Foreign Market Entry Strategy – Four Seasons in Brazil

[pic] [pic] Four Seasons Hotels and Resorts Strategic Marketing Plan for Entry into Rio de Janeiro, Brazil [pic] EXECUTIVE SUMMARY Four Seasons Hotels and Resort is the world’s premier luxury hotel management company. It is currently operating 83 hotels in 35 countries and has built an unrivalled reputation for reliability, trust and connection with its guests (Four Seasons, 2010). As the hotel mogul prepares to enter Brazil, this paper narrates in detail the marketing plan Four Seasons will implement in the local geopolitical environment. Brazil’s present political, legal, social and economic state draws the conclusion that acquiring a local luxury hotelier while utilizing its business resources like a partner, is the best mode of entry for Four Seasons. Fasano’s grandiose local brand recognition as a world-class hotelier and partnership with Brazilian real-estate developer, JHSF, makes it an ideal candidate for Four Seasons’ market entry strategy. Exceptional personalized customer service, an integral part of Four Seasons’ brand image and strategy, is standardized and will be directly transferred when entering Rio de Janeiro. Acquiring Fasano’s hotel in Rio de Janeiro, while simultaneously retraining all of its existing staff members will accomplish Four Seasons’ main objectives when entering Brazil which include: 1. Providing a standardized service Four Seasons’ target market has come to receive and expect, while showcasing an authentic Brazilian experience for its guests. 2. Establishing a genuine connection with the local community and understanding Brazilian culture to ensure a sustainable business relationship for future expansion. 3. Utilizing the most ffective and efficient market strategy to expedite Four Seasons’ entrance into Brazil. To guarantee a successful entry into this new growth market, two Integrated Communications Campaign strategies will be put into place to reach out to the local community and international consumer base. TABLE OF CONTENTS I. EXECUTIVE SUMMARY1 II. TABLE OF CONTENTS2 III. COMPANY AND SERVICE OVERVIEW3 A. FOUR SEASONS HISTORY3 B. RECENT DEVE LOPMENTS3 IV. MARKET ATTRACTIVENESS ASSESSMENT5 A. ENVIRONMENT OVERVIEW5 1. CULTURAL ENVIRONMENT5 2. POLITICAL ENVIRONMENT8 3. ECONOMIC ENVIRONMENT10 4. LEGAL ENVIRONMENT12 B. COMPETITIVE ANALYSIS14 1. MAJOR COMPETITORS14 2. SWOT ANALYSIS FOR FOUR SEASONS21 C. POTENTIAL TARGET MARKET ASSESSMENT22 1. FOUR SEASONS’ GUEST DEMOGRAPHICS22 2. TARGET SEGMENTS23 V. MARKET ENTRY STRATEGY25 VI. MARKETING MIX PLAN28 A. BRAND STRATEGY28 B. PRODUCT/SERVICE29 C. PRICE34 D. PLACE35 E. ADVERTISING AND OTHER PROMOTION35 1. Integrated Communications Campaign for Brazilians35 2. Integrated Communicates Campaign for International Travelers37 3. FIFA World Cup 2014 & Summer Olympic Games 201640 VII. CONCLUSION & RECOMMENDED RESEARCH40 A. SECONDARY RESEARCH41 B. PRIMARY RESEARCH41 1. SURVEYS41 2. FOCUS GROUP42 3. IN-DEPTH INTERVIEWS43 4. OBSERVATION STUDIES43 VIII. REFERENCES44 COMPANY AND SERVICE OVERVIEW 1 FOUR SEASONS HISTORY Isadore Sharp, founder of The Four Seasons Hotels and Resorts, opened his first hotel in Toronto, Canada in 1961. A modest hotel with 125 affordable rooms, The Four Seasons Motor Hotel marked the beginning of a new kind of hotel in which every customer would be treated as a special guest. Within ten years, three hotels had been opened in Canada, leading to the opening of the company’s first hotel abroad in London, England in 1970. Over time, Four Seasons made four strategic decisions that formed the pillars of the company. The first pillar, quality, was chosen during the initial expansion abroad in the 1970s, to continuously meet guest expectations from one hotel to the next. Four Seasons as a brand would represent exceptional quality with a focus on being the best hotel in each location. The second strategic decision was to build Four Season’s competitive advantage in service. Four Seasons was recognized for its superior service with the opening of its first branded U. S. hotel in Washington, DC in 1979. During the 1980s, Four Seasons continued to expand and introduce flagship hotels throughout the US. The brand name began to develop and a distinct brand image was created. The third pillar, culture, would play a significant role in the growth of a strong brand name. The corporate culture became based on the Golden Rule, which Mr. Sharp defines as â€Å"to deal with others—partners, customers, coworkers, everyone—as we would want them to deal with us† (Martin, 2008). In 1985, Four Seasons added branded private residences to their hotels and began to transition from a hotel owner to solely a hotel management company. With the change, the fourth pillar evolved: â€Å"to grow as a management company and build a brand name synonymous with quality† (â€Å"Four Seasons Hotels and Resorts- About Us: Four Seasons History,† 2010). Since, Four Seasons has created a brand name worth much more than its real estate by offering the best service to luxury travelers around the world. Four Seasons has consistently innovated the services offered at its hotels over the years, becoming the first to offer shampoo in the shower, 24-hour room service, bathrobes, cleaning and pressing services, a two-line phone in each guest room, a well-lit desk, a full-service spa and 24-hour secretarial services (Martin, 2008). In 1986, the company went public and was listed on the Toronto Stock Exchange. A strong brand name allowed the Four Seasons to engage in a series of successful hotel openings across the world in the 1990s and into the new millennium. The company has gradually expanded its portfolio of resorts to include 83 hotels and resorts in 35 countries and continues to grow in both size and recognition today. Every hotel, from Cairo to Chiang Mai to Milan, demonstrates the four pillars that Mr. Sharp has built the Four Seasons brand upon. 2 RECENT DEVELOPMENTS Headquartered in Toronto, Canada, Four Seasons Hotel and Resorts became the first large hotel company to manage hotels through real estate owners and developers. In 2007, Four Seasons Hotels returned to private ownership, with Bill Gates and Saudi Prince Alwaleed Bin Talal each owning 47. % of the company, and Mr. Sharp owning the remaining 5% (Segal, 2009). The purchase was based on the decision to expand more aggressively, specifically into regions not conducive to public companies (O'Brien, 2008). With operations in 35 countries, it has been extremely successful abroad and will continue to expand into new markets in the future; the Chinese and Indian markets are pre dicted to play a vital role in the future of the company (â€Å"Four Seasons CEO Sees Luxury Trajectory,† 2009). As a hotel management company, Four Seasons has complete control over all hotel operations, participates in the designing of new hotels, and earns approximately 3% of revenue from hotel owners in addition to collecting fees to cover global sales, marketing, and reservations (O’Brien, 2008). The major decision makers in the company headquarters currently are: ? Isadore Sharp: Founder, chairman, and CEO ? Kathleen Taylor: President and COO ? Jim FitzGibbon: President Worldwide Hotel Operations ? Nick Mutton: Executive Vice President Human Resources and Administration ? Scott Woroch: Executive Vice President Worldwide Development ? John Davison: CFO and Executive Vice President Residential ? Antoine Corinthios: President Europe/Middle East/Africa ? Susan Helstab: Exective Vice President Marketing (Four Seasons Hotels and Resorts- About Us: Corporate Bios, 2010). Four Seasons is continuously recognized as an outstanding company winning awards year after year. Four Seasons has remained on Fortune’s 100 Best Companies to Work For every year since 1998, for a total of twelve consecutive years (â€Å"Four Seasons Hotels and Resorts- About Us: Four Seasons History,† 2010). Twenty-two of the Four Seasons properties have also been recognized for excellence in the hospitality industry with the AAA Five Diamond award in 2010 (2010 AAA/CAA Five Diamond Lodgings). This is a very prestigious award, presented only to â€Å"0. 27% of the 60,000 Diamond Rated lodgings and restaurants throughout the United States, Canada, Mexico, and the Caribbean,† truly setting Four Seasons Hotels apart from its competitors (â€Å"Five Diamond Award Winning Hotels and Restaurants,† 2010). The thirtieth anniversary issue of the Robb Report,  published in 2006, included the Four Seasons on its list of â€Å"the most exclusive brands of all time† alongside other luxury brands such as Rolls Royce, Tiffany’s and Louis Vuitton (â€Å"Four Seasons Hotels and Resorts- About Us: Four Seasons History,† 2010). Conde  Nast Traveler also consistently recognizes the Four Seasons as a leader in the hospitality industry. On  Conde  Nast Traveler’s Global Top 100 List, eighteen Four Seasons’ hotels have been included, which is triple the amount of the next most-listed hotel chain (Martin, 2008). By incorporating the four pillars into its business strategy, the Four Seasons has developed into one of the most-recognized prestigious brands within the hospitality industry. Through its constant focus on excellent customer service in all markets, Four Seasons creates a brand that is immediately associated with exceeding customer needs and expectations in every location. Mr. Sharp summarized the idea by saying â€Å"If you don’t meet it every time, you don’t have a brand† (â€Å"Four Seasons CEO Sees Luxury Trajectory,† 2009). The architecture of a hotel is irrelevant because any competitor can replicate it, however the employees of the Four Seasons differentiate the company by constantly delivering the premier service promised to the guests, hence, creating the strong brand image travelers associate with Four Seasons. In addition to providing timely and sophisticated service, employees are trained to personalize the service delivery through customer name recognition and offering unique services to match guest preferences. Training employees to deliver customized service has been a greater challenge, because â€Å"personal service is not something you can dictate as a policy. It comes from the culture† (O'Brien, 2008). Mr. Sharp explains the effect of a strong corporate culture on the guests: â€Å"how you treat your employees is how you expect them to treat the customer† (O'Brien, 2008). Brand integrity, coupled with the corporate pride instilled in 30,000 employees worldwide, is what allows Four Seasons to charge a premium price. The company has become legendary for its unmovable standards, despite economic recessions, believing that altering room prices will diminish the brand. Four Seasons loyal guests continually pay premium prices because they are confident the superior service that is expected will be delivered. Each Four Seasons Hotel and Resort strives to achieve the ideal balance of adaptation to the local environment and standardization of the service. Four Seasons Hotels are built after comprehensive research of the market and country to adapt to the local style and create an authentic experience for guests. The company does not have a uniform style that is common in many competitors such as The Ritz Carlton. While the hotel is built to reflect the local culture, service is standardized across all Four Seasons properties. This is a key factor to the adaptation/standardization balance as service is considered the company's sustainable competitive advantage. Guests expect to receive the same high-quality service at every Four Seasons hotel, despite being in a different country. Room rates also vary at different properties, taking into account seasonality, economic factors of the host country, and exchange rates. However, each hotel offers a fairly large price range to reflect the different types of rooms and suites available in the property. MARKET ATTRACTIVENESS ASSESSMENT 1 ENVIRONMENT OVERVIEW 1 CULTURAL ENVIRONMENT 1 HOFSTEDE CULTURAL DIMENSIONS |Country |PDI |IDV |MAS |UAI |LTO | |CANADA |39 |80 |52 |48 |23 | |BRAZIL |69 38 |49 |76 |65 | |URUGUAY |61 |36 |38 |100 | | (â€Å"Geert Hofstede Cultural Dimensions,† 2009) Although three main target segments for Four Seasons in Brazil are non-Brazilian nationals, the company must acknowledge cultural differences to be properly prepared to select, train, and compensate local employees and positively interact with local businesses. Local firms are vital to Four Seasons’ business model since they have significant control over word-of-mouth promotion for the hotel. In order to receive customers for conferences, catering or special events, a lasting relationship needs to be built with firms in the local environment. Additionally, it is important to understand cultural dimensions to be successful in acquiring the tangible aspects of the business that are locally sourced. According to Hofstede measures, Canada and Brazil vary drastically on all cultural dimensions excluding masculinity. Compared to Canada, Brazil has a very high Power Distance index (â€Å"Geert Hofstede Cultural Dimensions,† 2009). As a result, the Four Seasons Introductory Training Program (FSITP) may need to be modified. Currently, all new employees representing different levels of the organization, including housekeepers, department managers, non-paid interns, etc. , are placed into one large group for FSITP. Since local Brazilians expect a sharp division between subordinates and supervisors (Gillespie, Jeannet, & Hennessey, 2007), separate training schedules may be instituted to account for differences in responsibilities. This could pose a difficult challenge because the training program is very standardized and is one of the components that provide the service competitive advantage. On account of strict boundaries between subordinates and supervisors, lower-level employees are not as comfortable with empowerment than those in low power distance cultures (Gillespie, Jeannet, & Hennessey, 2007). The Four Seasons managers may want to consider providing narrow and clear job descriptions. If narrow job descriptions are constructed, managers must establish monitoring systems to void bureaucratic inefficiencies. The greatest difference between Canada and Brazil is on the Individualism ranking. Compared to Canada, Brazil is a highly collectivist culture. (â€Å"Geert Hofstede Cultural Dimensions,† 2009) This facet creates a significant challenge in dealing with local businesses, whether clients or suppliers. Building and maintaining a relationship demands a substantial amount of time and effort devote d to face-to-face meetings. It is not an easy task to form a business contract with Brazilians without creating a relationship. This task is increasingly difficult because Brazil is also a high uncertainty avoidance culture (â€Å"Geert Hofstede Cultural Dimensions,† 2009). In these circumstances, it would be extremely wise to partner with a Brazilian representative. By capitalizing on a local representative's already established personal and business contacts, Four Seasons can conserve a great amount of resources. As it would be almost impossible for a local representative to provide every contact, a significant amount of time needs to be allocated for lengthy negotiations and contact building. Although Brazil and Canada drastically differ in Hofstede cultural dimensions, it is important to recognize Four Seasons as a profitable multinational company. It has successful experience conducting its business model across various geographic areas, including Latin America. While the Four Seasons should not replicate their strategy entirely, it would be unwise to not utilize prior knowledge gains from countries, such as Uruguay, that are culturally very similar to Brazil. 2 EDUCATIONAL SYSTEM The average number of years of education for the population entering the workforce is five (Fraga & Bowler, eds. , 2008). Lack of a properly trained workforce could negatively impact the internal operations of the Four Seasons. Strangely, Brazil's public universities are excellent in contrast to the country's under-resourced primary and secondary schools (Fraga & Bowler, eds. , 2008). Accordingly, Four Seasons should consider partnering with local universities to provide internships, job opportunities, or management training programs. Apart from managers, Brazil's poor education standards may not adversely affect Four Seasons because the company heavily emphasizes personality, rather than work experience, in recruiting and selection. Instead, Four Seasons relies on its comprehensive training program to provide the skills necessary to perform required tasks and meet the company’s core standards. 3 GENDER ISSUES Common among several Latin American countries is the notion of machismo, the belief that males are superior to females (â€Å"Doing Business in Brazil,† 2007). Machismo is perpetuated through society with the assignment of traditional roles to men and women. While this view has recently been challenged due to the influx of Brazilian women into both higher education and the workforce (â€Å"Doing Business in Brazil,† 2007), managers should be aware that it exists. Furthermore, many customers of Four Seasons will be from foreign countries where the same gender norms are not present. 4 NORMATIVE BUSINESS PRACTICES Recognizing that normative business practices vary across borders will be pivotal in succeeding in the Brazilian market, as Brazilian local businesses comprise one of Four Seasons’ target markets. In addition, familiarity with the business culture can affect the outcome with essential local suppliers. Foreign managers can earn the respect of local associates and illustrate the importance of their relationship by engaging in the local business customs. Upon meeting an associate for the first time, men should shake hands accompanied by a pat on the shoulder or arm and women should give a kiss on each cheek (â€Å"Doing Business in Brazil,† 2007). While Brazilians are very informal and prefer to be addressed by their first name, some sort of title such as Doctor or Professor usually accustoms it (â€Å"Brazil: First Name or Title? ,† 2008). Brazilians tend to be extremely extroverted and friendly and close physical contact while conversing is considered normal (â€Å"Brazil: Conversation,† 2008); also, be prepared for personal questions. Gifts are not necessary at a first meeting (â€Å"Brazil: Gift Giving,† 2010). Since the majority of employees will be Brazilian nationals, normative business practices affect the Four Seasons internal operations in addition to outside relationships. Due to the country's collectivist nature, Brazilians do not work at private desks, but instead, share a large space with several coworkers (â€Å"Doing Business in Brazil,† 2007). If the Four Seasons structures the work environment accordingly, managers must realize that shared workspace results in a constant mix of personal and work-related conversations and plan deadlines accordingly. Besides workspace, Brazil's collectivist culture also impacts break schedule. Brazilians usually take their lunch breaks simultaneously (â€Å"Doing Business in Brazil,† 2007). If the Four Seasons agrees to this practice, scheduling will need to account for huge shift changes. A Canadian business manager will be horrified if unaware of the routine aspects of a business meeting. Meetings do not begin on time; a meeting normally begins twenty to thirty minutes past the agreed upon time. Once a meeting commences, the setting is very informal. A large portion of time at the onset is dedicated to personal conversations. Throughout the meeting, it is not unusual for attendees to take phone calls or leave the room. (â€Å"Doing Business in Brazil,† 2007) Hence, meetings do not serve as an efficient avenue to establish an immediate outcome. Negotiations require time, as Brazilian managers prefer to discuss agreements or disputes among themselves privately; this stems from the collectivist and feminine nature of the culture (Gillespie, Jeannet, & Hennessey, 2007). These differences can be curtailed with the help of a local representative, however, each non-Brazilian manager must acknowledge the lengthy time required to close a deal in order to provide realistic schedule projections and deadlines. 2 POLITICAL ENVIRONMENT 1 POLTICAL SYSTEM Brazil instituted a federal republic system of government in 1985 following the end of military rule. The structure grants a substantial power to the elected president who holds office for four years with the opportunity for one additional term if reelected. The president reserves the right to elect his/her cabinet, while the people elect members of Congress. Congress represents Brazil’s twenty-six states and sole federal district of Brasilia through two groups: an 81-seat Senate and a 513-member Chamber of Duties. Within Congress, majority power constantly transitions as representatives switch political parties often. (Background Note: Brazil, 2010) 2 POLTICAL SITUATION Currently, Luiz Inacio da Silva is nearing the end of his second term of presidency. The upcoming election is scheduled for October 3, 2010 for a new president. President Luiz Inacio da Silva is using his popularity among Brazilian citizens to support candidate Dilma Rousseff. Rousseff's main opponent, Jose Serra, currently holds an early poll advantage. Regardless of the winner of the October election, the Four Seasons will not be significantly affected as both candidates are expected to continue economic reform and the privatization of industries. (The Economic Intelligence Unit Group, 2010) 3 DOING BUSINESS IN RANKINGS    |Canada |Brazil | |Rank |Doing Business 2010 |Doing Business 2010 | |Ease of Doing Business |8 |129 | |Starting a Business |2 |126 | |Dealing with Construction Permits |29 113 | |Employing Workers |17 |138 | |Registering Property |35 |120 | |Getting Credit |30 |87 | |Protecting Investors |5 |73 | |Paying Taxes |28 |150 | |Trading Across Borders |38 |100 | |Enforcing Contracts |58 |100 | |Closing a Business |4 |131 | (The World Bank Group, 2 010) While conducting business in its home country is much easier than it is in Brazil, Four Seasons operates in more than thirty-five countries, two of which, India and Syria, rank below Brazil in â€Å"Ease of Doing Business† (The World Bank Group, 2010). Seeing as the Four Seasons is a successful multinational enterprise with deep pockets, the struggle to receive credit in Brazil does present a considerable hurdle for the company. To avoid difficulties related to trading across borders, Four Seasons should obtain necessary tangible components of its operations from local suppliers. In addition, local products will facilitate a good relationship with the local environment as well as provide a more authentic experience for guests. Areas that would be of trouble to Four Seasons include enforcing contracts, dealing with construction permits and registering property within Brazil. Fortunately, because the company specializes solely in management, much of the responsibilities associated to troublesome aspects will be shifted to their partner. A local Brazilian partner would be optimal since strong networking and contacts can help alleviate the burdens related to obtaining contracts and permits. Although Brazil is characterized as a new growth market, the World Bank Group’s Doing Business Rankings demonstrate Brazil’s institutional weaknesses that are more align with a developing market. For instance, employing workers is extremely difficult within Brazil compared to the rest of the world. A lack of transaction facilitators, such as executive headhunters, makes it extremely burdensome to locate and recruit employees that possess the necessary skills to be successful at Four Seasons. This absence especially poses a challenge to Four Seasons because its sustainable competitive advantage of superior customer service is facilitated through its employees. Although not as difficult as employing workers, enforcing contracts presents a significant threat to businesses operating within Brazil. Due to a lack of adjudicators, firms will find it arduous to verify payment or reliability of contractual partners. This problem is further exacerbated by the nonexistence of credibility enhancers and informational analyzers that assist with partner selection. 4 POLITICAL RISK According to The Coface Group, Brazil received an A4 in both Country Rating Risk and Business Climate Risk (2010). An A4 rating indicates an unstable political and economic environment (The Coface Group, 2010). Volatile conditions pose an enormous threat to Four Seasons due to the amount of direct investment needed to offer its service. Unlike a product offering, the Four Seasons does not have the ability to immediately exit, or temporarily leave, the market. In an effort to curtail the effects of drastic changes, Four Seasons should create a managerial position solely dedicated to environmental scanning. This person should be aware of the significant changes and how they will affect company forecasts. An unstable environment can greatly deter customers from visiting the Four Seasons, particularly the primary target segment of brand loyal guests. If a brand loyal guest is interested in visiting Latin America, they have the option of staying in a Four Seasons located in Costa Rica, Mexico, Argentina, or Uruguay if Brazil appears dangerous and/or unsafe. 5 CORRUPTION Transparency International ranked Brazil 75 out of 180 countries with a score of 3. 7 out of 10; 0 represents high corruption (2009). Despite the Four Seasons’ experience in highly corrupt countries such as China, Argentina, Egypt, India, Mexico and Syria (Transparency International, 2009), Four Seasons must adequately prepare for the effects of corruption in Brazil. It should incorporate the knowledge gained from the past by consulting senior managers involved in highly corrupt countries to produce contingency plans. However, it is important that the company recognizes differences between countries. For this, Four Seasons should consider using a Brazilian partner. A local partner possesses knowledge of the local community and business environment and can offer an insider perspective on solving obstacles that arise out of corruption. Furthermore, a local partner holds local contacts that may be utilized to sidestep corrupt organizations or dealings. 6 FOREIGN RELATIONS Brazil remains open and friendly toward the majority of countries, especially its South American neighbors. Recently, Brazil has focused on expanding relations with its neighbors through associations such as the Latin American Integration Association (ALADI), the Union of South American Nations (UNASUL), and Mercosur, a customs union between Argentina, Uruguay, Paraguay, and Brazil, with Chile, Bolivia, Peru, Colombia, and Ecuador as associate members. (Background Note: Brazil, 2010) Openness toward foreign nations ensures embargoes, or other forms of impediments, will not disrupt imports. While Four Seasons should procure components from local suppliers to enhance its relationship with the environment, the company does not need to spend time concerned over delivery of its imported supplies. For imported aspects, Four Seasons should examine countries that are involved in the Mercosur customs union to take advantage of less costly tariffs and/or taxes. Apart from products, Brazil’s openness ensures that travelers will not confront burdensome procedures to enter the country or hostility from Brazilian citizens when visiting. 3 ECONOMIC ENVIRONMENT 1 OVERVIEW Due to a shift toward market liberalization, Brazil has more than doubled its trade flows in the past four years. While portfolio investment has increased, foreign direct investment inflows hit record levels in 2007 and 2008. However, in 2008, Brazil registered its first current-account deficit in five years as a result of a sudden increase in imports. President Luiz Inacio da Silva has focused on a floating exchange rate, inflation targeting, and primary fiscal surpluses to enhance macroeconomic policies, and therefore, increase Brazil’s global competitiveness. These factors have lead Brazil’s economy to shift toward a more service-oriented market. Nevertheless, the agricultural sector and diverse industrial base continue to function as enormous drivers of growth. (Fraga & Bowler, eds. , 2008) 2 CURRENCY The modern real was introduced on July 1, 1994 to stabilize the broader Brazilian economy. When introduced, the real was set equivalent to 1 unidade real de valor, a non-circulating currency which ultimately set the real equivalent to 1 US dollar. Initially, the real climbed against many major currencies. Strong capital in-flows supported a strong real through late 1995. By 1996, the Central Bank of Brazil instituted tight controls over the real to bring the currency’s value down. The currency depreciated slowly through 1998, but the Central Bank relaxed controls in 1999 and the real experienced a sudden devaluation. From 1999 to 2002, the currency remained relatively volatile vis-a-vis major orld currencies. By mid-2002, the real reached an all-time low against the Canadian dollar, along with many major currencies, including the US dollar. The presidential election in late 2002 brought long needed stability to the Brazilian currency. From late 2002 to October 2008, the real s lowly appreciated against the Canadian dollar and other major currencies. When the financial crisis hit in late 2008, the currency bounced from rates not seen since 2001 to around R$2:C$1. Since the crisis, the currency has again been slowly appreciating against the Canadian dollar. In recent months, the real has been slightly depreciating against the Canadian dollar. Overall, the Brazilian real remains a relatively stable currency, especially among Latin American currencies. This will benefit the Four Seasons, as it repatriates profits to headquarters and pays local suppliers. However, as with any foreign currency — especially those in new growth markets — immunity from fluctuation isn’t a rule. New regimes can negatively affect currency, as well as Brazil’s significant current account deficit, significant government spending on the World Cup and Olympics and susceptibility to inflation. Four Seasons plans on pricing in US dollars, which appeals to many of its target markets and is consistent with Four Seasons across the globe. 3 INFLATION Since 2003, Brazil has been successful in easing inflation pressures on account of strict monetary policy and an appreciation of the Real (Fraga & Bowler, eds. , 2008). Yet recently, inflation has rose in recent months owing mainly to the global recession as well as increased wages and inertial pressures within the country. The Central Bank of Brazil has set a target of 4. 5% for 2010. The Economic Intelligence Unit is optimistic, predicting that inflation will fall 4. 8% to 2. 5% between 2010 and 2011. (The Economic Intelligence Unit Group, 2010) Four Seasons must constantly monitor the inflation rate once within Brazil. If the EIU is correct, a 2. 3% change in the inflation rate will have an enormous impact on the operations (The Economic Intelligence Unit Group, 2010). Brazil will need to constantly change their prices in order to keep up with large-scale changes. Fortunately, the majority of price postings occur through the company’s website allowing the company to avoid immense costs required to reprint materials. Higher inflation translates into higher prices not only for Four Seasons guests, but also for components the hotel buys from local suppliers or imports from other countries. Additionally, Four Seasons may consider using employee contracts that adjust for inflation to curb anger associated with loss of purchasing power. Luckily, the EIU predicts inflation to decrease and remain relatively stable in the future at 2. % (The Economic Intelligence Unit Group, 2010), limiting negative consequences incurred by operations. 4 LABOR CODES The Brazilian government requires all companies, foreign and domestic, to provide specific elements to its employees including thirty days of annual leave, an annual bonus equal to one month’s sala ry, and severance pay if dismissed without a cause. Additionally, if a firm employs more than three employees, Brazilian nationals must account for two-thirds of the total employees and payroll. Brazil has instituted a system of labor courts to handle workplace disputes involving working conditions, wages, dismissal, etc. (The Department of Commerce, 2009) It would be ill advised to ignore government employment requirements. Not only would the company risk being forced out of the market, Four Seasons would incur a tarnished reputation within the global arena. When hiring and scheduling future employees, Four Seasons must account for each individual’s thirty days of leave; the firm must decide whether it will assign vacation time or negotiate with employees for specific requests. If two-thirds of payroll must be distributed to Brazilian nationals, Four Seasons should scan the local environment for senior management positions, as these executives tend to comprise a large portion of pay. As Four Seasons offers a service requiring an array of different workers, the company must find a way to ooperate with highly unionized Brazilian workforce; currently, over 16,000 unions exist who are very well organized and are not hesitant to use aggressive methods (The Department of Commerce, 2009). A local partner may possess pertinent information to help alleviate any contentions that may arise. 5 INFRASTRUCTURE President Luiz Inacio da Silva announced the Growth Acceleration Plan in 2007, which committed a US $296 million investment in infrastructure by the end of 2010. Although the GAP is promising, Brazil’s infrastructure remains one of the largest obstacles within the economy. Poor quality and numerous deficiencies remain in roads, ports and airports; no passenger trains travel outside the suburbs of major cities and only 12. 5% of the existing roads are paved. (The Department of Commerce, 2009) While the 2016 Summer Olympics should increase incentives for private companies to improve infrastructure, Four Seasons must contemplate the effects of a poor transportation system. It may want to consider sourcing the majority of its tangible components from nearby local suppliers to ensure secure and fast delivery. Furthermore, imports are more likely to be priced higher on account of the inefficiencies within the infrastructure. A foreign direct investment is an option to increase efficiency and satisfaction; Four Seasons should investigate options near the hotel in addition to routes travelers predominately use. For example, it could form a strategic alliance with another firm to enhance the roads to and from the airport. 4 LEGAL ENVIRONMENT 1 INTELLECTUAL PROPERTY Brazil is a signatory to various agreements—Trade Related Aspects of Intellectual Property (TRIPS) Agreement, the Bern Convention on Artistic Property, the Patent Cooperation Treaty, and the Paris Convention on Protection of Intellectual Property—committing the government to stringent protection of intellectual property rights. The decision to take part in international contracts was the country’s first realistic step toward putting an end to issues such as copyright infringement, however, piracy and counterfeiting remains a problem within Brazil. (The Department of Commerce, 2009) While Four Seasons does not possess a substantial amount of intellectual property that would threaten its existence, it does need to consider violations when procuring components for its hotel, particularly authentic furniture, decorations and artwork. It would be wise for Four Seasons to implement a system used to differentiate genuine pieces from others. 2 ENTRY MODE Four Seasons, or any foreign or domestic private entity, may establish, own, and dispose of business entities allowing the company to chose any entry mode grounded solely in its own decision making (The Department of Commerce, 2009). Although a lack of government regulation offers the firm freedom of choice, it would be extremely useful to use a local representative to own the hotel building itself. As previously mentioned, Brazil is a highly collectivist culture that requires an extensive amount of time dedicated to relationship building to be successful in procuring supplies, building contracts, permits, etc. A local partner possesses established networks that can be utilized to sidestep regulations and corruption in addition to knowledge specific to the Brazilian environment. 3 IMPORTS Brazil imports are subject to three separate taxes: Import Duty (II), Federal Industrialized Product tax (IPI) and the State Merchandise and Service Circulation tax (ICMS) (The Department of Commerce, 2009). Because both the IPI and ICMS are value-added taxes (The Department of Commerce, 2009), imports end up becoming very expensive for customers. Unless a specific tangible component is critical to the success of Four Seasons, it would be in the country’s best interest to purchase supplies from local businesses to avoid high prices pushed down to the customer because of high taxes. High import taxes paired with Brazil’s poor infrastructure will threaten the safe and efficient obtainment of products. If the Four Seasons depends on certain aspects from headquarters, or another Four Seasons location, it should be aware that the foreign entity must register with Foreign Trade Secretariat (SECEX) in order to conduct trade with Brazil. 4 TRADE AGREEMENTS Brazil has established bilateral investment agreements with numerous countries including Belgium, Luxembourg, Chile, Cuba, Denmark, Finland, France, Germany, Italy, Republic of Korea, Netherlands, Portugal, Switzerland, United Kingdom and Venezuela; however, the Brazilian Congress has not yet ratified any of these. (The Department of Commerce, 2009) Brazil has signed Mercosur, a regional trade agreement, between itself and Argentina, Uruguay, Paraguay, and Brazil, with Chile, Bolivia, Peru, Colombia, and Ecuador as associate members (The Department of Commerce, 2009). If imports are required, Brazil should heavily consider sourcing from countries involved to significantly decrease costs associated with imports. Furthermore, Brazil maintains a double taxation with Canada, making imports from its headquarters extremely expensive. 5 LABELING Labeling requirements should not present Four Seasons with a notable barrier. Firstly, the primary focus of the company is services, not products. Besides the gift shop and food menus, Brazil will rarely encounter barriers in labeling. Secondly, The Brazilian Customer Protection Code does not call for unconventional or outlandish. Specifically, labeling must â€Å"provide the consumer with precise and easily readable information about the product’s quality, quantity, composition, price, guarantee, shelf life, origin, and risks to the consumer’s health and safety† (The Department of Commerce, 2009). The only hurdle Four Seasons may encounter relating to labeling is a Portuguese translation and metric equivalent to the requirements listed above. 6 PROMOTION Direct mail is emerging in Brazil as a very useful method for reaching Brazilian consumers; citizens receive an average of 9. 3 pieces of direct mail every month and 74% of Brazilians prefer direct mail to create awareness of a new product or service (The Department of Commerce, 2009). Four Seasons is encouraged to use direct mail to target local businesses and community members within its promotional aspect of its marketing campaign. It should especially use Veja, the most popular magazine in Brail with an average of one million copies dispersed a week, and Folha de Sao Paulo, the largest newspaper with an average of 317,000 copies distributed Monday through Friday and 400,00 on Sunday (The Department of Commerce, 2009). Media in Brail is still heavily controlled through the public sector; foreign ownership is limited to 49% (The Department of Commerce, 2009). This should not affect Four Seasons greatly since the company avoids advertisements in mass media outlets. Also, the majority of Four Seasons target segments does not reside in Brazil. 2 COMPETITIVE ANALYSIS Many multinationals, especially Four Seasons traditional competitors, have yet to enter the Brazilian market or only have a small presence in Rio de Janeiro. Additionally, there are only a small number of luxury local brands in Rio de Janeiro that are capable of competing with Four Seasons. In many regards, Brazil remains a relatively untapped market, though a number of international brands have recently begun eyeing the market, including Hilton. With the increased opportunity in Brazil, now more than ever may be a great time to enter the young market, armed with the experience learned through other brands’ ventures. 1 MAJOR COMPETITORS 1 PESTANA HOTELS AND RESORTS (PORTUGAL) Pestana is Portugal’s largest tourism and leisure group, operating 41 hotels across 3 continents in countries with former colonial ties to Portugal (Pestana, n. d. ). Pestana entered Brazil via Rio de Janeiro in 1999 with a local partner, Renato Albuquerque Group (â€Å"Grupo da Madeira investe US$25 milhoes no Brasil,† 1999). Rather than building a new establishment, the company acquired the Carlton Rio Atlantica hotel, modernized the establishment, and added a new business center to attract business travelers (â€Å"Grupo Pestana lanca cartao no Rio,† 2001). Since 1999, Pestana has been heavily investing in Brazil and considers Rio de Janeiro a focal point for the company (â€Å"Grupo Pestana lanca cartao no Rio,† 2001). By 2001, Brazil accounted for 20% of Pestana’s hotel business (â€Å"Grupo Pestana reforca atuacao no Pais,† 2001). By 2004, the company had opened 6 hotels across Brazil with the stated goal of opening 10 more hotels within the next 10 years. The company’s significant investment in the market – $110 million by 2004 – has brought increased legitimacy and credibility to the Brazilian market as an opportunity for luxury and business travel, according to Francisco Rabelo, financing director for Bank of Northeastern Brazil. This significant growth has been fueled by the company’s success in the country: the company has achieved an average annual return of 31% on its investments and the country is already its best performing territory in Pestana’s portfolio. The Director of the Finance and Investment Promotion Department of Brazil's Tourism Ministry said the group was one of the largest hotel groups in Brazil; by 2005 the company was expected to have 400,000 room-nights in the country, more than any other hotel chain (Renata, 2006). One of Pestana’s most palpable assets is its intimate understanding of Portuguese culture, being a Portuguese company. Brazil’s cultural and colonial ties to Portugal make the Brazilian market a particularly attractive market for Pestana, and as the company’s exceptional returns have demonstrated, Pestana is taking full advantage of its country-of-origin effects. With the company’s high knowledge of local culture and Brazil’s cultural similarity to Portugal, the company is able to keep the services within Brazil appear as very localized without adapting its standardized services much. This is a trend Pestana has demonstrated in the past, as it only enters markets with cultural ties to its home market (Pestana, n. d. ). In this sense, Pestana can maintain a relatively standardized offering while appearing to be adapting to the local context. This intimate knowledge of Brazilian culture will be rewarding, as other multinationals don’t have access to or credibility with local culture. Another unique advantage that Pestana has is its ability to build pousadas within Brazil. Pousadas are boutique, luxury hotels that encapsulate Portuguese culture. Until 2003, the Portuguese government was responsible for developing and managing the hotels. Pestana bought the sole rights to building pousadas from the Portuguese government in 2003, though the government maintains highly involved in overseeing each new pousada to ensure it meets minimum standards (Pousadas de Portugal, n. d. ). Pestana has expressed interest in bringing these unique products to Brazil and completed the construction of one in 1999. The company plans on expanding its offerings in the coming years in tandem with its commitment to building 10 hotels in the coming 10 years (Renata, 2006). These hotels automatically connect with locals and foreigners abroad who want an authentic experience in Brazil. No other hotel chain can emulate these boutique hotels – even localizing a hotel as much as possible won’t replicate a pousada as it won’t have the unique stamp by the Portuguese government. Moreover, pousadas are often located in historic buildings, making them even more of an attractive destination (Pousadas de Portugal, n. d. ). Pousadas have the possibility of attracting travelers interested in an authentic experience without the risk of traveling to an unknown hotel. Travelers can experience luxurious accommodations and proven service in the local context of pure and authentic Portuguese culture, service and food. In fact, Brazil's Minister of Tourism has said that pousads will attract a higher class of tourists who are willing to pay additional money for the unique experience (Renata, 2006). Another strength Pestana has demonstrated is its ability to connect with locals and operate efficiently within the local political and economic environment. Across Brazil, Pestana has demonstrated a tendency to enter cities by acquiring local hotels, as it did in Rio de Janeiro and Natal. This ensures that the hotels Pestana operates have a distinctly local flair and enable the company to penetrate the market quicker, avoiding lengthy construction times. The company also enters local markets with local partners, though it uses different partners in different cities. This willingness to share ownership gives the company powerful local allies and gives the company legitimacy among locals. These are important strengths, as many other multinationals are less successful at navigating Brazil’s complicated and corrupt government. Moreover, entering a market with a local partner shifts risk and offers the company invaluable local knowledge. A possible weakness the group has is its organizational structure. The group maintains an International Division Organization structure. While Pestana only operates in markets based on the Portuguese culture, countries with similar histories still vary greatly in terms of market power, government regulation and destination type. By clumping all international destinations under one group, the company may fail to fully take advantage of each market or understand each market. The company’s lack of resources committed solely to Brazil may enable competitors to build a structure that is more flexible and responsive to trends and changes within the Brazilian market. Further, as the company begins expanding outside Brazil into other South American countries, the company may continue to dilute its attention to Brazil, thereby rendering many of its potential strengths as much less poignant. A final weakness of the company is its intense focus on growth. Between its 10 hotels in 10 years policy in Brazil, and its overarching 30 hotels in 30 years policy, Pestana may begin to focus on quantity above quality. While the company’s unique products and intimate knowledge of Portuguese culture may attract luxury travelers at first, maintaining the high quality and service standards demanded by the business traveler and luxury leisure traveler may to be difficult amidst such an emphasis on growth. Finally, as the number of hotels owned by Pestana surges, the company may saturate the market and devalue the novelty of its brand. The hotels may become less alluring and less of a destination as they become ubiquitous and commonplace. 2 STARWOOD HOTELS & RESORTS (UNITED STATES) AND GOLDEN TULIP HOSPITALITY (SWITZERLAND) Starwood is one of the world’s largest and most geographically diverse hotel and leisure companies. The company is primarily a hotel management corporation, responsible for luxury brands The Luxury Collection, Regis, W and Le Meridien and other midrange brands Westin, Sheraton and Element (Starwood Hotels & Resorts). Until recently, the company’s sole exposure to Rio de Janeiro was its three Sheraton hotels, two of which lacked a spa. While the hotels have meeting faculties, the hotels don’t appear in trade magazines as specifically targeting the business community. As such, these three hotels are not considered to be in direct competition to the Four Seasons because they do not focus on any of our target markets. On June 12, 2009, Starwood acquired Golden Tulip Hospitality, a global hospitality company with a strong focus on the corporate traveler. Tulip manages three hotel chains, including the upscale Golden Tulip, which focuses on business travelers, and the luxurious Royal Tulip, which focuses on leisure travelers (Golden Tulip Hospitality). Tulip has one property in Rio de Janeiro, the Golden Tulip Ipanema Plaza. The property has a spa and complete business center. The hotel’s focus on corporate travel finally endorses Starwood as a viable competitor in the Rio de Janeiro market. Tulip is a unique hotel insomuch as it relies on international standards of service, yet has been relatively successful at integrating local flavors into its brand. The company advertises its local touches through its advertising campaign, â€Å"International standards, local flavors. † Tulip’s worldwide presence also lends it strong appeal and acceptance worldwide, especially among the luxury and business traveler. This is, in part, due to its global standards of service that international travelers have come to know and rely on. Tulip’s ability to incorporate local culture into a standardized brand is a powerful competitive advantage. Maintaining standard levels of service is important to the international traveler, as it assures him/her what to expect when traveling and builds brand equity. However, by maintaining these standards and adding local culture into each property, Tulip finds a middle ground between standardization and adaptation. This is a strategy that enables the company to remain flexible to local demands and local clients, but also cater to international travelers. One strength of the Starwood’s acquisition of Tulip is Tulip’s acceptance among the international elite. Until the acquisition, Starwood’s two luxury brands – St. Regis and the Luxury Collection – did not have properties in Brazil. This acquisition gives Starwood immediate penetration into Rio with a familiar and proven portfolio of properties. With Starwood’s and Tulip’s combined international experience, the group can effectively begin targeting the elite traveler more vigorously. Co-branding opportunities and brand extension opportunities also exist, as both hotel companies have more luxurious brands they could deploy in Rio de Janeiro if the Golden Tulip proves successful. Moreover, Starwood’s large reserve of loyal guests gives the combined company an automatic target market from which to draw. A final strength of the merger is Starwood’s and Tulip’s global footprint and established luxury brands lend it credence among the international elite. The company’s brand equity is an important strategic asset that can be used to connect with world travelers and attract them to their properties in Brazil. Starwood’s skill at managing a portfolio of multiple brands is important, as Tulip becomes another brand that Starwood can leverage, advertise and use to attract travelers. One potential weakness of the merger is the possibility that incongruous corporate cultures may stymie the companies’ ability to synergize strengths and build a comprehensive network. As with any merger, it takes time to fully integrate a new company into an existing company, and Starwood must be able to keep Tulip’s corporate culture in tact if it hopes to reap the benefits of the company’s strengths. If Starwood tries to change or adapt Tulip too much, it will lose Tulip’s connections with the business traveler and the company’s unique ability to combine international standards with local adaptation. Starwood must focus on maintaining Tulip’s brand identity and equity, while simultaneously merging the company into its portfolio to fully realize a competitive advantage. Another possible weakness is Starwood’s limited exposure to the Brazilian market, especially Rio de Janeiro’s luxury market. While Tulip has been in Brazil for some time, and both companies have experience in the luxury segment, Starwood is less familiar with the luxury hotel segment in Brazil than some of its existing competitors. This lack of experience could prove to be harmful if Starwood is not careful in executing operations, especially since the Brazilian market has proven to be difficult for international brands to tap. Starwood and Tulip both lack a positive country-of-origin effect, as the Brazilian market has proven to be fiercely loyal to local and Portuguese brands. Assuming that the namesake of its hotels will make the company successful could prove to be an unsuccessful route for the company to head. MARRIOTT INTERNATIONAL (UNITED STATES) Marriott is one of the world’s largest lodging companies with over 3,000 hotels spread across 67 countries. Marriott primarily franchises under an array of brands, including the luxurious J. W. Marriott and Ritz Carlton and other full-service and oth er mid-tier hotels (Marriott). Marriott entered Rio de Janeiro in 2001, focusing its efforts on attracting luxury business travelers to respond to the country’s bourgeoning market (â€Å"Hotels check into Brazil†). The opening of the J. W. Marriott in 2001 marked the city’s first new five-star resort in over 12 years (â€Å"A new Rio de Janeiro Marriott Hotel,† 2001). The J. W. Marriott is one of Brazil’s two multinational hotels on Travel + Leisure’s â€Å"World’s Best Hotels 2010† list, a comprehensive listing on the world’s 500 best hotels (â€Å"T+L 500: World's Best Hotels 2010,† n. d. ). The hotel offers a full-service spa, executive floor, complete business facilities and banquet halls and on-site restaurants. Before opening the hotel, Marriott sold off its stake in the hotel with the help of a local consulting firm. However, the acquisition of land along with the initial costs and design were all sponsored by Marriott without the specific help of locals. Marriott retained control over management of the hotel (â€Å"Rede Marriott e Odebrecht colocam hotel carioca a venda†). Marriott is the largest and most recognized multinational brand currently in Brazil. The J. W. Marriott brand, in particular, has resonance with our target markets, especially luxury travelers, as demonstrated by its placement on the Travel + Leisure rankings. This is a powerful asset, as the combination of brand equity, name recognition and recognized quality may connect with luxury world travelers. Moreover, the company’s worldwide presence and name recognition may also resonate with business travelers who are already familiar with the brand and trust the hotel to be a quality establishment. A major weakness the hotel faces also stems from its name. Like other multinational chains discussed, Brazilians prefer local hotels. The negative country-of-origin effects have hurt Marriott, as US flags are not necessarily familiar locally since Brazilians’ exposure to these brands is significantly more limited and Brazilians tend to be attracted to local brands. This is a weakness the company faces when targeting local visitors and businesses, another target market that the Four Seasons is hoping to target. Another weakness Marriott faces is its lack of local partnerships. When entering the market, Marriott did not search for a partner. This is in stark contrast to other successful chains, especially since Marriott lacks experience in the Brazilian market overall. According to the CEO: In order to move forward, we will need to find common ground with the Brazilian business model and probably take some equity positions in some of the developments to gain market knowledge and brand acknowledgement. A second option is to enter with our existing relationships through local partners to implement our manage-franchise business model (O'Neill & Chao, 2008). Coming from a country with significantly different normative business practices and limited exposure to Brazilian culture – despite its significant international presence – has proven a difficult obstacle for Marriott. This is an important weakness to consider for all multinational companies, especially those unfamiliar with the Brazilian marketplace. A final weakness Marriott faces is its pricing structure, which is higher than many of its competitors. While the hotel has higher rankings than other multinationals, if the benefits of the brand are not properly communicated, the hotel may seem overpriced. Moreover, if the hotel does not distinguish itself as luxurious, the company may face problems persuading international travelers to choose an American hotel chain over a more localized chain. 4 COPACABANA PALACE BY ORIENT-EXPRESS HOTELS (BERMUDA) The Copacabana Palace is a historic, luxury hotel built in 1923. It is considered by many around the world as the place to stay in Rio (Doyle, 2009). The Copacabana Palace is one of three hotels on Travel + Leisure’s â€Å"World’s Best Hotels 2010† list located in Brazil (â€Å"T+L 500: World's Best Hotels 2010,† n. d. ). Additionally, the hotel is a member of the 5 Star Alliance, an online travel agency that partners with the world’s most luxurious hotels. Owned by the Guinle family of Rio de Janiero until 1989, the hotel is now owned by Orient-Express (Five Star Alliance, n. d. ). Orient-Express purchases individual luxury hotels across the globe. The company does not advertise itself as a chain, rather positioning each property individually. Properties are managed locally: â€Å"every hotel†¦has its own name and personality† (Orient-Express, n. d. ). Following its purchase, Orient-Express renovated the hotel, outfitting the fifth floor as an executive business center to focus on business travelers. The hotel includes meeting facilities and banquet facilities, all aimed at business travelers’ needs (Five Star Alliance, n. d. ). The hotel also focuses significantly on elite travelers, as its reputation for service and quality attract politicians, royalty and actors. The hotel has a complete spa and two restaurants, neither of which serves Brazilian cuisine (Five Star Alliance, n. d. ). An important advantage the Copacabana Palace has is its legacy and long-term association with Brazil. From its beginnings, the company has been intertwined into local culture. The owners were local and today, Orient-Express continues to manage the hotel as an independent property. Many view the hotel as the nation’s preeminent local option, and foreigners who want an authentic experience may opt to stay at the Copacabana Palace over other multinational chains. The hotel’s brand equity is particularly strong, as it is a clear favorite among elite travelers. The company’s increased focus on business travelers further expands the hotel’s brand equity and product scope. Another strength the Copacabana Palace is its long history in Rio de Janeiro. The company’s experiences in Rio de Janeiro give it a level of knowledge foreign multinationals can’t match. Moreover, the company’s success in Rio de Janeiro reflects its ability to work within the country’s legal and political structure. As investment increases in Rio de Janeiro and new multinational chains enter the market, Copacabana’s deep understanding of local cultures and the regulatory environment will be exponentially more valuable. While the company is known to Brazilians and the well-traveled elite, a lack of a true multinational brand name may stymie some elite travelers. Not only does the company lack a network of brand loyal patrons, the lack of an internationally recognized brand name may make some travelers hesitant. Additionally, the hotel’s high price may make other, more familiar options more appealing to travelers, who are sure of the level of quality to expect. 5 FASANO HOTELS (BRAZIL) Fasano is one of the few remaining local competitors yet to be acquired. The company was established in 1982 as a world-class restaurant; the company remains recognized for its culinary achievements. The restaurant pioneered the gastronomic movement in Brazil and continues to uphold its elegant blend of contemporary and traditional Brazilian cuisine. In 2003, Fasano opened its first hotel in Sao Paulo. In the same year, Fasano became a member of the Leading Small Hotels of the World (Five-Star Alliance) and was ranked as one of the world’s 50 best hotels in Travel + Leisure (Fasano, 2010). Fasano opened a hotel in Rio de Janeiro in 2007 amid great hype and reviews, â€Å"eclipsing the fabled Copacabana Palace as the top play den for Brazil’s rich and famous† (Beehner). From its foundation to the finishing touches, Fasano is a local competitor. This is a significant strength the hotel has, as its numerous restaurants all share the spirit of Fasano’s famed culinary expertise. The hotel is designed in Bossa Nova-chic style and Brazilian touches compliment every aspect of the hotel. More than any competitor, Fasano remains a localized and focused hotelier, and has limited experience outside the growing Brazilian market. Fasano is a traveler’s only real option, when he/she wants to stay at a local, luxury resort. Every other luxury boutique hotel has been acquired or is at a different tier of service than Four Seasons. Another strength Fasano has is its long-term, strategic partnership with real-estate developer JHSF. This has given Fasano access to the Brazilian market and enabled the company to take less risky positions in its hotels as JHSF has a 50. 1% stake in the hotel. This also frees up capital for other ventures, as the company is currently building additional properties in Brazil and Uruguay. A possible weakness of Fasano is its lack of experience managing hotels and meeting the expectations of guests, especially foreigners. As Brazil’s most expensive hotel, the elite guests who frequent Fasano have incredibly high expectations. While multinationals have experiences with such clientele, Fasano does not have the same expertise in dealing with this segment and may be overextending its existing resources in an attempt to compete with world-class contenders. Indeed, excitement over the hotel has faded since its opening in 2007 and the company continues to charge a significant premium over every other Brazilian hotel. Another weakness is the company’s

Analysis of Shakespeare Sonnet 60

Like As The Waves Make Towards The Pebbled Shore Time is a common theme throughout Shakespeare's Sonnets, this is most apparent in Sonnet 60. This sonnet is about the ravages of time. How time never stops and is constantly changing. Also how time is aging us, and eventually takes what is has given us. But Shakespeare poetry will stand the test of time: Like as the waues make towards the pibled shore, So do our minuites hasten to their end, Each changing place with that which goes before, In sequent toile all forwards do contend. Natiuity once in the maine of light.Crawles to maturity, wherewith being crown’d, Crooked eclipses gainst his glory fight, And time that gaue, doth now his gift confound. Time doth transfixe the florish set on youth, And delues the paralels in beauties brow, Feedes on the rarities of natures truth, And nothing stands but for his sieth to mow. And yet to times in hope, my verse shall stand Praising thy worth, dispight his cruell hand. Sonnet 60 starts w ith a very relatable illustration of a waves constantly traveling towards the shore. This is like time in that there are minutes constantly, continuing, going to their end.Each minute or wave replacing the one that just happened, in a continuous march. Just like every wave is building in strength and then crashing again only to be followed by another in its place. Time cannot be stopped, one minute is always followed by the next in a never ending cycle. The second quatrain says that a new sun rises and with time it rises to maturity, noon, where the sun is its highest and king of the sky. Then the sun starts to set and now what once gave the sun its glory is now taking that glory back, time. This is a metaphor of a sun having a human life.The sun starts out being born â€Å"Nativity† and then crawls like a baby until it reaches its highest point where it is â€Å"crowned† with maturity. Then the sun continues to fall back to darkness or death. â€Å"And time that gaue , doth now his gift confound† this last line concludes the metaphor with the assertion that time both gives the gift of life and then takes in away. The final quatrain goes on to explain that time destroys the perfection of youth, and carves wrinkles in a beautiful face. â€Å"And delues the paralels in beauties brow. If you replace delues with deludes and beauties brow with our forehead, then you can see that its stating that times makes wrinkles or lines across your forehead. So, time is aging us. Times also feeds on the rarities of natures perfection, and lays waste to all in its path. â€Å"And nothing stands but for his sieth to mow. † Seethe is constantly used as a metaphor for death, this is saying that nothing stands in times way, or deaths. Again the metaphor of time giving you life and then taking it away is expressed in this quatrain, though it being much darker and showing how relentless and unforgiving time can be.This metaphor is also more relatable since it is about us and how time ages us and eventually leads to our death. â€Å"And yet to times in hope, my verse shall stand Praising thy worth, dispight his cruell hand. † These last couple of lines go on to explain that his verses shall stand the test of time, praising your worth in spite of time's cruel hand. These last lines are saying that even as time takes him, makes him old, and eventually even kills him, his poetry will live on, not affected by time's cruel hand. It looks like he was right because over five hundred years later and here we are today still reading and analyzing these works.Time is a very relatable thing, and this sonnet explains time very well. It explains what time is, it's just seconds building on minutes continually going to their end. Time is giving, giving someone life and power, raising that person to their prime. Time is also very cruel, it takes that power and life away from that person. Time is such a simple thing, it's only seconds and then m inutes, but through this sonnet it has been personified to something more, something greater. It is a giver and taker, it is life but is also death, and in the end it is time that takes us.

Prejudice, Stereotyping, and Discrimination Essay

Most people have experienced prejudice, stereotyping, or discrimination at some time in his or her life. There is no doubt social discrimination, prejudice, and hostility still create serious problems and challenges, even in today’s apparently more and more individualized and â€Å"enlightened† society. This paper will discuss prejudice, stereotypes, and discrimination in the context of social psychology; what the consequences of stereotyping and discrimination are; and strategies to improve attitudes, judgments, and behaviors. Social psychologists recognize prejudice, stereotyping, and discrimination â€Å"by focusing on whether they involve feelings (affect), cognition, or behaviors. † (Feenstra, 6. 1 Prejudice, stereotypes, and discrimination, para 1). Prejudice is a negative belief or feeling (attitude) about a particular group of individuals. Prejudices can be passed on from one generation to the next. Cognitive schemas can cause stereotyping and contribute to prejudice. Stereotypes are beliefs about individuals involving their membership in a particular group. These beliefs can be positive, negative, or unbiased. Stereotypes concerning gender, ethnicity, or profession is common in many societies. â€Å"Discrimination is negative behavior toward individuals or groups based on beliefs and feelings about those groups. A group you are a part of is called your ingroup. Ingroups might include gender, race, or city or state of residence, as well as groups you might intentionally join. A group you are not a part of is called your outgroup. † (Feenstra, 6. 1 Prejudice, stereotypes, and discrimination, para 1). Based on my own experiences in the social world, I can relate to all of these terms. The era in which I grew up ushered in the civil rights movement, anti-war protests, hippies, the Cuban missile crisis, and political and feminist activists. The world was a changing place; many times, we saw and heard prejudice, stereotyping, and discrimination at its worst. Unfortunately, we are seeing the same types of prejudices, stereotyping, and discrimination going on today; especially since the â€Å"9-11† attacks and with the â€Å"Occupy or 99%† movement going on today. Social identities depend on the groups to which people belong. Any group a person belongs to is an ingroup, and those that they do not belong to are considered an outgroup. Social cognitive research suggests that outgroup discrimination and prejudice are a result of basic and functional cognitive processes such as categorization and stereotyping. â€Å"Our prejudice and stereotypes come not only from the way our systems process information but also from the world around us. Societal origins of prejudice involve the norms in the world around us, the competition that exists between groups, and the social inequalities that exist in the world. Ingroup favoritism leads to unequal treatment of those we have categorized as in the outgroup. And outgroup homogeneity bias blinds us to the differences within the outgroup. † (Feenstra, 6. 1 Social Cognitive origins of prejudice and stereotypes, para 2). â€Å"Immediate social contexts do shape individual responses to individual outgroup members. This exemplifies a social psychological analysis, that is, how actual, imagined, or implied other people influence and individual’s stereotyping, prejudice, and discrimination. † (Fiske, 2000, P. 303). Categories help us deal with large amounts of information. They make it possible for us to process more information and save cognitive energy, so we use categories copiously. â€Å"That might not be a problem if all we did was categorize people, but it turns out that along with quickly and easily developing categories, we use them to make later decisions (Tajfel, 1970). † (Feenstra, 2011, 6. 2 Categorization, para. 4). Competition for resources can also create prejudice. This competition could be economic interests, political or military advantage, or threats to the safety or status of the group. People can become angry if they feel that a rival group is taking resources or prestige from their ingroup; and anger is a strong motive for prejudice (Feenstra, 2011). â€Å"Social discrimination results from the generalization of ingroup attributes to the inclusive category, which then become criteria for judging the outgroup. Tolerance, on the other hand is conceptualized as either a lack of inclusion of both groups in a higher order category or as the representation of the inclusive category in such a way as to also include the other group and designate it as normative. † (Mummendey & Wenzel, 1999, P. 158). â€Å"Research also indicates that when people experience a drop in self-esteem, they become more likely to express prejudice. An unfortunate implication of this research is that for some people, prejudice represents a way of maintaining their self-esteem. At the same time, the link between prejudice and self-esteem suggests a hopeful message: it may be possible to reduce prejudice with something as simple as a boost in self-esteem. † (Plous, n. d. , P. 10). Stereotyping and discrimination can powerfully affect social perceptions and behavior. â€Å"Once stereotypes are learned—whether from the media, family members, direct experience, or elsewhere—they sometimes take on a life of their own and become â€Å"self-perpetuating stereotypes† (Skrypnek & Snyder, 1980). One way this can happen is by people experiencing a stereotype threat that lowers their performance. Stereotypes can also become self-perpetuating when stereotyped individuals are made to feel self-conscious or inadequate. † (Plous, n. d. , P. 19). Since all of us are part of a social group, we all have the possibility of having our performance disturbed by stereotype threat. â€Å"The roots of prejudice are many and varied. Some of the deepest and most intensively studied roots include personality factors such a right-wing authoritarianism and social dominance orientation, cognitive factors such as the human tendency to think categorically, motivational factors such as the need for self-esteem, and social factors such as uncharitable ingroup attributions for outgroup behavior. Research on these factors suggests that prejudiced attitudes are not limited to a few pathological or misguided individuals; instead, prejudice is an outgrowth of normal human functioning, and all people are susceptible to one extent or another. † (Plous, n. d. , P. 11). The most important question is, what can we do to improve attitudes, judgments, and behaviors in order to reduce prejudice and discrimination? â€Å"The contact hypothesis proposes that contact between members of groups that hold prejudice against one another may reduce prejudice. Contact can reduce prejudice when a number of conditions are satisfied. Common goals, called superordinate goals, are particularly helpful in bringing groups in conflict together. † (Feenstra, Ch. 6 Summary). Looking at the world today with all of the large bank and corporate bailouts, the state of our economy, continued protesting, and the discontent of the majority of the American people; I do believe that we are inadvertently creating self-fulfilling prophecies in our society. In Self-Fulfilling Prophecies, Michael Biggs states, â€Å"A theory of society could, in principle, prove self-fulfilling. Marxism predicts that capitalism is fated to end in revolution; if many people believe in the theory, then they could forment revolution (Biggs, 2009). † It seems that now would be a good time for everyone to learn and practice the Seven Pillars of Mindfulness (Kabat-Zin, 2010). People throughout the world live with prejudice, stereotyping, discrimination, and the consequences of the resulting actions every day. There is no doubt social discrimination, prejudice, and hostility still create serious problems and challenges, even in today’s apparently more and more individualized and â€Å"enlightened† society. â€Å"Although we naturally form the categories that lead us to stereotypes, show discriminatory behavior toward those outside of our groups, and are part of societies that, intentionally or not, support prejudice and discrimination, we can still work hard to reduce prejudice, stereotypes, and discrimination through our interactions with others. † (Feenstra, Ch. 6 Conclusion). References Biggs. M. (2009). Self-Fulfilling Prophecies. Retrieved from http://users. ox. ac. uk/~sfos0060/prophecies. pdf Feenstra, J. (2011). Introduction to social psychology. Bridgepoint Education, Inc. Fiske, S. T. (2000). Stereotyping, prejudice, and discrimination at the seam between the centuries: evolution, culture, mind, and brain. European Journal of Social Psychology (30), 299-322. Retrieved from http://www2. psych. ubc. ca/~schaller/Psyc591Readings/Fiske2000. pdf Kabat-Zinn, J. (2010). Mindful Attitudes. Retrieved from http://mindfulworkshops. com/? tag=non-judging. Mummendey A. & Wenzel, M. (1999). Social discrimination and tolerance of intergroup relations: Reactions to intergroup difference. Personality and Social Psychology Review, Vol. 3, No. 2, 158-174. Retrieved from http://dtserv2. compsy. uni-jena. de/ss2009/sozpsy_uj/86956663/content. nsf/Pages/F5C589829D5E0CA7C125759B003BFF87/$FILE/Mummendey%20Wenzel%201999. pdf Plous, S. (n. d. ). The psychology of prejudice, stereotyping and discrimination: An overview. Wesleyan University. Retrieved from http://sscholar. google. co. uk/scholar? start=10&q=Prejudice, +stereotype,+discrimination+ingroup+vs. +outgroup&hl=en&as_sdt=0,3.

Project on Micro Economy Essay Example | Topics and Well Written Essays - 1250 words

Project on Micro Economy - Essay Example Opportunity cost refers to the best alternative forgone when Supa drinks decides to produce Thasta over other product lines. When the concept of opportunity cost is discussed it is critical to put into perspective issues such as implicit and explicit cots. Implicit cost is when an alternative if forgone but there is no actual cost included. Therefore, implicit cost refers to financial benefits forgone when one makes one decision over the other. On the hand, explicit costs refer to cost that is easy to account for owing to the fact that their effects are easily traceable (Hirschey112. They include cost such as wages, rent, material cost. In fact, in implicit costs, the management has to pay the money directly. By Supa Drinks deciding to start the production of Thasta, it is going to incur both implicit and explicit cost. The implicit cost incurred refers to the forgone profits that Supa Drink has not received because they opted to produce Thasta instead of the other alternative. Thast a was faced with several options, which include production of detergent, production of stationery, and production of electronics. Out of all the production choices, the one that had the best alternative to Thasta was a production of detergents. The company had estimated that it would record on average net cash flow of $ 200, 000 per annum. By deciding to produce Thasta over the Detergent, it has undergone an implicit cost of $200, 000. On the other hand, explicit costs that are incurred by the company include labor costs, input cost and general expenses. Production of Thasta is a costly affair; there is therefore, huge initial capital outlay that is required to start the production of Thasta. There is cost required to erect a plant for production of the drink, there is wages that will be incurred to pay workers, and general expenses such as electricity expenses among others. The explicit cost that will be incurred by the company is outlined below. Item no Expense item Cost per annum ($) 1. Labor cost 50000 2. Plant maintenance cost 40000 3. General cost 10000 4. Promotion costs 15000 5. Total cost 115000 It is worth noting that opportunity cost refers to both the implicit and explicit cost. Therefore, by management deciding to produce Thsata over the best alternative of the production of detergent will result to an opportunity cost of $ 215000. This is calculated by summing up the total implicit cost, which is $ 200000, and the total explicit Cost, which is $115000. It is also recommended that the company operate at economic profits so that there is both allocative and productive efficiency in production. Allocative efficiency refers to a situation in which the net profit is zero. This point of production would mean that the company is not under producing or overproducing the soft drink. Second Section: Trade Offs The company will produce two brands of Thasta, which is the orange flavored and the other is coke flavored. This means that the company must conside r the issue of trade off when deciding the units of the orange flavor and coke flavor to produce. It is worth noting that the company has a production capacity of up to 50000 units’ daily production. This production capacity must be divided between the two brands. This brings about the concept of trade off. As the company produces more and more of orange flavor, it will produce less of Coke flavor along the production possibility

Internal Conflict in Germany Essay Example | Topics and Well Written Essays - 500 words

Internal Conflict in Germany - Essay Example The sudden increase in foreign population triggered aggressive reactions perpetrated particularly by factions of youthful males who opposed the idea. Practically, they must have envisioned the probability of multicultural divergence. Subsequently, conflict intensified between right-wing extremist and the migrants, and the right-wing-extremist and the destitute of the former West Germany (Ewald and Feltes, 2002). The negative impact of the aggressive acts of factions was boldly expressed in: first, the creation of a commission on immigration which is tasked to see to the appropriate immigration procedures and reduce further questions on clandestine entry, as well as additional unnecessary inflow; secondly, tourist would practically be staying away from areas where there are known clashes; third, prospective investors would not dare take the risk of pouring in money in areas where there is existing collision among antagonist groups; and fourth, a negative image of the country as a whole is projected internationally because of internal conflict (Ewald and Feltes, 2002). Looking at this situation objectively and intellectually, the antagonist must make a strong decision on whether they would like to keep living in a nation of turmoil and decay, or they would rather enjoy living in a community of an actively functioning economy.

Product Comparisons among three Separate Retailers Assignment

Product Comparisons among three Separate Retailers - Assignment Example The second shop is located at the bus terminal. The business targets people who are about to travel or those embarking from their journeys. The owner deals with home theatre systems in addition to phones. This is an advantage when compared to the first shop due to a variety of goods for sale. The shop has services such as educating the consumer on how to utilize the product. The strategy aims at the achievement of customer loyalty with the store. The customers who buy more than one phone get discounts and rewards, as a strategy, to encourage more purchases. The third shop is located at the airport. The target market consists of tourists and domestic professionals. The consumers buy such goods before boarding the flight or due to local network compatibility issues. After sell services provided, such as internet configuration, enables the owner be competitive in the market. The other advantage is the availability of product variation of the electronics. The other strategy that the retailer employs is the ability of the business to stay operational for longer hours. This is because the airport is in operation all the

Strategic management (General Motors) Case Study

Strategic management (General Motors) - Case Study Example The company recorded revenues of $185.5 billion up by about 4.6% from $177.3 billion in 2002. Although GM's global market share declined to 14.7 percent from 15.0 percent, three out of its four automotive regions posted gains. Leading market position: GM has consistently maintained its leading position as the world's largest vehicle manufacturer. In US it is the league of the big three with Ford and DaimlerChrysler. GM also has a strong market position in the UK, Germany, Brazil, Australia and China. Strong market position enhances the brand image of the company and provides economies of scale throughout the supply chain. Robust revenue growth in Asia Pacific: The Asia-Pacific region has proved to be very encouraging and having immense potential for the company. Despite the challenges in the Asia-Pacific region, GM recorded strong revenue growth in this region with continued strong performance by Shanghai GM in China and Holden in Australia. For 2003, GM Asia Pacific (GMAP) earned $577 million, more than three times the net income of $188 million in 2002. Company is also aggressively expanding its operations in India, another big market in the region. Such a strength in this region helps the company to offset its losses in some other regions. Strong brand portfolio: GM has a strong brand portfolio.

Summary Essay Example | Topics and Well Written Essays - 500 words - 2

Summary - Essay Example While Pennsylvania showed average tuition and fee charges as $8410 in 2005-2006, it was $3100 in Florida and $6910 in South Carolina. In fact, there was notable difference in charges as well as in the student enrollment in various institutions. A number of reasons are pointed out as the factors driving tuition charges. Dennis Jones suggests tuition setting in public institutions as closely related to the health of other institutional revenues. Apparent influences of a variety of political factors in postsecondary policy making at the state level has been observed. Various examinations revealed relationships between indicators of educational structure and indicators of political influence. Descriptive representation compares the similarities in background between elected officials and their constituents. On the contrary, substantive representation refers to the interests elected officials serve. There are various opinions on the enhancement of substantive representation and various mo dels are also developed. The model named ‘presence’ assumes minority representatives to act as stronger advocates for minority constituents (McLendon et al, 6). The panel-data model implies that pricing behavior of universities is heterogeneous and is difficult to be captured using available data (McLendon et al, 15).

Discuss potential reasons for a groups failure to meet their goals and Term Paper

Discuss potential reasons for a groups failure to meet their goals and objectives - Term Paper Example Lack of proper timing may be a possible cause of failure by group members to undertake strategies aimed at accomplishing set goals and objectives of a group project. Goals and objectives need close supervision to ensure the set strategies to accomplish them are in the right track. Proper reporting of progress is vital to realizing the set goals and objectives of the group. Failure to undertake supervision of the progress, coupled with proper reporting may be a possible cause of unattained goals and objectives in a group project (Yarbrough, 2008). Besides supervision, the progress of the goals should be subject to evaluation for appropriateness and relevance. This is a core step to realizing goals and objectives of a group project. Planning plays a fundamental role in realizing set goals and objectives. A plan serves as a blueprint that guides the strategies of achieving set goals and objectives. A group, therefore, needs a detailed and well-defined plan to guide it through the course of the process. Failure to set an appropriate plan, therefore, can be a possible cause of failure to achieve a group’s set goals and

Three Cultural Regions of America Before Colonization Essay Example for Free

Three Cultural Regions of America Before Colonization Essay The three cultural regions of North America preceding colonization were the southwest, south, and Northeast. In these three cultural regions, there were several different groups of people that occupy the land. The Southwest region has the Pueblo Peoples or Pueblos. The south region has the Cherokee. The northeast has the Algonquians. The Pueblo peoples or the Pueblos settled mainly on the east of the Grand Canyon. The Pueblos traditional homes were made from the sandstone, which was held in place with mud. The houses were stocked up together as defense in mind. There were several groups that made up the pueblo peoples. The Pueblos spoke several dialects but one thing they all had in common was their affection and commitment to their land and their villages. Each Pueblo peoples clan and secret religious societies have their own political independence but still followed the same communal pattern. Various leaders from the clans and the religious societies formed the governing systems of the Pueblo villages. The Pueblos relied on farming. They grew corn, squash, beans and pumpkins. The Southwest region was extremely dry but they were still able to get irrigation sources from the several rivers that flowed out from the mountains. The Pueblos have several ceremonies and rituals which involves dancing, singing, chanting, and impersonations. The rituals and ceremonies were performed for marking important events, celebrating planting and harvesting, and to pray for rain. The Cherokees settled mainly on the high mountains. The Cherokees traditional homes typically have two separate houses that were designed to fit the changing climate. The Cherokees were one of the largest groups in the south region. The women often played a great role on the group. They were responsible for the household and clan was passed on through mothers, also known as the matrilineal kinship system. The group was not ruled by class or kings. Elderly men governed the tribe but the women were as powerful and influential leaders of the community. Although the south enjoys the climate suitable for farming, it was not as important as hunting. As the women tended crops in the fields, the men provided for the family by hunting and fishing. As the men hunt, the female farmed. The main concerns for the Cherokees were sustaining harmony. The Cherokees have rituals and ceremonies that balance in the world and help maintained harmony. When a hunter killed a deer, he performs a ritual as a sign of apology. They perform a ceremony called the Green Corn Ceremony, which symbolizes as a thanksgiving celebration for the harvest and a sign of new beginnings. The Algonquians settled mainly in the woodland sections of Atlantic and around the Great Lakes. The Algonquians built their villages near rivers and lakes and were usually very small. Traditional homes were built dome-shaped. Young Trees, or saplings, were used to build frames. Most of the communities were independent. There were approximately over fifty Algonquians tribes, which were separated into smaller groups called the bands. The bands were consisted of several extended families who belongs to same villages and each had a chief. The Algonquians hunted, fished and farmed. The Algonquians were experts on farming. They planted beans, corns, squash, pumpkins, sunflowers, and tobaccos. The Algonquians believed in supreme spirit. The Spirit was believed to have helped them grow crops and hunt for food. They had ceremonies held at different times such as planting season, harvest time, and hunting season. They danced, sing, and played instruments. Tobacco was used at these ceremonies because the Algonquians believed that the smoke had the ability to take their messages to the supreme spirits. Faragher, John M. Buhle, Mari Jo, Czitrom, Daniel, Armitage, Susan Out of Many Upper Saddle River, New Jersey, c2009 Perdue, Theda Indians of North America: The Cherokee United States of America: Chelsea House Publishers, c1989 Santella, Andrew First NAtions of North America: Southeast Indians Chicago, IL: Heinenabb Library an imprint of Capstone Global Library, LLC, c2012 Broida, Marian First Americans: The Pueblo Tarrytown, New York: Marshall Cavendish Corporation, c2006 Kellogg, William O. American History: The Easy Way United States of America: Barrons Educational Series, Inc, c2003 Quiri, Patricia R. The Algonquian United States of America: Franklin Watts, c1992

How Firms Become Multinational Enterprises

How Firms Become Multinational Enterprises A multinational enterprise according to Brooke and Remmers is a company that is present in more than one country, the home country and the host country and provides valuable activities in a service or manufacturing area (Dunning, 1993, p.3). Though Maurice Bye 1958 began to see and recognize multinational enterprises by the definition Multi-territorial firm indicating that a MNE was purely given the name by the amount of countries a company occupied(Maurice Bye 1958). Academics see the multinationals in great depth and definitions are slightly different, J.Dunning defines a Multinational enterprise as an enterprise that engages in foreign direct investment (FDI) and owns or controls value adding activities in more than one country (J.Dunning 1992). MNEs therefore, control a package of resources, which they move across national borders, and continue to control over those borders. This transfer is often conceived solely in financial terms, but in practical terms the role of MNEs in tra nsferring capital between countries is one of their less important functions. The critical resources, which multinationals transfer across borders, are the areas of technology and organisation, entrepreneurship and culture. MNEs are imperative because they have the capacity to move technologies and ideas around the world. This gives the firms the potential to serve as engines of growth. This essay will explain why and how firms become multinational enterprise. The subsistence of MNEs might seem apparent, in the sense that firms in the capitalist system exist to make profits, and investing in foreign countries could be seen as a coherent way of making more wealth than staying in one country. In spite of that not all firms in the world are multinational. In addition to this, according to Jack Behrman there are four main types of Multinational corporations motives (Jack Behrman 1972). The first motive, the resource seekers the enterprises, to obtain particular and specific resources at lower real cost that cannot be obtained in their home country aim to invest abroad. One kind of these is the physical resources like, raw materials, minerals, agricultural product and location advantage, which generally involves substantial capital expenditure. Another kind of resources is semi-skilled and unskilled labour that is available at lower costs, in countries developing in advanced industrialization like, Mexico, Taiwan, China and like Primark outsour cing from India. One more motive why firms seeking FDI in resources is to obtain technological skill, management and organizational skills already accessed there. The second motive the market seekers enterprises, aim to prolong or protect existing market or to promote in new markets. Thereby, there are four main reasons firstly, to cope-up with the suppliers and customers who have set up foreign producing facilities. Secondly, to hunt the market, the product needs to be modifying according to the local customers preferences. Thirdly, sometimes it is a lot cheaper to produce in the host country than to export from home country. This is becoming more necessary if there are trade barriers and restrictive government laws. Furthermore, the last reason for market seeking investment is that enterprise wants to have physical presence in the foremost markets served by its competitors. Therefore, companies like Nestle, Bayer and Ford expanded internationally in search of new markets. The third motive the efficiency seekers enterprises want to obtain from the common governance of geographically scattered activities and to have benefit of economies of s cale and of risk diversification. Therefore, enterprises wants to compete on the basis of the product it offers and its ability to diversify its assets and capabilities by exploiting the benefits of producing in several countries. The fourth motive the strategic asset seeker enterprises to sustain their international competitiveness acquire the assets of foreign corporations. Like one company might acquire a business so as to thwart competitor from doing so or another might merge with its foreign rivals or one might acquire suppliers to corner the market for raw materials. Enterprises seeking strategic FDI are trying to protect or advance their long-term competitive position. Apart from these four motives other motives like escape investments, support investments, passive investments also play a big role why firms want to go international (Dunning 1992). Therefore, these motives were and will be the main driving force behind the expansion of MNCs. The ways in which these motives have mainly pushed firms from United States to become MNCs are based on product cycle theory developed by Professor Raymond Vernon. This theory suggests that the starting point for the internationalization process is typically an innovation that a company creates in its home country (Raymond Vernon 1966, p.190-207). Then after the product is launched it is gaining success in its domestic market and finally the product becomes highly standardized and company has gained recognition thereby, the competitors enter the same business. Market now focuses on price so the company has to move its production to low-wage developing countries so as to be above the competition and later has to develop market share in other countries, which they have lost in home country. For example Nokia started as domestic company in Finland but its success at home country led its produc tion and sale to foreign markets. This way firms should analyse their role of management, motives of the organisation and their success at home country and should think of entering foreign market but question here arises how will firms do that. This can be explained on the basis of theories of Internationalisation. The Eclectic paradigm sets out to explain the extent, form and pattern of international production and is founded on the juxtaposition of the ownership- specific advantages of firms contemplating foreign production, the propensity to internalize the cross-border markets for these, and the attractions of a foreign market for the production (Dunning, 1988). The eclectic paradigm, with its emphasis on TCA, i.e. Transaction cost analysis tells how firms and especially MNCs evaluate whether or not to establish a manufacturing subsidiary in a market abroad (Erramilli and Rao, 1993). This information is cost-based, requiring the costs of running a system to be calculated so that the firms can make any evaluation. Thereafter, industrial network approach (Johanson and Mattsson, 1986) and the business strategy approach (Welford and Prescott, 1994) present detailed models incorporating a number of factors which impact upon market entry and the selection of a market entry method. By doing so, it seems clear that information on these factors is a pre-requisite of a firms decision. However the Uppsala model is unique in seeing information about a market, specifically that based on experiential knowledge, as the crucial indicator of market entry and, particularly, market entry mode selection. (Jan Johanson et al. 1977) So, the firms should make an initial commitment of resources to the foreign market, and through this investment it gains local market knowledge. On the basis of this, the company will be able to evaluate its current activities and opportunities for additional investment. Thereby, companies should accumulate their time of entry on the basis of its level of commitment in the foreign market and level of control over foreign activities. This all depends on the nature, form of the firm whether the firm is going to only sell its product or the firm is producing and selling goods and services. At the first stage this can be done by the indirect exporting, licensing/ franchising and then at second stage by direct exporting, direct sales operations in host country, joint ventures and FDI. Firms can potentially enter into international business at any of these stages and decide to prolong at that stage but can go to other stage and choose another option in starting or later period of business. Like, some companies internationalize gradually by moving up the scale from exporting through joint venturing to direct foreign investment. With exceeding industrial period of globalisation firms have shown mounting interest in going abroad because of the increasing need to go international, pressure to procure cheapest inputs, efficiency seeking, the opening up of new markets, considerable changes in location costs and benefits and a strive to strike a balance between globalisation and localisation. Therefore, firms should choose appropriate business options to enter and service the host market on the basis of above discussed Multinational corporations motives and then decide which stages firm will go ahead so that firms corporate objectives are achieved efficiently and effectively. Then domestic firms can face challenge as cross border mergers and acquisitions, MNCs have been constantly increasing and MNCs account for over 40 percent of the worlds manufacturing output and almost a quarter of world trade. So firms should analyse their business prospective on the basis of above discussed Uppsala model, eclectic theory an d other theories and then go ahead. However, international business has taken a quantum leap and is now considered strategically important both by firms and governments. How Firms Become Multinational Enterprises How Firms Become Multinational Enterprises INTERNATIONAL BUSINESS ASSIGNMENT II Introduction A significant shift is taking place in the world economy today; previously each nation had different and relatively isolated economies from each other by different barriers to cross border trade. But now we are drastically moving towards an independent global economic system in which different national economies are blending together which is referred as globalization. Independent global economic system has brought effective involvement of numerous firms from various countries in the international market; the shift towards globalization has been accelerating currently, and it looks set to carry forward. Multinational Enterprise An enterprise that operates and has its assets and facilities in more than one country excluding its home country is called as multinational enterprise, such firms has have offices, factories, outlets and etc., in different countries and usually have centralised head office where they co-ordinate global management. The swiftly developing global economy creates many factors and opportunities for business worldwide. It creates opportunities for business to expand their resources, profit and market, this make many firms to become globalized for example Wal-mart , Coca-Cola, Exxon Mobil, Levi Strauss, and Royal Dutch Shell are some of the most successful multinational enterprise in the world. But still many significant differences exist between national markets along many relevant factors which need to be overcome to be successful globally. Why Firms become Multinational Enterprise? As an enterprise operating in an International Business environment provides many new openings to a firm than operating in a domestic environment. A worldwide operation provides an enterprise access to new markets, resources and many other benefits, mainly it also widens the options of strategic moves of the firm against its rivals. Lets discuss the reasons for the firms becoming a Multinational corporation elaborately. The Eclectic Paradigm An effective approach to the study of the internationalization of business was offered by John H. Dunning. The Eclectic paradigm was a dominant framework for explaining the reason for the existence of Multinational enterprises and the determinants of foreign direct investment. Dunning stated three factors to the eclectic paradigm: i. Ownership-specific advantages The enterprise which invests in a foreign country has a competitive advantage and out-competes the firms that operate in the country where the investment is done. The multinational enterprise has advantages of Intangible assets like trade name, brand, and patents. The firm has benefits of reputation, technology and skills of management. ii. Location-specific advantages This advantage is based on the geographical position of the firm; according to this many positive factors like resources, cheap labour, host countrys regulations and political stability are available for the multinational enterprises. iii. Internationalization-specific advantages When a firm enlarge its operations in another country, by acquiring the property of the assets that are abroad its get this internationalization benefit. The firm gets a new market, reduces the production cost and can keep its skills and capabilities internal to the firm. The Product life cycle theory The product life cycle theory was framed by Raymond Vernon, this illustrate that in the beginning stage of the product life cycle the production and the rest of the operations of the product takes place in the home country. First the product will be serving the local market and then world market, when the product gains reputation the production gets relocated abroad to gain from lower labour cost and the other benefits available in host nation. At a point of time the country which invented the product becomes an importer of that product. The best example for this is the invention and production of personal computers by IBM. This is also an essential cause for firms to become a multinational enterprise. The Internationalization theory The market imperfections approach to Foergin direct Investment is typically referred to as internalization theory. The Internationalization theory was developed by Buckley and Casson. This theory states the main reasons for which the firms become a multinational enterprise due to market imperfection. Due to market imperfections, the monopolistic advantage of the firm can be used to widen worldwide to again competitive advantage. A firm overcomes market imperfections by creating its own market by the means of internalisation through this the firms become a multinational enterprises. Resource seeking The firms develop into a multinational enterprise to seek and secure natural resources like raw materials, minerals and human resource. This helps the firms to reduce the labor cost and production cost. Market seeking The multinational enterprises emerge to identify and exploit new markets for their products. This approach is followed by the firms to overcome trade barrier and to reduce high transport cost. Efficiency seeking The firms try to enlarge globally to obtain the efficiency benefits they obtain from the host country like cheap labour force, for example multinational enterprise obtain low cost but labour intensive manufacturing in many Asian countries. Capabilities seeking The firms follow strategic operations by buying existing firms or assets abroad, this is an approach by the firm to seek adequacy in order to sustain and advance its competitive position globally.These are the major reasons for a firm to become a multinational enterprise. How firms become multinational enterprise? Once a firm take on Foregin Direct Investment(FDI) it become a multinational enterprise, a multinational enterprises have substantial direct investment in foreign countries. FDI (Foreign Direct Investment) refers to the long term participation like management, partnership, technology transfer and etc., between a foreign country and a host country. FDI has become a vital accept of global economy, many nations liberalized the regulations for FDI and numerous host economies has have reduced trade barriers for foreign nations to do business in their nation. When a firm decides to enter foreign market and expand to become a multinational enterprise then mainly there are six different modes to enter. Joint venture Establishing a joint venture with a foreign firm has been a feasible mode of enter to the world market. Setting up a firm that is jointly owned and operated by two or more firms is called as joint venture. A firm can gain advantage from a local partners knowledge of the host countrys competitive conditions, culture and political system. Through this joint venture a firm can gain by sharing development cost and high risk of entering a foreign market with the local partner. Wholly Owned Subsidiaries When firm owns 100 percent of the stock then it is termed as wholly owned subsidiary. If a firm wants to compete based on its technology then this will be the most preferred entry mode. Many high-tech firms prefer this mode of entry for overseas expansion. Establishing a wholly owned subsidiary in a foreign market can be done by setting up a new operation in that country or by acquiring an established firm and using that firm to operate. Licensing Licensing is very attractive approach for the firms which lack capital to develop overseas operation. Licensing is an arrangement by a firm to grant the rights to intangible property to another entity for a period of time and in return a fee is charged by the licensor. The advantage of licensing is that the firm does not need to bear the set up cost and risk involved in opening a foreign market. Franchising Franchising is basically a specialized form of licensing in which franchiser sells the intangible property and provide business assistance to the franchisee. The best example for a firm using franchising strategy is McDonalds.   By using this a firm can build up a global operation quickly at a low cost and risk.  Ã‚   Exporting Most of the firms begin their internationalization as an exporter. Exporting reduces the costs of establishing manufacturing operation in the host country. By manufacturing the product in a centralised location and exporting it to world market; the firm may get the picture of substantial scale economies from its global sales volume. Turnkey Projects This is a means of exporting process technology to foreign countries. Under turnkey project, for a foreign client the contractor designs, construct the whole manufacturing unit and also train the operating personnel. After completing the contract, the contractor hands over the key to a plant that is ready for full operation hence this approach is called turnkey. Turnkey projects are common in chemical, petroleum refining and metal refining industries, all of which require costly, complex production techniques. Conclusion Abstaining national trade barriers and advancement in communication, information, and transportation technologies are the main factors which influence the trend towards internationalization. These changes have enabled firms to operate worldwide and emerged different nations market into a single global market. The advantages of the growing global economy should be utilised for the welfare of the people all over the world. BIBLIOGRAPHY Buckley, P.J. and Ghauri, P. 1993. A Theory of International operations: The Internationalization of the firm-A Reader, pp 45-50. Elkahal, S. 1994. The Internationalization of trade: Introduction to International Business, pp. 65-70. Hill, C.W.L. 2000. Entry strategy and strategic alliance: International business-competing in the Global Marketplace, pp. 426-448.