Macao-Resort-Hotel Entry in Greece - Research Paper Example

Table of Contents Page Introduction 2 A. Business system and cultural conditions in Greece 2 B. Pattern and trend of trends of trade 4 C.1. Exchange system between Greece and China 7 C.2. Implications of International Institutions 9 D. Alternative courses of actions 11 E. Recommendation 13 References 14 Introduction This report is about a Chinese company that wants to conduct business in Greece. In this case, an investment would be from a company coming from a developing country which would want to conduct business in a developed country. This company from China which is Venetian, Macao-Resort-Hotel specifically wants to enter in the tourism Industry in Greece. Prior to its market entry in the country, there is a need to understand the whole thing about business environment especially on Greece’s tourism industry. This is to take into consideration better understanding of the line of businesses to be implemented in the tourism industry in Greece. This is also to further understand things that are necessary to be done prior to the actual market entry. In particular, there is a promising area for hotels and other related businesses in Greece’s tourism industry. This is one important idea that can be substantially considered in line with the consideration on what business to be conducted in Greece. In order to analyse this situation further, it is important to conduct some assessment and cultural evaluation, political considerations, social aspects and other related business-related environmental concerns. A. Business system and cultural conditions in Greece The first part of this report is about the analysis of the national business system and cultural conditions in Greece. This is in line with knowing the probable impacts of national business and cultural system in Greece on the future success of Venetian, Macao-Resort-Hotel in the country. The identity of Greece when it comes to its tourism industry is moulded by political, historical and ideological process (Moutafi, 2004). This suggests that the country is highly influenced by on-going political concerns, historical development and beliefs that are developed over time. This only shows the fact that Greece is subject to both environmental and social changes over time. This only gives specific idea that the development of Greece is not different from the development of other countries in general. The world has slowly been integrated by globalisation and especially it is heading forward to creating one important business culture for all. This is evident by how everyone is influenced by the effect of media that try to substantiate the impact of information technology. Information technology is an important tool everyday because it influences decision, planning and any other decision-making process (Vlahos and Ferratt, 1995). In many parts of Greece internet-based tourism services are widely spread (Organisation for Economic Co-operation and Development, 2002). This is an indication that tourism industry has become sophisticated and there is a strong link between information technology and marketing system for tourism industry. In fact, travellers nowadays got to choose different packages in order to enjoy various destination of choice at the most convenient way of placing bookings online such as hotel reservation and other related travel activities. This is made possible because of online convenience in conducting business online especially in Greece, a developed country where many travellers come and go to their destination of choice. This is a clear identification of the fact that there is a strong involvement of technology in conducting business in Greece particularly in its tourism industry. In 2000 tourism in Greece was regarded an important component of its economy due to its substantial contribution of 7% of the gross domestic product (Chatziathanassiou et al., 2004). This is a positive indication of a booming tourism industry in Greece in which such has provided positive outcome in creating identity for Greece as one of the most wonderful tourist attractions in the world. However, it is noted that the booming tourism industry in Greece had also resulted to some environmental issues or problems due to fast-paced needed development (Chatziathanassiou et al., 2004). It is always implied that such could trigger government concern and thus would further imply implementation of policies or procedures that could be beneficial to the restoration of the environment. In particular, the hotel sector in Greece has wide concern on environmental management as part of sustainable development (Chatziathanassiou et al., 2004). This is very important to consider that conducting business in Greece may have positive implication on the health of its environment due to wide array of concerns for its restoration. After all, there is a need to restore its environment so as to maintain its significantly high level of tourist attraction. B. Pattern and trends of trade Based on its history the foreign investment capital in Greece was reasonably designed to be attractive due to full reinforcement of the law as especially strengthened by Law Decree 2687 of 1953 with special constitutional protection power (Tayfur, 2003). This is the basic Greek law for the protection of foreign capital and to make foreign investment in Greece attractive. In short, just like any other developed countries like the United States, Greece tries to come up with level of protectionism for its national economic interest and to its specific concerned industry in particular. The high growth rate but mix economic performance in Cyprus for instance is said to be influenced by the tendency of its economy to be influenced by tourists based on economic, social and political aspects (Inc Icon Group International, 2008). This only shows that part of Greece is highly influenced by tourists’ activities. This means that there is a strong manipulative power for foreign investment in Greece. This is a wonderful opportunity then for Venetian, Macao-Resort-Hotel to enter in the scenario knowing that Greece is a place with substantial opportunity for foreign investment. Considering that Greece is open for foreign investment especially in tourism, there is a need for Venetian, Macao-Resort-Hotel to be competitive enough when it comes to its trading activity. The strong opportunity for tourism industry in Greece is without question would attract investors considerably knowing that the law in the country has provided substantial protection of foreign capital investment. This would mean further intense competition among key players in the tourism industry. Such of this competition is healthy for Greece’s tourism industry. This is the reason why it tries to encourage foreign investors because in the first place this would create substantial impacts for the benefits of the customers and the whole economic setting of the country’s tourism industry. This means intense competition among the key players and there is a need for Venetian, Macao-Resort-Hotel to come up with competitive strategies. According to Porter (1980) there are three generic strategies that an organisation can implement for its entire operation. These include focus, differentiation and overall cost leadership. In the case of Venetian, Macao-Resort-Hotel as a new entrant in the tourism industry in Greece, there is a need to strongly combine all of these strategies in order to come up with competitive edge among competitors. Defining these strategies in the first place is not going to be easy in the case of market in Greece. After all, every organisation that wants to become a cut above the other has to go for these three generic strategies. In the case of Venetian, Macao-Resort-Hotel, it is good enough to consider in its case to go find for its competitive advantage. In order to determine the competitive advantage of Venetian, Macao-Resort-Hotel, there is a need to study how mostly Chinese companies operate in other places in the world. Chinese are known for their ability to dominate in the market (Peng, 2008). Their strong influence when it comes to business enterprise is remarkable. However, such is not going to be a strong assurance in the market economy everywhere else. In Greece in particular, business is necessary to be in line with the law and should be governed by important guidelines and policies. Chinese competitive advantage therefore to succeed their businesses in Greece is their remarkable know-how in business and their ability to integrate skilled manpower at a reasonable cost. There labour is absolutely among the cheapest in the world which absolutely results to low cost of production. In the case of services, it would result to relatively lower and competitive price of service offering. Thus, in anyway, Chinese companies have the potential to control the market knowing that they can sufficiently find ways on how to control the final market price of their offerings. C.1. Exchange system between Greece and China This relationship can be logically observed between the existing economic relationship of China and the European Union (EU). The level of exchange system of relationship can be generalised by the on-going economic policy that China is trying to maintain to give to the EU. The focus is central to maintaining harmonious economic relationship between China and EU because the former wants to expand economic territory in the future. This can be understood by the specific following objectives existing within the China’s EU policy (Wang, 2009; Mattlin, 2009): 1. To be able to promote sound China-EU political relations through mutual respect, trust and seeking mutual grounds while ensuring acceptance of differences to ensure peace and stability. 2. To develop China-EU mutual economic benefits in trade and economic activities for common ground of development. This implies common ground of development to ensure fair access to economic achievement. 3. To be able to promote socio-cultural relationship between China and EU to further ensure cultural harmony between the western and eastern part of the world. As it can be observed, the above-mentioned objectives try to point out political, economical and cultural considerations. This implies that China has been viewing these three important business environmental concerns as crucial to the determination of its future relationship with countries in the EU. This means that the real threat or risk of probable relationship between Greece and China for instance specifically lies on the outcomes of the above objectives. In order to develop a successful trade between Greece and China, it is not only enough to come up with cultural understanding but the bottom line is to combine other essential aspects such as economic and political considerations. In other words, the best gauge to measure the probable imbalances that may exist between the China-EU relationships and in particular in Greece is the business environment itself. This particularly should involve the three most essential components in China’s EU policy: the economic, political and cultural or social considerations. Under a healthy economic circumstance, these components must be equally balanced in order for the objectives to work out as plan. The real threat for the success of this good business environment can also be determined on the level of response by those countries in the EU. In particular, this can be observed on the Greece’s response. Greece seems to be encouraging more healthy foreign trade as discussed earlier. However, such is much focused on its economic prosperity. Thus, it is clear that China has the potential to be more flexible in its attempt to develop in expanding its economic territory. This in general has the tendency to balance any unnecessary circumstance as the exchange of business relationship continues between China and Greece. At the bottom line, this has specific impact to whatever business China wants to be proposed in Greece. In the case of the proposed Venetian, Macao-Resort-Hotel in Greece, its success does not only concentrate on the acceptance of the market. However, the bottom line should start within the healthy relationship that exists between China and Greece in the first place. Such international level of relationship should exist first so as to give any firm a chance to survive in an international market with uncertainties at some point. C.2. Implications of International Institutions International institutions such as the World Trade Organisation (WTO), European Union (EU) and North America Free Trade Agreement (NAFTA) function as important entities to create international guidelines and policies for whatever international trade and economic activity that will take place between nations. These institutions have remarkable impacts on the proposed company from China to be instituted in the tourism industry in Greece. The proposed plan is not going to be easy considering that there are available international institutions that try to control the whole flow in the context of international business. The World Trade Organisation (WTO) has important role to play and there are generally three which include limits on the use of trade-restricting measures among the members, reduction and negotiation of trade barriers and finally dispute settlement and any related activities to be performed by the Secretariat (Whalley, 2004). These governing role played by the WTO have important implications for the proposed Venetian, Macao-Resort-Hotel in Greece. The role of WTO substantially covers the tourism industry in Greece and especially in China’s creation of its essential economic steps. In particular, as members in WTO, China and Greece are governed by the role and such is very important from both parties prior to the creation of international business. The WTO is remarkably an institution that helps address corresponding issues of globalisation and its presence is a good opportunity for Venetian, Macao-Resort-Hotel to successfully operate in Greece. On the other hand, as member of the European Union, Greece needs to substantially adhere to the principles and policies in which the members have to live by. In line with this, as the EU substantially focuses on the integration of culture among the members, Greece has to be integrated with the European culture in general (Barnett, 2001). This may have substantial impact on China and its firms as far as augmenting of economic power to international market comes into a wide concern. In particular, the Venetian, Macao-Resort-Hotel may have to adhere to full acceptance of European culture which would leave away behind China’s own cultural style. However, this may also give substantial limitation on the part of Greece on the acceptance of foreign investment knowing that the European Union is able to create a pattern of purely integrating European culture for the exclusive benefits of its members. This is a specific issue of adaptation and governmentalisation of culture and other related concerns. In this level, it is not easy to pursue international investment that has to substantially pass through a certain standard that is governing the business environment of a nation. This is a clear case between China and Greece and particularly for Venetian, Macao-Resort-Hotel into Greece’s tourism industry. NAFTA is responsible for governing issues and policies regarding the trade, industry, environment, agriculture and mobility of persons among the members (Crane, 2004). This is to create a remarkable line of policy that tries to create neutral impacts among the members. This is also to ensure that the trade and other related economic activities have to be clearly defined with mutual trust and support among members so as to ensure effective implementation of guidelines and policies. Firm coming from China should adhere to the principles which are governing Greece for its effective relationship with other members in NAFTA. China for instance is known for its substantially cheap labour. Such can be a significant competitive advantage of Venetian, Macao-Resort-Hotel in Greece’s tourism industry. However, under the policies and guidelines of NAFTA such practice may be corrected for the mutual benefit of Greece, China and other members. Thus, this only shows that international organisation such as NAFTA has significant power to substantially create an impact on any strategic moves of each nation that tries to deviate away from the purpose of mutual benefits and advantage. Furthermore, there may be a significant impact on the issue of control in line with creating competitive strategies on the part of Venetian, Macao-Resort-Hotel. Thus, it is important for China to go review policies and guidelines of international institutions in detail that try to govern Greece in its economic activities. D. Alternative courses of Actions Based on the above discussion, there are different alternative courses of actions that Venetian, Macao-Resort-Hotel should take. The first alternative of course is tantamount to not pursuing its investment in Greece. However, other alternative courses of actions would involve outward-bound, inward, vertical and horizontal foreign direct investments (International Monetary Fund and Organisation for Economic Co-operation and Development, 2003; Patterson and International Monetary Fund, 2004). The good thing about outward-bound FDI is that it is backed by the government in order to eliminate involved risks. However, tax incentives and disincentives are also associated with this foreign direct investment for it also deals with direct investment abroad. The inward foreign direct investment on the other hand considers removal of restrictions and limitations but it is strongly subject to interest loans, tax breaks, and subsidies. Thus, there is a lesser level of control. Considering that ownership or control is a significant issue for the success of foreign direct investment, the inward foreign direct investment is a specific investment that needs to be applied for prior to consideration of differential performance and various limitations. The vertical foreign direct investment on the other hand is highly applicable for multinational firms. On the other hand, the horizontal foreign direct investment is applicable when a certain multinational company operates the same line of business operation in different nations. Unless the Venetian, Macao-Resort-Hotel is not ready to go multinational, then vertical foreign direct investment may not be applicable in its case at present. E. Recommendation Political risks are so strong among foreign investments knowing that sometimes it is only at its superficial level where good intentions can be observed. However, there are various considerations in choosing the right foreign direct investment. At its general sense, it is important to consider the motives or intention behind it. This is especially one of the most important considerations among firms that want to go try international business. However, there are other considerations and these involved business environment concerns such as political, economic, social, technological, legal and environmental concerns. Not only that, these concerns will further result to other important considerations such as international institutions in which they governed certain role and standards to follow in the international business. In the case of Venetian, Macao-Resort-Hotel it is important to consider all of these factors in order to come up with important decision. Based on the present condition and intention of Venetian, Macao-Resort-Hotel there is a need to go for outward-bound foreign direct investment so as to get substantial support from the government to fight corresponding risks. This would also take into account other related business environmental issues. For new entrants like Venetian, Macao-Resort-Hotel, it is important to considerable number of risks. Thus, with the presence of any back ups from the government, associated risk with foreign direct investment is taken into consideration. References Barnett, C. (2001) ‘Culture, policy, and subsidiarity in the European Union: from symbolic identity to the governmentalisation of culture.’ Political Geography, Vol. 20(4): 405-426. Chatziathanassiou, A., Mavrogiorgos, D., and Sioulas, K. (2004) ‘Environmental Initiatives in the Hotel Sector in Greece: Case Study of the ‘Green Flag’s Project’’, in B. Bramwell. 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