Services in Hotel Business

1.The price of the U.S. dollar in terms of Brazillian Real is 2.5.

2.The price of the Japanese yen relative to the dollar will fall by 3%.

3. E = P Baht / P $

Fact: % change in E = % change in Baht - % change in $

The inflation rate of Thailand is 12%

The inflation rate of U.S.A. is 2%

E= 12%/ 2%

Fact: % change in E = 12%-2%

= 10% (rise)

So, E= 10% of 5 Baht/$

= 0.5

The new exchange rate at the end of the year would be 5+0.5= 5.5 Baht/$.

4. I'm in danger of losing contract because the U.K. is offering the cheaper price.

According to this calculation;

$300,000 * Norwegian Kroner 7 = 2,100,000 Norwegian Kroner.

GBP 160,000 * Norwegian Kroner 12 = 1,920,000 Norwegian Kroner.

As I see from above, it shows me that I have a higher price than a competitor from the U.K.

7. Before make a decision we need answer these questions:

1. How high are transport cost and tariff?

a. Dasani, Bottled Water-------------> High

b. PC Hardware, IBM/Lenovo------> High

c. Hotel Marriot-----------------------> High

e. Milka Chocolates------------------> Low then export (trade)

2. Is know-how amenable to licensing?

a. Dasani, Bottled Water-------------> Yes

b. PC Hardware, IBM/Lenovo------> Yes

c. Hotel Marriot-----------------------> Yes

3. Is tight control over foreign operations required?

a. Dasani, Bottled Water-------------> Yes then FDI

b. PC Hardware, IBM/Lenovo------> No

c. Hotel Marriot-----------------------> No

4. Can know-how be protected by licensing contract?

b. PC Hardware, IBM/Lenovo------> No then FDI

c. Hotel Marriot-----------------------> Yes then license/ franchise

In my opinion, Dasani should FDI its business since the company would be able to invest its production in Brazil instead of trading. Dasani would want to keep their brand image as well. For PC Hardware, IBM/Lenovo, they should FDI their businesses in India and Russia because of the government in these two countries would love to learn know-how from them. For Hotel Marriot, to keep their high services in hotel business and also adapt their business to the host market, they should licensing their business. For Milka Chocolates, to keep their brand name and the cost of transportation or tariff would be high, they should trade their product with Japan.

8. The two strategies that firms pursue for value creation are

1. Low cost strategy (lowering of costs), to exploit economies of scale, lowest cost structure of any competitor in an industry. Example for this strategy should be Casio because it holds the high rank in low-cost sport watches.

2. Differentiation strategy, to increase value to the customers by making products more attractive (superior design, stylish, functionality, reliability, after sales service, etc). The example of this strategy should be Omega watches that create value of their product to be high-class product. So, they could set the high price and maintain their brand with high value.

9. a. I think