What Is George Wilson International?
ISM UNIVERSITY OF MANAGEMENT AND ECONOMICS
Wilson International
Case analysis
Prepared by:
Kaunas, 2013
Abstract
The Case study presents situation of Wilson International, international chain of over 100 luxury hotels found mostly in developed countries, which are considered politically stable and present little political risk. Though the case study shows that with possibility of market saturation beginning to rise, George Wilson is considering an opportunity to expand into other markets. He has been approached by a trade representative to build a business hotel in St. Charles, a small and moderately industrialized island in the Caribbean. So the company met a problem how to enter into a new market and how to avoid higher risks associated with the environment and social unrest on the island. By analyzing current situation of Wilson International we have an aim to provide recommendations how to deal with this challenge and entering International Business.
Keywords: International Strategy, Foreign-direct Investment …show more content…
George Wilson, a former Chicago sales representative who frequently traveled internationally, started the company and was able to expand his hotel concept to 20 countries.
The pre-opening phase of a new hotel is both a big challenge and great opportunity at the same time. It is very important to avoid common mistakes made in the process. The hotel has to generate income, the sooner we start making revenue the quicker we will be able to turn the business equity profitable. First we want to make sure we are in the right town, the right country. In our case we have St Charles, which always enjoyed a brisk tourist trade, and now the country is diversifying its economy into light manufacturing. Time have changed, the country has opened up to international trade and
investments. New strategies are needed to face the competitive environment. In this case the design of an international strategy for Wilson hotel chain is needed first. Before making the investment decision it is very important to analyze the Transnational Strategy, where firm strives to be responsible to local needs while retaining central control of operations. Talking about Four Characteristics of Strategic Management it is very important to mention External Focus, which includes economy, competitors and market demographics. We know that St. Charles is a small and moderately industrialized island; the currency of St. Charles is the Caribbean dollar, which has been devalued against most hard currencies of the world. Talking about competitors it is important to do our research about other hotels and pricing in the same area, because they can always undercut your price. Before doing International business it is very important to analyze Organizational readiness to Internationalize (Step 1). You need to know how this will impact firm resources such as management, human resources, and finance. It is important to mention Porter’s Five Forces for International Strategy. The Threat of New entrant’s such as costs; Government-imposed barriers (regulations, licensing, tariffs, trade agreements) must be analyzed in detail. Threat of Substitution –customer preferences, product comparison and product substitution has to be considered. In our case we have other hotels with the same quality but cheaper rates. Buyer power is the impact that customers have on a producing industry. Supplier power and Rivalry should be considered as well. This is a great opportunity to view our competitors, evaluate our time and cost. Before making Foreign Direct Investment it is important to analyze SUNK COST (labor, rent, license), Expropriation (assets can be seized by government for political, religious reasons) and Management Sway (you have to investigate and understand the market before you take your company to new country). SWOT analysis will be used to outline goals for Wilson International it will show what you need to improve and how your goals might be hindered by external elements It will be helpful to evaluate Strengths (advantage over others and reputation in market place), Weaknesses (Internal factors), Opportunities (lower taxes, changes in government) and Threads (the environment that could cause trouble for the business). For International Company political risk refers to the risk that a host country will make political decisions that will prove to have adverse effects on the profits or goals. According to Imaad A. Moosa (2013),” A simple and straight forward definition of political risk is that it is that part of country risk related to political factors “(p.151). Political actions can range from very detrimental such as widespread destruction due to revolution, to those of a more financial nature, such as the creation of laws that prevent the movement of capital. George and his associates do not consider St Charles to be high –risk country, but are concerned about recent increases in petty street crime and social unrest. It has been reported that citizens have resorted to violent street protest to express their displeasure with the increasing prices of some consumer goods. Going to another country International Company may face the risk that will only affect a certain industrial sector or business, such as corruption and prejudicial actions against companies from foreign countries. Going unprepared for these adverse situations may end up losing a lot of money. To avoid the political risk or at least minimize it, the simplest solution is to conduct a little research on the riskiness of a country. Paying for reports from consultants that specialize in making these assessments can do it or doing it you, maybe it is possible to purchase political risk insurance also. Considering that St Charles is not considered to be high-risk country I recommend take the risk and build a hotel. Because it has no currency or foreign direct investment restrictions, and allows for full repatriation of company profits. In recent years, the government has been attempting to promote the island as an attractive location for foreign investment. It is important to mention that multinationals from the United States and Europe have established customer service operations on the island, managers from these companies frequently visit the island, and they need more luxurious hotel. Adding a hotel with meeting and banquet spaces would be a good idea. Another alternative is to build a hotel in more stable environments. Before doing that it is important to analyze GDP of a specific country. Looking at Purchasing Power Parity charts, it is obvious that the leading countries today and near future are United States, China and India.
References
1. http://trove.nla.gov.au/work/27715159
2. http://www.ibtimes.com/international-tourist-arrivals-exceed-expectations-first-half-2013-1400157
3. http://www.quickmba.com/strategy/porter.shtml
4. http://2012books.lardbucket.org/books/strategic-management-evaluation-and-execution/s11-03-types-of-international-strateg.html
5. Imaad A.Moosa (2013). Foreighn Direct Investment Theory, Evidence and practice . http://www.petritgashi.000space.com/Fakulteti%20Filologjik,%20UP/Master/
Wilson International
Case analysis
Prepared by:
Kaunas, 2013
Abstract
The Case study presents situation of Wilson International, international chain of over 100 luxury hotels found mostly in developed countries, which are considered politically stable and present little political risk. Though the case study shows that with possibility of market saturation beginning to rise, George Wilson is considering an opportunity to expand into other markets. He has been approached by a trade representative to build a business hotel in St. Charles, a small and moderately industrialized island in the Caribbean. So the company met a problem how to enter into a new market and how to avoid higher risks associated with the environment and social unrest on the island. By analyzing current situation of Wilson International we have an aim to provide recommendations how to deal with this challenge and entering International Business.
Keywords: International Strategy, Foreign-direct Investment …show more content…
George Wilson, a former Chicago sales representative who frequently traveled internationally, started the company and was able to expand his hotel concept to 20 countries.
The pre-opening phase of a new hotel is both a big challenge and great opportunity at the same time. It is very important to avoid common mistakes made in the process. The hotel has to generate income, the sooner we start making revenue the quicker we will be able to turn the business equity profitable. First we want to make sure we are in the right town, the right country. In our case we have St Charles, which always enjoyed a brisk tourist trade, and now the country is diversifying its economy into light manufacturing. Time have changed, the country has opened up to international trade and
investments. New strategies are needed to face the competitive environment. In this case the design of an international strategy for Wilson hotel chain is needed first. Before making the investment decision it is very important to analyze the Transnational Strategy, where firm strives to be responsible to local needs while retaining central control of operations. Talking about Four Characteristics of Strategic Management it is very important to mention External Focus, which includes economy, competitors and market demographics. We know that St. Charles is a small and moderately industrialized island; the currency of St. Charles is the Caribbean dollar, which has been devalued against most hard currencies of the world. Talking about competitors it is important to do our research about other hotels and pricing in the same area, because they can always undercut your price. Before doing International business it is very important to analyze Organizational readiness to Internationalize (Step 1). You need to know how this will impact firm resources such as management, human resources, and finance. It is important to mention Porter’s Five Forces for International Strategy. The Threat of New entrant’s such as costs; Government-imposed barriers (regulations, licensing, tariffs, trade agreements) must be analyzed in detail. Threat of Substitution –customer preferences, product comparison and product substitution has to be considered. In our case we have other hotels with the same quality but cheaper rates. Buyer power is the impact that customers have on a producing industry. Supplier power and Rivalry should be considered as well. This is a great opportunity to view our competitors, evaluate our time and cost. Before making Foreign Direct Investment it is important to analyze SUNK COST (labor, rent, license), Expropriation (assets can be seized by government for political, religious reasons) and Management Sway (you have to investigate and understand the market before you take your company to new country). SWOT analysis will be used to outline goals for Wilson International it will show what you need to improve and how your goals might be hindered by external elements It will be helpful to evaluate Strengths (advantage over others and reputation in market place), Weaknesses (Internal factors), Opportunities (lower taxes, changes in government) and Threads (the environment that could cause trouble for the business). For International Company political risk refers to the risk that a host country will make political decisions that will prove to have adverse effects on the profits or goals. According to Imaad A. Moosa (2013),” A simple and straight forward definition of political risk is that it is that part of country risk related to political factors “(p.151). Political actions can range from very detrimental such as widespread destruction due to revolution, to those of a more financial nature, such as the creation of laws that prevent the movement of capital. George and his associates do not consider St Charles to be high –risk country, but are concerned about recent increases in petty street crime and social unrest. It has been reported that citizens have resorted to violent street protest to express their displeasure with the increasing prices of some consumer goods. Going to another country International Company may face the risk that will only affect a certain industrial sector or business, such as corruption and prejudicial actions against companies from foreign countries. Going unprepared for these adverse situations may end up losing a lot of money. To avoid the political risk or at least minimize it, the simplest solution is to conduct a little research on the riskiness of a country. Paying for reports from consultants that specialize in making these assessments can do it or doing it you, maybe it is possible to purchase political risk insurance also. Considering that St Charles is not considered to be high-risk country I recommend take the risk and build a hotel. Because it has no currency or foreign direct investment restrictions, and allows for full repatriation of company profits. In recent years, the government has been attempting to promote the island as an attractive location for foreign investment. It is important to mention that multinationals from the United States and Europe have established customer service operations on the island, managers from these companies frequently visit the island, and they need more luxurious hotel. Adding a hotel with meeting and banquet spaces would be a good idea. Another alternative is to build a hotel in more stable environments. Before doing that it is important to analyze GDP of a specific country. Looking at Purchasing Power Parity charts, it is obvious that the leading countries today and near future are United States, China and India.
References
1. http://trove.nla.gov.au/work/27715159
2. http://www.ibtimes.com/international-tourist-arrivals-exceed-expectations-first-half-2013-1400157
3. http://www.quickmba.com/strategy/porter.shtml
4. http://2012books.lardbucket.org/books/strategic-management-evaluation-and-execution/s11-03-types-of-international-strateg.html
5. Imaad A.Moosa (2013). Foreighn Direct Investment Theory, Evidence and practice . http://www.petritgashi.000space.com/Fakulteti%20Filologjik,%20UP/Master/