International Business Midterm BY tsn24993 Midterm Exam Essay When analyzing the nation of Stiltania for the purpose of entering into the food- service Industry, It Is crucial to take Into consideration many factors that will either hinder or help our company’s success. I have researched eight key areas that will have a major impact on our success in Stiltania if we decide to go through with our proposal to open restaurants there.
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These eight areas consist of legal systems, religion, international law, general economy, barriers to entry, customer base, roduction, and company employees. Legal systems When evaluating the legal systems of Stiltania, I observed that they operate under a theocratic law system. A legal system is a system of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress of grievances is obtained. A theocratic law system is a system of law based on religious teachings.
In Stlltania, the “Great Leader” Is the head of both the political and religious happenings. This will impact our business in Stiltania since the Great Leader will be the one to decide if and how we operate in his nation. Religion The religion of Stiltania is another variable to evaluate when considering entry Into the marketplace. Rellglon Is a system of shared beliefs and rituals concerned with the sacred. The religion there is headed-up by the Great Leader, and the people all worship the Ka-Lee-Ya flower.
The Great Leader rules the nation with an “iron fist” but his followers have been loyal without question. They even went to New York City to protest their nation being denied entry into the united Nations. With followers of a religion that will subject themselves to just about anything, I have concerns about what would happen to the political stability of Stiltanla If the Great Leader lost support of his followers, if something happened to him (was assassinated, imprisoned, etc. ), or if he convinced his followers to perform very unethical actions.
Rioting could occur and the general safety of living In Stiltanla could be shaken very easily.
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The impact of this religion on business would allow for heavy fish sales (since itizens are required by religion and law to eat two meals of fish per week) but would also be subject to the whims of an Irrational leader. International law Adherence to International law Is not seen In Stiltanla. Intellectual property, the products of the mind and ideas, is not recognized there and the Great Leader does not think that piracy is a crime.
This could impact our business in negative ways if either he or another citizen of Stiltanla decided to steal our company Ideas, product lines, logos, or other property that is protected elsewhere in the world. In Stiltania, we ould be concerned with losing our competitive advantage in the food-service United States. General economy An analysis of the general economy of Stiltania will help our company decide if we want to pursue an entry into the country. Stiltania appears to have a mixed economy other than some barriers to entry.
A mixed economy is an economy in which productive activities are mostly privately owned while some are run by the government. The fishing industry is highly regulated, and the government has established a system under which the youngest members of the community must atch the fish since they are on the lowest rung of the hierarchical system. All other food industries seem to be free of government control or interference which would allow our company to set our own prices against the invisible hand of the market.
Barriers to entry Some important barriers to entry into Stiltania that must also be considered are import quotas and trade policies. Barriers to entry are factors that make it difficult or costly for firms to enter an industry, and import quotas are direct restrictions on the quantity of goods that may be imported into a country. In this case, there is no ability to import any fish (since they have such an abundance), and they have banned all chocolate imports since the Great Leader fears that his people will be led astray to worship the cocoa plant instead of the sacred Ka-Lee-Ya flower if they taste it.
Also, one-quarter of all Stiltania imports come from Aberana, which leaves only 75% of goods allowed into the country for the rest of the world. On top of this, companies that operate in Stiltania are required to purchase fish for their U. S. restaurants from Stiltania’s U. S. distributor. The import quota is somewhat flexible if the Great Leader is given secret amounts of chocolate milk, however. All of this will impact our company’s business in Stiltania as well as some U. S. business. The fish ban is not a concern since buying it from Stiltania is cheaper and will actually save money in U.
S. restaurants from purchasing from Stiltania’s U. S. distributor. The chocolate ban is concerning for our company’s line of desserts, as many will not be allowed to be sold in Stiltania or will have to undergo a serious transformation to make the desserts without chocolate. We could bribe the Great Leader with chocolate milk, but I think that this is unethical and could lead to real political instability if the people found out that their Great Leader was consuming the very thing that he adamantly opposed his followers from having.
Customer base When evaluating the market’s demand for our company’s service we have to account for the customer base seen on Stiltania. 95% of the population of 5,000 is comprised of semi-educated, high-school aged citizens. We are still waiting on the results of the market data in this field, but we do know that in most countries those ho have only a high-school education do not make a substantial salary, and therefore, they do not have much disposable income.
However, high-school aged citizens are also the most likely to eat at a fast-food (or low-cost) restaurant and are have to spend at restaurants would be spent at our restaurants if we offered low-cost items. Production The production of food for our restaurants starts with raw materials. Since Stiltania is an abandoned oil platform in the middle of the ocean, there are not many raw materials (food sources) readily available other than fish (which is under overnmental control).
This could pose problems for our company unless we can be sure that the goods we need can be imported at a low tariff rate and that we won’t be “capped” in the amount of goods we can bring in. Once again, we are faced with the potential ability to bribe the Great Leader (a tactic that I would recommend against). Company employees (people) Our company would also have to make employee decisions as to the people it wanted to hire. People is a term that is part of the organizational architecture that includes strategy used to recruit, compensate, and retain employees.
As noted in the customer base section, the population is comprised of mostly high-school students. With 95% of the population fitting under this category, it is safe to say that most of our employees would be also. Having high-school aged citizens working for our company in Stiltania would be beneficial (since they tend to accept Jobs when they know they won’t be paid a lot for their work), but will most likely also have a high turnover rate and lack of motivation which could lead to high costs for training new employees, lost profits from poor service, and the risk of employee theft.
Conclusion Based on the analysis of the legal systems, religion, international law, general economy, barriers to entry, customer base, production, and company employees found in Stiltania, I think that our company will be able to make a much more informed decision about whether or not to expand its business into Stiltania. While there are many freedoms in existence in Stiltania, which is what drove so many people to live there in the first place, there are also hindrances to our company objectives that may prevent us from thriving in the food-service industry there.See More on Law