Location Analysis And Recommendations For Ms. Amalia’s Tourism Business

The Changing Economic Environment

The Changing Economic Environment which requires the lecturer to evaluate the understanding of students on microeconomic and macroeconomic concepts. This report is based on a scenario where Ms. Amalia is weighing various locations where she wants to put her tourism business. Therefore, this report will thoroughly prepare and discuss a professional report based on findings, interpretations, ideas, and recommendations based on the tourism venture of Ms. Amalia Adora a popstar from Kazakhstan who is deciding to put up her tourism venture either in Lagoons of New Caledonia.

New Caledonia, French Nouvelle-Calédonie, is French territory, it is 900 miles from east of Australia. The capital of New Caledonia is Noumea. Surrounded by different bodies of island, New Caledonia lagoons together with their various reeds and combined ecosystems, were named a UNESCO World Heritage Site in 2008. (Britannica, 2018) The tourism activities to do in New Caledonia are snorkeling, diving, kitesurfing, hiking, camping, and dining out in french and local cuisines.  While in Canaima National Park in Venezuela, Venezuela, named the Bolivarian Republic of Venezuela since 1999, is situated on the northern shoreline of South America.

The country contains a mainland terrain and various islands in the Caribbean Sea. Venezuela is known generally for its oil industry, the ecological diversity of its region, and its natural highlights. Home to a gigantic decent variety of wildlife in a variety of protected habitats, Venezuela is thought to be among the 17 most megadiverse nations on the planet.

New Caledonia’s lagoons, somewhere in the range of 60% (15,000 km²) is recorded as an UNESCO World Heritage Site and the marine condition is a standout amongst the most wonderful on the world, protecting many underwater wildlife species and a stunning decent variety of corals and plant species. New Caledonia is a biodiversity hotspot with a level of endemism, per square kilometer, seen no place else on earth. 76% of the nation’s plant and untamed life species are just found in New Caledonia. New Caledonia’s economy is driven by three key segments: the mining business – nickel (around 20% of GDP), magnesium, press, cobalt, chromium and manganese, monetary exchanges from France around 15% of GDP, and tourism.

Limitations

            The government service tax, corruption index, human development index, Economic freedom and taxes on tourism for New Caledonia were assumed due to limited resources explaining the same.

Scope of the Report

            This report will be divided into three parts: Part A will identify the location for the business based on various factors such as GDP, GDP growth rate, inflation rate, unemployment rate, corruption index, economic freedom index, corporate income tax, human development index and others. Part B will address the types of tourism ventures that can be explored by Ms. Amalia in the identified location. It will also address the barriers to this sector in the selected location. Part C will address the impact of the tourism sector in the selected location. Finally, the paper will be concluded by conclusions and recommendations for the investor.

Scope of the Report

Body

            Below is the table for New Caledonia and Valenzuela investigating the current GDP,  inflation rate, unemployment rate, and the development of the last 5 years in both countries.

A.   Location Analysis

Discuss all the terms before giving your location analysis.

Gross domestic product – it is the value of all finished goods in the market. Anything you resell is not part of the GDP.

GDP per capita – measures if the country is rich or not. GDP/Population

Venezuela makes the population smaller by sending them to another country. War will decrease the populations. Outbreaks will decrease population.More work the number of finished goods will increase. When the population is reduced there will be less finish goods.

Based on the GDP Ms. Amalia Adora can choose:

Based on the graph we would put it in Venezuela because they are a poorer country compared to New Caledonia. (employee work is high and salary is lower) however new Ms. Amalia

New Caledonia – can also be put here because the country is more developed. The security is high.

Based on the GDP growth rate. In New Caledonia because of the growth rate. In Venezuela because of their negative growth rate.Inflation rate is the increase of prices of the basket of goods of one country from period x to y

Inflation rate is present – previous/previous (Formula)

Basket of goods = consumer price index

Acceptable inflation rate is between 2-4%. If the inflation is too low the producers may stop producing if it is too high the consumers will stop consuming. Economics is a balancing act so businesses should maintain an inflation rate from 2-4%

Based on the inflation rate we can decide to put the business in New Caledonia because they have inflation rate of 1%. Lower cost. Do not have to charge tourists high. In Venezuela Based on unemployment rate and number of people who are unemployed we would put the tourism venture in Venezuela because they have more people who are unemployed which means more jobs. However, we would also put them in New Caledonia because

Based on the perception corruption index we would put the business in New Caledonia because of their low corruption rate. If the country is corrupt there is so much red tape. You bring out more money for permits Etc.

Economic freedom is to produce goods freely without any barriers and then sell it in the free market. From the table, the business would be put in Valenzuela because its economic freedom rating is known as compared to New Caledonia whose freedom to produce and sell goods freely is not known.

Body

Trade Surplus or deficit – if export is less than import then that is trade deficit, if export is greater than import then that is surplus. Based on the table in trade surplus or deficit New Caledonia is such a small country and do not have a lot of natural resources therefore they will import a lot of their items. Therefore, the business would be put in Venezuela where trade deficit is low.

Travel tax is important when putting up a business because some tourist will be turned off due to the travel tax increase. Different countries have different travel taxes. For both countries, there is no clear information and figures regarding to travel taxes; therefore, it cannot be used to make decision. However, travel taxes differ from one location and it is only applicable to citizens and tourists who have stayed in a certain country for more than one year.

Corporate Income Tax is the amount of money a government levies on the profits of a company. Based on the table we will put up the business in New Caledonia because of their 30% corporate income tax because it is lower rather than Valenzuela which has a 34% corporate tax. This implies that the Valenzuela government charges more money on profits than New Caledonia.

Government service tax – is the additional tax that you pay for every product that is being produced or service that is being rendered. From the table, we would put the business in New Caledonia because government service tax is not applicable as compared to Valenzuela which charges some fee on the services produced.

Human development index – when people are developed they are more skilled, they have the technical know how to handle various tasks. Based on the table, the business would be put in Valenzuala whose HDI is known as compared to New Caledonia whose HDI is yet to be known. Sometimes it is better to conduct business in an environment whose risks are anticipated.

Recommendation Location Analysis New Caledonia

• More reason to discover the country
• Higher employment rate
• Inflation rate is low
• Corruption low
• Corporate tax low

B. Tourism Venture in New Caledonia

Based on the graph as her advisers we would suggest to put the tourism venture in New Caledonia because of the many opportunities the tourism venture may face. It will also be a good idea to place the tourism venture in New Caledonia because they have a low corruption rate, higher employment rate, inflation rate is low, and it is still very undiscovered which will allow more tourist to discover the country.

Recommendation Location Analysis New Caledonia

            B.1 Hotel

                        The hotel will be a family resort that will be facing the beach, it will also be a sustainable hotel, that will employ most of the locals in the island. This hotel will have 150 rooms and 3 dining outlets. The activities that this hotel will offer water activities such as parasailing, jet skiing, scuba diving, kite surfing and island hopping. The hotel will focus on the specific target markets such as the class A and B the upper and middle class of families, honeymooners, and people who travel for leisure.

            B.2 City Tour

                        The City tour will be available for the guests who wish to see the beautiful Caledonia. They will have an option to either walk, a small private car, or horseback riding. This city tour will be readily available for travelers who love to discover new places and who want to immerse in Caledonia. The city tour will also include whale watching and sightseeing in the Unesco Sight The Grand Terre & Island des Pins and dining in the beautiful starry night of Caledonia. Adventure Park                       

                        The Adventure park in New Caledonia will be for tourists’ and guests’ who love adventure. The adventure park will consist of the following activities such as hiking, rock climbing, a rope course, paintball course, glamping (glamorous camping) and stargazing at night. A mini adventure park specifically made just for kids, and dino land. The adventure park is suited for all age groups; however, the target market will focus on families, and for people who love the outdoors.

            B.4.1 Unesco

                       UNESCO attempts to make the conditions for discourse among developments, societies and peoples, in view of regard for usually shared values. It is through this exchange the world can accomplish worldwide visions of sustainable advancement encompassing recognition of human rights, common regard and the mitigation of poverty, which are all at the core of UNESCO’S activities and mission. United Nations Educational, Scientific and Cultural Organization or UNESCO seeks to ensure and save such locales through the Convention Concerning the Protection of the World Cultural and Natural Heritage.

It looks to build peace through global collaboration in Education, the Sciences and Culture. UNESCO’s modified add to the accomplishment of the Sustainable Development Goals. Political and economic courses of action of governments are insufficient to anchor the lasting and earnest help of the peoples. Peace must be established upon mutual understanding and dialogue. Peace must be based upon the moral solidarity and intellectual of humanity. UNESCO helps nations to receive global norms and oversees modified that cultivate the free flow of knowledge and ideas sharing.

B.1 Hotel

B.4.2 Environmentalist

                     An environmentalist is an individual who may declare about enhancing the world and somebody who educates the community about how we are wrecking the natural habitat and what changes that can be made. Environmentalist trust that as a whole population, we can cooperate to enhance the world. They are centered around making a harmony between nature and humans. Environmentalism can be illustrated as a belief system concentrated on the welfare of the earth or as a social development.

Environmentalism seeks to secure and preserve the components of earth’s biological community, including water, air, land, plants and animals, alongside entire natural surroundings, for example, deserts, seas and forests. They are supporter of the objectives of the ecological development, a political and moral development that seeks to enhance and ensure the nature of the indigenous habitat through changes to naturally destructive human activities.

C. Tourism Multiplier

                       Tourism not just makes occupations in the tertiary part, it additionally supports development in the essential and optional segments of industry. This is known as the multiplier impact which in its least complex frame is how often cash spent by a visitor circulates through a nation’s economy. Cash spent in a hotel help makes occupations straightforwardly in the hotel, yet it additionally makes employments indirectly way somewhere else in the economy. The hotel, for example, needs to purchase food from local agriculturists, who may spend a portion of this cash on manure or garments. The tourism multiplier is a demand for local items increments as travelers frequently purchase gifts, which expands auxiliary business.

During their stay, the travelers will require entertainment, a chance to test the local delicacies and see sights the area brings to offer by taking a guided visit or mentor voyage through the environment, all of which require individuals which ideally local to maintain a strategic distance from spillage of income back to man the activities or exercises and in this way will make work in the local area. The requirement for individual administration, for example, being held up upon, or having an individual tour guide implies that the tourism business is probably going to utilize numerous individuals over the span of the high season. This implies the general population required with tourism generally should look for business somewhere else, as the traveler season is concentrated in the peak season.

Conclusion

Based on the finding of this report we can say that New Caledonia is the best place to put the tourism venture because low corruption, unemployment, inflation and corporate income tax rates and more adventurous opportunities to discover the country.

As advisories, (business coaches and mentors who examine various trends and combine them to draw conclusions aimed at helping an investor make good business decisions) we are supposed to advise the client the best place to put up her business. Therefore, we recommend New Caledonia because it has a promising future.

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