When companies begin to dominate the local market most of the time they would want to expand their horizons to the outside world where it could either make great strides or horrible losses.Corinthia Hotels is a Maltese founded company which began from a beautiful villa around 40 years ago in Malta that has now spread to Europe and north Africa in countries like Hungary,Portugal,Russia,Czech republic and Libya.The success of this company has been brought about by careful analysis of the country it intends to operate in. Reasons being for every business that wishes to go international and wanting to expand are Survival,Core competancy,globalisation and maximisation of profits/resources.Learning the culture and way of life of the people is of utmost importance as to be alert not to offend anybodies beliefs or traditions and making sure that your product/service is in Demand as to avoid suffering potential losses in foreign investments.To see how businesses cope with these problems we shall see how the P.E.S.T. analysis plays a vital role in assasing the countries current situation.Also how organisations all over the world should abide by certain rules which are monitored by the World Trade Organisation.A useful tool in making trade and the running of the business’ easyer is having a common currency as to avoid problems.These problems might consist of trade barriers as we shall see further on which for some reason or another would discourage companies from opening up.Despite rules,regulations and determined business men,in the last segment of my report we will find out that there are more or less 10 strategic risks that entrepreneurs have little or no control over,only predictions and awareness can provide limited help in making the right decisions when launching your desired product on foreign land.
Section 1 - The Business Environment of any Maltese Business Affliated with MHRA Operating in the EU
Corinthia is a great example of making use of the P.E.S.T. analysis because it had to learn important factors about the countires current situation.This comprises of; * The Political Aspect
* The Economic Environment
* The Socio-Cultural Environment
* The Technology
By researching these 4 vital factors a company could gain the edge needed over its competitors and find out more whether or not it is safe to begin operations within the designated country. The Political Aspect; political stabililty within a country is the most important because if a business opens up during the time of a war,the current ruler is a dictator or the policies for running operations is very different,the company will have no chance of surviving.Whereas if the government/country was stable,the people would have steady jobs and therefore could be able to afford the goods/services provided by the foreign company. 3 important Politcal aspects a company should keep into consideration are;
* The political risks are whether the country has a favourable trade environment, meaning that there is no discrimination between people like gender, religion, etc. and they have few regulatory hurdles and little or no beurocracy that the business have to have to enter in a different country.
* The ownership risks are where the owners and managers of the company have to be sure that they want to go international. The risks for the owners are very grievious; example going bankrupt because they do not have enough money to go international or the country does not except the products or services the company has to offer.
* The operational risks are where the contract between the government and the business is correct to both of them and does not involve serious risks for example after a certain time the business has to leave the country, the government has to have a say in the companies decisions. Luckily there are laws to to protect these expanding industries;
Common Law ; is mainly found in the United Kingdom because...