In Order to remain more competitive on a global scale, often companies today are deciding to globalize their markets by taking their businesses to outside countries. Successful implementation of products and services into a foreign market requires the business to conduct a necessary analysis of all the risks involved and create any applicable strategic plans addressing these issues. In this paper, a risk analysis will be conducted to help Playa Frente successfully open and run a hotel in Mexico.
Political, Legal and Regulatory Risks The political, legal and regulatory risks of opening a hotel in Mexico vary. Playa Frente's plan is to acquire an existing hotel and move it under its own brand. Playa Frente is in no way threatening to the political climate in Mexico. Legally, the risk associated with opening the hotel could be good and the company must make sure in compliance with rules and regulations regarding the opening and operation of the property.
Playa Frente must also make sure that the business being acquired has not had any illegal irregularities in the past. Customers might always associate the company with the new hotel and risk a loss of business.
Exchange and Repatriation of Funds Risks Exchange rates and repatriation of funds needs to be considered with Playa Frente opening a store in Mexico. By acquiring a hotel already in existence, Playa Frente could possibly inherit its distribution channels and suppliers and reduce exporting costs. Pricing will also be a factor. If the company bases pricing by US standards then the possibility of products being high in Mexico are tremendous. The exchange rate on US dollars to Mexican Pesos needs to be factored in.
Competitive Risk Assessment Playa Frente's key competitors are already conducting business in Mexico and creating a strong and profitable presence. Hilton and Marriott...