of NGO’s in improving Disproportionate development Effective utilization of funds for standard of living in rural due to limitation of scale and development of rural areas areas. resources Impact of strategic Fosters symbiotic growth and May result in a paradigm shift alliances and partnerships development of the industries from Consumerism to between dependent and promotes healthy Producerism industries on domestic competition between them market scenario. Impact of implementation Eliminates the need of foreign Promotes fairness and and adaptation of CAFTA- firms to act through local agents transparency in government DR on foreign direct to participate in public tenders procurement procedures ent investments. resulting in increased FDI resulting in reduced corruption Impact of global credit There may be a lower inflow of An opportunity to consolidate the crunch on the Tourism tourists adversely impacting the tourism industry and formulating industry. tourism industry policies regulating eco cies eco-tourism Scenario Investigation & Analysis – Iteration 2 17

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B Impact of trade union on Government policies favoured Good representation of domestic politics. and biased towards specific businesses and industries in lobbyists only government will facilitate industrial reforms What will be the impact of Lower inflow of aids and Strained relationship with US the oil-deal with development funds from US resulting in impact on Maquila Venezuela? Nature and impact of the Decrease in military/ armed Decrease in armed forces result decrease in military forces. forces can pose a threat to in reduced spending on military, national security which can then be used for development projects What will be the impact of Slow down in US will adversely Weakness of US economy will credit-crunch in US on impact both demand for exports impede investment slowing down Honduran economy? and flows of remittance which economic growth account for 1/5 of Honduran GDP Impact of promotion of Reduced freight charges resulting Possibility of incurring more loss for inland railways for in increased profit margin for the government due to transportation of goods and business entities - Promotes trade increased pospossibilities of theft of people, by improving the railway tracks current infrastructure. Opening up Puerto Corte’s Improvement in political & Increased revenue and ability to port for handling economic relationship with reach capacity utilization of the merchandize beyond El neighbouring countries Puerto Corte port Salvador and Nicaragua. Partido Nacional party PN leaders will focus on getting PN government will adopt harder coming to power, in the tough on crime and in creating stance on wages and spending next general election. hospitable climate for business cuts in response to pressure from will benefit Honduras in the long IMF, rather than revenue run enhancement policies to reduce fiscal deficit Exploration of alternative Reduces dependencies on fossil Higher cost of initial capital sources of energy. fuel and import of crude oil investment resulting in less funds available to address other pressing needs Impact of growing rate of Encroachment of agricultural Increase in pollution resulting in urbanization on the eco- lands for townships resulting in deterioration of health system and natural food shortage in the long run resources. Impact of impunity before Increase in social unrest, resulting Oppression of economically and the legal system for the in higher crime rate and human politically weaker communities in social elites on the human rights violation the society resulting in social rights index. imbalance and Plutocracy Will the government provide Higher cost of initial investment of Reduces per capital expenditure free primary health-care in infrastructure with no immediate and mortality rates in the the rural areas? returns medium-long terms long Impact of cultural attitudes Women being isolated and Social imbalance created due to on women’s employment increase in likelihood for them lower percentage of women and empowerment. becoming easy targets for sexual employed in high high-skilled jobs harassment at work Scenario Investigation & Analysis – Iteration 2 18

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B Impact of change in USA Relationship of Honduras Honduras focuses on other free trade policy on increases with Venezuela. countries for export. Honduras export. Competition of Maquila Change in Maquila products to Maquila products focused in products with Asian establish identity in USA market. other markets. products in USA. Implementation of anti Youth frustration leads to rejoin in Strict implementation of law gang law on freedom of gang. curbs the gangs. youth. Impact on Honduran High funding by USA to Honduran Longer US--Honduran relation to government with removal government for maintenance of sustain growth. of US army from Solvano army. airbase. Role of microfinance on Increase in employment in both Increase in investment for entrepreneurs in urban urban and rural population. business infrastructure. population. Role of rural society towards Proximity of Maternity centre will Less response to maternity centre modern maternity centre. help women health. by women due to conservative nature of women. Role of small parties in Influence gangs to increase their Gangs will combine with PN to general election in vote banks in election. overpower PL in general election. November. High interest rate on loans, Parents send child to work Increase in child labour. affecting child education. instead of school to repay the loan. Impact of EU trade More revenues coming from EU More employment opportunities agreement on Honduras market as exports. helping in eradicating poverty. export. Role of female condom on Decrease in HIV/AIDS numbers in Increase in HIV/AIDS number in HIV/AIDS spread. Lesbian and heterosexual male to male sex partners. partners. Impact on unskilled labours Secure bread basket for the local Improvement in financial due to minimum wage labours every day. conditions of the unskilled standard. workers. Role of wheat and rice Less dependency on government Less impact of diseases as farming on malnutrition of aid leading to continuous food children are healthy with children in rural area. supply to children. sufficient food supply. Impact of literacy on Higher role in family affairs Better self- -awareness leading to women empowerment. leading to gender equality. better maternal health. If judicial System not Though Judicial system Judicial System takes action Influenced by executive separated from the executive against corruption severe body what impact would body Corruption not affected. decrease in corruption seen there be on corruption. Impact of labour unions in Labour union work towards better Labour union keeps on calling providing quality education. working condition for teacher strikes for teachers school which results in better quality of intermittently closed for long education periods of time. iods Ability of existing education Existing education system Though 95% literacy achieved system in producing skilled produced high quantity of the degree has no value in the labour. professionals / Skilled labour. job market. Scenario Investigation & Analysis – Iteration 2 19

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B Stance of the Poor towards The poverty prevailing in The poor are not concerned Government Providing free Honduras sees free primary about education they see it as a Education. education as the first step in factor that would decrease Alleviating Poverty house hold income Effects of Cultural value Overall high level of acceptability Although high level of system on Education. of need for education acceptability of need for education rejection of Organized schooling. Ability of the local News Media makes govt more Political control on media makes paper and TV to impact accountable for their actions them tools for party Political Change. propaganda.8 Ability of Honduras to Honduran Govt was able to Honduras spends 20 M US$ on develop Bio Fuel. develop bio fuel from Sugarcane research however no new bio and African Palm to meet the fuel developed 33% requirement budgeted by them Impact of Censorship on The Govt censor board weak Government censors any Anti the Honduran TV and News media speaks its mind on political government material on the local papers. action TV and News. Efficiency of the Honduran The Government of Honduras in Eco friendly mining laws ( Govt in chalking out an deadlock over coup Eco-friendly formulated) though delayed ecological policy on mining act is shelved mining. Will Gangs (MARAS) impact Gangs grow in size high impact Cultural rejection of MARAS national Security? on national security decreasing impact on MARAS Impact of new ecological Decreased production and The new law does not impact act on Shrimp farming. export of shrimp shrimp farming practices practices. Ability of Honduras to The Honduran Govt in support Tourism Industry booms however develop eco friendly with IADP develops a plan fo for the ecological laws are not tourism. eco-friendly tourism eco adhered to. Ability of the Honduran Honduras develops and repairs The road infrastructure remains Govt to improve the road existing road structure decrease the way it is, status quo on oil infrastructure. in transit times and improved consumption from transport. efficiency on oil consumption Ability of Government to Energy losses continue as poor Private sector kicks in on energy curb loss of energy in infrastructure. well managed plants with transmission and distribution. minimal losses of energy in transmission. Change in Attitude of Though religious leaders against Religious Institution remains religious groups to providing introduction of sex education conservative towards introducing sex education in schools. Government Introduces it in sex education in primary school. Primary School Impact of NGO in creating NGOs work in HIV prevention in a NGOs actively piece meal and awareness regarding HIV major way reaching out to the there is no follow follow-up prevention. highly Susceptible population Ability of the UN AIDS to UN AIDS work in collaboration NGOS feel threatened by UNAIDS collaborate with the NGOs with all NGOs working on a work in terms of loosing working on HIV prevention. systematic national plan to independence. control HIV. Scenario Investigation & Analysis – Iteration 2 20

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B Impact of introduction of Legal sex work not monitored Recognition and monitoring of monitoring of HIV status of resulting in no change on health this group leads to tab on HIV Legal sex workers on HIV status of Sex Workers. status amongst sex workers and prevention. improved awareness levels. Impact of training Nursing Trained Auxiliary staff goes back Trained Auxiliary staff though Auxiliaries on infant to the community advocating assist in deliveries but have no mortality. and assisting in studded impact on changing mindset deliveries. towards institutionalized deliveries Impact of cooperation Cooperation between Though there is a sharing of between regional municipalities learning from each managerial processes no sharing municipalities on Health other shared resource base of resources as they are limit limited. resources / learning. specially effects smaller municipalities Impact of cultural diversity Culturally diverse groups not Culturally diverse groups more on acceptance health care receptive of modern day acceptable of taking assistance delivery. medicine in Health from trained members of their own community Ability of the Government Government manages to Failure / Delay in payment lead to procure more drugs for continue and further subsidize to spoilt relationship with HIV through negotiation procurement of drugs from pharmacy companies and in with pharmaceutical pharmaceutical companies procurement of new drugs. companies. Ability to generate The municipal Government calls Govt looks at buil building training adequate professionals on local resources training others facilities for provision of skilled dedicated to control HIV. within the community manpower to deal with HIV care Does increase in tourism More sexual transmitted disease Sex tourism reason for more leads to increase in among people tourist to coming in prostitution. Increase in tourism affecting Real estate price goes up More infrastructure development real estate price. Does corruption leads to Corruption may sometimes leads Country GDP will decline decline in GDP. to consumerism Effectiveness in the flood Information generated was rarely Dispute between Nicaragua & management between translated into early flood Honduras leads to falsification of Honduras & Nicaragua. warning data in the case of disaster Feasibility of giving free Because of centralized health Since majority of population are mosquito net by care system (Hospitals) in urban areas distribution government to prevent distributing mosquito net though feasibility is high which can malaria. hospitals in not a good idea prevent malaria spreading Does microfinance More women in business More business start up thereby contribute to the economy. better GDP Does minimum wages of Primary education rate increase Rise of gangsters among young children curb child labour. age people decrease Strategic alliance with gold Increase in gold export add more Lack of skilled labour in Honduras companies to dig gold in value to the economy may be problem to maintain Honduras. mining plant Is judiciary influenced by Legal system fails increase in Increase in number of crimes politics. corruption Scenario Investigation & Analysis – Iteration 2 21

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B Feasibility of strategic Foreign university education Due to poverty people might not alliance with foreign might be expensive be interested in higher education universities to create skilled manpower. Is increase in child mortality Lack of doctors is a problem More life span among children an impact of de-centralized hospital system? Feasibility of having Government of Honduras unable Women empowerment their by separate quota for women to give salaries to employees family stability in public sector jobs who complete primary education. Women headed business Better gender equality Improved women education sustains family. Does world bank project for Energy exploitation may happen Rural areas getting electrified energy alleviate energy crisis in Honduras. How effective is water Decrease in death rate due to Better health for people in rural sanitation project in Rural impure water areas areas? How much possible is Youth contributing more to the Increase in primary education inculcating agriculture economy resulting in less crime and poverty education in primary education? How effective is role of Educational & social uplift NGO’s are not able to convey NGO’s in spreading the increase among children message to the world “Feed a message “Feed a child in decrease in poverty child in Honduras” Honduras”? Does government labelling Tagging or labelling of all trees De-forestation can be reduced forestation of trees reduce illegal are not feasible which iin-turn up to an extent timber production? illegal cutting of trees Possibility of exploiting highly Maintenance of mining plant will Lead & zinc export will add better precious metal like zinc, be harder because lack of skilled value to country silver in Honduras. man power The rigid rule by US for Illegal Illegal immigrants of Honduras Increase in unemployment due immigrants from Honduras. sent back to their countries to more eligible people for one job Impact of awareness of Usage of condoms increases in Population control is done with condoms on male males sex with male workers high usage of condoms prostitutes. leading to decrease in HIV Influence of women for Use of condoms increases due to Reduction in chances of HIV due decision making regarding more influence of woman in to increase in use of condoms the use of condoms. purchasing process Impact of free health check Better health of children when Backward society opposing up’s of pregnant woman on born health check up due to social h infant mortality rate. norms PL regaining power in Amendments in judiciary laws Quality of education enhanced General elections. by involving professional teachers from abroad Scenario Investigation & Analysis – Iteration 2 22

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B Is working environment More employment opportunities Disparity in income for women in equal for men and women for women in private sector private sector despite same in private sector. qualification Utilization of health care Special budget assigned for More advance techniques/ budget in research and research in health care vaccination been used to cure technology of new current diseases medicines. Impact of industrialist People with less income selling off Growth of hospitality industry in buying property on their lands with less value of their Honduras near beaches beaches. lands Exploration of minerals to Export of minerals leading to Burden on few minerals will be increase GDP. increase in GDP reduced as there will be market for more minerals Impact of transmission of Manufacturing of products will Foreign trade will increase due to Maquila sector to less production of goods which to be manufacturing sector on sold in different countries economy. Impact of development of Dominance of US will be reduced US will take action against trade relations with Honduras because of trade countries outside US and relation with their countries Latin America. Role of gangs in slowdown Involvement of gangs in robbery Gangs involvement in politics of economy. and murder leading to de growth leading making laws in favour of of econ economy them Impact of awareness on Deforestation reduces with Conservation of trees leading to conservation of trees. increase in awareness healthier environment for future Women employability in Low wages given to women Woman faces sexual harassment private sector. compared to men of same in office calibre Access of hospitals in rural Limited access of hospitals in rural Accessibility of hospitals to rich areas. areas people Impact of legalized Growth of tourism leading to high People moving out of poverty prostitution on HIV. GDP Political instability can lead US companies removing their Increase in unemployment due to loss of investment by US business from Honduras to US companies removing their companies business Political impact of Honduras Strong alliance among members Strong alliance leading to joining ALBA. leads to more trade reduction in US decision making in Latin America Role of catholic churches in Influence of catholic churches fluence Influence of catholic church politics. increases as its followers increases leads to amendment to constituency laws What will be the Venezuela supply of oil and Venezuela continues to supply oil consequences on oil supply political links are strengthened but does not require A.L.B.A. due to Honduras’s political within A.L.B.A. membership as a political pre pre- stance? requisite. Scenario Investigation & Analysis – Iteration 2 23

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B How could the EU trade E.U. Trade negotiations result in E.U. trade negotiations result in Negotiations affect new markets for all agricultural new markets for Agricultural Honduras agricultural output and nothing more. output & foreign direct policy? investment in sustainable manufacturing. What will be the USA policy USA Continues with repatriation USA agrees to keep Honduran on convicted Hondurans in of Honduran convicts. convicts in American penal the USA illegally? system until end of sentence. If Hydro electric dams are Rural communities continue to Rural communities are helped by not built, how will rural rely on Kerosene for electricity NGO's to utilize small scale local community’s energy needs generation. hydro-electrical systems. electrical be met? What Will happen to Power The selloff of Public Power The selloff of Public Power supplies if State companies Generation companies creates a Generation companies does not are sold to the private more competitive energy market create a competitive market for sector? for consumers. consumers but revenue made from the sale is re om re-invested in electrical infrastructure. What will Honduras do if oil A National Oil Company is A National Oil Company is is found in territorial waters? formed which works in formed with links to Venezuela partnership with International Oil and other A.L.B.A. Countries. Companies. What will Honduras Work with Geographic Work with A.L.B.A. as a primary Governments' foreign policy neighbours in O.A.S. & CAFTA group member including military be towards its nearest with no Military agreements. consequences. neighbours? Will the UN intervene in the U.N. intervenes and helps return U.N. Intervenes & advocates current political unrest? Honduras to the current state of constitutional change on the way political stability. to returning state to democratic control, helping separate Judicial from political. Will the Judiciary continue The Judiciary are not appointed The Judiciary continue to be to be linked to the Political by political parties but are linked to political parties systems? accountable to the people Will the Maquila business Maquila production becomes Maquila production diversifies model develop to cope uneconomic - leading top a into a different model, and with recession in the USA? reduction in working women. creates more job opportunities for Women. What effects will textile USA Policy will no longer support Textile manufacture continues to import policy of the USA textile manufacture. Selling to be supported from the US. have on the Honduran E.U. covers shortfall. economy? Will changes in Agricultural Honduras Agriculture becomes a Agricultural policy is aimed at Policy be influenced by more integrated part of domestic staples with cash crops companies like Wal-Mart? American food supply chain and as a secondary objective. is supported by agricultural policy Will population Agricultural, Mining & Tourism People continue to move to demographics continue to encourage higher wages in rural urban areas .Development of move to an urban setting? areas, toping labour movement industrial centres around the 4 to the cities. Special economic main urban areas’ due to zones drive this. infrastructure and power demands. Scenario Investigation & Analysis – Iteration 2 24

Exploring International Business Environment Uncertainties Plausible Outcome A Plausible Outcome B How does the catholic The Catholic church does not The Catholic Church Actively church change the Human intervene at a country level protests at a country level for Rights record of Honduras? regarding political systems but human rights to be respected. concentrates at local level to address injustices. Will the fishing Industry on The Fishing industry maintains its Fishing Industry maintains catch the East Coast of Honduras catch sustainably. Cash Crop for at sustainable levels 7 resource is continue to be a net Export to USA. used to keep Honduran poor fed. exporter? What effect will Central The CAFTA Agreement increases The CAFTA Member increases American Free Trade talks cash crop production towards prices to USA & Europe, some have on Honduras? USA & Europe. land reclaimed for domestic food supply security. What effects would a Increased mining activity resulting Increased mining activity resulting renewed mining industry in increased employment but in increased employment and have on the environment? conflicting with Nature reserves export revenue. for tourist/ecological revenues. What will happen to If Remittance incomes increase If the remittance incomes remittance incomes then families will be able to be increase then there are more better nourished & Educated drivers to leave family and move leading to less gang to the US illegally - results in more membership. gang memmembership. What will the catholic Catholic church focuses on Catholic Church Focus on church do to affect the lives education of the poor to break feeding the poor via charity and of under nourished the poverty cycle. working with N.G.O.'s. children? Will the level of Maternal Maternal Care stays at these Maternal Care is prioritized again; Care stay at current levels? relatively high levels. Benefits additional resources added continue to grow. leading to further reductions in mortality rates and education which in turn leads to a population boom. Will focus on preventative Chaga's Disease continues to be Chaga's disease raised as an health campaigns have an seen as a low priority. area of concern. impact on Chagas disease? If unemployment rates stay Unemployment rates are Unemployment rates are high at historical levels, what continually high so parents see which lead to poverty which effects will this have on primary education as the only results in lower attendance in primary education? way to give children a chance. primary education. What would be the effect A new "Coffee Cartel" could A new "Coffee Cartel” could of the re-formation of the create a market that would help create a mono mono-culture similar to “Coffee Cartel”? Honduras rise out of poverty. the Banana plantations of the early 20th century. Scenario Investigation & Analysis – Iteration 2 25

Exploring International Business Environment 5. Clustering of Uncertainties (Sheet 4) Cluster Heading Uncertainties Cluster # 1 ⇒ PL party regaining power in general election ⇒ PN party coming to power in next general election Immediate political ⇒ Role of small parties in general election in 2009 repercussions and ⇒ Will election happen in 2009? consequences of the Coup ⇒ Nature & impact of the decrease in military forces ⇒ Impact of Honduran government with removal of US army from El Salvador airbase Cluster # 2 ⇒ Impact of industrialists buying property on beaches ⇒ Ability of Honduras to develop eco-friendly tourism friendly Impact of tourism on rural ⇒ Change in Garifuna culture by tourism socio-economic conditions ⇒ Does increase in tourism lead to child prostitution ⇒ Impact of tourism on child education ⇒ Will population demographic continue to move to urban setting? Cluster # 3 ⇒ Impact of reducing dependencies of trade in coffee & banana Ability of Honduras to carry ⇒ Change in agriculture crop type – Diversifying / Growing new through industrial and crops on self sufficiency on staple crop agricultural diversification ⇒ Exploration of minerals to increase GDP ⇒ What effects will Central American free trade have on agriculture? ⇒ Possibility of exploiting highly precious metal like zinc silver in Honduras feasible ⇒ What effects will Central American free trade have on agriculture? ⇒ What effect would a renewed mining industry have on the environment? ⇒ Efficiency of the Honduran government in chalking out an ecological policy on mining ⇒ Ability of Honduras to develop bio-fuel from sugar cane & fuel African palm Cluster # 4 ⇒ Will Changes in agricultural policy be influenced by companies like Wall-mart Government agricultural ⇒ How much possible is inculcating Agricultural education in policies and their effect on Primary education? child nutrition ⇒ Availability of Children hospitals in rural areas. ⇒ Adaptation of latest Techniques and Technologies for Agricultural development across the country s ⇒ What will Catholic Church do to affect the lives of under nourished children? ⇒ Role of wheat and Rice farming on Malnutrition of children in rural areas. ⇒ How effective is role of NGO’s in spreading the message “Feed a child in Honduras”? Scenario Investigation & Analysis – Iteration 2 26

Exploring International Business Environment Cluster Heading Uncertainties Cluster # 5 ⇒ Impact of employment on Prostitution ⇒ Impact of cultural attitudes on the ability of women's Future of HIV infection rates in employment the Honduran Society ⇒ Ability to generate adequate care professionals dedicated to manage HIV ⇒ Impact of introduction of monitoring HIV status of legalised sex workers on HIV prevalence ⇒ Impact of Literacy on women's employment ⇒ Impact of NGO’s in creating awareness regarding HIV Prevention ⇒ Does an increase in tourism lead to an increase in o prostitution ⇒ Role of Female condoms on HIV/AIDS spread ⇒ Ability to procure more drugs for HIV through negotiations with Pharmacy companies ⇒ Impact of awareness of condoms on male prostitutes ⇒ Change in attitude of Religious groups providing sex education to primary schools ⇒ Influence of women for decision making regarding the use of condoms Cluster # 6 ⇒ Does govt labelling of trees reduce illegal timber production ⇒ Impact of awareness of conservation of trees reness Impact of policies of the ⇒ Impact of forest conservation law on new crop sustainability government on environmental ⇒ Govt stance on environmental conservation management ⇒ Impact on new ecological act on shrimp farming ⇒ If hydro electric dams are not build how will rural communities’ energy need met? ⇒ Will fishing industry on the east coast continue to be as net exporter? ⇒ What will happen to power supplies if state companies are sold to private sector? Cluster # 7 ⇒ Impact of free health checkups of pregnant women on infant mortality rate Future prospects of primary ⇒ Role of rural society towards modern maternity centre maternal health-care ⇒ Impact of cooperation between regional municipalities on health resource / learning ⇒ Is increase in infant mortality ratio an impact of decentralized hospitals? ⇒ Will the government provide free health care in rural areas? ⇒ Utilization of healthcare budget in research and technology of new medicine ⇒ Will the level of maternal care stay at current level? ⇒ Impact of cultural diversity on health care delivery Cluster # 8 ⇒ Effect of cultural value systems on education ⇒ Stance of the poor on government providing free education Poverty level impacting the ⇒ High interest rate on loan affecting child education effectiveness of free education ⇒ Ability of existing education in providing quality education system ⇒ If unemployment rates stay at historical levels what effect will this have on primary education? ⇒ Internet connection facility impact on child education in rural area ⇒ Impact of labour union on providing quality educ education Scenario Investigation & Analysis – Iteration 2 27

Exploring International Business Environment Cluster Heading Uncertainties Cluster # 9 ⇒ Ability of the Honduran Govt to improve road infrastructure ⇒ Impact of promotion of inland railways for transportation of Level of investment in large goods & people, by improving the current infrastructure infrastructural projects in ⇒ Ability of Govt to CURB loss of energy in transmission & Honduras distribution ⇒ Prioritizing the allocation of fund towards infrastructure development ⇒ Does World Bank project for energy alleviate energy crisis in Honduras ⇒ How effective is water sanitation program in rural areas? Cluster # 10 ⇒ Impact of implementation & adaptation of DR DR-CAFTA on Foreign Direct Investments Influence of US policy ⇒ Will the Maquila business model develop to cope with international trade of Honduras recession in the USA ⇒ Impact of transmission of Maquila sector to manufacturing sector on economy ⇒ Impact of development of trade relations with countries outside US & Latin America ⇒ Impact of change in US free trade policy on Honduras export ⇒ What effects will textile impact policy of the USA have on Honduran economy? ⇒ Impact of EU trade agreement on Honduras export ⇒ What would be the effect of the reformation of the Coffee cartel? ⇒ Competition of Maquila products with Asian products in USA a ⇒ Impact on unskilled labourers due to minimum wage standard Cluster # 11 ⇒ Will gangs (MARAS) impact national security? ⇒ Roles of gangs in slowdown of economy Role of Judiciary in dealing ⇒ Impact of implementation of Anti-gang law in freedom of gang with corruption and gang Youth culture ⇒ Impact of censorship on the Honduran TV & News paper ⇒ Effectiveness of the enforcement of judicial systems & the rule of Law ⇒ If judicial system not influenced by executive body what enced impact would there be on corruption ⇒ Ability of local news paper & TV to impact political change ⇒ Will the Judiciary continue to be linked to political systems? Scenario Investigation & Analysis – Iteration 2 28

Exploring International Business Environment 6. Validating Clusters (Sheet 5) Scenario Investigation & Analysis – Iteration 2 29

Exploring International Business Environment Scenario Investigation & Analysis – Iteration 2 30

Exploring International Business Environment 7. Remarkable Person Prof. Sally Humphries is professionally associated with University of Guelph, Canada as an Associate Professor in the Department of Sociology & Anthropology, Prof. Humphries has been conducting research with an NGO, called Fundación para la Investigación Participativa con Agricultores de Honduras (FIPAH), an organization which is dedicated to support participatory agricultural research with Honduran hillside farmers for the past 15 years. rmers The research themes of her team included gender and agriculture, participatory plant breeding, organic agriculture, migration, youth and women empowerment & participatory research on farmers' wellbeing. Prof. Sally and her Honduran partners are currently working with IDRC on access and benefit sharing in plant genetic resources. Prof. Sally Humphries The following is an abstract of her responses (verbatim) to our Questionnaire on the current state-of-affairs in Honduras. affairs On the role of catholic churches in rural as well as urban day day-to-day life and on women day empowerment... “The Catholic Churches’ influence is waning in some parts of the country due to the aggressive increase of other Christian churches who seem to be more focused on changing the basic’s for the changing people.” On the financial status of Hondurans both in urban and rural areas... Hondurans, “With the average earnings of the rural population being 65 cents a day, it is close to the poorest in the world. We have colleagues who have worked in Malawi who say that the poverty here is of a e Malawi, similar level. Yet at the same time there are malls in the cities that can rival the USA. USA.” On the status of infrastructure in Honduras Honduras... “Poor investment – a more interesting metric to look at is the number of cell phones. It is really common for people in rural areas to travel down to the nearest town/ village to charge their phones!” On the current industrial set-up... “Industries are mainly concentrated in towns and cities up in the northern coast While there are coasts. small Mequila’s in regional towns, the main ones are on the northern coastline. , coastline.” On the health care system in urban and rural region regions... “Very poor health provisions due to poverty – any comparison with Guatemala would be a false positive due to the treatment of non Spanish speaking indigenous communities who fair even worse non-Spanish than poor Spanish speakers.” Scenario Investigation & Analysis – Iteration 2 40

Exploring International Business Environment On the role and status of gangs in society society... There are Gangs in rural areas also – we have experienced being shot at – there are random murders and intimidation – they terrorised some communities until people the took the law into there their own hands and fought back There is a Wild-West attitude. Interesting comparison is with back. West Nicaragua, as they move to Costa Rica for economic advancement. Nowhere near the same gang culture and a safer country to visit or live live-in possibly, because the route to “El Norte” does not happen due to the number of borders they have to cross The Guatemalan border with Mexico is cross. he extremely hard at the moment. On whether the power of judiciary is significant enough to fight Gang culture... ... “No real Police or law in the rural areas where Gangs thrive...” olice areas, On the influence Politics have on Judiciary Judiciary... All the elite–politicians are the industrialists who are also the major land owners People are very politicians owners. dispirited by the current coup as no rea change will come from it. Initially people thought it would real nitially would, but not now they don’t. At least Zelaya was making some efforts to change society and was popular in the rural areas for this reason. On the status of women in Honduran society... (We discussed the statistics regarding the perceived young women married to older men) oung “It is more likely a Civil Union rather than marriages Fathers rarely stay and children from these It marriages. unions are often cared-for by grandparents. There is a huge wish for all boys to get to the USA for USA. Often fathers and sons make the journey together. It is extremely hard and dangerous with many athers . dying or returning maimed after falling off packed trains.” On Government’s stance regarding economic development... ’s “They don’t really care as long as the status Quo remains remains!” On the type of entrepreneurial activities the Hondurans people are taking up... up... “Entrepreneurship is not a particular trait of Honduran’s. On the other hand, Salvadorians are more ot Honduran’s. entrepreneurial group.” Scenario Investigation & Analysis – Iteration 2 41

Exploring International Business Environment 8. Impact/ Predictability Analysis (Sheet 6) t/ Scenario Investigation & Analysis – Iteration 2 42

Exploring International Business Environment 9. Framing and Scoping Scenario End States (Sheet 7) Scenario Investigation & Analysis – Iteration 2 43

Exploring International Business Environment 10. Stakeholder Analysis (Sheet 8) Scenario Investigation & Analysis – Iteration 2 44

Exploring International Business Environment 11. Iceberg Analysis – Corruption & the role of the elite in Honduras lite The National Report on Transparency, Events Social Forum on Externa Debt and External published a month ago by the state Development in Honduras (FOSDEH), which National Anti-Corruption Council, Corruption claims that the country has lost La38m (around US$2m) per day through corruption recorded 3,000 known cases of corruption Rated 126th in the during Zelaya’s period in office. in the last six years, but only 11 of these 2009 Global have gone to court. Corruption Report Source: Country Profile Page 13 (Intranet) The latest scandal broke "There’s a vicious circle and there doesn’t seem “Since taking office on Jan. out in July (2008), when an to be a place to break it. Even when we monitor 27, 2006, the government has investigative commission the media, we see that although the press been the target of over 10 reports cases of corruption, the news stops there: appointed by the allegations of corruption, there is no follow-up by journalists or by the president confirmed including theft of electrical authorities. It’s like a show that gives information irregularities in contracts energy by high administration and disinformation at the same time," officials, irregularities in tenders approved by the head of for health supplies, the hiring the Road Fund, Ramiro http://ipsnews.net/news.asp?idnews=38937 of advisers for non-existent Chacón. But once the jobs, waste of resources in the commission had reported Feedback from Professor Sally Humphries telephone company, (RP).The control of the Elites is all encompassing, its findings, Zelaya influence peddling and abuse politically/ industrially/ judicially and they are also rewarded Chacón by of power in handing out road the largest land owners in the country. offering him the post of building and energy generation contracts” vice minister in the Chiquita earlier this year joined Dole in criticizing Secretariat of Public Works, the government in Tegucigalpa which had http://ipsnews.net/news.asp?i Housing and Transport. raised the minimum wage by 60%. dnews=38937 http://ipsnews.net/news.as http://latinamericasolidarity.org/2009/07/22/from p?idnews=38937 -arbenz-to-zelaya-chiquita-in-latin-america/ References EUI country profile 2008 page 11, 12 Pattern In 1904 humorist O. Henry coined the term “Banana Republic” to refer to the notorious United Fruit Company and its actions in Honduras. ed Structure “The report complained that there was a strong • Corruption and mis- -governance are regarded as tendency on the part of many journalists of the the most serious problem in Honduras. mainstream media to seek personal gain, rather than • Corruption exacerbates poverty and is a real obstacle for the private sector. give attention to the country's corruption problems” • But corruption needs to be tackled with a variety of measures since it takes many different f forms Source: National Report on the Right to Information • Learning from the good experiences and Freedom of Expression," published annually by • There is a real willingness to fight corruption corruption. the nongovernmental Committee for Free Expression (C-LIBRE). Source: World Bank Institute Report 2002 GOVERNANCE AND ANTI- CORRUPTION IN HONDURAS: AN INPUT FOR ACTION PLANNING Stake holders: Cardinal Oscar Rodriguez, Vice Minister in the Secretariat of Public Works, Housing and Transport, Oscar Alvarez, Minister of Security,President Zelaya, Fernando Aguirre, Chiquita’s CEO Scenario Investigation & Analysis – Iteration 2 45

Exploring International Business Environment 12. Scenario vs. achievement of Millennium Development Goals The following table provides a comparative analysis of the various scenarios in achieving the Millennium Development Goals. Our understanding of the current status quo in Honduras, against oals. each of these goals, is also provided for reference. LEGEND: ⇒ GREEN indicates compliance with Millennium Development Goals ⇒ AMBER indicates partial compliance with Millennium Development Goals ⇒ RED indicates non-compliance with Millennium Development Goals compliance Scenario Investigation & Analysis – Iteration 2 46

Exploring International Business Environment 13. Scenario Stories (Sheet 9) Scenario 1: Brown Field Development The framing of the story line is that the current political tensions are the catalyst for change in Honduras1. The first main point is that US government policy towards Honduras must remain positive and that recent political movement towards ties with ALBA and specifically Venezuela2 are positive drivers for change within this relationship. The second main driver is that the “Coup” happened in June, there has been a spotlight cast on Honduras by the rest of the World. This may lead to more scrutiny from the world institutions (i.e. UN, scrutiny World Bank, IMF etc.), this scrutiny can be a driver for change and since the gang culture and corruption are endemic in Honduras. The last driver in this scenario is an acceptance among all Hondurans and aid o organisations that except primary education nothing else will reach its full potential within the 8 Millennium Development Goals. Our story line follows from the points raised earlier to take us to specific changes in the near future. With the US economy going weak there will be pressure to remove aid and support for Honduras3. It is a key that the US Military airbase is used as a bargaining chip by the Hondurans to strengthen the links to the US. The oil deal with Venezuela for 20,000 bbl /day at 40% off market prices with 3 year grace period and repayment over 25 years4 is the bargaining chip that the US has to match. To this end if Honduras can encourage a more favourable aid package in any DR CAFTA agreement. DR-CAFTA We also see in the story that with UNAIDS focus towards to coordinating the various NGO’s working in HIV/AIDS prevention, treatment & education, there would be an improvement in both the awareness and the prevention of this disease. At present the government is funding 70% of the medication (Antiretroviral Therapy)5 . With improved negotiations and better procurement processes etroviral due to decreased corruption this can be improved. Similarly with government focus on education and common peoples understanding of HIV improving, there could also be a shift which helps to develop a system of care providers for people suffering from HIV/AIDS. As we have stated that primary education is at the bedrock of all progress on the MDG’s then a program of teacher exchange and peer to peer learning, could be a way that the deal would feed that into our story. The privatisation of the final state run power companies would help in two ways, firstly it would put the oil supply issue back into private hands i.e. removing Venezuela’s political stance being government to government and secondly ensuring that American legislatures and businesses see ment Honduras being a free market economy in their image. Part of the US deal would also involve training and resources for the military again this helps in various ways: I. Closer Military Links US /Honduras6 II. Use of the Military against the Gangs in Rural area’s A more liberal timeline for illegal immigration will help with remittances coming into the country over the next 10 years and much needed hard currency for the Honduran economy. A huge part of this scenario is the separation political from the judicial as currently laid down by the Honduran Constitution7. With the country’s elite being the politicians, the industrialists, the judiciary Scenario Investigation & Analysis – Iteration 2 47

Exploring International Business Environment and the major land owners there is currently know way to break the strangle hold on development without a change in this system. With an independent Judiciary the lines start to clear for a real change on the gang front and on systemic corruption in the country. However without this change the chancchances of removing the “Maras” gangs from the poverty cycle are immense. This change can have wide ranging effects as independence gives the judiciary much more power and if the US has also supported a military training program we could have the beginnings of a more oppressive police state rather than one which is trying to better itself along democratic lines. References: 1) Political Risk Analysis - Zelaya Return Likely, But No Re-election Honduras - election Political Risk - 16 Sep 2009, Business monitor 2) Zelaya and Hugo Chavez relation: www.csmonitor.com/2009/0922/p90s04 www.csmonitor.com/2009/0922/p90s04- woam.html 3) Country Studies - Federal Research Division of the Library of Congress Country Profile Government And Politics 4) Economic Intelligence unit country profile 2008 Page 5, subheading - Outlook for 2009-1010 5) Economic Intelligence unit country profile 2008 Page 18, Side heading Energy 6) UNAIDS - Country situation analysis for Honduras - http://data.unaids.org/pub/FactSheet/2008/sa08_hon_en.pdf 7) Economic Intelligence unit country profile 2008 Page 8, Sub heading political background The Diagram on the next page shows how these building blocks lead into final states that have direct consequences for the UNDP and the MDG’s in 2021. Scenario Investigation & Analysis – Iteration 2 48

Scenario 2: A Level Playing Field This scenario is being forecasted based on the combination of fundamental premises viz., the rise of Venezuela as a regional force, a decrease in the influence of US on Honduras, due a variety of Geo-Political complexities, in collusion with a positive change in the attitude of Honduran government to enforce a strong internal process systems and controls, to check corruption and Gang culture. The USA, has up until now, been the single biggest contributor and benefactor of Honduran manufacturing and services industry. With US economy weathering an acute recession, it is bound to have a negative impact on Honduran GDP4. Hence, the Maquila sector will be forced to look at markets other than US for its products and services, and the government will now be compelled to look beyond the Maquila to support the economy which has seen a slump from 5.9% in 2007 to 3.9% in 20099. Since US will now focus on resolving it’s own economic and other internal issues that it is faced with, not much of financial aid can be expected to come through for Honduras3. Hence, Honduras will be forced to look for other allies and will be motivated to go ahead with oil tie-up with Venezuelans, who undertake to sell 20,000 barrel of crude oil a day at 40% of the prevailing market price7. This deal is bound to further estrange Honduran-US relationship. However, with the ever increasing inclination and need to look beyond USA, Honduras will look to penetrate EU5 and Asian markets both for exports and FDI’s. The government will also look to increase the agricultural output, both by investing in rural infrastructure and also by diversifying into other cash & staple crops – other than Banana and Coffee – which have been Honduras’s prime agricultural outputs10. The government can also be expected focus on the mining industry and in the exploration of Oil bays across its east coast, in partnership with China & Russia, since they have already evinced interest to provide financial aid, technical help and operational support to Honduras in these areas11. The current state-of-affairs regarding the law and order situation in Honduras is that of disrepute, with corruption being intrinsic to the society1&6. Add to this, an ever increase in gang culture and plutocracy, this seems like a vicious circle that seems to feed on to itself and, with political elite and businessmen being almost synonymous in every sense of word9, the legal system – or at least its enforcement - can largely be ascribed as having a broken-down. As is the case with any evolutionary setting, a socio-economic deprivation for a prolonged period of time is bound to shake up parts of the society which would result in increasing unrest amongst the citizenry. When this increases to an extent that it threatens the regional stability, it is expected that the international bodies and lobbyists would be putting enough pressure on the country’s government for judicial reformation and to act swiftly and severely to put the state back in order. Therefore, no matter which government (PL or PN) would be at the helm, it would be impelled to amend the requisite constitutional changes and strengthen the law enforcement agencies to bring- about, both efficiency and accessibility of legal recourse for the victims. While no immediate secessions or paradigm-shift in the law and order improvement in human rights situation can be expected, in a fairly longer run, the above scenario would help curb corruption, separation of the executive arm from the judiciary and would positively impact in the reduction of the Gang culture. All of the above would lead to a growing level of self-sustenance – albeit in patches; which would give Honduran government the ability to invest in improving its business infrastructure, in order to facilitate the overall development. However, it would be difficult for the Honduran government to fund this, given the fact that the US would plausibly no longer send financial aid. The world-bank project2 that is currently working on improving the Energy infrastructure is a crucial step in the right

Exploring International Business Environment direction for Honduras, since up-to 22% of its energy reserves are wasted in any year in the form of to energy leakages due to poor state of transmission transmission-network infrastructure8. A revival of railways, backed by re-arming and recruiting for railway police force would help traders in transporting goods at a lower arming cost12. This in a way would create a congenial atmosphere for entrepreneurial spirit to flourish. More jobs would be created both in the urban and rural areas, as a result of these series of initial small steps, leading to a reduction in unemployment rates – and would consequently lead to decrease in child labour and increased focus on education. The revived need for more skilled workers would create more job opportunities for women at work, leading to a step towards gender equality, which may be achieved ove a longer period of time. over In effect, the digital divide between the Rich & the Poor, will get diminished to a good extent; the plutocracy and the rule of the elite would be evened out and over dependency on any one super power (Read: USA) for the growth and development of the country, will be almost eliminated – generating a more Level Playing Field for Hondurans. Implication of Millennium Development Goals - 2021: Goal 1: While several steps in the right direction towards poverty eradication have been made, eradication of poverty comprehensively would not be achieved by 2021. Due to reduction in financial aid from US, and the decline of Maquila industries, there would be a marginal increase in unemployment especially in the urban areas. Furthermore, due to lack of development in the rural areas, during the initial years, the problem would have been temporarily accentuated. However, these are short-term set-backs and Honduras will be on the right track towards eradicating poverty if backs it continues with its reforms and explores allegiance with other regional and global powers. Goal 2: The goal of achieving universal primary education is most likely of all the millennium development goals to be met, since the development of rural economy boosted by agricultural reforms will decrease child labour, and extreme poverty. With no other socio socio-economic barriers affecting this, and since the primary education will be free in the country, this goal is certain to be met. Goal 3: This goal is least likely to be met, since the sequence of events starting from the decline of Maquila (that employed women as the skilled workforce) to the lack of patronage by US to fund omen initiatives targeted at rural development and women empowerment. The government is also least likely to look at this aspect as a critical issue, since many macro economic and geo macro-economic geo-political issues had to be dealt with as a priority. Goals 4, 5 & 6: These goals are also expected to be met with negligible margin for doubt. The rural development, agricultural reforms and infrastructural development will generate sufficient revenue which can be ploughed back for setting up health centres and providing quality health care. Subsequently, with tie up with regional powers such as Venezuela, there will be enough option to train skilled professionals to be employed in health centres to deliver quali quality healthcare. An improved judiciary will create congenial atmosphere to check corruption and ensure that the funds are utilized optimally and for the intended purposes, and public health and HIV awareness program will help create healthy and a more civili civilized society. Goal 7: While the rural development being a focus will help optimize the agricultural production, it may result in deforestation to some extent. The refocus on mining and oil exploration will have its ecological impact, although Honduras would be influenced by the international regulatory bodies would to ensure conformance with the appropriate laws governing Environment and Ecology conservation, related statutes. The growth of industrial cities will also have a cascading effect, converting some of the agricultural lands around the cities to commercial and residential lands. This he will be a mixed-bag scenario of development and degeneration. bag Scenario Investigation & Analysis – Iteration 2 51

Exploring International Business Environment Goal 8: This will be hitherto the biggest challenge for Honduras. However, by 2021, Honduras would have made significant improvements in trade relations with many countries outside US, which has so far been its single biggest trade partner. Tie Tie-ups with Venezuela, El Salvador, Nicaragua, European , Union, Russia and China would have been bolstered giving Honduras a significant international allegiance. References: 1) Postcards of revolution, Monday, July 6, 2009 http://www.chavezcode.com/2009/07/role-of-international-republican.html http://www.chavezcode.com/2009/07/role republican.html 2) Energy project http://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/I B/2008/01/03/000020953_20080103144947/Rendered/PDF/420230ENGLISH0H N0Power0sector01PUBLIC1.pdf 3) Business monitor: Political Risk Analysis - Zelaya Return Likely, But No Re Re- election Honduras - Political Risk - 16 Sep 2009, 4) Economic Intelligence unit country profile Sep 2009 Page 5, subheading - Outlook for 2009-10 5) Economic Intelligence unit country profile Sep 2009 Page 5, subheading - country Monthly review 6) Economic Intelligence unit country profile 2008 Page 11, subheading – Judiciary 7) Economic Intelligence unit country profile 2008 Page 14, subheading – Energy 8) Economic Intelligence unit country profile 2008 Page 14, subheading – profile Energy 9) Honduras Country Report published on November 1, 2008 by Political Risk Year book (PRS) 10) IHR Global Insight – Country Intelligence (http://www.ihsglobalinsight.com) (http://www.ihsglobalinsight.com 11) Mining Industry Today - an EIN news service for global professionals dustry (http://mining.einnews.com/honduras ) http://mining.einnews.com/honduras 12) Icon Group International Inc., Executive Report on Strategies in Honduras – A Report The Diagram on the next page shows how these building blocks lead into final states that have direct consequences for the UNDP and the MDG’s in 2021. Scenario Investigation & Analysis – Iteration 2 52

Scenario 3: Green Shoots in Shade This Scenario builds on two uncertainties: Role of Judiciary in dealing the corruption and gang culture, and influence of US policy on international trade policy of Honduras. The scenario end state leaves Honduras with scattered development in Rural Areas with continued support from the US. However this is paralleled with a continued plutocracy and a corrupt system of law and order in the urban environment which sees the MARAS gangs as an intrinsic fiber woven into the entire political and cultural fabric thus influencing day to day life. In the past we have seen a very high dependency of Honduras on the US. Whether it is economic development in terms of Trade or the increase in the Maquila industry, the US has played an important role in the post independence development of the country1. In fact US marine ships have been an integral part of Honduran domestic security which has helped to keep the peace with many of its neighboring countries. However since Independence Honduras has experienced many periods of instability and even dictatorships in its political history.2 It is only after the 1980‘s that they have truly moved towards a more Democratic Outlook. 2 This Democracy though is infested with corruption, with a hand in glove policy of Land owners, politicians and Manufacturers. In terms of corruption it is estimated that in the past regimen of President Zelaya there has been a loss of approximately 2million US$ on a daily basis just because of corruption3. Another important influence in shaping the politico – social environment of Honduras has been the effect of the MARAS or the local gangs, which in actuality originated in the USA, Los Angles in the 1960’s4. They too are politically connected and associated with the political parties as is evident from the gang wars which take place within prisons themselves. The present scenario is of utter political unrest brought by the Military Coup which has been led by Mr. Roberto Mitchelli, the current Prime Minister of Honduras who has ousted his predecessor President Zelaya. The elections for the country have been predicted for 29th of Nov 20095, but at present it is not certain that this will happen. Corruption at the same time runs a mock in the city as government funds are siphoned and money related political favors are common6. An Example of how far the corruption goes up the political ladder is that the last minister for foreign affairs was also implicated in a Passport scam7. Maras at present are at strength of 30,000. The efficiency of the judicial system and law & order in general is heavily impacted by the overcrowding of the penitentiaries, which though made to house approximately 5500 inmates are currently housing around 13000 prisoners8. Similarly Gang crimes within the prisons9 are also quite common and various riots have been documented with Gangs violence being the initial spark10 The influence of MARAS is not only limited to the city but is also prevalent in the rural areas where there is a limited amount of police presence. Here it’s a wild Wild West situation with people taking law in their own hands to get justice. Governments have already got laws regarding Corruption & Anti-gang Laws which need more vigorous enforcement11. In the Story the Key events which take place are Stringent Enforcements of these laws. The Government is also providing free education and the Primary education enrolment rate is 93.4%12 but the impact of this primary education is not seen in the job market. We see the population of Honduras accepting education as an integral first step in alleviating poverty and the Government. The government of Honduras with the help of local unions and US succeed in improving the quality of education. Another key event is the local communities being able to push back the MARAS’s gangs at a grass roots level – creating an environment where membership of a MARAS gang is seen as anti-community. We see the rise of a “Free Press” i.e. one not owned by the political/industrial elite. In parallel we see the US supporting Honduras in terms of education, agricultural innovation13 and in the development of Hydroelectric power generation14&15 on a smaller scale in the rural areas. Lastly we see the US establishing a fair trade policy for the Agricultural produce from the farmers.

Exploring International Business Environment The scenario Green Shoots in Shade sees continued support from the United States of America for Honduran’s development. Initially we see support towards Honduran economy for Maquilas and at the same time we see social innovation to reduce the cost of textile manufacturing. Later on in the textile scenario we see support and aid from the US for development of better quality education through work by teachers from America, And then in agriculture e.g. in joint agricultural research, implant breeding projects, organic agriculture etc13.Generation of Hydro electric power at the rural local anic level 14&15 (both of these are at present happening though on a small scale). We also see that the US Government at the moment lenient in its policies regarding repatriation of ill illegal Honduran Immigrants 16. In parallel we see the Honduran society remaining at the same levels of corruption as it is at present. We see degradation in the law & order situation with strengthening of the MARAS’s gangs, both from their political connections as well as from its connections with the US gangs. We connections see this happening to a level where the people can’t take it anymore and retaliate. The people come together as communities take up a fight against the Maras at a local level especially in the rural areas where the police is not very strong. We see that there are more acceptances for education as a way to alleviate poverty this is assisted with an improvement in the quality of education with help from the US and advocacy from the Roman Catholic and th Evangelist the Churches. The educated people lead to the rise of a free press which is not controlled by any political party. The developments aided by the US in the field of Agriculture and Hydroelectric Power generation helps in further development of the rural areas. The Cities however remain impacted by the torments of Gangs and corruption. The endemic corruption prevents development of infrastructure and thus prevents improvement of any of the healthcare scenarios in Honduras. The Eco Eco-tourism law is released as the rich and politically connected lobby for it. At the same time because prostitution is legal we see a rise in Sex tourism to the newly developing tourist tourist. Religious institution remains conservative towards sex education in the country Hond Honduras. . This leads to a slight increase in the prevalence of HIV. The condition for women would probably deteriorate because of the rise in the sex industry plus as more men immigrate to the US and women are pushed back to look after their homes. Implications on 8 Millennium Development Goals - 2021 tions Goals 1, 2 and 8: All three of these goals are impacted positively. There is an improvement in the level and reach of Education through increased acceptability by the people of Honduras and support from the US in improving its quality of education. Poverty too is influenced positively through the development of new methods in Agriculture, Hydroelectric power generation and increased Tourism. This together brings about improved Global partnerships especially with the USA and its allies. Goal 3: Promotion of gender equality and empowerment - is not impacted, as we see a rise in prostitution and immigration of men to US. The latter we feel can reinforce the conventional role of the woman at home. Even though at the we also see a rise in levels of education, we feel it is not significant enough to offset the above mentioned phenomenon. fset Goal 4 & 5: Looking forward to 2021 in this scenario we see that there would be no significant change from the current state today of the millennium development goals 4&5. The reason for this is that due to continued corruption we see that the probability of the Government investing in either orruption health in general or infant mortality prevention. Goal 6: The only goal which is negatively impacted is the goal towards prevention of HIV / AIDS, Malaria and other diseases, goal 6. This is due to a combined effect of no actual improvement goal taking place in the healthcare system, and an increase in the Sex industry. Another factor which plays against this role is the rejection of sexual education from various conservative religious groups. Scenario Investigation & Analysis – Iteration 2 55

Exploring International Business Environment Goal 7: which is in regard to Environmental conservation, will also not be impacted as even though there is an introduction of a Environmentally friendly law in regards to mining and Tourism , it is forced by the Honduran oligarchy for their own interest. Thus we are not very certain about how strictly this would be implemented. References: 1) Economic Intelligence unit country profile 2008 Subheading Economy. 2) Library of Congress Country Studies Honduras Chapter 1. Historical Setting 3) Economic Intelligence unit country profile 2008 Subheading Highlights. 4) http://en.wikipedia.org/wiki/Maras_%28gangs%29 5) Economic Intelligence unit country profile 2008 Subheading Highlights. 6) The Crinis Project -Money in politics, everyone´s concern Money http://www.transparency.org/regional_pages/americas/crinis 7) Economic Intelligence unit country profile 2008 Subheading important recent events. 8) http://www.chronogram.com/issue/2008/4/Arts+&+Culture/Prison-Pictures http://www.chronogram.com/issue/2008/4/Arts+&+Culture/Prison Pictures 9) http://www.cbsnews.com/stories/2003/04/05/world/main547920.shtml CBS ww.cbsnews.com/stories/2003/04/05/world/main547920.shtml news world, San Pedro Sula, Honduras, May 17, 2004 103 ad In Honduras Prison Fire,Inmates Killed In Blaze Caused By Short Short-Circuit 10) http://news.bbc.co.uk/1/hi/world/americas/7369487.stm 11) You tube.com a. http://www.youtube.com/watch?v=uqeaqvzda3m b. http://www.youtube.com/watch?v=tzaik 3tmli&feature=channel http://www.youtube.com/watch?v=tzaik-3tmli&feature=channel c. http://www.youtube.com/watch?v=nstqpduub3e&feature=channel 12) Economic Intelligence unit country profile 2008 Subheading Education - Education page 13) Sally Humphries 14) Http://www.ecs.baylor.edu/ece/index.php?id=52633 Mr. Brian Thomas 15) Discovery channel website Http://planetgreen.discovery.com/tech Http://planetgreen.discovery.com/tech- transport/green-inventors inventors-rural-electricity.html 16) Economic Intelligence unit country report 2009 Subheading Outlook for 2009-10 Political outlook, International relations - page 6 10 The Diagram on the next page shows how these building blocks lead into final states that have direct consequences for the UNDP and the MDG’s in 2021. Scenario Investigation & Analysis – Iteration 2 56

Scenario 4: Recipe for Revolution This Scenario builds on two uncertainties: Role of Judiciary in dealing the corruption and gang culture, and influence of US policy on international trade policy of Honduras. This scenarios end state is the partial improvement of the financial conditions and food supply of the unskilled majority through eco-tourism and diversification of the economy in Honduras. The relationship of Honduras with the USA was very close for a very long time. Military and political links were especially strong during the 1980’s when Honduras, positioned between El Salvador and Nicaragua, both fought bloody civil wars. The Maquila trade was established by the USA as offshore unit for US market and is one of the big sectors of employment and revenue for Honduran economy. In particular, it is one of the biggest employers of women in Honduras1. Concurrent to this the judiciary of the country was heavily influenced by the Honduran Oligarchy and is appointed by political representation. The judicial system is ineffective & unable to fight against corruption. This is ultimately leading to loss of integrity in the judiciary and a loss of respect for them in the wider society. The judiciary is helpless to curb the gangs in spite of Anti-Gang laws2. The present scenario is heavily influenced by the current status of Honduras government. The current President Zelaya was exiled to Costa Rica but is in the Brazilian Embassy under siege at the moment. The second in command i.e. the Vice president of PL party, Roberto Micheletti, took over as head of the country. The general election was going to happen in November 20093. President Zelaya has shown interest to increase alliance with Venezuela4 by signing oil deal. This oil deal is not seen by the US government as positive step5. This is shown by the US companies restricting their business with Honduras. Simultaneously the flow of aid funds from the USA has decreased due to ongoing relations of Honduras with Venezuela6. The coup has been linked to President Zelaya’s attempts to raise the minimum wage by 60% and some parallels have been drawn with Brazil in 1964 where a sitting president was deposed after a similar wage rise for the poor of his nation. On the other hand, inside the country the judiciary is handicapped due to high level of influence held by politicians, and a gang culture that is strongly linked to the USA and has been historically hard to control or limit. The crime rate and corruption is increasing at all levels of the society, with politicians using loopholes of the judiciary to gain economic benefits in terms of misusing the funds for their own interest. This is resulting into negative impact on poor people. As the gap between the poor and rich is expanding, the gangs are adding more grief into an already grim situation. As whole the Honduran society is in a state of unrest due to crime, corruption and human right violations. Government has made more forward thinking legislation such as the Forest conservation act, right of information act and eco-friendly guidelines for tourism industries in Honduras. A policy for eco- friendly mining is still to be launched as government is looking for various parameters to protect ecology and natural resources from mining.7 Also, Honduran government is trying to establish relationship with Venezuela and ALBA countries2. If the Venezuelan government take a stance to restart the oil deal to establish future relationship with Honduras, then Venezuela will influence the government to reduce the US presence in Honduras. As the Maquila production will not be for the US market anymore, there could be an increase of unemployment rate in country. If the US repatriate the more Honduran convicts and illegal immigrants from Honduras unemployment will increase and reduction in remittance income. This results in a severe impact on Honduran Government finances as remittance is one of the biggest source of revenue for economy8.

Exploring International Business Environment This encourages the government to look for other countries to export to & to also take initiatives to diversify the countries agriculture, mining and tourism industries to become lee US US-centric. To increase the export market, strengthen the economy and secure the country Honduras strengthens its links with ALBA. Joining ALBA may helps to decrease in expenditure for army. Also trade agreements with Europe may open new avenues for agricultural products. This all helps to lessen interference of USA in Honduras’s political and economic future. Inside the country the high rate of unemployment, corruption, and gang culture is creating a pressure cooker environment for the citizens. Ultimately communities take a stand to come together in a cohesive group and fight against gangs, corruption and unemployment from the bottom up. unemployment They raise their voice and work in cooperation for survival. This could result in a “free press” one that is not linked with the Historical Honduran oligarchy, this could be through the internet or more likely through the labour unions in the urban areas and campesino’s groups in the country. The press can ur then drive change, and make government more accountable towards the common people. Slowly there is cultural rejection of gangs from the society. People opt for more entrepren entrepreneurial activities to become self sufficient and survive. Free press and new export markets encourage the government to make policies for sustainable development mining and natural resources. As time moves forward, with new policies, such as in mining a and eco-tourism, starts in Honduras. It tourism, helps into slightly increase in employment in unskilled sector. The poor are now in a slightly better financial condition and can feed their families. Looking ahead at 2021 we see in this scenario that there is no significant change in the MDG goals 2, 3, 4, 5 and 6. Goal 2 which talks about achievement of universal primary education is not impacted in this scenario. Though there is no particular rejection of the present system of free primary education, but at the same there is no further increase in its acceptance either. The quality of education too remains the same as Government does not take any positive step towards improving it. There is however a slight improvement in the state of poverty which should ideally positively influence levels ideally of education, however in this scenario this is not the case as the decrease in poverty is brought about the generation of employment for the unskilled labor which could cause more people to leave their education to earn money as early as they can. Goal 3: Gender Equality and Empowerment of Women is not impacted as there is neither a change in the level and quality of education nor cultural value systems, which are the two most important drivers in bringing about Gender Equality. In fact women employed in the Maquila industry would Equality. lose their jobs due to closure of this industry however we feel that some of them would be absorbed in agriculture or the tourism industry. Goals 4 and 5 which deal with Reduction in Infant Mortality and Maternal mortality respectively are Mortality also not influenced and would remain as they are at present. This is because there is no improvement in infrastructure or in Government’s expenditure in healthcare as corruption is still quite prevalent. Similarly there is no improvement in either education levels or women Empowerment rly which would actually have an influence on these goals in the form of qualified care givers and acceptance of need for institutionalized child birth. Goal 6 which is concerned with Prevention of HIV / AIDS, Malaria and other diseases would remain d the same in this scenario as the government is still spending the same amount as before for Healthcare. Similarly we are also assuming in this scenario that the UNAID would continue to support its AIDS awareness and management program in Honduras. At the community level too we don’t see any significant change in attitudes towards the prevention of HIV. On the other hand we Scenario Investigation & Analysis – Iteration 2 59

Exploring International Business Environment see that there would be an increase in the tourism industry for Honduras this in turn may result in for increased sex tourism Goal 1, 7 & 8 are influenced positively in this scenario. We see alleviation in poverty which would basically be through an increase in the employment for unskilled labor. We see that there wo would be an increase in the mining, agriculture and tourism industry as a repercussion of the closure of the Maquilas and decrease in demand for export of manufactured goods. There would be increased global partnership initiatives from Honduras as they now find themselves out of the shadow of USA. find Venezuela and other Central American companies would open up to Honduras. Goal 7 Environmental conservation would benefit from the release of the eco eco-friendly Mining and Tourism Law. As Honduras look at a more sustainable economic model other than the Maquila and sustainable Manufacturing Industry. References: 1) Economics intelligence unit country profile 2008 subheading Economic performance 2) http://community.seattletimes.nwsource.com/archive/?date=20041114&slu g=honduras14 3) BBC News: news.bbc.co.uk/2/hi/americas/8127530.stm Zelaya and Hugo Chavez relation: www.csmonitor.com/2009/0922/p90s04 relation: www.csmonitor.com/2009/0922/p90s04- woam.html 4) Http://www.venezuelanalysis.com/news/4828 Venezuela to OAS: increase international pressure on the Honduran dictatorship 5) Zelaya and Hugo Chavez relation: www.csmonitor.com/2009/0922/p90s04 relation: www.csmonitor.com/2009/0922/p90s04- woam.html 6) http://community.seattletimes.nwsource.com/archive/?date=20041114&slu g=honduras14 Economics intelligence unit country report September 2009 subheading unit International relations 7) http://www.eiu.com/report_dl.asp?issue_id=963984681&mode=pdf 8) Economics intelligence unit country profile 2008 subheading Demographics and resources page 7 9) http://www.idrc.ca/en/ev http://www.idrc.ca/en/ev-97286-201-1-DO_TOPIC.html The Diagram in the next page shows how these building blocks lead into final states that have direct consequences for the UNDP and the MDG’s in 2021. Scenario Investigation & Analysis – Iteration 2 60

14. Identification of Key Indicators (for each of the scenarios ey for scenarios)

Exploring International Business Environment 15. Bibliography Source Citation: Arana, Ana. "How the Street Gangs Took Central America." Foreign Affairs 84.3 (May-June 2005): 98. General Business File ASAP. Gale. University of Strathclyde GSB. 5 June Oct. 2009 http://www.ecs.baylor.edu/ece/index.php?id=52633 Mr. Brian Thomas baylor.edu/ece/index.php?id=52633 Local universities bring electricity to rural areas of Honduras http://planetgreen.discovery.com/tech-transport/green-inventors-rural http://planetgreen.discovery.com/tech rural-electricity.html Mollett, sharlene. Volume 41, number 1, 2006, e e-issn: 1542-4278 print issn: 0023 4278 0023-8791 http://muse.jhu.edu/login?uri=/journals/latin_american_research_review/v041/41.1mollett.ht .jhu.edu/login?uri=/journals/latin_american_research_review/v041/41.1mollett.ht ml Strathclyde Intranet Country Data: https://www.intranet.sbs.strath.ac.uk/intranet/courseinfo/mba2009/eibe/panama_gulf_envir ttps://www.intranet.sbs.strath.ac.uk/intranet/courseinfo/mba2009/eibe/panama_gulf_envir onment/country_data.asp?section=8 Environmental Issues: https://www.intranet.sbs.strath.ac.uk/intranet/courseinfo/mba2009/eibe/panama_gulf_envir onment/environmental_issues.asp?section=8 UNDP Annual Report: http://www.undp.org/publications/annualreport2009/index.shtml Brief about country: http://en.wikipedia.org/wiki/Honduras Macroeconomic Forecasts - Honduras- Business Monitor Online Honduras - Economy - Sep 03 2009 2009-Business Monitor Online Ratings Update - Mission Failed Business Monitor Online Failed- Source Citation: Arana, Ana. "How the Street Gangs Took Central America." Foreign Affairs 84.3 (May-June 2005): 98. General Business File ASAP. Gale. University of Strathclyde GSB. 5 June University Oct. 2009. Source Citation: "Honduras/Nicaragua politics: A maritime border dispute is finally settled." Economist Intelligence Unit: Country Views Wire (Oct 16, 2007): NA. General Business File ASAP. Gale. University of St Strathclyde GSB. 4 Oct. 2009 Weissman, Robert. "Dying for drugs: how CAFTA will undermine access to essential medicines." Multinational Monitor 25.4 (April 2004): 13(6). European Business ASAP. Gale. University of Strathclyde GSB. 7 Oct. 2009. Source Citation:"Honduras/Nicaragua politics: A maritime border dispute is finally settled." on:"Honduras/Nicaragua Economist Intelligence Unit: Country Views Wire (Oct 16, 2007): NA. General Business File ASAP. Gale. University of Strathclyde GSB. 4 Oct. 2009 Source Citation: McNamara, Paul E. "Using agricultural economics to strengthen nongovernmental organizations' food security programs for people living with HIV/AIDS: an example from Honduras." American Journal of Agricultural Economics 87.5 (Dec 2005): 1304(6). General Business File ASAP. Gale. University of Strathclyde GSB. 7 Oct. 2009. iness Source Citation: Isgut, Alberto E. "Non farm income and employment in rural Honduras: "Non-farm assessing the role of locational factors." Journal of Development Studies 40.3 (Feb 2004): 59(28). General Business File ASAP. Gale. University of Strathclyde GSB. 7 Oct. eral Source Citation: Wilvert, Calvin. "Sweat and Conservation." Focus 46.1 (Spring 2000): 32. General Business File ASAP. Gale. University of Strathclyde GSB. 7 Oct. 2009 Source Citation: Shiffman, Jeremy, and Ana Lucia Garces del Valle. "Political history and disparities in safe motherhood between Guatemala and Honduras." Population and Scenario Investigation & Analysis – Iteration 2 63

Exploring International Business Environment Development Review 32.1 (March 2006): 53(29). General Business File ASAP. Gale. University of Strathclyde GSB. 5 Oct. 2009. e In Honduras, there is variation among the population in the use of medical attendants at birth and institutional facilities for delivery; however, these differences are associated predominantly with socioeconomic variables education and urbanization variables--education urbanization--rather than with ethnicity (HMPH et al. 2001; Danel 1998). Source Citation: Arana, Ana. "How the Street Gangs Took Central America." Foreign Affairs 84.3 (May-June 2005): 98. General Business File ASAP. Gale. University of Strathclyde GSB. 5 June Oct. 2009. Honduran political crisis http://en.wikipedia.org/wiki/2009_Honduran_constitutional_crisis Water sanitation program http://www.wsp.org/UserFiles/file/wspla_hon_project_sheet_42.pdf Energy project http://www http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/01/03/000020953_200 80103144947/Rendered/PDF/420230ENGLISH0HN0Power0sector01PUBLIC1.pdf Disaster management http://siteresources.worldbank.org/INTLACREGTOPHAZMAN/Resources/ArticlefromTOLIV.pdf Malaria report Inter American Bank http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=1904479 adb.org/wsdocs/getdocument.aspx?docnum=1904479 Education http://www.worldfoodprize.org/assets/YouthInstitute/06proceedings/ZaneTraceHS.pdf Deforestation http://www.springerlink.com/content/l3143368j380m66n/fulltext.pdf Scenario Investigation & Analysis – Iteration 2 64

Scenario Planning to Achieve UNDP's MDG for Honduras

by Sanil Subhash Chandra Bose

Accessibility

Categories

Upload Details

Usage Rights

2 Embeds 7

Statistics