Global Business Plan Essay Example

Global Business Plan Essay Example Global Business Plan Essay Global Business Plan Essay Executive Summary Moto-Europe Tours has sought to fill a niche in the tour guide industry. The founders of this business venture saw a need to expand the company’s operations globally. Moto-Europe Tours is a business venture with the goal of expanding tour experiences to Italy and its surrounding countries. The stabilization of Italy’s government, its inviting culture and close ties with the U. S. are factors that make opportunities for Moto-Europe Tours to expand ideal. This report contains the following: a Statement of Purpose, Regional Analysis and Host Country Analysis. Moto-Europe Tours’ objectives and a discussion of Italy’s political, cultural and economic situations are presented. The business analysis will integrate all the factors necessary for consideration in order to make Moto-Europe Tours’ business venture a reality. Final Global Business Plan Statement of Purpose Description of Organization Moto-Europe Tours provides tour experiences to motorcycle enthusiasts who want to experience Italy’s beautiful countryside, culture, local cooking and wine, and Italian customs. Individuals will be able to tour solo or as a group with a customized itinerary. Excursions can be added to enhance the customers’ Italian experience including wine making and tasting, shopping for and cooking a meal, and cultural sights. Strategic Goals The strategic goal is to expand the existing company, Moto-America Tours, into the European tour market by specializing initially in Italy and later expanding into France, Spain and Portugal. Vision Statement To be the premier motorcycle touring company in Italy for people who want to travel as temporary Italians with a motorcycle as the mode of transportation. Mission Statement : Moto-Europe Tours will use tradition and experience to guide and encourage motorcycle enthusiasts to explore the Italian countryside with the best of motorcycles and first class services in the leisure motorcycle tour industry. Moto-Europe Tours’ Service Description This company will design a customized itinerary for groups and individuals who would like to experience Italy on two wheels. Tours can be guided or independent, depending on the riders’ preferences. Guided tours will include a bilingual guide who will provide insight to Italy’s sights, culture and language. A chase vehicle and driver are included in the group packages to provide the convenience for carrying extra luggage, and to provide an extra person and vehicle in the event of an unexpected occurrence. Guides will know general motorcycle mechanics and first aid. Independent tours will provide a general itinerary and map so that the experience can be at the rider’s pace. Options are available along with a variety of experiences to make one’s experience in Italy an unforgettable one. Host Country Synopsis Map of Italy (Kwintessential, n. d. ) Italy’s stable political environment and close partnership with the U. S. are strong incentives for businesses to expand their products and services. Italy’s magnificent country scenery and rich culture make Moto-Europe Tours an inviting compliment to the country’s tourist attractions. Other than the touring the usual tourist spots, Moto-Europe Tours can enhance the Italian experience by providing opportunities to explore local areas and peoples. With Italy’s few natural resources and extensive reliance on imports, Moto-Europe Tours can be a boon to the country’s local economy. Traveling as temporary Italians in this beautiful country would lend support to Italy’s culture and promote business relationships with native Italians. Regional Analysis The European Union (EU) is dedicated to improving the economic assimilation and increasing relationships with the members. The EU consisted of seven different countries and five more joined afterwards. Today, the EU consists of 25 different countries comprising of 20 different languages. EU’s headquarters is located in Brussels, Belgium (Wikipedia, 2006). Italy is one of the original members of the EU, which was established originally on November 1, 1993. The predecessors can be linked back to 1951 with the originating organization, the European Coal and Steel Community (ECSC). In 1967, the ECSC became the European Community (Wikipedia, 2006). There are many different objectives for the EU. It’s â€Å"principal goal is to promote and expand cooperation among member states in economics and trade, social issues, foreign policy, security and defense and judicial matters† (Encarta, 2006). Citizens within the 25 countries were all granted European citizenship. Citizenship allows individuals to work, live or study in any of the EU states (Wikipedia, 2006). Political and Economic History A goal of the EU is to standardize currency amongst all the EU countries with the Economic and Monetary Union (EMU). In 2002, 12 of the EU countries replaced their national currency with the euro. The 10 most recent additions to the EU as well as Sweden, the United Kingdom and Denmark have not changed their currency (Wikipedia, 2006). The EU is run by a parliament. The parliament’s goal is to create laws that impact the lives in the member states. The parliament is comprised of one president whose term is two and one half years. The main role of the president is to oversee the activities of parliament. The president will also represent parliament in any international dealings and in official visits whether inside or outside the EU (Wikipedia, 2006). The parliament is comprised of 732 members elected from the 25 EU member states. The parliament term is five years compared to the president’s term of two and one half years. The parliament members sit in political affiliations not by nationality. Currently, there are seven different political groups within parliament (Wikipedia, 2006). Within parliament there are 20 parliamentary committees. These committees range from 25 to 78 members of European parliament. Each committee will have a chair, a secretary and a bureau. These committees meet to discuss and draw up, adopt and amend proposals for legislation and initiative reports. The committees meet once or twice a month in Brussels for discussion and debates, which are open to the public (Wikipedia, 2006). Economic Regional Alliances The EU is considered to be the largest economy in the world if considered as a single unit. The economy for the EU is expected to grow as more countries join the Union. The economic growth is expected to create nearly 3. 5 million jobs within the euro zone where the economic growth is expected to be around 2. % in 2006 with a forecasted 2. 7% growth in 2007 (Eurostat, n. d. ). The creation of the Lisbon Strategy set a strategic goal â€Å"of becoming the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion† (Eurostat, n. d. ). With the Lisbon Strate gy, the economic situation within the EU can improve. By creating jobs and growth opportunities, the members of the EU can use its alliances to reform the economy. Host Country Analysis Political Environment Italy has been a democratic republic since 1946. The country’s constitution was formally proclaimed in 1948. Italy is a centralized state with the prefect of each of the provinces appointed by and accountable to the central government. Regional governments have been established that brought some decentralization of the national government’s powers. Many regional governments continue seeking additional powers (U. S. Department of State, n. d. ). Italy’s constitution established a parliament composed of the Chamber of Deputies and Senate, a judiciary branch, and an executive branch made up of a Council of Ministers headed by a prime minister. Italy’s president is elected for seven years by the parliament and the president nominates the prime minister who chooses the other ministers (U. S. Department of State, n. d. ). Italy’s judicial system is based on Roman law, which has been modified by the Napoleonic code, the French civil code established by order of Napoleon 1, and by other statutes (Wikipedia, 2006). A constitutional court rules on the legitimacy of laws and its powers and frequency of decisions are not as extensive as those of the U. S. Supreme Court (U. S. Department of State, n. d. ). Until recently, Italy has had frequent government turnovers since 1945. Italy’s political situation has been fairly continuous and stable due to the dominance of the Christian Democratic party during the country’s postwar period. Italy has politically faced major struggles during the years from 1992 to 1997 as a consequence of disenchanted voters demanding various reforms. Major political parties were subjected to extensive changes due to scandal and the loss of voter confidence. In the March 1994 elections, Italy experienced the rise of new political forces and new adjustments of power (U. S. Department of State, n. d. ). In May 2006, the parliament selected Giorgio Napolitano as president. President Napolitano previously served as a lifetime senator, Minister of the Interior and a Member of the European Parliament. When his term ends in May 2013, the Senate and regional representatives will vote to elect his successor (U. S. Department of State, n. d. ). Italy is an important partner of the United States. Italy’s nearness to areas of tension in the Balkans, the Eastern Mediterranean and North Africa make Italy a strategically significant country for the United States. Italy is a founding member of NATO and has worked with the United States to promote democracy in Central and Eastern Europe and peace in the Middle East. Italy has worked with NATO to expand efforts toward economic and political stability in Albania. Italy has also played an important role in the growth of the EU (Industry Canada, 2006). Economic Environment Italy’s economy has changed dramatically after World War II. Italy has developed from an agriculturally based economy into an industrial nation ranked as the sixth largest market economy. Other than being a member of the EU, Italy also belongs to the Group of Eight (G-8) industrialized nations and the Organization for Economic Cooperation and Development (U. S. Department of State, n. d. ). Since most of Italy’s land is unsuitable for farming, the country has few natural resources such as fish and natural gas. Most energy sources and raw materials used for manufacturing are imported. Italy’s major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing (U. S. Department of State, n. d. ). Italy has been experiencing a slow economic recovery after the tragic events of 9/11 as seen in the country’s very low economic growth average for the last five years. Italy continues to struggle with massive budget deficits and public debt. Recently, the European Commission issued a warning to Italy that it must lower its budget deficit beneath its ceiling of 3% of the country’s Gross Domestic Product (GDP) by 2007. Currently, Italy’s budget deficit is over 4. 3% of GDP (U. S. Department of State, n. d. ). Italy conducts most of its trade with other countries of the EU and cooperates closely with the U. S. on major economic issues. In spite of the close ties Italy has with its trading partners, the country has also struggled with globalization since other countries, particularly China, have weakened Italy’s lower-end products sector (U. S. Department of State, n. d. . Cultural Environment Italian is the official language of Italy. Native Italian speakers comprise 93% of Italy’s population and approximately 50% speak a regional dialect. Italy’s culture has strong family values that serve as a stabilizing influence that is central to the family’s social structure. Although immedia te family members usually live together, extended families often reside together in one house. Emotional and financial support to all members is characteristic of Italian families (Kwintessential, n. d. ). In Italy, Catholicism is the primary religion and its influence is very high, although church attendance is low. Children are named for a particular saint and the saint’s day is celebrated similarly to the child’s birthday. Many office buildings have crosses or religious statues and each profession has a patron saint. Italian relationships are hierarchical; therefore, respect is given to older persons and to successful business professionals. The church promotes these relationship perspectives (Kwintessential, n. d. ). In Italy appearances matter since the way one dresses and carries oneself can indicate one’s social status, family background and education level. First impressions are lasting impressions in Italy; therefore, they are very important because native Italians are extremely fashion conscious in regard to clothes, shoes and accessories (Kwintessential, n. d. ). Business etiquette and customs are very pervasive in Italy. Italians have strong views as to meeting etiquette, table manners, gift giving and dining etiquette. For example, greetings are enthusiastic but formal and kissing on both cheeks is customary once a relationship develops. Italians prefer to do business with those they know and trust, and they also prefer face-to-face contact. Appointments are considered mandatory and should be made in writing well in advance. Italians frown upon high-pressure sales tactics. Italians also respect power and age in business negotiations (Kwintessential, n. d. ). Political Risks The political risks for Moto-Europe Tours’ expansion into Italy are low. In business and foreign affairs, there are always risks and outliers that could affect one’s company. Moto-Europe Tours is a company that will have very few risks when transitioning and expanding into the country of Italy. Coming from the United States, the company does not pose a significant social or governmental threat. Italy’s stable political environment and close partnership with the U. S. are strong incentives for businesses to expand their products and services. Since Italy has seen how new businesses can revitalize and grow its already thriving economy, Italy has offered incentives and various contributions to new businesses. Italy has organized support through the â€Å"State and Regional laws for incentives, which allow various kinds of contributions and concessions† (Business Italia, 2005). These incentives and contributions can range from subsidized loans, to grants or even tax credits. The only requirement for these incentives is that the grant be used in the granting territory. This is a great way to attract and spread businesses and services out to territories that are not overindulged with such services. Moto-Europe Tours plans to recruit native Italians who speak the native tongue and have diplomatic knowledge. The company knows that it must grow accustomed to Italy’s political culture in order to be successful in a different environment. The company is prepared to mitigate risks assumed through expansion by using employees as assets. Moto-Europe Tours will recruit employees who are exposed to the political arena and are well versed in the political games that might be played on a local level. Legal and Regulatory Risks On January 1, 2004, Italy rewrote its rules and regulation for startup companies. The country’s goal was to update its current system and align itself with other advanced countries. The outcome was ease of decision-making, simplification, and flexibility for corporations and organizations to expand into Italy. Previously, the government was at the center of the regulations, but now the regulations have shifted toward the company as a provider of wealth. The key element of the reform is self-regulation, which allows companies vast powers to establish specific rules in their memorandum and articles of incorporation, without too many strict, pre-defined obligations† (Business Italia, 2005). Italy has also reformed its regulatory stance in a profound way. Among the best examples of such ch anges is the country’s new stance on bankruptcy laws. The past regulation would require heavy punishment to be placed upon the entrepreneur or sister company. The new regulations emphasize saving failing companies or those in crisis. The local, state and regional officials will step in and negotiate with creditors and provide judiciary support to protect and prevent the destruction of such a company (Business Italia, 2005). Therefore, the legal and regulatory risks for Moto-Europe Tours are low. If the legal and regulatory situation in Italy were to change and negatively impact the company’s business, then its operations would need to cease and move on to one of the nearby countries. Europe has many favorable locations for visitors to experience enjoyable tours as motorcycle enthusiasts. Social and Cultural Risks To successfully expand a company into a foreign environment requires the support of the local community. Moto-Europe Tours should gain social and cultural support through commitment to local business owners. Moto-Europe Tours will not discount the knowledge and hospitality of the local bed and breakfast hotels by partnering with a large hotel chain. The company is in the business of providing temporary Italian citizenship to customers, and the best way to do this is to immerse them in the local social and cultural past time of Italy. Competition is anticipated between local hotels and restaurants for Moto-Europe Tours’ business since it will be a boost to the local economy. The company will need to be diplomatic in its decision-making since the business does not want to create any animosity in the process. Due to the nature of Moto-Europe Tours’ customers, an unforeseeable event may occur in which the company may need to change lodging locations. Therefore, the need to develop good relationships with all surrounding hotels is crucial. These relationships can protect Moto-Europe Tours and its clientele from the attitudes and behaviors of other customers. Some of the possible cultural risks may be the dissatisfaction of the locals with our business or our clienteles’ cultural differences. It is possible for some local Italians to view tourists as visitors encroaching upon or not appreciating Italy’s traditional ways and people. Therefore, cultural risks for Moto-Europe Tours are moderate. In order to mitigate the cultural risks, Moto-Europe Tours will use brochures and local advertising. These marketing strategies can help impress upon the locals that the company is designed to educate its customers in the rich heritage and culture of Italy and expose them to the non-commercialized life of Italians. Moto-Europe Tours needs to express that it is not its intention to give an outsider’s view of Italy but to give a true glimpse that personifies the Italian’s view of the country. Exchange Rates Risks In the overall scheme of Moto-Europe Tours’ business risks, the fluctuation of the exchange rate will not affect the company very much due to the service industry it is in. The only foreseeable risk would be if currency fluctuates in favor of the euro, which would deflate the power of the dollar. This situation may cause the company to lose money because the amount of services promised to customers would cost more than what was negotiated. The exchange rates risks for Moto-Europe Tours are low. Since the euro is based on the establishment of stable conditions for the economy as a whole, the euro is far better equipped than the previous national currencies to withstand fluctuations in the external exchange rate. The important size of the euro area economy makes the euro a major transaction currency. The euro is designed to foster economic growth (European Communities, 2006). To protect the company from possible exchange rates risks, Moto-Europe Tours would need to make agreements or partnerships with local shops and restaurants. An agreement to have fixed prices on goods and services for a specific amount of time would protect both parties. With this agreement in place, shops and restaurants can raise prices but give Moto-Europe Tours ample preparation so that it can make package price changes as necessary. With respect to gas prices and inflation of the exchange rate, Moto-Europe Tours would need to build a discrepancy factor into the rate of each package so that the company could be covered no matter the price of fuel. Another necessary precaution is the partnership with a transportation carrier. The best way for the company to position itself would be to book the flight and rail travel for clients but make it an additional cost. This way there is no set price and the company is not liable for any fluctuations in the price posted by transportation companies. Repatriation of Funds Risks In this business, there is a low risk for repatriation since the company is providing a service, not producing goods. Moto-Europe Tours will use goods and services that are sold and provided by Italians. The main staple of the business is its motorcycles, which will be a brand currently sold, if not produced, in Italy. The Italian government should welcome the company into the country because it is promoting tourism and creating an economic surge in small cities. The only thing that the company will get hit for would be regular corporate taxes, which will be discussed further. Due to the ease of starting a business in Italy and because Moto-Europe Tours is a service-oriented business, there will be little risk of repatriation of funds. Taxation and Double Taxation Risks In 2003, the Italian Parliament granted permission to legislation to reform the tax system as to how it pertains to corporations and individuals. By making the system easier to maneuver through, the Italian government hopes to create a favorable tax situation to entice both local and foreign business investment. Under the new tax structure there will be five primary types of taxes: personal income tax, corporate income tax, value added tax (VAT), taxes on services and excise taxes (Sviluppo Italia, 2004). The taxation and double taxation risks for Moto-Europe Tours are low since the main corporate components of the new tax structure are (Sviluppo Italia, 2004): Reduction of corporate income tax rate to up to 33% Exemption of capital gains arising from the disposal of qualified participations into Italian and foreign corporations Abolishment of the full imputation system on distribution of corporate profits, i. e. he dividend tax credit, and introducing a 95% exemption on dividend distributions Introduction of a group taxation regime for Italian/foreign corporations belonging to the same group to consolidate their tax base at the level of the Italian parent Introducing the so-called ‘thin capitalization rule’ whereby a debt/equity ratio aims to avoid thin capitalization of Italia n corporations As in the case of the legal and regulatory risks, if the taxation situation in Italy were to change and negatively impact the company’s business, then its operations would need to cease and move on to one of the nearby countries. A more favorable corporate tax environment in another European country may be suitable to continue providing motorcycle enthusiasts with enjoyable experiences as tourists. Overall Market Risks Throughout the EU, tourism is a strong industry (Sviluppo Italia, 2004). There are three primary risks for Moto-Europe Tours when entering the Italian tourism market and these risks are moderate. The first risk is the choice consumers have to choose from all of the other forms of tourism within Italy, which include: independent travel, guided bus tours, cruises and other than motorcycle specialty tours. The second risk is other motorcycle touring companies. The largest motorcycle touring company in the Central Italy region is Beach’s Motorcycling Adventures, Ltd. Beach’s provides similar services to that of Moto-Europe Tours; however, the â€Å"Ltd. † at the end of its name suggests that it is also â€Å"limited† in its capabilities. Since Moto-Europe Tours will provide full concierge-type services, the company feels that Beach’s primary appeal will be to unimaginative vacationers. For those individuals or groups who want to get out of the tourist traps to the small towns and living like a temporary local, Moto-Europe Tours will be the trendsetter. The last market risk is terrorism. The World Trade Center bombings in New York City have had a lasting impact on the worldwide tourism trade. One year after the terrorist attacks, travelers’ vacation habits had still not returned to normal. Most vacationers were opting for shorter trips close to home or combining a vacation with a honeymoon, rather than taking two separate vacations (Klancnik, 2002). Mitigating any of these risks would require a move back to the States or to another country nearby. Distribution and Supply Chain Risks The risks associated with distribution and supply chains are low and not of major concern to Moto-Europe Tours as the company provide a service, not a product. However, there are channels of distribution for marketing and sales, which would need to be maintained for optimal performance. The primary means for initial contact of the consumer or travel agency would be via the World Wide Web to the company website. The website must be adequately maintained and provide current contact and general company information. By partnering with travel agency chains such as the Automobile Association of America (AAA), Motorcycle (Hot Bike Magazine) and Travel trade magazines (Conde Nast) and motorcycling enthusiast clubs (Ducati Owners Club), Moto-Europe will need to convey the feeling of exclusivity without the prohibitive costs. One means of distribution, Italy’s road and highway system, may be of intermittent concern as construction and unforeseeable natural occurrences such as flooding and extreme weather may make travel either unsafe or undesirable to tourists. But, as of 2004, Italy’s 479,688 km of paved roadways (including 6,478 km of expressways) could enable tours to be rerouted (CIA, 2006). Trade Barrier Risks At this time, there are no major trade barrier risks as Moto-Europe Tours is a service company within the tourism industry. Therefore, trade barrier risks are low. Competitive Risk Assessment Although there are several tour companies that specialize in motorcycles as the primary mode of transportation, none of them offer the level of concierge service that Moto-Europe Tours offers. With tourists coming from all over the world with different traffic laws, signs and conditions, Moto-Europe Tours provides a comprehensive guide to clients, which gives insight to those issues pertaining to Italy. Safety is the primary concern of Moto-Europe Tours. So, a riding skills checklist will be provided for clients to prepare their riding skills for the possible situations that may arise. An example might be a weaving strategy in case of one trying to avoid a rockslide. By facilitating safety in a foreign country, guests will enjoy their experience from the back of a motorcycle rather than looking out of a hospital window. Part of Moto-Europe Tours concierge service will include luggage and package service. Motorcycles do not come equipped with a large amount of storage space. This is partially what is appealing to motorcycle enthusiasts: one is able to get up and go without worrying about how to pack. The concierge will arrange to transport the clients’ luggage from their various destinations. Even though customers may normally opt for a casual dress code, Italy is a fashion-conscious country. One would not want any â€Å"little black dress† wadded up in a saddlebag. In addition to transporting luggage to different destinations, purchases can also be collected and shipped to a customer’s home address. Cyber and Technology Risk As discussed previously in Distribution and Supply Chain Risks, the World Wide Web will be an important tool for travel agencies and consumers to get general information and communicate with Moto-Europe Tours. A specialized management system will need to be developed to maintain customer information, distribution channels, and up-to-date information on culture venues, hotels, etc. Another system will need to be developed to facilitate customizing the client’s itinerary. The system should provide a pocket-sized booklet that provides riders with a map with their preferred route, contact information for their lodging, and tickets or passes for various excursions. Since the Internet is ubiquitous and Moto-Europe Tours provides a service, technology risks are low. Internet providers have backup storage systems that allow retrieval of information from virtually any location with web access. Motorcycles will come equipped with a European Navigational System that uses satellite technology. This technology is also an important part of rider safety. The system can notify Moto-Europe Tours if a motorcycle is in a collision or upset. This would indicate that there might have been an accident, which would require medical aid and towing services. The global positioning system (GPS) will enable Moto-Europe Tours to direct medical assistance to any location. In the event that a motorcycle is stolen, the GPS will allow police to locate the vehicle. Each motorcycle will also be equipped with a satellite phone system. Not only will this system be able to be used in the event of an emergency, but also allow the tour operator and rider to communicate about other information. For instance, the tour operator can advise that there is a road closure at part of the route and how to detour past it. The rider can also arrange to have show tickets purchased or dinner reservations made by a Moto-Europe Tours concierge. SWOTT Analysis Strengths Experience in bike tours Name identification Success in the United States The strengths that have been identified for Moto-Europe Tours are based on the experience and knowledge gained in the United States operations. Through extensive knowledge and planning, Moto-Europe Tours has built a reputation of quality motorcycle tours within the United States. The company’s reputation will be an asset with the expansion into a new international market. Weaknesses International experience Service capacity Financial resources Some weaknesses that have been identified are based on experience in the international market. Although team members have culture knowledge, doing business in a foreign market can be a challenge. Another area that can be determined as a weakness is the capacity with which the company can operate. Tours will usually be planned in advance for groups desiring this type of service. Last minute tour requests can be a challenge to fulfill with limited qualified staffing levels. Finding sufficient financial resources could be a challenge. Even though Moto-Europe Tours has a very good reputation and character, venturing into international markets involves risks. Initially, some joint ventures may need to be fostered to get Moto-Europe Tours started. Opportunities Local business environment Flexibility in types of tours Tourism Economic boost to economy Culture knowledge The opportunities available to Moto-Europe Tours are the basis for expanding into Italy. The tours that will be promoted are out of the normal tourist realms. The tours will take tourists into outlying areas that will expose them to the local business environments. This will help boost the economy in Italy. Due to the flexibility with the types of tours available, a boost to tourism for Italy can increase. Some of the staff within Moto-Europe Tours has done some extensive traveling in Italy. The preliminary tours available through Moto-Europe Tours will be designed with those travels in mind. Allowing tourists to experience the culture of Italy as though they were citizens is the ultimate tour experience goal. Threats Local competition Weather conditions Accidents The threats that have been identified for the expansion into Italy deal with local competition, weather conditions and the likelihood of accidents. Local competition will be an immediate threat to Moto-Europe Tours. The way to overcome this threat is to provide services that the competition does not have. Weather conditions can affect the tours in different ways. Rainy conditions increase the likelihood of accidents on motorcycles. Tour groups may also opt to cancel the tour due to the weather conditions. Trends International travel for yuppie middle class motorcycle enthusiasts Ability to plan type of trip desired with tour escort The trend that has been identified deal with the need to promote the vacation opportunity that is different than what is currently available. Motorcycle tours in Italy will appeal to the yuppie middle class travelers. The goal is to promote the company’s unique services to them. Another unique service available with Moto-Europe Tours is the tourists’ ability to plan the specific tour they would like to take. All of the tours with Moto-Europe Tours provide a guide to ensure there are no language barriers with local citizens. The services will also allow tourists to stay in different levels of accommodations based upon their desires. Mode of Entry Moto-Europe Tour’s entry into Italy is based upon a joint venture strategy. Since Moto-Europe Tours is a service organization, creating partnerships with different hotels and Italian motorcycle dealerships can create a win-win situation for all involved. By creating a joint venture with local hotels, they can reap the benefits of the services provided to Moto-Europe Tours’ customers. A principal concern for Moto-Europe Tours is to maintain a majority controlling interest in the joint venture. Moto-Europe Tours wins by having established relationships with different hotels on the many different tour routes. This will allow Moto-Europe Tours to negotiate reduced rates for its customers to keep costs manageable and to maximize profitability. The hotels win by having a source of revenue generated from Moto-Europe Tours’ customers. Another joint venture will involve the local motorcycle dealerships. Since the tours are dependent upon motorcycles, partnering with local dealerships makes sense. Touring bikes and off-road bikes are required to provide services; therefore, having a reliable source from which to lease and purchase motorcycles is imperative. Human Resource Management and Structure Staffing concerns are addressed. At first, representatives from the company’s U. S. operations will be in Italy to help set up the Moto-Europe Tours office. Local people will be hired as tour guides and office support staff. Any U. S. employee sent to Italy for business purposes will be compensated as per the Foreign Affairs Manual policies. The main human resource department will be at the U. S. location. Any employee in either location will be able to contact the human resource department. Due to the time difference between the U. S. and Italy, there could be a delay for the Italy employees to receive a response. In case of an emergency, a human resource employee can be reached at any time. In addition, any U. S. employee that will work in the Italy facility must receive special training. As a result, the employee will understand the cultural differences encountered in Italy and will be prepared to handle those differences with care and respect. This cultural sensitivity training is important to Moto-Europe Tours’ success. In order to give customers the experience of being a local, all employees must understand the culture and embrace it. Compensation for all employees in Italy will be based on what is offered in the U. S. Pay will be determined upon competitive rates in Italy. All employees receive the standard medical, dental and vision packages, as well as 401(k) benefits. Employees who work on any defined holiday will receive holiday pay and one and one-half times their current rate of pay. Since tour guides are on-call when guiding a tour, their pay will be based on the tour they conduct. A set wage will be based upon the distance traveled and the amount of days for each tour. Tour guides will also receive additional compensation in the form of tips from customers. Supply Chain Management Supply chain management within Moto-Europe Tours is quite different than that of a traditional product-based business. Since the company is service oriented, the main concern for Moto-Europe Tours is to have sufficient motorcycles to meet the demand. The demand can be met by the relationships developed with the local motorcycle dealerships. Tours that are planned and scheduled in advance will allow Moto-Europe Tours to lease an adequate number of motorcycles for customers. In the supply chain, virtually all intermediaries are eliminated since the dealerships will supply motorcycles directly to Moto-Europe Tours and its customers as the end users. Information Technology and E-Business Strategy Information technology will not be a challenge in Italy. Since Italy is one of the top European countries, Internet access will not be an issue. The system infrastructure will need to be compatible with the U. S. operation. An Intranet will be developed and maintained which allows both countries’ employees to access any and all company information. An IT support department located in the U. S. operation should be able to service both locations in case any need should arise. During the initial set up of the Italy operations, the IT personnel will be required to travel to Italy to ensure that computer systems are up and running properly. The Italy system will be directly linked to the U. S. operations. The Italy operation will have one member on staff that can troubleshoot any minor problem that may occur. Technology is important to the success of the business. Since most of the advertising for the company is promoted through the Web, having technological capabilities is a key element. Most of the client base will be B2C. With Moto-Europe Tours’ user friendly Web page, potential customers will be able to read about the company’s philosophy and what its mission and vision goals are in providing the best unique vacation possible. Research and Development (RD) Strategy Since Moto-Europe Tours is not a product-based company, research and development take on a different dimension. Research is based upon the assets Italy has to offer. Discovering all of the country’s hidden treasures and being able to share those treasures with customers are important elements. Another aspect of the research will be in the different cultures customers will encounter on their tours. With the research conducted, Moto-Europe Tours will be able to share knowledge with customers in order to give them a more enriched cultural experience. The development strategy is based upon the different tour routes the company can provide. The information derived from the research is used to develop the different culture-filled tours. Development strategy will also play an important role for customers who have specific requirements that they would like in their tours. The responsibility lies on Moto-Europe Tours to develop a tour that will meet the specific requirements of customers. Any new tour that is developed allows for more options to choose from. In research and development, one key element to keep in mind is the safety factor of the tours the company designs. Since all tours are conducted on motorcycles, the type of terrain and weather conditions must be taken into consideration. Moto-Europe Tours’ priority is the safety of its customers and employees. Ethics Moto-Europe Tours is a service-oriented company dealing with many small town entrepreneurs. When dealing with ethics there are many situations that might occur in the course of daily business. The company must be careful with whom it does business and with employees who may be tempted by greed in putting the company at risk. The first area that tests the company’s ethics is the choice of alliances with a hotel and restaurant. When entering a small town, all the local businesses want to gain more business and are willing to do almost any thing to get it. Moto-Europe Tours needs to be careful that it is not bribed by other businesses so that the company can remain clean. One possible situation is when a hotel and restaurant offer money in exchange for business. They could also offer a free room or meal for Moto-Europe Tours’ employees if the company uses the hotel and restaurant. While these offers are not blatantly unethical they could lead to a company culture that suggests that taking bribes are permissible. The goal of negotiations with the hotels and restaurants is to develop a good standing partnership and relationship. As a developed company in a new area, Moto-Europe Tours does not want to make a bad start. Moto-Europe Tours wants to instill the morals and ethics that have developed the company into what it is today. Tour services will include visiting and frequenting small, tightly knit communities of rural Italy. It is expected that when entering these small communities there will be some sort of collaboration amongst business owners to inflate prices. This effort will be relatively unknown to Moto-Europe Tours because it will broad in scope that includes members of the community. Upon entering a community, Moto-Europe Tours hopes that its native Italian employees will be able to curtail the inflation and negotiate fair prices for the company and its customers. As a foreign company coming to a diverse and established country, Moto-Europe Tours will rely heavily on its employees and their knowledge. Moto-Europe Tours will screen and pick very carefully the tour guides because they are the heart and soul of the company’s operation. Another ethical area involves the maintenance of the company’s motorcycles. Many mechanics and auto body shops have been caught in scandals due to the unethical nature of their business and employees. This trend could lead to an extensive liability for Moto-Europe Tours and the company needs to protect its business and customers. The company’s goal is to never harm quality with regard to maintenance and any safety issue by economizing. Moto-Europe Tours will hire well-respected mechanics to perform routine maintenance on the motorcycles. An alternative is to transfer a respected employee from the U. S. operation to the new company in Italy. Safety is a key ethical factor for the company and its customers that requires the greatest care and attention. Moto-Europe Tours will procure safety equipment that meets the highest standards set by any organization or country. Italy has very similar motorcycle laws to that of the U. S. Helmets are required for riders in Italy and company policy will also require riding gear for all motorcyclists. Another safety precaution will be to delay trips due to inclement weather. Moto-Europe Tours will not endanger the lives of its customers or the integrity of the company by goading motorcyclists to ride in treacherous conditions. Although this decision will cost the company money if bad weather results in a trip being canceled, the decision would be an ethical one and also the right thing to do. Marketing Plan A marketing strategy provides a big picture of what a firm can do in a specific market. When creating a marketing strategy, a firm must identify a target market and a related marketing mix. A target market is â€Å"a group of similar customers to whom a firm wishes to appeal,† and a marketing mix is â€Å"the controllable variables the company puts together to satisfy this target group† (Perreault McCarthy, 2005, p. 36). Focusing on specific target customers can help a firm develop a marketing mix that satisfies those customers’ specific needs better than another firm, thereby making a firm less likely to face direct competitors (Hill, 2005). Moto-Europe Tours’ marketing mix will combine the beautiful landscape and culture of Italy with a comfortable and reliable motorcycle. The team has analyzed the market and etermined that many bike enthusiasts want to explore the country side of Italy and have the freedom to roam at their own pace. This is the reason why the company is marketing its services as a small group guided tour that will enable groups to determine where and when they want to go. Moto-Europe Tours is a guide service, but guests a re not required to adhere to a set agenda. The company will work with its guests before they arrive and plan specialized and specific tour destinations prior to their arrival. This personalized service offers an attention that customers can get nowhere else. Moto-Europe Tours prides itself in providing a sense of temporary Italian citizenship to customers during their tours. The company also knows that true bikers desire a certain image. The inventory and selection of bikes will offer all types of images. The company offers custom bikes, designs and the production bike that just hit the market that some customer may have always wanted to ride. The bikes all have low mileage and are magnificently maintained to industry standards. Moto-Europe Tours believes that bike maintenance is a key factor in the customers’ enjoyment. The company’s inventory is so wide that it can provide a bike that will feel just like the bike customers left at home. These bikes will take them on an Italian tour that cannot be experienced from the seat of a car or tour bus. The only way to experience the heart of Italy is by riding on a motorcycle with Moto-Europe Tours. The company has decided that the best place to do business and promote its service would be through the Web. The company has designed multiple webpage themes and ideas for the business and will determine which is best suited for the company. The only way to truly depict the beauty and intrigue of Italy would be through visually stimulating pictures on such a webpage. This will entice and encourage potential customers to book a trip to Italy with Moto-Europe Tours. Moto-Europe Tours will also use the international motorcycle magazine community to promote the service. The company knows that the majority of motorcycle enthusiasts read or subscribes to such a magazine. The company’s advertisements will introduce enthusiasts to Moto-Europe Tours’ service. Once they see the ads, they will be prompted to call the customer service phone number or visit the website for more information. The most important promotion technique that Moto-Europe Tours hopes to develop would be the word-of-mouth feature. The company’s goal is to provide customers with such an eye-opening and awe-inspiring experience that they will share and promote the tour services. In such a service industry, the only way to gain national recognition is through the receipt of awards and the only way to be nominated for such awards is through customers’ nominations. In promoting the company’s services, customers are Moto-Europe Tours’ most important assets. If Moto-Europe Tours provides them with the ultimate vacation and service, then they will extend the ultimate award, which is praise. When determining the pricing strategy, an overview of the local competition is necessary. For example, Le Volpe Ciccione SRL offers motorcycle tours in Italy with a price range of Euro 1,657, which is equivalent to $2,187, for a 10-day tour (Le Volpe Ciccione SRL, n. d. ; Yahoo! Inc. , 2006). Le Volpe Ciccione SRL offers the following (Le Volpe Ciccione SRL): 10-day motorcycle rental and helmets Unlimited mileage Saddle bags and back case depending on model 10-day/9-night accommodation in selected country inns Road book and general map of the area Assistance Moto-Europe Tours plans to offer a two-day motorcycle tour for Euro 200. The one variable that will set the company apart will be customer service. Moto-Europe Tours will begin strategic negotiations with hotels, restaurants and local transportation carriers to extend better pricing to customers so that the company can be profitable. Financial Projections In order to evaluate the profitability and financing needs of the global venture, a financial plan is developed for Moto-Europe Tours. As shown in Figures 1 through 4, financial projections are prepared for the first three years of operations. The parent company will invest Euro 52,000 and will also finance a Euro 468,000 note carried by Moto-Europe Tours. The investment and financing will be used to start the business, lease the office space, and lease and purchase motorcycles. The business venture will prove to be highly profitable since the Euro 52,000 investment will yield in three years a net present value of Euro 610,315 at a 10% discount rate. Figure 1: Figure 2: Figure 3: Figure 4: Financial Overview Italy has been experiencing an underperforming economy due to its massive budget deficits and public debt (U. S. Department of State, n. d. ). On the other hand, Italy welcomes foreign investment, which is an ideal situation for Moto-Europe Tours to expand its services, and Italy does not tax the repatriation of profits generated through an Italian permanent establishment (The Heritage Foundation, 2006; Sviluppo Italia, 2004). Although bank sources of financing in Italy may be a viable option, it seems that the country’s excessive bureaucracy makes domestic financing a better alternative. As previously mentioned, the parent company will provide the necessary financing for Moto-Europe Tours. A capital budgeting analysis also evaluates the viability and profitability of the company’s global business venture. As shown in Figures 5 and 6, all possible variables are taken into consideration. As a result, the analysis reveals that the Internal Rate of Return (IRR) is 220% with a Pay Back Time (PB) of less than two years. The business also becomes profitable in two years. Therefore, the burn rate shows that the new business will be spending its capital initially but reporting positive cash flow in two years. The financial viability of the business venture indicates a high profitability. Figure 5: Figure 6: Governance Plan Operational Feedback Moto-Europe Tours is a wholly owned subsidiary of Moto-America Tours. As such, it ultimately has to answer to its parent company for its progress. The CEO of Moto-Europe Tours directly reports to the CEO of Moto-America as to the strategy, direction and budget of Moto-Europe Tours. A Steering Committee will be formed from individuals throughout the organization to provide insight, expertise and research to aid in the company’s direction. During the forming stage of the company, the committee will meet weekly to explore alternative options, discuss problems and potential roadblocks, and successes. The head of the Steering Committee will report the results of the meeting to the CEO of Moto-Europe Tours. At some point to be determined, meetings will be held on a monthly rather than a weekly basis. A second set of meetings will take place among the department heads, including the CFO, to ensure adherence to the timeline set for the development of the company and to make sure that the budget is being followed. At these meetings, requests for additional resources may be addressed. Command and Control Mechanisms The Internet Technology Department will be a crucial component to all departments within Moto-Europe Tours. The company will operate in two countries; so effective communication is essential. Software will be purchased or developed to control and monitor sales, accounting, cartography, marketing, policies and procedures, and human resources. Within the Sales Department, a Pipeline Report will be utilized to track quoting and sales activities. The report will be tailored by the Sales Manager, so he or she will be able to see closing ratios by the department and individual, referral sources, type of tour ordered, tour dates and length of tour. This report will serve as a tool to determine an individual’s sales productivity, trends in types and lengths of tours, and seasonal issues. Ultimately, operational control will be a â€Å"top-down† structure. However, it will be imperative that the voices at the â€Å"bottom† be heard as those individuals will be in direct contact will clients, business partners and the Italian community. For example, if Moto-America Tours were to pursue using U. S. -made Harley Davidson motorcycles without sound muffling baffolds, the CEO must understand the implication that will have on the community. Especially in small communities, locals do not want their peaceful lives interrupted by U. S. citizens coming in. Moto-Europe Tours’ position is to have its clients become temporary Italians, not to turn Italians into tourists in their own country. Administrative Practices Human Resources will be responsible for drafting the Administrative Practices or the company based on the administrative practice of the parent company Moto-America tours. Any differences in general administrative practices will need to be approved by the CEO, and possibly the CFO. One of the functions of a Department Manager will be to draft policies and procedures, which are specific to that department. These policies and procedures must be posted on the Intranet to be accessible to all employees within that department. Another form of administrative practice will take place in the form of e-business. Although in the U. S. e-business is growing at a rapid pace, some of the countries in the EU, such as Italy, France, Spain, Finland, Greece and Slovenia, have been slow to respond. As a result, no major legal issues have been raised with these countries restricting trade or business operations (European Communities, 2004). Since the majority of Moto-Europe Tours’ clientele will be from the U. S. , e-business is readily used and its implementation is on the rise. This will enable the sales and marketing staff easy communication and booking capabilities. According to a study done by the European E-Business Support Network, the lack of use of e-business is due to national restrictions, not international restrictions. The national restrictions are from the local business owners’ lack of understanding of general business and legal issues rather than from e-business itself (European Communities, 2004). Centralized versus Decentralized Organization Due to economies of scale, certain business functions will remain at the U. S. headquarters of Moto-America Tours. Additional accounting and sales staff in the U. S. will be added under the direction of Moto-Europe Tours. Since office space, qualified applicants and general infrastructure are in place in the U. S. , there will be certain unnecessary redundancies. Marketing and sales within the U. S. will utilize technology in order to enable regional marketing representatives to be home-based, but will require travel within their assigned region. In the host country, an IT department would need to exist to monitor and maintain issues specific to hardware, software, internet security and virus protection. Clients will have hardware that they will utilize during their vacation, including a satellite phone system and a GPS. Staff would need to be able to make repairs on site, or deliver replaced equipment to the client within 24 hours. IT would also work with operations in the U. S. to facilitate communications between the two countries. The following is an example of Moto-Europe Tours’ organizational structure: *Position based in the U. S. **Positions in the U. S. and Italy Timeline The implementation of the business venture will span six months. As shown in Figure 7, the implementation will start with the establishing of the budget. Then, business relationships and a joint venture will be developed followed by the leasing of office space and motorcycles and the new hires. Finally, tours will be sold with the first tour date scheduled. Figure 7: Exit Strategies In the event the need arises for Moto-Europe Tours to exit its business out of Italy, the company will entertain two exit strategy options. The capital investments in Italy will be relatively low consisting of a small amount of office space, motorcycles, GPS and satellite phones. The lack of significant capital resources will facilitate the liquidation of assets. The second option would be to hand over the business to the joint venture partner. This decision would be the germane exit strategy choice for Moto-Europe Tours. A hotel can continue the business of offering motorcycle tours to customers after Moto-Europe Tours leaves Italy. The opportunity will open for the company to move its services to a nearby country. The decision to divest the business assets and hand them over to the joint venture should raise about Euro 750,000 for Moto-Europe Tours. Italy, with its very rich history and culture, made great contributions to the world, especially since Europe’s Renaissance period began in Italy. The country is known for its fine arts and fine food. Literary achievements, the musical influence of Italian composers, the painting, sculpture and architecture contributed by artistic giants such as da Vinci, along with modern artists and designers, make Italy a memorable and exciting country to explore (Kwintessential, n. d. ). References Business Italia. (2005). Ministero dell’Economia e delle Finanze. Retrieved December 9, 2006, from: http://businessitalia. finanze. it/inglese/ CIA. (2006). Italy. The World Factbook. Retrieved December 8, 2006, from: https://www. cia. gov/cia/publications/factbook/geos/it. html European Communities. (2004, April 26). Legal barriers in e-business: The results of an open consultation of enterprises. Commission Staff Working Paper. 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