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Final Paper Exit Stratergy

Essay by   •  January 4, 2011  •  5,910 Words (24 Pages)  •  1,207 Views

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The purpose of this paper is to introduce the new global business venture from Team VBMB. This venture is to be named Island Security Inc. From security systems to security guards, Island Security Inc. will be ready with the most comprehensive protection systems available to handle all of the customers security needs. Both personal security issues and public event security issues will be provided by Island Security Inc. In today’s world security is on the minds of individuals as well as corporations looking towards the global market place to pursue new ventures , Island Security Inc will be on the forefront of the security field in the Fiji Islands and South Pacific region .

Over the past 20 years, the Fijian economy had an annual growth rate of 2.7%. (CIA-World Factbook, Feb. 8, 2007). Their economy has been doing poor due to the high cost business environment. The qualities of their infrastructure are not even up to standards and doing business with the communication company and their airport are very expensive. The financial and legal systems are hard to access without a high cost. The tax rates on companies are 31%.

Fiji’s commercial legal framework is outdated and can not support modern business transactions. Fiji’s business laws require procedures that incur high transaction costs for business and increase the risk of enforcing business deals. The legal system requires a broad range of costly licenses and registrations, particularly for the locals. The problems of delays arising from investment approvals have been documented in several other Asian Development Bank (ADB) reports. Recently a joint World Bank/FIAS initiative has begun to tackle the problems of regulation and delays in investment approvals; this report strongly endorses the initiative. Within our global business venture for security service implementation in the Fiji Islands, there are several marketing mix factors which may pose risks to be managed. The marketing spectrum is extremely broad, but we will focus on possible risks for the Four P’s of Marketing. The Four P’s consist of the product, price, place, and promotion for our security service. The product will be the security service that we will offer in Fiji. The service will consist of private and organizational securities and the availability of personal bodyguards. The current condition in Fiji is lacking stability and an increased tension between the military and the government has created the need for the installation of our security service. There could be potential risks related to this product. One major risk would be the possibility for more turmoil due to sudden change. The development of a partnership from the government and military would be a must to manage this risk. The next market factor is the price of our service. The risks of this factor would include finding the right price for the service. Management will take into consideration the median salary of the islands and develop a price on that figure to help minimize any risks related to price. Lastly, the place and promotion market factors could face very similar risks. With over 325 Fiji islands, the ability to staff all islands with security and to promote to all islands will be challenging. Management will minimize these risks by ensuring that enough security staff is hired to support all islands as well as finding the most cost and time efficient method to promote the new service. Management will put most of their security budget into television and radio promotion for its ability to reach all islands.

The government has announced that it will seek to improve growth performance by encouraging private sector development. Removing barriers that discourage investment and entrepreneurship has started in several of the areas. However, before meaningful reform can be achieved substantial progress remains to be made. The government is encouraging foreign domestic investment that will help the economy grow. Barriers and taxes will be adjusted to meet those needs. The Island Security Inc. will take advantage of this opportunity to create a foundation within Fiji.

Fiji’s investment policy is currently directed at offsetting the country’s natural endowment disadvantages as well as “man-made” investment barriers through the use of incentives in the form of tax holidays and accelerated depreciation allowances that put a significant portion of the economy outside the formal tax system. This arrangement leads to business decisions that do not allocate resources effectively for the development of the Fijian economy, with investment being dictated by the desire to avoid taxes rather than through obtaining the best before tax return on investment. The poor foreign investment and gross capital formation data suggest that the incentive regime has not been successful.

Putting the private sector at the heart of Fiji’s economy will require making some difficult choices. It will take courage, leadership, and political will to do so. However, these choices must be made if poverty is to be reduced for opportunities. One of the factors that have provided momentum to the recent reform efforts has been increased dialogue between the government and the private sector.

Government reform commitment, as articulated by the Prime Minister and senior government officials at various occasions, should manifest itself in directives for mid-level government employees to ensure that any momentum generated does not flounder on the rocks of bureaucratic inertia. It may be useful to identify counterparts outside government who will take on particular issues and push for change. The Law Society could become the counterpart with the Ministry of Justice to promote legal change while the Capital Markets Development Authority (CMDA) could be the counterpart to promote financial market reform and the Chamber of Commerce could promote reform of the incentive environment. In addition, recently created advisory committees have substantial potential to promote reform over a wide range of issues.

Suggestions on the timing and sequencing of the reform agenda needs to be made before Island Security Inc. enter the Fijian market. Strengthening the legal and regulatory environment for private sectors will aid in more foreign businesses. Priority reforms, such as electronic transactions, business registry and contract enforcement, can be implemented over three to five years, but the larger reform agenda may require a ten year horizon. The foreign investment regulations should be an ongoing process in order to keep up-to-date and make the necessary accommodations. Reducing the company taxes and eliminates all tax holidays, import duty holidays, and accelerated depreciation will definitely favor foreign and domestic investors. Taxes and the incentives

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