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Essay Subject: Overview of nation's economics, politics, culture, education, globalization & taxation to discover pros & cons of multinational investment in hospitality industry.... More...

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Paper Abstract: Overview of nation's economics, politics, culture, education, globalization & taxation to discover pros & cons of multinational investment in hospitality industry. Paper Introduction: Introduction Innovations in transportation and communications during the twentieth century have resulted in the ability of goods and services to move among nations with greater ease than at any other time in history. International business is no longer the exclusive realm of the large multinational corporation; small businesses are creating marketing niches for themselves in particular product or service areas. Because of this greater interest in the global economy, companies which are seeking to build long-term strategic plans must consider whether or not international marketing is a critical part of those long-term plans. Thailand, with a burgeoning economy and a government committed to inviting foreign investment in that economy, represents one of the most attractive target countries for companies considering mult Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Increased globalization also means that Thailand is subject toinfluences of other cultures, and noticeable changes have occurred in thefabric of society as well as in the business environment. Amanufacturer of high technology equipment is unlikely to market to areaswhich have little or no infrastructure to support that equipment, forexample. Traditional Society Thailand is a so-called traditional society in that much of itseconomic activity continues to be based on agriculture rather than onindustry or service. This is becoming increasingly so now that Thai firms have movedup the technological ladder to compensate for rising local labor costscompared with other parts of Southeast Asia and southern China. 8 -81. Vatikiotis, M., & Silverman, G. Allemployees are entitled to a vacation of six work days a year, in additionto the 13 holidays traditionally observed in Thailand. Vox populi. In theservice sector, joint ventures offer an attractive way to enter the Thaimarket quickly and with experienced managers. 6-7. 3 ).Western governments have called for Thailand to improve its human rightspolicies, and the new interdependence of the nation with its Westerncounterparts increases the likelihood that such changes may take place(Fairclough, 1996, p. The disposal of profits abroad isnow defined to include amounts set aside for the payment or settling of adebt. These businesses also haveinvestment opportunities open to them because they conduct business in morethan one country. They are interested in makinga profit on their transactions, but they are also interested in maintaininga healthy market for their goods and services. The prime minister must be anelected member of Parliament. 1 ). 11). Best Western gets big boost in FarEast. Political Context Thailand is a constitutional monarchy with a Parliament similar inform to that of the United Kingdom. Growth rate steady at Radisson.Hotel & Motel Management, pp. Influence of Globalization Thailand has been heavily influenced by the globalization of theinternational marketing arena. 45). Other concerns are child labor abuse, workplacesafety, and restrictions on public sector employees' freedom of associationand collective bargaining rights. The normal work week is 54 hours for commercial workers and48 hours for industrial workers, with overtime payable at one and a halftimes the wage rate for any work in excess of these limits. Also, 43 representative offices offoreign banks are in Thailand, including 14 American banks (includingAmerican Express Bank and Chase Manhattan Bank). Fairclough, G. Economic Context Thailand's economic development policies are based on a competitive,export-oriented, free-market philosophy (Weinberger, 1997, p. Also, while the nationhas instituted educational reforms designed to improve the quality of itswork force, these reforms have not yet resulted in a highly educated groupfrom which managers and supervisors can be drawn; this means that a numberof personnel will have to be brought in from the outside, which increasesthe cost of doing business in Thailand. Best Western, for example, has formed a partnership withThailand's Baiyoke Hotel Group, including an 89-story Best Western propertyin Bangkok (Bergsman, 1996, p. Thailand--As good a friend asalways. 3 . During 1994, per capitaincome was $2,423. (1997, February 22). While the Chuangovernment was criticized for the slowness of its decision making, it wasgenerally regarded as honest and friendly to business. The succeedinggovernment of Banharn Silapa-archa has adopted this approach, as well(Mydans, 1997, p. Companies with annual turnover of lessthan $24, are exempt from the VAT. Inturn, Thai firms generally offer plenty of capital, valuable local vendorand government contacts, and established business relationships throughoutthe region. At the same time, Radisson Hotels hasalso expanded its presence in the Far East, including 17 new properties anda high-profile presence in Thailand (Koss-Feder, 1995, p. The American government has been pressing for improvements in Thaiprotection of intellectual property rights, particularly protection ofcomputer software, and enforcement against violators. However, Thailand's economic policies have remained consistent throughpolitical problems and changes in government (Vatikiotis & Silverman, 1997,p. Far EasternEconomic Review, p. This availability of migrant labor has contributedto Thailand's rapid industrial growth, particularly in the lightmanufacturing, construction and service sectors. AlthoughThailand is a relatively open and friendly society, approaching potentialbusiness contacts without a prior introduction or personal reference is notadvisable. 2 ). New deal, or more ofthe same? Chipkin, H. At the end of 1993, commercial bank deposits accounted for about37 percent of all financial assets in Thailand (compared with 7 percent in1986). This migration enlarges the labor pool available to companies in the urbanareas but also brings with it the potential for greater social ills whichmay not be easily solved as urban overcrowding and increased crime becomemore commonplace in Thailand. 1 -11. 11. 6). Indeed, the greater likelihood is that the government will continue itspro-business stance and continue to court foreign investment in order toimprove the nation's overall economic standing. Fairclough, G. These statistics indicate that the nation is wellpositioned to expand its economic activities, and the population as a wholeis in a better position to take advantage of the services offered by thehospitality industry. Bangkok is a cosmopolitan city which offersstrong opportunity for the hospitality industry, and an increasingly well-prepared work force is available from which to draw skilled providers. Conclusion Thailand's government has taken the requisite steps to make the nationone of the most attractive to multinational companies. In manycases, the only way to overcome costly freight charges, importrestrictions, and competition from cheap local goods is through localproduction. Thefinancial infrastructure includes banking facilities which can accommodatethe needs of multinational organizations, and the transportationinfrastructure can support the travel needs of the hospitality industry'scustomer base. On May 19, 1995, Prime Minister Chuan Leekpai dissolved Parliamentafter one of the parties in his five-party coalition withdrew from thegovernment. At the same time, a shift away from the traditional agrarian societymeans that Thais have increased personal wealth, which makes them likelyconsumers of the hospitality industry, and educational reforms mean thatthe nation is able to supply better-educated workers who can offer much toemployers. 3-4. The Thai cultural values of patience, respect for status, and notlosing face are significant factors in business relationships as well.Losing patience or using what may be perceived as an overly aggressiveapproach will probably not achieve the desired results. The United Stateshas also sought improvements in Thailand's protection of internationallyrecognized worker rights. The fundamentals of the Thai economy remain strong, and Thailandshould maintain healthy economic growth for the foreseeable future. Mydans, S. The availability ofinternational banking facilities such as these increases the likelihoodthat foreign business operators will be working with financialorganizations with which they already have relationships elsewhere in theworld. (1996, July 22). Hotel & Motel Management, pp. Further, the Social Security Act,which has been in effect since 199 , requires employers with 1 or moreemployees to contribute 1.5 percent of the employees' wages for injury,sickness, disability, death and maternity. (1997, March 6). A Workman'sCompensation Fund covers injury, sickness and death to which all businesseswith 1 or more employees must contribute. The shift of workers from the agricultural sector is continuing; theproportion of those working the land continues to drop, especially in thenortheast, where agricultural productivity is marginal (Vatikiotis &Silverman, 1997, p. 37. 45). Joint ventures and licensing agreements are important market-entrystrategies for foreign companies doing business in Thailand. Legal Context In 1992, Thailand introduced a 7 percent value-added tax whichreplaced the previous multi-tiered business tax that imposed 21 differenttax rates depending on the product. Thailand is also likely to continue to see an increase in the numberof women entering the workforce and to see a continued shift away from itstraditional society based on an agrarian focus to a more modern societybased on industrial and service activities. 46). Travel Weekly, pp. Until skilled managers and supervisors are available inthe labor pool (including those schooled on the job), these positions arelikely to be filled by workers from outside Thailand who may have a moredifficult time communicating (both linguistically and culturally) withtheir workers than Thai supervisors would have in the same context. Modern Society Thailand's education system is still geared toward the needs of alargely agrarian, traditional economy and society, although the governmenthas made great progress over the last two decades in providing basiceducation. For companies with annual turnover ofbetween $24, and $48, , the government instituted a 1.5 percentturnover tax as an alternative. Back to school. Koss-Feder, L. Political unrest, while not as significant as in other parts of theworld, can still result in problems for companies operating in the region,and the economic reforms which have been implemented have not been in placelong enough to determine their long-term efficacy. For many products and services, companies are turning to thediversification that international marketing brings. Despite these difficulties, an increasing number of companiesthroughout the world are marketing on an international basis for twoprimary reasons: competition and markets. Asian locations gain in popularity.Chemical Week, pp. 2). Role of Global Institutions Commercial banks traditionally dominated the Thai financial system.However, as Thailand's economy expands and diversifies, so do its financialmarkets. In addition to infrastructure projects, Thailand has invitedcompanies to compete for pharmaceutical projects and similar activitieswhich bring not only foreign capital, but also foreign technology andinformation into the country, enhancing its own ability to compete in theglobal market over the long term (Singh, 1997, p. Almost all state enterprises are alsosubject to the VAT (Mydans, 1997, p. Social Context All employers must specify the terms of employment for their staff,and employers with 1 or more employees are required to specify workingregulations. A number of aggressive companies have already entered intostrategic joint-venture relationships with Thai partners in Indochina andChina (Chipkin, 1995, p. Increasednumbers of women are entering the workforce, for example, and the level ofliteracy within the nation is increasing (Fairclough, 1995, p. Policy priorities of the Chuan government includedmeeting basic economic needs and developing rural areas. Americans, forexample, purchase cars and electronics from Japan, ham and golf carts fromPoland and shoes from Brazil. Previously, firms not listed on the StockExchange of Thailand paid a 35 percent marginal rate. Itseconomy is well along in a transition from an agricultural base to a moreopen and broadly based economy with a large manufacturing sector. Elections must be held every fouryears but may be called more frequently. This labor pool is alsoattractive to those in the hospitality industry since it provides a strongsource of labor for that sector. Economist, pp. Many business relationships havetheir foundations in personal relationships developed within the socialcircles of family, friends, classmates, and office colleagues. Terpstra, V. Weinberger, C. The nation iscommitted to inviting foreign investment, and few barriers prevent directinvestment or joint ventures. Education is an important consideration for foreign businesspeoplebecause having managers and supervisors from the host country running theoperation provides significant advantages; such staff positions requireeducation that is currently only beginning to be available on a widespreadbasis in Thailand. These four banks are Citibank,Chase Manhattan Bank, Bank of America, and Bank of America (Asia) Ltd.(formerly Security Pacific Bank). Pros and Cons of Doing Business in Thailand As an emerging Asian market, Thailand represents one of the mostpromising places to conduct business in the world today. Multinational corporations must also be concerned with the currencyexchange rates in the various countries in which they operate. 37). Taking a baht. In 1993, Thailand had 725, students enrolled in publicand private colleges and universities, including those studying in foreigncountries, or about 8.5 percent of the 18-24 age group (Thanatat & Forbes,1996, p. Internationalbusiness is no longer the exclusive realm of the large multinationalcorporation; small businesses are creating marketing niches for themselvesin particular product or service areas. As currency rates move up and down, the relative performance ofthe company's fortunes can rise and fall. (1997, April 1 ). Market opportunity and growth iscertainly present in foreign countries, although purchasing power can varygreatly. If the currency in one of itsmarkets falls, for example, the company might be losing money in real termseven if sales increase in that country. The VAT covers manufacturers, theservice sector, wholesalers and retailers, and most importers. Asian Business, pp. These regulations affect those in the hospitality industry since mostproperties will employ more than 1 workers. These businesses include banking, finance, securities,insurance, pawning and real estate. The employment of childrenyounger than 13 is prohibited, and the employment of children and youthsthrough the age of 18 is restricted. This enhances the nation'sability to compete on a global level, and it brings greater numbers ofworkers from rural areas to urban areas in order to find better employment. Competition comes not only from recognizedindustrial nations, but also from developing nations and the former SovietUnion. Political parties are not usuallyideologically oriented; instead, they are formed around a key figure,usually the party leader. International dimensions of marketing. A commitment toeducation reforms, few barriers to entering the market, and an economicenvironment which is focused on bringing in capital investment has createdan environment where multinational firms now compete regularly. Many Thai firms actively seek joint-venture partners who bringtechnical, marketing, and management skills to a business relationship. The nation actively invites foreign investment in major capitalprojects, with the result that foreign workers and business professionalsare now present in Thailand in greater numbers than at any time in thepast. Consequently, a constant flow of rural, generally unskilled Thaisseeks work, both seasonally and permanently, in Bangkok and the moreindustrialized regions. Despite rapid growth in the industrial and servicesectors, the Thai economy and the Thai workforce remain traditional to alarge degree. Thailand's political orientation is moderate toconservative, and all political parties support a free market system. 52-53. These moves indicate the commitment of Thailand to expandingits global economic role. The hospitality industryin particular has significant opportunity in Thailand as this serviceindustry serves the needs of the business professionals drawn to Thailandas well as the needs of Thais whose personal prosperity now makes leisuretravel a viable alternative. Kempinski Hotels keeps its name andphilosophy. Thailand tumbles from top debt rating.International Herald Tribune, p. Inestablishments where work is deemed dangerous or a risk to health orpersonal safety, working hours may not exceed 42 hours a week. Cultural Context Business relationships in Thailand are not as formal as those inJapan, China, Korea, or the Middle East, but neither are they as relaxedand impersonal as is common in the West. (1996, December). The competition facingcompanies domestically is increasingly from foreign firms. 45-46. 11). Boston,MA: PWS-Kent Publishing Company. The government discourages thispractice, and companies would do well to avoid hiring these workers becauseof restrictions on the type and amount of work which they can perform. (1995, April 27). Forbes, p. This research considers the environment ofThailand for foreign investment and the attractiveness of the market to thehospitality industry. Introduction Innovations in transportation and communications during the twentiethcentury have resulted in the ability of goods and services to move amongnations with greater ease than at any other time in history. Future Trends The changes which have occurred to this point within Thailand,including increased globalization and increases in the education level ofthe people are likely to continue. Changing Factors The recent government of Chuan Leekpai devoted much effort tonurturing democratic institutions, including working with the military (asignificant force in Thai politics) to identify an appropriate role in thepost-Cold War world. 52). Even if thecompany conducts business in the currency of the host nation, it generallymaintains its financial statements in its own currency for standardizationpurposes. Employer contributions for oldage pensions, family allowances and unemployment compensation may berequired in the next few years. (1995, January 9). By marketing to avariety of nations, a company is not so severely affected by a downturn inany one country's economy. Thegovernment's commitment to education reform means that future supervisorsand managers can be drawn from the residents, which will enhance theability of companies doing business in Thailand to succeed. References Bergsman, S. Thailand's trade relations have traditionally been oriented towarddistant markets, particularly those in North America and Europe. Internationaltrade would be impossible if companies were not willing to take on theexpense and difficulties associated with the process. Somebusinesses are not be subject to the VAT but instead pay a specificbusiness tax (between 2.5 percent and 3 percent in most cases) on theirrevenues. 3). The new tax measures also unified corporate tax rates at 3 percent ofnet profits for all firms. Thanatat, C., & Forbes, A. Thais are more receptive if the business representative arriveswith an introduction or letter from a known government official or businesscontact. Thecreation of an ASEAN Free Trade Area, agreed to by ASEAN heads ofgovernment at their January 1992 summit meeting in Singapore, maycontribute to more rapid growth in Thai trade with its ASEAN partners inthe coming years. Child labor should not be anissue for most employers, although those younger than 18 commonly seekemployment as an alternative to education. There are 29 commercial banks in Thailand, 15 domestic and 14foreign, including four American banks. The income taxwithholding rate on both the payment of dividends and the remittance ofafter-tax profits was reduced to 1 percent. Annualgrowth in gross domestic product averaged more than 8 percent during thelast decade and just over 1 percent annual growth from 1988 to 1994.Growth rates slowed modestly in 1992, to 7.8 percent, in part because ofpolitical unrest in May 1992, which briefly undermined investor confidence. Thailand, with a burgeoningeconomy and a government committed to inviting foreign investment in thateconomy, represents one of the most attractive target countries forcompanies considering multinational operations. However, Thailand is an emerging market, not a developed one at thispoint, and some risks continue to be associated with conducting businessthere. (1997, March 26). 49). Primary enrollment in Thailand is now approximately 95 percent,and the adult literacy rate is reportedly one of the best in the region.However, compulsory education is only through grade six; nine years willbe compulsory under the Eighth Economic and Social Development Plan from1997 to 2 2. Singh, B. (1995, November 2 ). By trading in currencies in which they do business,companies can hedge some of the risk associated with a single currency.Unlike the pure speculator, these companies generally take a long view withregard to their foreign exchange practices. Far EasternEconomic Review, p. Exchanging personalinformation defining status might be important upon first meeting someone(Singh, 1997, p. During its two and one-half years in office, the Chuangovernment restored domestic and foreign economic confidence in Thailandthrough its pro-democracy and pro-market stances. Introducing and marketing products abroadincrease the company's overall market share and are thus competitivedecisions that many companies are turning to. Regardless of theoriginating countries, and even in today's high technology environment,expanding into the international arena is fraught with difficulty.Domestic regulations, regulations in the destination country, the logisticsof moving the product to the destination country and successfully buildinga marketing program there, and problems with foreign exchange need to beconsidered (Terpstra, 1989, p. Official estimates show 59 percent of those employed areengaged in agriculture, on either a part-time or a full-time basis, andrural laborers commonly take jobs off the farm during slack periods in theplanting and harvest cycle or carry on a small business in addition to farmwork. International Marketing Considerations Corporate policy, government intervention and the emergence ofregional economic groupings greatly affect trade patterns. Because of this greater interestin the global economy, companies which are seeking to build long-termstrategic plans must consider whether or not international marketing is acritical part of those long-term plans. The country is ideally situated as astopover for individuals conducting business in Asia, and the nationitself, with a commitment toward improving its economic environment, servesas an attractive end market. (1989). 81). (1997, April 7). Thailand's geographic location and itscommitment to economic reform and expansion have made it an importantparticipant in the global economy, and the current government, orgovernments in the future, is not likely to relinquish the position easily. When a company begins considering the possibility of internationalmarketing, or when it evaluates a current international marketing program,it must take into account the characteristics of the destination country(including demographics, purchasing power and political considerations). (1996, December 19). State of denial.Far Eastern Economic Review, pp. It includes applications to convert or transfer abroad foreigncurrencies arising from the profits of the business ("Taking a baht," 1997,p. Growthof the gross domestic product increased in 1993 to 8.2 percent and rosefurther to 8.5 percent in 1994 to $143 billion. Improvements in the nation's infrastructurehave given it the ability to compete in manufacturing sectors, and Thailandnow has a strong export trade with other parts of the world (Singh, 1997,p. From this standpoint, Thailand presents a very attractiveinvestment opportunity for the international hospitality industry. 48-5 . 2 . The result of this emphasis on exports is that increasing numbers offoreign travelers now view Thailand as a destination in and of itself andnot just as a stopover point on their way to other locations in Asia.Because of this, the need for additional hotel rooms has increased, and anumber of international hospitality companies have recognized this increasein demand. The tax rate on the paymentabroad of income for companies not officially established in Thailand wasreduced from 25 percent to 15 percent. Thailand was among the first ASEAN nations to implementthe first round of duty cuts on very high-tariff goods imported from ASEANcountries. 48). The other major reason that companies consider the internationaleconomy is the availability of markets. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.