Global Financial Crisis Impact and Cause

The Global Financial Crisis (GFC) of 2007 stemmed from a lack of regulation of the United States Financial System. The financial system comprises of financial institutions, markets, services and practices that allow for the transfer of money between savers and borrowers.1The lack of regulation triggered a liquidity shortfall in the United States??™ banking system, attributed to the overvaluation of assets. In the US, sub-prime mortgages were sold widely to people looking to get houses that they could not afford for a low rate. When the supply of houses outstripped the demand for them, banks increased their interest rates, making it harder for financially inept individuals to repay the loan. The businessmen that developed these mortgages tied these loans with several liquid assets that had no value, worsening the financial burden felt by many. Without repayments on their loans the banks lost all their money. Other factors that contributed towards the GFC include falling consumer spending and rising unemployment domestically within the US, tight margins on credit borrowing and extensive international trading of goods and services. Due to the highly connected nature of the global financial sector, were credit money is lent and repaid frequently to and from places around the world, the Australian economy felt the impact of this crisis. As the Australian Securities Exchange experienced a downturn, the Australian Government attempted to bail out banks in order to stimulate the economy. Throughout 2007/08 the government implemented extensive damage control strategies which effectively stabilized the effect of the crisis, making Australia the only country that stayed out of a recession. This is based on Keynes??™ Multiplier Theory whereby an initial injection of funds with generate a proportionally greater increase in aggregate demand for goods and services; increasing the demand for labour and reducing the negative outcomes which arise due to the GFC. Economists argue that if Australia felt the recession, it would be categorised as a ???mild-recession???.2 In order to prevent this Crisis from occurring again, a number of market-based regulatory solutions have been implemented within the Australian Economy and the Financial System.??As lending between banks and consumers dramatically fell due to the lack of regulation of the United States Financial System, extreme panic caused a loss of consumer confidence, making the situation worse. Due to the inability to repay loans in the United States, many people were forced into poverty. The victims of this scheme were drained of cash, and therefore had no money to spend within the economy. The ???big four??™ of the Australian financial system is extremely regulated in comparison to the American system only giving out loans where there is proof that the borrower will likely be able to make repayments on the loan. A decrease in consumer demand saw a decrease of business revue and profits. As labour is a derived demand, businesses could not afford to maintain current levels of staff, further worsening Americans??™ financial stability. A lot of American and European businesses that were largely dependent on offshore production in more expensive places like Italy and France were also affected by the lack of consumer demand all over the world, as well as the tight credit measures. Rather than collapsing under the pressure, Italian luxury fashion house Dolce & Gabbana was forced to move most of its production from the ???glamorous??? Italy and France to China due to the lack of consumer demand for their products in America. Due to the high $311 million net revenue that is generated yearly (prior to the GFC), Domenico Dolce and Stefano Gabbana could afford to lower their prices of their main Dolce & Gabbana collections in America by 20 per cent during the GFC in order to stimulate some consumer spending.3 Unlike Dolce and Gabbana, many businesses could not afford to hire people, or run production the way they always have. They were forced to close down all whilst banks further increase their interest rates. Australian businesses did not suffer as much because Australia??™s local businesses obtain funds from Australian banks, which have some of the best credit ratings in the world due to the well maintained flow of money. In addition, as Australian businesses don??™t deal with foreign banks as much as a lot of others do in the world, there was a lot less debt troubles within the Australian domestic financial system.

As American banks were short of money, they had to borrow from overseas banks. These overseas banks did not get their money back, and of course, also went into debt from borrowing. For example, a business based in Hong Kong can still be dependent on American Citibank to get funds for their business, also pulling them into debt. This chain effect established a shortage of money all over the world, making several financial institutions reluctant to lend to companies or to households, undermining confidence, and causing a fall in business investment and household consumption. Through the monetary policy, the Reserve Bank of Australia combated this impact with pre-emptive and consecutive cuts in their cash rate. The cash rate went from 5.5 to 6 per cent to 3.25 per cent in May 2008, the lowest since 1950. This is achieved through the RBA selling securities, causing an excess of borrowable funds, a decrease in market interest rates and a increase in consumption and investment spending. If the supply of money has shrunk, the circular flow will have a lot of leakages, meaning that people will save more than consume. This was a very effective response to the GFC because this made borrowing credit funds much easier and cheaper, with less money required to pay off existing debts. As Australian businesses were able to now repay their loans due to the fiscal spending package, they were encouraged to borrow and produce.

In order to combat the rising unemployment rates, diminished consumer spending and increasing inflation rate, the Australian Government implemented a number of policies. This pro-active role saw a general increase in government spending and borrowing to stabilise the business cycle. This principle is based on the Keynesian theory whereby governments are able to influence the level of aggregate demand in the economy depending on the level of their intervention in the marketplace. In October 2008, with the economy facing a recession, the Rudd Labor government introduced an economic stimulus package worth $10.4 billion. The stimulus package payments were aimed at those with a high marginal propensity to consume, ensuring that the money was spent within the economy. People with a high marginal propensity to consume include the working class, in particular those that are young and single. The improved consumer spending and demand improved employment, profit levels and saved many businesses, for example Australian Sass & Bide. As the Bureau of Statistics reported, retail figures have increased by 2.2 per cent following the Government??™s stimulus package. As labour is a derived demand, an increase in retail figures mean that more people are employed in the economy, resulting in an increase in consumer confidence. A second economic stimulus package was introduced in February 2009, with $47 billion split into payments for schools, for 20, 000 new homes, for road repairs and infrastructure, small business tax breaks and cash bonuses for every Australian taxpayer who earned less than $80, 000. The stimulus packages prevented an otherwise four-time larger contraction; sustaining employment by generating aggregate demand through increasing expenditure, avoiding a rapid economic downturn. A Nation-Building infrastructure project worth $22 billion was introduced. This project ensures long term employment opportunities as capital investment boosts the economy??™s future productive capacity. The Rudd Labor government implemented productivity-enhanced investment in infrastructure and in education and training programs, successfully lessening the effect of the GFC.

Nonetheless, the previous Australian government lead by John Howard and treasurer Peter Costello ensured that the present government inherited a strongly placed economy4. This is attributed to the fact that the Liberal party of Australia managed to return the Federal budget to surplus, maintaining the budget in balance on average in the economic cycle, approximately at 1% of GDP. The Howard government established a improved arrangement to manage the day-to-day operations of the economy, set a medium-term objective for the budget and formally accepted the interest rates set by the Reserve Bank of Australia. As Australia??™s fiscal affairs were in good order ???there needed to be no hesitation in the decision last Oct (Oct 2008) for the Government to spend big in an effort to reduce the downturn in the economy.??? When the Credit Crisis hit America, the American government conjured up big annual budget deficits, in addition to the high levels of accumulated debt. In addition, the Liberal government resisted pressure from the big four; Commonwealth Bank of Australia, ANZ, Westpac and National Australia Bank, to merge and become ???national champions???. Through this, the Australian government helped to keep its banks out of trouble. Comparatively Australia??™s financial system is airtight in comparison to the United States. In the US the responsibility in their financial system ???is shared between four or five buck-passing authorities???, proving to be an enormous problem when the Credit Crisis hit. ?
The American government responded in a similar manner to the Australian government. It aimed to improve the macroeconomic environment, promote market stability and advance structural repair. The monetary authorities reacted relatively quickly in response to the demand by financial institutions to increase access to central bank liquidity. Legislation action was taken, with the introduction of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act of 2009. Both aimed to provide support for financial institutions5 and to provide stimulus to the economy6. The Department of the Treasury presented the Obama Administration proposal with an aim to reform the financial system. These include to promote regulation of financial firms, a new Financial Services Oversight Council, Stronger capital and other prudential standards for all financial firms and the elimination of the federal thrift charter7. All of these actions aim to reduce the effect of the GFC and to prevent it from occurring again in the future. However comparatively Australia??™s financial system is airtight in comparison to the US.
?Following the collapse in the housing bubble, rapid increases in a number of commodity prices within Australia were noted. As the financial crisis began to take hold in late 2008, the price of oil tripled from $50 to $147 per barrel. This increase diverted consumer spending into gasoline, ???creating a downward pressure of economic growth in oil importing countries.???8 However, due the high demand for Australia??™s coal and mineral exports, especially from developing economies like China, ensured that Australia didn??™t feel the full extent of the GFC. This high demand has a huge impact on Australia??™s place in the international share market as more people see Australian companies, i.e BHP, to be most promising. This brought about a general increase in price for Australian stocks. In February 2008 BHP climbed A$1.50 (4.1 per cent), to $38.55. As economies are injecting money into the Australian economy, more revenue was generated, more savings and therefore a larger supply of loanable funds. This increase in loanable funds placed a downward pressure on interest rates. This desire for Australia??™s coal and minerals is expected to increase in the years leading out of the Global Financial Crisis. One reason that can be attributed to this strong desire for Australia??™s raw materials is because of the geographically strategic location in comparison to the US and the UK in relation to these rapidly developing Asian nations.9 This constant desire for Australia??™s rare resources and Australia??™s strategic location will strengthen the Australian dollar and the Financial system, ensuring that if another recession were to eventuate in the world, Australia will come out unscathed.

In the wake of the GFC, a Group of Twenty countries (G20) are constantly deliberating and reforming the regulation of their financial systems. In the future, international standards will be adopted to align financial regulation.10The Australian government still implements a strong monetary policy to regulate internal demand, in a fear that inflation pressures could once again emerge. Microeconomic policies continue to allow the supply side to expand in order to accommodate future growth in demand, avoiding long term inflationary pressures.11 Dr. Ken Henry, Secretary to the Treasury argues that the GFC has enabled Australians to strengthen its financial regulation to further safeguard against further financial crisis.12 Short term responses that have occurred in the Australian Financial system and economy include measures to promote investor confidence, ???unfreeze??? and restore liquidity to capital markets, prevent destabilizing speculation and resolving troubled financial institutions. These short term changes aim to unwind the ???resulting distortions to the financial system???.13 There are many long term changes that are implemented in order to ensure strong economic growth in the future. There are several Parliamentary Committee Inquiries in progress to discuss and analyse aspects of financial regulation. These bodies, for example APRA and ASIC promote significant regulatory changes in response to the GFC. A paper discussed by Deborah Ralston looks at ???the transfer of responsibility for stock market supervision from the operator, ASX, to the regulator, ASIC???14, in addition to a need to shift consumer finance regulation to the ASIC controlled National Credit Code from the State government??™s Uniform Credit Code. Other long term changes to the financial system include capital and liquidity enhancements to raise the level of capital on an institution??™s balance sheets, to implement a cap to better monitor the build-up of leverage in an institution??™s balance sheets, to implement procyclicality measures and to re-define regulatory boundaries (macroeconomic and prudential) to enhance regulatory effectiveness.15 An international prudential standards policy for banking is set to be implemented by the end of 2010 after various committee hearings. More specific reform is still deliberated over and will be released by the end of 2010 to be implemented by the beginning of 2012.

The GFC during 2007-008 can be attributed to a number of factors. These include a liquidity shortfall in the United States and the inability of borrowers to repay loans in the United States, forcing American banks to borrow from overseas banks. The Australian economy experienced a mild-recession in comparison with other economies. The worldwide credit crisis meant that a lot of jobs were lost, forcing businesses to go bankrupt. However, due to the actions of the government, the Reserve Bank and the mining boom in Western Australia, Australia came out of the GFC relatively unscathed. The Australian Government implemented new infrastructure reforms and spending initiatives to increase the nation??™s future productive capacity to supporting employment levels at a time when it was facing the prospect of a severe downturn, as a result of the impact of the GFC. Comparatively Australia??™s financial system is airtight in comparison to the United States. As a result of the Financial crisis, the Australian economy and the Financial System has undergone reform in order to prevent long term inflationary pressures.

Bibliography ?
Wikipedia: Financial system. http://en.wikipedia.org/wiki/Financial_system. ?Referenced from: ???Economics: Principles in action???. By Steven M. Sheffrin (2003). Upper Saddle River, New Jersey 07458: Pearson Prentice Hall pp. 551 ??Ross Gittins. ???It??™s no accident Australia has avoided a severe recession this time around.??? November 13, 2009. http://www.brisbanetimes.com.au/business/its-no-accident-australia-has-avoided-a-severe-recession-this-time-around-20091113-ieu0.html Last viewed 10/08/2010

Dolce & Gabbana Discount Fashions for Financial Crisis??? http://bagbunch.com/dolce-gabbana-discount-fashions-for-financial-crisis/ 17th June (year posted unknown. Last viewed 10/08/2010

Ross Gittins. ???Give the Old Blokes a little credit??? September 16th 2009. www.theage.com.au/opinion Last viewed 10/08/2010

CRS Report RL34730, Troubled Asset Relief Program: Legislation and Treasury Implementation, by Baird Webel and Edward V. Murphy.

CRS Report R40537, American Recovery and Reinvestment Act of 2009 (P.L. 111-5): Summary and Legislative History, by Clinton T. Brass et al.

The Global Financial Crisis: Analysis and Policy Implications. Dick K. Nanto, Coordinator. Specialist in Industry and Trade October 2, 2009. CRS report for Congress.

Ross Gittins. ???Don??™t fret – oil price jump has its positives??? October 23 2004. http://www.smh.com.au/articles/2004/10/22/1098316860877.html Last viewed 10/08/2010

Ross Gittins. ???How the puny Pacific Peso became a pumped-up dollar became a pumped up dollar??? October 14th 2009. http://www.smh.com.au/opinion/politics/how-the-puny-pacific-peso-became-a-pumpedup-dollar-20091013-gvs3.html Last viewed 10/08/2010

Australian Economic Statistics. Trends, objectives and policies. 2010-2011. By Robert Price. Published by Warringal Publications, Victoria, Australia, 2010.

The Senate Economics Committee had inquiries underway into the National Consumer Credit Protection Bill, Aspects of Bank Mergers, and Bank Funding Guarantees. The Joint Committee: Corporations and Financial Services was inquiring into Financial Products and Services and into Agribusiness Managed Investment Schemes and the House Economics Committee completed an inquiry into Competition in the Banking and Non-banking Sectors in November 2008.

Financial Regulation after the Global Financial Crisis. Kevin Davis Department of Finance, University of Melbourne and Melbourne Centre for Financial Studies. http://kevindavis.com.au/secondpages/acadpubs/2009/AER-Financial%20Regulation%20after%20the%20Global%20Financial%20Crisis-09.pdf Last viewed: 12/08/2010.

The Australian financial system – emerging from the global financial crisis. Address to the Count Financial Conference, Canberra, 15 March 2010. Spoken by Dr Ken Henry AC, Secretary to the Treasury.

The Market Economy. By Tim Dixon and John O??™Mahony. 2010 Edition. Year 11 Preliminary Eonomics. Leading Edge Education Sydney, 2010

Reforming International Financial Regulation report. By the Institute of Chartered Accountants in Australia. (Unknown date of publication). Last viewed 10/08/2010?

Chester E. Finn, Jr. an Advocate for Educational Reform

An in-depth analysis of Mr. Finn??™s achievements consists of him as a scholar, educator, and public servant. He currently serves as a Fellow at Stanford??™s Hoover Institution and is president of the Thomas B. Fordham Foundation also president of its board of trustees. Nevertheless, he has been a professor of Education and Public Policy at Vanderbilt University since 1981. He is a founding partner as well as senior partner in the Edison Project. Furthermore, he has been a former Assistant U.S. Secretary of Education as well as a Research and Improvement Counselor to the Secretary of the U.S. Department of Education. Incidentally, he has been a Staff Assistant to Ronald Reagan, Junior Advisor to Richard Nixon, also Special Assistant to the Governor of Massachusetts but also a former legislative director for Senator Daniel Moynihan, as well as, Counsel to the American Ambassador to India. In any case, he was a Research Associate in Governmental Studies at the Brooking Institution, but also a John M. Olin Fellow at the Manhattan Institute and at the Hudson Institute. Still, he serves on a quite a few boards that are concerned with elementary and middle grades schooling, such as, the Center for Education Reform, the Foundation for Teaching Economics, the Colorado League of Charter Schools, the Center of the American Experiment, K12, Project Achieve, Parents Raising Educational Standards in Schools, the National Council on Teacher Quality, The National Alliance for Public Charter Schools, the Philanthropy Roundtable, and Keys to Improving Dayton??™s Schools, Inc. The Thomas B. Fordham Institute (2003-2006).
Dr. Finn graduated from Harvard University with an under graduate degree in American History, a Master??™s Degree in Social Studies and a Doctorate Degree in education on Policy and Administration. He also holds an honorary Doctor of Laws Degree from Colgate University. On the other hand, he is a Philanthropist who has produced a huge amount of high quality research studies as well as being directly involved in the reform education in Dayton, Ohio. He has dedicated the majority of his career to enhancing education. As a result he has obtained citations and awards for his labor from the Educational Press Association of America, Choice magazine, the Education Writers Association Times, The Chronicle of Higher Education, Harvard Business Review, The American Spectator, The Boston Globe, and The New York Times. The Harry Walker Agency, Inc (2005).
He is the author of 14 books in addition to more than 350 articles. He co wrote such recent books as Leaving No Child Behind: Options for Kids in failing Schools, Re-thinking Special Education for a New Century, Charter Schools in Action: Renewing Public Education and The Educated Child: A Parent??™s Guide From Pre School Through Eighth grade, The New Promise of American Life, Radical Education Reforms, Education Reform in the 90??™s,We Must Take Charge: Our Schools and Our Future, and What Do Our 17 year Old Knows. He currently writes weekly columns in the education Gadfly at Thomas B. Fordham Foundation. His articles has been seen in journals such as, The Weekly Standard, The Christian Science Monitor, The Wall Street Journal, The Public Interest, The Washington Post, The Chronicle of Higher Education, Harvard Business Review, The American Spectator, The Boston Globe, and The New York Times just to name a few The Thomas B. Fordham Institute (2003-2006).
Dr. Finn is an education policy guru whose educational philosophy is one of the conservative education perspectives. His impact on education is that he has advocated for more than 25 years as a leader of the national debate about school reform. He has advised every President beginning with Richard Nixon on educational reforms.
Besides that, a lot of changes he advocates for he has also been involved in to some degree. For example, the Edison project is a private company that was designed to operate public schools on a for profit basis. Pollard (2002), reported that Finn said, ???We were paid to brainstorm the perfect school design.??? This company started in 1995 and is still operating today. Its curriculum consists of The Success for All reading curriculum, Spanish being taught to all students, computer-based assessments on a monthly basis, and ninety minute of professional development for all teachers every day. This educational management organization requires an eight- hour school day but also an extended school year as well. The company is headquartered on Fifth Avenue in Manhattan, New York and manages about one hundred fifty public schools in twenty-three states with a student population of about eighty-five thousand. It has bought over 30 thousand computers for its student??™s families. Consequently, bragging that it has increased achievement by eighty-four percent. Even-though the company has recently been investigated by the Securities Exchange Commission, it still plan to keep growing.
Finally, in looking at a few of Dr. Finn??™s publications and testimonies to various political parties, he appear to have advocated for everything dealing with changing traditional schooling all the way to ???The No Child Left Behind??? laws and what it entails.
References
Harry Walker Agency, Inc. (2005) Chester E. Finn, Jr.
Retrieved online 11/8/06 from
http://www.harrywalker.com/speakers_template.cfmspea_id=332
Pollard, R. (December, 2002). Classroom. Inc: Will privatization save public schools
Retrieved online 11/8/06 from
http://www.gse.harvard.edu/news/features/classroomsinc12012002.html
Thomas B. Fordham Institute. (2003-2006) Chester E. Finn, Jr.
Retrieved online 11/8/06 from
http://www.edexcellence.net/institute/about/individual_detail.cfmid=8

Global Expansion

Examples of good assignments from previous years

Why do many hotel organisations seek global expansion and evaluate the factors they would need to consider in order to realise such expansion.

In the post-modern information society one is amidst, the local market seems as a relic of an earlier era -the traditional industrialised society. The technologically potent society has broadened out its arms embracing growth in trade and travel, leaving the local market appearing as an obsolete phenomenon. Defined market borderlines are dissolving and the only limitation is within the capabilities of the expanding company itself. Globalisation appears to be a general trend but there seems to be a similar tendency of global growth within hotel organisations or maybe rather one derived from the former. Growth in international trade has brought along an increased amount of business travellers in need of high standard accommodation, and the decrease in airfare prices has resulted in a growing tourist market. This essay shall consider hotel organisations as defined by their ownership, the global expansion as the drawing in of local businesses into the global arena and finally the various factors decisive for the successful expansion. The changing business environment, demand for accommodation and the feasibility of the selected area will also be considered. Furthermore the essay will attempt to prove or rebut if the hotel industry is loosing its foothold within its own orbit due to the divorce of ownership from control, which presumably is a natural consequence of seeking global expansion.

The importance of the UK hospitality industry, (HI) became evident with the improved transportation system in the mid-nineteenth century. Hotels and resorts were constructed , but it was only around the 1960s that global expansion took place. (Knowles, 1994). This change is confirmed by Go & Pine (1995: 102) ???During the 60s and 70s the US lodging industry experienced a switch from independently owned and operated hotels to properties with a chain affiliation??™. The advantages of hotel chains enabled expansion and US franchise and management contract systems became dominant in the development of the major business centres in Europe in the 60s and 70s. Albeit the development became significant later in Europe, companies such as Forte and Club Med were important on the European scene. In the late 70s and 80s globalisation was at its peak with the occurrence of south-east Asia-based companies, as well as internationals expanding globally, and constructing new sites. In the 90s however multi-nationals (MNC) will have to turn away form the power centralised geocentric orientation towards a policy involving the host-country for a more healthy and vivid future for the MNC. (Go & Pine, 1995).

Hotel organisations are as any other businesses concerned with profitability and growth. As diverse as the structure and ownership of the MNC is, so is the way in which they approach the achievements of these goals. According to Go & Pine (1995: 6) there are five principles or ways to gain profit. Firstly, expanding within the domestic market. Secondly, the ethnocentric principle where expansion takes place in countries similar to the home-country. Thirdly, the polycentric principle, expansion abroad with decentralised power, where companies are managed from the host-country. Furthermore the regiocentric principle, similar to that of ethnocentrism, but characterised by a clear regional orientation. Finally the above mentioned geocentric principle, expanding globally with a standardised product, and a centralised power constellation. It is however rather simply put that an organisation selects an environment to work in, and there might be more reason to the statement that firms in industrialised slow-growth economies are forced to expand abroad due to lack of growth opportunities. (Go & Pine 1995: 3). It seems logical that it is the world economy that influences the HI and not the contrary.

Throughout history Europe has seen itself as the cradle of civilisation and economic trends have been set from here since the industrialised society was invented by the UK. (Encarta, 1995) The distribution of power however changes and the Pacific Rim has become a centre of interest. This region has seen a tremendous growth within the last four decades, a growth similar to the industrialisation process in Europe. If the development in Asia follows that of Europe one can expect a similar pattern, de-industrialising towards the service society. The result of the industrialisation in the Pacific Rim is according to Go & Pine (1995: 194) that ???…wages go up, payrolls increase and profits decrease.??™ The loss of the low-cost labour force will inevitably diminish the competitiveness of the Asian tigers. There are though, according to Robinson (1995), other emerging development opportunities. The Middle East: Lebanon, Israel and Jordan, Latin America and South Africa will all be targets for multinationals if political stable situations can be guaranteed, Eastern Europe and the NICs with their up-coming democracies all provide excellent expansion opportunities as well.

The occurrence of potential growth areas, as mentioned above, causes a demand for accommodation which MNCs will make the most of. Whereas prime locations in western European cities are difficult to get hold of, eastern European cities have prime locations within reachable price ranges, meeting the demands of the discerning business traveller. (Robinson 1995). Accommodation for the pleasure traveller are furthermore of immense importance for the HI. Cheaper air-fares commencing with the first transatlantic flight in the 60s, has resulted in a steady annual growth of 6% in the air transport sector. (Vellas & Becherel, 1995). The Inter-Continental Hotels is one example of how accommodation succeed air transportation. The company was started in 1946 by Pan American Airways, in need of supplying their customers with high standard accommodation in the Latin American Region. (Go & Pine, 1995: 269) An important economic factor influencing the demand of accommodation is the elasticity of demand, the relationship between the real disposable income and the spending on leisure services. This factor combined with the changing demographic situation the ageing population, has created a potential group of wealthy travellers. Another important issue is that of budget accommodation. Cheap air-fares has resulted in an awareness of the possibilities of travelling. The French Hotel Group Accor has seen the potential of this market, and concentrated highly on budget accommodation. (Knowles, 1994) This trend is reflected in Granada??™s future plans for Forte, with the intentional selling of the groups luxury standard hotels. (Blackwell, 1996).

All MNCs are PLCs today which means the companies are based on equity capital. Selling out equity is a way to raise capital for expansion and thereby maximise profit. One option for independent hoteliers is to operate under the hotel consortia umbrella. Consortia is an excellent opportunity for small scale companies, especially if MNCs turns towards budget accommodation, eg Accor. Companies such as Hyatt and Hilton are according to Go & Pine (1995) exclusively management companies, whereas Marriot who did not have anything to do with property either, has turned towards franchising. Franchising seems useful in the aim for global expansion, but there is a certain danger for the franchiser to lose control of the end-product as managed by the franchisee. Some companies such as Forte are however still involved in real estate ownership, and own some of their properties. Though the divorce of ownership form control is less apparent in this case, recent events have shown the fragility of the company. Granada, the leisure, television and catering company made a bid on Forte, which might be an end to the Forte empire. What the outcome will be is actually less interesting than the fact that a non-hospitality firm is capable of shaking the grounds of the most powerful UK hospitality organisation. Granada will change the plans for the company completely but a third party, the Mercury Asset Management, has an important say in whether Forte or Granada stands out for victory. (Blackwell, Gapper, 1996).

The constellation of the hotel organisation, its goals and the outer factors such as the business environment, demand for accommodation and customer profile have now been discussed, enabling an evaluation of how global expansion is achieved. The growth of Forte was constituted by the merger of Forte Holdings and Trust Houses Limited back in 1970. (Go & Pine, 1995) Branding is the keyword in Accor??™s expansion success. Each brand aim for a certain market share, e.g. Pullman and Formule 1, respectively upper and budget. The Formule 1 with its Fordistic expansion methods, prefabricate hotel rooms in France, assemble them on site and run the units with three employees. (Euro Trends 1993) By working with a highly standardised product, a minimal amount of resources can increase productivity. Capital though is not the only ingredient. If companies underestimates the importance of information technology they might be ignored by tour operators for not being linked to a global reservations system, and if the popularity of the internet keeps on increasing, companies ought to create home pages allowing reservations to be made by individuals.

It would be of relevance to do a thorough S.T.E.P.L analysis of the potential growth area and the probable success of the expansion, but the limitations of the essay will only allow referring to it briefly. Hospitality Consultants Kett & Stanton (1993) suggest a feasibility study to be carried out, to determine the effect upon the existing business and whether the outcome will have economic relevance. They suggest five areas of research: location, accessibility, catchment area, market sectors and competition. Will the location attract customers, are the transportation and infrastructure working, what is the amount of disposable income locally, size and industry of the area, influx of tourists and profitability of the competitors. As the article suggests it might be worthwhile employing professional guidance for such an extensive search.

This essay has shown that hotel organisations seek expansion foremost for reasons such as growth, profit and survival in an exceedingly competitive environment. This was pushed forward due to a weakening of growth possibilities in the industrialised countries. Cheap air-fares and demographics however encouraged expansion in other areas. Types of business formats has been discussed and their advantages/disadvantages for expansion. Strategies such as branding and market segmentation has been touched on as well as the steps to be taken preceding expansion. Success though is not guaranteed by taking all the above mentioned factors into consideration. All the business formats carry within them potential undermining aspects and the recent bid on Forte has shown the vulnerability of the hotel organisation. Is the traditionally defined HI disappearing This is a question for hoteliers in MNCs to consider when expanding into the global market.
References

Blackwell, David. Granada squares up for final round. Financial Times. Weekend January 13/14, 1996.

Encarta, The Complete Interactive Multimedia Encyclopedia. Microsoft. 1995.

Euro Trends, Formule 1 – the McDonald??™s of the hotel industry. No. 7, April, 1993.

Gapper, John. At the centre of the City Web. Financial Times. January 19, 1996.

Go, Frank M. & Pine, Ray. Globalisation Strategy in the Hotel Industry. Routledge. 1995.

Kett, Russell & Stanton, Leonor. What??™s Feasible Hospitality. August, 1993.

Knowles, Tim. Hospitality Management – An Introduction. Pitman Publishing. 1994.

Robinson, Sally. World Trends. Hospitality. October/November, 1995.

Vellas, Francois & Becherel, Lionel. International Tourism. Macmillan Press LTD. 1995.

Bibliography

(As above +)

Daneshku, Scheherazada & Wighton, David. Granada buys up 9.2% of Forte shares. Financial Times. January 17, 1996.

Drew, John. Readings in international enterprise. Routledge. 1995.

Tuck, Allene. Oxford Dictionary of Business English. Oxford University Press. 1993.

Williams, Allan M. & Shaw Gareth. Tourism and Economic Development. Belhaven Press. 1991.

How would the implementation of the social charter affect day to day operations in any hospitality outlet

The Implementation of the Social Charter will affect many operations on a day to day basis in the hospitality industry.

A hospitality outlet can be regarded as: a service that provides accommodation, food, and beverages; this could vary from a fast-food outlet to an upper class hotel. To create an understanding of the Charter the essay first states what the Charter is and why the United Kingdom rejected it during the Thatcher years. Then looks at the possible effects that the acts will have on the hospitality industry in Britain. The
arguments put forward address the following areas: working conditions, health and safety, equality for employees (male, female and foreign) and dialogue between management and labour.

The Social Charter was signed in December 1989 by eleven of the twelve member states of the European Community, Britain was the only country not to sign. Britain rejected the Charter whilst Margaret Thatcher was Prime Minister; it was rejected for three main reasons: it would cost UK industry many jobs, it did not take account of member states??™ customers and practices, and not enough attention was paid to ensuring the effects of the Charter were the same across Europe. A Department of Employment spokesman stated that the implementation of the articles on part-time and temporary workers would add an estimated one billion to Britain??™s business costs.

Under the Charter the twelve countries of the European Community agreed to authorise the eleven member states to use the acts and mechanisms of the treaty in applying for decisions. The Charter is a list of twenty nine articles. Acts of the Council made under the protocol can only be implemented with a majority of forty four votes. Any financial consequences of the Charter will not be charged to Britain.

The main objectives of the Charter are: promotion of employment, improved working and living conditions, proper social protection, dialogue between management and labour, the development of human resources with the view to lasting high employment, and the combating of social exclusion.

To achieve this, the community will support and complement activities to help the other areas. The EC Charter will try to create the principle of equal pay for both female and male workers. The eleven note that the community does not intend, in laying down minimum requirements for health and safety of employees; to discriminate in a manner unjustified by the circumstances against employees inn small and medium undertakings. The Charter was drafted at the suggestion of the Council of Ministers of Social Affairs, and consolidated by Jaques Delors. (President of the European Commission).

An important factor to consider about the Charter is that it is an expression of political intention, not a legal instrument.

If the Social Charter was implemented, working conditions is one of the areas of most concern in the hospitality industry. This is highlighted by the fact that the British economy is in recession. Within the Charter (under articles 1 and 2) employees??™ gains would include: the improvement of the working environment and conditions, social security and social protection of workers, protection of workers where their employment contract is terminated, representation and collective defence of workers and employers, including co-determination, financial contributions for promotion of employment and job creation, without prejudice to the provisions relating to social fund.

The Acts of the Charter are all inter-related and therefore it is not always possible to separate the different concepts for argument.

At present the hospitality industry has few laws about working hours. There are no laid down rules about holidays or night shifts; however under the Social Charter a policy of maximum hours worked will be introduced. If this is implemented a large shake up in the hospitality industry will follow. Effects will be direct and indirect factors.

Directly, the employer will have to employ more staff, to compensate for the fact that workers will have more free time. During an unstable economic time this could create: a fall in profits, a rise in prices and structural changes. Small businesses would be hit worst; a spokesman for the department of employment, estimated accepting the articles on working times would add an estimated two billion pounds costs to British businesses.

The permitted hours per working day would be restricted to no more than twelve hours a day. This would mean that the working weekend – (that is any work period between Friday and Monday) – should last no longer than thirty six hours. If implemented the average worker in the hospitality industry would gain more free time. However it would also restrict the amount of overtime for workers could take on. In effect this would prevent students, waiters and kitchen staff taking on more jobs and limit the amount of hours they could work, in the process raising costs for the industry. However it could be argued that a workforce that works fewer hours could be more productive and have more job satisfaction.

It is possible that if the hospitality industry took more interest in understanding the acts of the Charter, then perhaps it could be used to the industry??™s advantage.

Michael Howard, Secretary of State for Employment stated:

???There is too little information for us to make a judgement at this stage.??? Once the Charter is more easily understood, then the outlets in the hospitality industry can organise themselves for Europe; as it is such a fragmented industry.

Rest periods under British legislation are eleven hours, the Charter would increase this to twelve hours; so companies such as Forte and Queen??™s Moat House would be breaking the law if they continue in their present practices. Again the money to employ more staff would come out of the pocket of the employer, this in turn would make them less competitive and cost them more money. According to Mike O??™Conner of the Caterer & Hotel Keeper Magazine, many employers, if the Charter is introduced, may wonder whether it is really worth employing temporary workers and part-time staff. Grand Metropolitan estimated that the Charters could cost them four million a year within its one thousand six hundred strong Chef and Brewers group of pubs alone. The implication of the Charter could put great financial strain on British companies.

The European Commission has also proposed equal access for training both temporary and full-time employees. If implemented the money to train the staff would come from the employers. This might create better quality of staff, but the employer would have to notify temporary staff of any permanent position which became available. Also if temporary staff were employed through an agency and the agency defaulted the payments, the employers would be liable.

Indirectly these proposals mean if the employees had reduced capital, then a run ripple effect would follow, with employees having less income. This would mean contribution to the required level of money towards the GDP would lessen, the final result being a reduction in the profitability of the hospitality industry. The less hours staff can work, then the less money they can circulate and spend.

The implementation of the Health & Safety laws under the Social Dimension will have a modest affect on the hospitality industry; this is mainly due to the stringent laws that already exist in Britain with the amendment of the Health & Safety Act in 1990 and the strong powers that Environmental Officers already have. The areas that the implementation of the Charter may affect are: hours that are considered detrimental to a person??™s health and safety. This might affect night shift workers or those who work long hours discussed previously.

Under Act 2 of the Charter there is a proposal for: ???equality between men and women with regard to the labour market opportunities and treatment of work; the integration of persons excluded from the labour market???. The implementation of the Social Charter would change an industry with a large proportion of a female working force.

One of the Charter??™s proposals is to create social protection for pregnant and breast-feeding women, standardising maternity leave and pay. The maternity leave would be for a prescribed time of the fourteen weeks when away from work for all the workers. The acts would also assure protection for working women who become pregnant, for instance, no night work for them. These objectives would give more equal opportunities for pregnant women. However this would affect hotels who employ chamber maids and receptionists for example, at night.

Women will also gain the right to sue an employer in the European courts if they believed they were being discriminated against, because they were pregnant. The EC stated that the member states

???Will doubtless fear the cost of the proposed new protection for pregnant women???.

These proposals would give women a fairer opportunity in a low paid fragmented industry. The employer would have to financially pay for any problems that arose. Yet men still have a longer service and higher salaries than women, and at the moment twice as many men are on pension schemes. So in effect pregnant and breast-feeding women would gain equal opportunities, but would the whole of the workforce At the moment there are different retirement ages between men and women; the implementation of the Charter will make this unlawful and thus create some equality. It will also create opportunities for women to have more highly skilled jobs, if they can continue in employment while pregnant and breast-feeding. Tapping perhaps talent that is not exploited at present.

The UK though is believed to be more equal in these areas than other European countries. If Britain was to confront these problems now then the hospitality industry could be more competitive when the Charter came into place. However it is estimated by the government that only around fifty per cent of British companies have prepared for Europe. A DTI spokesman stated:

???It will affect nearly every UK company, large or small, whether they trade locally or nationally. Company law, product standards, public purchasing rules, professional qualifications, transport and VAT are just a few of the measures???. The DTI estimates that there are more than 340 million customers in what it describes as the:

???the biggest market in the world???.

Under the Charter it will be illegal to exploit a foreign workforce. In 1971 Knight revealed in a survey that one seventh of industry employees began their working lives outside the UK and one twentieth of the workforce was Irish. This information is dated, and with the increase of ethnic minorities in England it is likely there are even more employed in the industry. If implemented the Charter will create greater coalescence for the European community.

With this Britain will experience an influx of European workers. Britain must if the Charter is put into operation look at the market available for business in the EC.

John Burnham of the CBI estimates that Britain has already invested fifteen billion in Europe over the last ten years. However if the Charter is enacted the UK must adapt for Europe: she must develop foreign language skills and thinking on a European level. Especially in areas such as contract catering which is a relatively booming business. One commentator put forward the view:

???In contract catering, there are a top five turnovers of two hundred million or less. There??™s a massive void and a lot of scope to fill that void from the middle of the group.???

Yet many are wary of the amount of member state nationals who could come into Britain. Any member of the European Community will be able to work anywhere in the UK as long as they comply with employment legislation and they have a valid passport. If implemented under the Charter would create for Britain competition. UK companies should take the initiative that some French companies have taken, such as Accor who are looking for a financial future using British business. UK companies must try to put themselves on the same level as European companies so that positive gains can be made out of the Charter.

Dialogue between management and labour under British legislation is at the present time at a modest level; however the enactment of the Social Charter will introduce laws that would create a more effective workforce. If the employers have a good understanding of what the staff feel then it will create a more profitable and organised outlet. This is likely to have less impact than other acts in the Charter.

To conclude, the Charter may be thought as a costly negative proposal from Brussels, and certain implications show that the Charter??™s implementation would be costly in the short run. However it does represent equal opportunities, and many who do not have a say will benefit. It is far better to think as a positive European, than deprive social aspects that would benefit others. This essay has argued that if certain aspects of the Charter were introduced they would create a better working environment and subsequently a more productive workforce; despite an increase in costs in the short term. An NOP survey for the TUC in the UK estimated, seventy one per cent of the British public were in favour of the inclusion of the Social Charter. From this the Government should take the initiative and lead the way for Britain into a productive Europe. However as Mark Verstringhe of the FHCIMA stated:

???To some people, the Channel is wider than the Atlantic and Pacific oceans put together.???

This attitude will only widen the chasm between the UK and the rest of the European Community.

Bibliography

1. John Hughes, The Social Charter and the Single European Market. (1991)

2. The Economist, November 23rd 1991, Europe Social Legislation. (Union
Comeback).

3. The Times, Friday November 29th 1991, The Unsocial Charter.

4. The Economist, June 29th 1991, The Social Dimension of Europe??™s Single
Market.

5. Roy C Wood, Working in Hotels and Catering, 1992, Routledge.

6. European Community News, 9th November 1990, Pregnant Women.

7. Eurofile, February 1992, Was Maastrict the end of the Chapter.

8. Hospitality, December 1992, Are we ready for the Single Market

9. Hospitality, September 1991, Social Charter or Employment Minefield.

10. Hospitality, September 1991, Working Together.

11. Caterer and Hotelkeeper, March 1992, UK Opt-Out Fails as EC Reintroduces Work Directives. (Richard Collings).

12. Caterer and Hotelkeeper, March 1992, Costs of Better Working Conditions.

13. Caterer and Hotelkeeper, November 1991, EC Charter and your Staff. (Richard Collings).

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Chest Injuries

Give brief description of the following Chest Injuries – Pneumothorax / Haemothorax / Flail Chest (Segment) / Open Pneumothorax (Sucking Wound) / Tension Pneumothorax

??? Chest injury causes impairment to breathing ( hypoxia
??? If left, 1 or both lungs can collapse ( pressure on heart ( Cardiac Arrest

Causes of Chest Injury

1) Blunt Trauma Blow to the chest with blunt object ( fracture ribs
2) Penetration Bullets, knives, pieces of metal, glass etc ( penetrate chest wall
3) Compression Crush injuries eg steering wheel or Hillsborough

Pneumothorax

Common in young men and the elderly, leakage of air from small spontaneous rupture in the lung surface ( build up of air in pleural cavity. Leads to lung collapse & blood vessel problems. From TRAUMA or LUNG DISEASE.

Haemothorax

Damage to lungs and the surrounding tissue by bleeding into pleural cavity. Gravity takes blood to the bottom of thorasic cavity. Lean on injured side, ventilate, dull thud sound ! FROM PENETRATION OR TRAUMA.

Flail Segment (or Stove In Chest)

Several ribs broken in more than 1 place causing segment to break from main part. Anterior flail ( sternum to detach from rib cage. It is so extensive ( interferes with breathing mechanism ! Paradoxical Breathing !!!!!

Open Pneumothorax (or Sucking Wound)

Air sucked into lung and pleural cavity through open chest wound during inspiration. Some air may bubble out of wound on expiration.

Tension Pneumothorax

Air into pleural cavity through open wound but can??™t escape due to flap of tissue acting as 1 way valve (on inspiration, not expiration). On inspiration, intrathorasic pressure increases. Pushes media stynam across chest.

Global Ethics

The anthocyanins are common plant pigments. They are water-soluble with some or all of the sugar groups removed. The colors of the charged anthocyanin pigments are dependent on the pH of the intracellular medium containing these pigments.

The betalains are subdivided into two structural groups: the red-violet betacyanins and the yellow betaxanthins.Beetroot contains a complex mixture of betalain pigments. However, the characteristic purple-red-violet colour of beetroot is mainly derived from a betacyanin pigment called betanin. After betanin, the yellow betaxanthin pigments vulgaxanthin-I and vulgaxanthin-II are the next most significant in beetroot. Mario Piattelli and colleagues, working in Naples, first described these pigments in beetroot in the 1960s. They found at least six betaxanthins in the cultivar they studied (Piatta d??™Egitto), all present in minute quantities. The characteristic root colouration of beetroot cultivars is due to variations in levels of different betalain pigments, especially the relative concentrations of betanin and the yellow betaxanthin pigments. The color of betanin depends on pH; between 4-5 it is bright bluish-red, becoming blue-violet as the pH increases, and hydrolyzing at alkaline pH to yellow-brown color.

When the beet root is cut, cells are sliced open and the pigment spill out, however, if the plasma membrane is altered, more subtly leakage of betacyanin is induced. Betacyanin leakage from beet root cells was found to increase with decreasing pH of its surrounding medium. The lower the pH, the greater the effect is as it denatures the proteins in the membranes causing leakage of red pigments.

Global Environmental Problems

Global environmental problems are the result of the industrialised world. What should the response be of developing countries of the South
This paper examines global environmental problems being a result of industrialised worlds. Particularly in terms of the developing countries of the South are concerned , what should their response be. This is done against the background of an explanation of the changing nature of industrialised nations in the global context. This pessimistic view of the globalization process argues that global competition by means of absolute (not comparative) advantages, allowed by the international mobility of capital, will lead to a deterioration of both environmental and labour standards at the global level.
From this point of view, industrialised countries would be the main losers of the process since they will face erosion of social contracts and deterioration of standards driven by ???unfair??? competition with over-population and low-standards developing countries. The following facts and trends shed some doubts about the validity of the race to the bottom hypothesis.
As stated before, there is little evidence supporting the idea that environmental standards in developing countries indeed attract industries from industrialised countries, a relocation of environmental-intensive industries to the South would likely improve rather than deteriorate, the condition of the environment in the North (Boyce, 2004). On the other hand, low-skilled workers in industrialised countries jointly with rural smallholders in ???marginal??? developing countries ??“ are probably among the most losers of economic globalisation. However, the failure of redistribution mechanisms in industrialised countries should be blamed for this, instead of the low wages in developing countries might fuel economic growth in the North through repatriation of profits and exploitation of huge internal markets in emerging developing countries by transactional corporations.
The countries of the South are demanding that the North abide by its own principles. The rich countries at the centre of the capitalist world system are not about to apply to themselves the same rules they impose on poor states in the periphery. Fiddling with their own trade barriers is not a means for achieving that end.

Cheryls Test

Policy: UST 616

10/27/10
Policy Mid-Term
Prospectus
Cheryl Walcott

1. The 2009 U.S. Census Bureau announced that Cleveland lost nearly 10% of its population this decade! An ???alarming, trend-setting??? pace. The fastest rate of decline of any major American city except New Orleans. In 1910, research proves that Ohio thrived with innovation and growth, especially in Cleveland. At that time, more than 560,000 people lived here. The people worked hard. They built schools, stores and churches. By 1920, it has been said that more than 1/3 of Cleveland residents had been born in another country. Foreign born residents in the Cleveland Metropolitan area had made an impression on Northeast Ohio??™s landscape. Immigrants played key roles as innovators and job creators and impacted both our economy and culture. Today, research says, only 5% of the residents in greater Cleveland are foreign born. As the proportion of locals claiming a foreign birth sits near the lowest mark in a century, the economy suffers. Although, this small number of foreign born and immigrant workers have held on to economic contribution well throughout the recession(s). Research says between 2000 and 2002, the foreign born unemployment rate rose 2 percentage points to 6.9%. This compares favorably with the native unemployment rate, which rose 1.8 points to 6.1 %.
2. It is very hard to find research speaking to the topic of my choice (Reentry and Immigration), but I will tackle this question, however. My response to question number one is influenced, mostly by facts stated in the research. A new report from a non-profit, non-partisan California think tank (Public Policy Institute of California, 2010, 25, Feb.), finds that immigrants, both legal and undocumented, have lower rates of incarceration and criminal activity in California the U.S. born population. It is reported that many of today??™s children of immigrants, both first and second generations, confront a complex set of circumstances that shape their processes of incorporation into American society and economy. Born or raised in the U.S., they inherit their immigrant parents??™ customs and circumstances but come of age with a distinctively American outlook and frame of reference, and face the often painstaking task of fitting into the American mainstream. Along the way, they face many obstacles which condition??™s their transitions to adulthood. For a small portion of this population, violence and gangs make up a large part of the realities of central cities. By the time these children of immigrants reach adulthood, the impediments and opportunities faced as adolescents solidify. Moreover, some form of delinquency during adolescence signals deeper future involvements in the adult criminal justice system.
3. Immigration has been the subject of legislation since the nation??™s founding. In 1790, the Congress established a formal process enabling the foreign born to become U. S. citizens. Just over a century later, in response to increasing levels of immigration, the federal government assumed the task of reviewing and processing all immigrants seeking admission to the U.S. Since then, numerous changes have been made to the U.S. policy of immigration. In a report on immigration policy changes, ???the crackdown on immigration came long before 9/11/. The impact of post 9/11 legislation on immigration has been limited.??? The biggest impact of 9/11 on immigration policy is that significant reform has been dropped from the political agenda. The best example is President Bush??™s proposal for a guest worker program: a way to bring needed labor to the U.S. if passed it could have regularized the status of millions of unauthorized Mexican workers. Another trend emerged in the 1990??™s: a move to limit the rights of non-citizen immigrants. To counteract resurgence in illegal immigration in the mid 1990??™s the federal government poured unprecedented resources into the Border Patrol in terms of both personnel and technology. Between 1994 and 1999, the number of hours policing the border more than tripled. The Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), passed in 1996, were instrumental in the crackdown on illegal immigration. The law added Border Patrol agents, allowed the removal of illegal immigrants without a hearing or judicial review, and greatly expanded the definition of deportable crimes. The expanded definition was applied retroactively to cover crimes that were not deportable at the time they were committed. As a result, deportations of criminal aliens??”both legal and illegal immigrants more than doubled between 1996 and 1998, rising from 80,000 to 180,000.
4. The literature says the economic contributions of immigrants are enormous. Further, it is clear the pace of U.S. employment growth is closely tied to the pace of immigration. If new policies deter future immigration, this has to be evaluated with respect to national security and economic concerns. If I agreed with the literature and other current, proposed and recommended policies, I would use the ???Punctuated Equilibrium??™ theory is described as a 3-step process. This process would allow the analysts to gain leverage on the episodic nature of policymaking. Agenda setting and path dependence is reported as the ???U.S. policy making process.??? This model of policy making emphasizes the tension between institutional and political sources of stability on one hand, and endogenous (driven by policy makers) and exogenous (environmental/structure) demands for change on the other. In applying this framework to immigration policy making, it is necessary to clearly specify the 3 dimensions of immigration and the US national interest: economics, international relations, and political culture, ( Rosenblum, p5).

List of resources

Books:
1. Immigrants and bureaucrats

Journals/academic articles:
1. Theories of Immigration: An analysis of Textbooks on Human Behavior and the Social Environment
2. The Political Science of Immigration Policies
3. Migration, financial flows and development in the Euro-Mediterranean area
4. Reexamining Our Words, Reimaging Our Policies: Undocumented Migration, Families, and the Moral Imagination
5. Street-level democracy: How immigration bureaucrats manage public opposition
6. Punctuated Equilibrium in French budgeting process
7.

Websites and reports/publications:
1. http://www.allacademic.com//meta/p_mla_apa_research_citation/2/6/8/7/2/pages268726/p268726-5.php
2. http://www.unomaha.edu/ollas/Cumbre%202010/finalpaper/Brenner.pdf
3. http://www.independent.org/issues/article.aspid=1505
4. http://www.clca.us/immigration/moreinfoDocs/5.pdf
Articles from popular publications:
1.

Global Enterprise

Contents
1- INTRODUCTION: 3
2- CULTURAL DEFINITION: 3
3- ORGANIZATION BACKGROUND: 3
4- THE ORGANIZATION GOALS, HABITS, AND NORMS IN USA: 3
5- THE SRC PROBLEM: 4
6- SOLUTIONS: 6
7- CONCLUSION: 7
8- REFERENCES: 7

1- Introduction:
The number of companies operating internationally is growing constantly. The world is opening up for foreign firms and new destinations in the company? business are increasing. Because of high competition the companies operating abroad are faced with a much larger task than before. When going international the challenges the company must handle are new and unfamiliar.
Obstacles the firm never faced before are becoming crucial in the everyday work. Culture is one of these obstacles and can affect the entire co-operation.
Culture can influence the business in different ways. Language problems, pricing difficulties and culture are uncommon, especially in the beginning. The company must be able to handle these difficulties in a way that is satisfying also for the other part. Mistakes can be difficult to correct and disrespect for the foreign culture can destroy the entire operation.

2- Cultural definition:
Culture is the ???set of distinctive spiritual, material, intellectual and emotional features of society or a social group and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs (UNESCO,2002) . International marketing consists of finding and satisfying international customer??™s needs and wants better than the competition, both domestic and international, and of coordinating marketing activities within the constraints of the global environment (MMC/ international marketing).
Culture has a great impact on international marketing. When conducting international business it is of great importance to consider the cultural aspects because it can seriously affect the company??™s future, the company must have to study about the local culture in-depth before offering a product to them, and must have to convert its all thinking into the culture of the local people. Sometime the company fails to make this conversion successfully as a result they fail to have local people attention and make huge loss.

3- Organization background:
As an example of cross cultural analysis in global marketing, we will talk about The Walt Disney Company and its experience in the French market. The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products (Walt Disney website).
4- The organization goals, habits, and norms in USA:
Disneyland Park is one and the first of the Walt Disney Parks and Resorts projects, it is a theme park located in Anaheim, California, and it is Known as Disneyland when it opened on July 18th, 1955, and it is still known by that name, it is the only theme park to be designed and built under the direct supervision of Walt Disney(Walt Disney website). Disney entertainment provides, for adults and children alike, a created experience that represents what many people would like the world to be: happy, innocent, simple, safe, clean, honest, and kind. The factors behind the park success were the innovative park design, the rich heritage of the company??™s cartoon characters, the unique nature of the visitor experience, and the high quality of the service delivery system. All those along with the cultural impact of the park on the American people (according to scholars such as Luis Marin (1973), Umberto Eco (1977), Alan Bryman (1995) and Janet Wasko (2001), books. Google , understanding Disney ), it did not just promote a new approach to amusement based on a themed experience. Rather, it promoted a totalizing vision of America based on a specific ideology which materializes in an ideal, and at the same time credible, world composed by themed lands. An all-encompassing ideology, which celebrates America??™s past and future and America??™s traditional, white middle-class family values Such an ideology is conveyed within a nostalgic representation of America??™s collective memory through attractions, costumes, and shows, so that the whole park appears as the most appealing, safest, and happiest of the possible worlds. This same ideology produces illusions and stimulates the desire for them, by presenting the park as the place where dreams, and particularly the American dream, come true, helped in making the success of the park so impressive (www.otto.to.it). Disneyland has a larger cumulative attendance than any other theme park in the world, with close to 600 million guests since it opened. In 2009, 15.9 million people visited the park, making it the second most visited park in the world that calendar year (www.themeit.com). Starting from that hit in the US market and realizing that a large number of the visitors are from Asia and Europe, Walt Disney Company decided to expand internationally. So a park in Tokyo was opened and described as a virtual replica of the U.S. parks. Again the Tokyo Disneyland was very successful mainly because it fits with various aspects of Japanese culture and the Japanese interest in American culture. The that the Tokyo Disneyland is viewed as a model of exceptional service in Japan illustrates the globalization of American service culture ( David E. Raz)
5- The SRC problem:
Nine years after the opening of the park in Japan Euro Disney started its operations in France. Once again the project was almost identical to the three previous projects in Florida, California, and Japan. However, Euro Disney was a struggle Disney didn??™t take into consideration cultural marketing. Euro Disney should have paid more attention to the definition of marketing. Marketing is based upon satisfying the varied needs or wants of a firm??™s customers, and the needs and wants are very much culturally based . If a product is not culturally acceptable, its use does not satisfy the human needs. Thus Disney needed to address the European market from a cultural perspective. Disney may have been more successful if it had looked at culture and cross-cultural differences. These differences included cultural heritages, tastes, buying patterns, working conditions, service mentality language, customs, and manners. Disney could have had better success if it incorporated the local culture into its theme parks whereas the common assumption is that the serious judgment error in cross-cultural communication was the primary reason for Euro Disney???s failure ( Richard Alan Goodman). Euro Disney did not even take into consideration the cultural norms such as the way people dine and dress. For example, Disney made a culture mistake by anticipating that Europeans were a fan of the sit down breakfasts, so Disney downsized its restaurants before it opened. During the opening days, Disney found the restaurants to be overwhelmed with people more than expected. In addition, Disney had difficulty realizing that Europeans eat at a set time every day. Disney had planned for the American behaviour of wandering around with lunch in hand However, what happened is Europeans all rushed to the restaurants around 12:30. This made the lines long which aggravated people. Then to make matters worse, Disney didn??™t serve wine or beer at the restaurants, because Disney believed it was a family park. Disney forgot that they were in the heartland of Europe where people drink alcohol with most meals. Soon after this incidence Disney adapted to the European culture of dining. Yet Disney still did not have a grasp on the European vacation. Euro Disney??™s ability to generate revenue would depend upon the number of visitors and the length of their stay. In addition, the length of stay was an average of 2 days when Disney predicted a week or two stay. However, Disney didn??™t know that most guests would not stay a week or two at a time, like they had planned. If Disney had concentrated on marketing to the European guest, they might have been more successful. Moreover, expectation of the European vacations was a cultural mistake by Disney. Disney thought that the Europeans would act similarly to Americans and take their children out of school during a vacation, but that was not the case (Recklies). Furthermore, Disney figured that, like Americans, Europeans take several small vacations. Instead Europeans take a long 4 or 5 week vacation in the summer. Most guests on average stayed for a night or two at a Disney resort. Disney thought it could change the European habits, but this adventure proved them wrong. In addition, Disney made the mistake of assuming American risk management policies would work in France. Euro Disney was promoted and defended by senior company managers in the United States, and as the chairman of Euro Disney was an appointed American who was argued to have strong ties with France. Blinded by their ethnocentric approach and beliefs that the success in Japan would be translated into France, Disney??™s management did not consider an extensive number of critical factors. In this aspect, they did not put too much of an emphasis to the fact that to be an American with strong ties in France did not mean that one has developed the French thinking, has become part of the French culture, and would incorporate French ideas in the project implementation. The lack of long-term strategic thinking and partnership factors turned out to be detrimental for Euro Disney??™s initial success. Miscalculations based on insufficient marketing research were made regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests were going to the theme park paying the steep entry fees, but spent less per-capita on food and merchandise than the Americans. This may be due in part to the fact that many guests wanted to spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. While the American and Japanese consumers did not leave the theme parks empty handed, the Europeans did. This resulted in lower-than-expected revenue by Euro Disneyland (www.oitc.com). Transportation preferences of visitors to the park and around the park were also miscalculated. For example, if speaking for transportation around the park, in the initial design of Euro Disney it was assumed that the Europeans would have the same preferences as the Americans. In the USA a variety of trains, boats, and tramways carried visitors from the hotels to the park. Although it was possible to walk, most Americans chose to ride, while the Europeans on the other hand, chose to walk rather than ride, leaving the vehicles significantly underutilized. As for the transportation preferences to the park, it was assumed that given the automobile ownership statistics in Europe, the majority of visitors would drive their own cars to Euro Disney and that a relatively small number of visitors would arrive by bus. As a result, the parking facilities were built accordingly as were the facilities for bus drivers. It happened, however that the initial planning vastly underestimated the proportion of visitors who would arrive by bus. The facilities for bus drivers to park their buses and rest were inadequate. Euro Disney was forced to reduce the space left for parking lots and to open more space for buses and bicycles that the Europeans were more willing to use (Www.oitc.com). In addition, all the cast members had to follow the dress code manual, which dictates how each and every cast member should be groomed (Recklies). The problem with the manual is that Europeans don??™t really adhere to an ???American Look???. After all, they are not American. Many of the European cast members believed the Disney Look stripped them of their ???individualism???. Furthermore, service was not the French specialty. Cast members lacked the American service mentality, so the service quality was not as good as in the American parks. Moreover, as a result of the strict dress code Disney was taken to court (Recklies). Europeans believed the dress policy violated the French labor laws; soon after, Disney had a new dress policy. The French felt that the workforce was ???too American???.
6- Solutions:
To incorporate the strategic predisposition and human resource plan into the Euro company goal of catering for multinational needs, Disneyland should firstly switch from the ethnocentric predisposition to region-centric predisposition. The emphasis would be on local responsiveness under this approach. The number of home-country executive would be reduced and more host-country nationals and third country nationals would be able to take part in the decision making process. By using a region-centric predisposition, the culture of the region is considered. Therefore Euro Disneyland is set up to be multinational responsive, which would allow it to meet the different demands and tastes of different European countries. The service can be standardized within the region if regional people are developed for key positions. The key issue of region centricity is to let Euro Disneyland develop its own managerial culture instead of having an emphasis of American management philosophy In addition; a reduction in U.S. executives allows local managers from a particular geographic region to handle operations in and around the area. Both the U.S. expatriate and the European region executives need to be trained. Through training, the ethnocentrism of expatriates can be overcome and thus create a better understanding of the value and customs of the host country and how to cooperate with local personnel. On the other hand, the European regional executives could gain international experience and knowledge from the expatriate as well.

7- Conclusion:
Nowadays, any multinational enterprise (MNE) should be aware of the cultural environment of the country where it is operating. Not surprisingly there is a saying that a company should act globally but think locally, and be culturally aware because it is the lack of cultural awareness that causes businesses to fail. The literature nowadays is full of examples of companies which have failed in one way or another to be successful in certain countries as a result of the negligence with which they regard host countries? cultures. One vivid example of such a company is Euro Disney as has been demonstrated here. Cultural differences must be considered from different angles and despite the fact they might fall under the same category, like Western culture for example, it is the cultural differences for the specific country that matter. For example, both France and the USA are Western culture countries and at the same time they have major cultural differences. Thus, it was the lack of awareness for these cultural differences that caused the initial project of Euro Disney to fail. The project was executed as an equivalent to the American model of Disney, under the assumption that it will have the same level of success in France as it had in the United States. However, the French culture, despite being Western in nature, is quite distinct and in many aspects radically different from the American mores and norms.