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Political Risk in Bangkok

Jennifer Schmelter – Political Risk in Bangkok

On June 25th our cohort arrived in Bangkok, Thailand.  After a group lunch at the hotel, we headed to our afternoon meeting with the American Chamber of Commerce.  This meeting was one of the most interesting to me as it displayed the close link between a country’s politics and its business.

As many are already aware, on May 20th the Thai government initiated martial law in order to restore order and stability within Bangkok.  This occurred after protests trying to remove Prime Minister Yingluck Shinawatra, and her government, turned violent and resulted in the deaths of at least 11 people.  The protests were in response to accusations of corruption within the government and that Shinawatra was abusing her power.Riot1 riot2

The intriguing part of this story is the disabling impact that politics, media, and public perception can have on a local economy.  After May 20th articles abound about the destruction of Democracy within the country and images depict martial law with tanks driving through streets and armed guards seemingly on street corner.

 

Fortunately for the Thai people, these images are not an accurate depiction of what is happening in their country; martial law has helped restore order to the city.  And even when protests were active, they were restricted to specific areas of the city, which many travel blogs helped communicate to travelers.

Unfortunately for the Thai people, most tourists are willing to accept the media images they see without question and choose to avoid Thailand all together.  I had several family members and friends ask before our trip, “Are you really going to Thailand? Have you seen the news?”  I assured them that the media coverage was blown out of proportion in attempts to earn higher ratings.  When some media sources opted to report based on an agenda instead of unbiased facts, the impact was real in Thailand.

According to the Wall Street Journal, Travel & Tourism comprises 9% of Thailand’s GDP, or $35 billion in 2013.  According to our speaker at the Chamber of Commerce, direct tourism comprises around 10% of Thailand’s economy, which rises to 14% when indirect spending is also taken into account.  During Q2, tourism dropped 5.85% year-over-year within the country and declines were expected to reach $2.6 billion within the first 6 months of 2014  Hotels within Bangkok have been hardest hit, with some hotel owners reporting losses of $90,000 per week.  CEOs are not the only people impacted, however.  Our speaker added that standard service charges are not being recouped, which can often add up to 30% of a hospitality worker’s salary, and hours are being reduced.  Given the high revenues Thailand normally earns from tourism, thousands of Thais are being impacted either directly or indirectly by the lack of tourists heading to the area.

Another economic challenge Thailand is facing is the lack of available political risk insurance.  Which, given the present circumstances, does not help potential investors generate confidence and enthusiasm for the country when making their investment decisions.  Whomever the Thai people choose as their next Prime Minister, it will be interesting to watch how his/her political decisions impact the Thai economy by influencing the faith international travelers and investors have in the country’s safety and stability.

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Antonio Caldas – Political Situation in Thailand

Thailand has been engulfed in political crisis for six months now, with street
protests pushing to outright topple the government of Prime Minister Yingluck
Shinawatra. The crisis is especially serious given that Thailand has experienced
more coups d’état than any other country in contemporary history. Scholars
sometimes describe the era beginning in 1932 and running up through today as
Thailand’s “coup season.” Since 1932, Thailand has endured an astonishing 11
successful military coups, as well as seven attempted coups. These coups
normally cool down and end quickly, without dramatic breakthrough. Every time,
though, some industries are dramatically impacted  notably the
tourism.

The most recent coup was initiated in December 2013 , with the
same script: relatively few casualties and short termed … local business people
forecast it will end by the end of this year, probably with new general
elections. This time again, tourism was hammered. Some less competitive hotels
are experiencing record low occupation in Bangkok. International media tends to
magnify the risks of traveling to Thailand in this periods.Captura de Tela 2014-07-03 às 19.33.16

Interesting, however, is the attitude of investment international community.
After confirming this is once more a short term situation, with limited impact on overall growth
of Thai economy, major indicators of international interest for Thailand are
back to normal. The Thai Bath only lost an average of 3% of its value versus the
US Dollar . The MSCI Thailand IMI 25/50 Index, designed to track the overall
performance of the Thai stock exchange initially dropped 20%, but since then,
managed to recover to the same average level of 2013.

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Adam Galea – Asian Service in Hospitality

The hotel industry in the United States prides itself on its service and hospitality.  A core concept that could be found in some variation in every employee handbook is the idea of going above and beyond to meet every guest’s needs and requests.  Differentiators between US hotels are mainly based around amenity or obscure service offerings, though it is often not long before the competition catches up.

Cohort 11 at the Shangri-La Hotel

Cohort 11 at the Shangri-La Hotel

We had an opportunity while in Taipei to meet with the General Manager and HR Manager of the Shangri-La Far Eastern Hotel.  After a great presentation around their business fundamentals and a tour of their hotel operation, I walked away with one concept mentioned by the General Manager still stuck in my head.  He had mentioned that this Hong Kong based company started in Singapore and was based on providing Asian service to their guests.  Asian service?  Several days had past and I kept finding myself thinking about that phrase, trying to define it through the several hotel stays I had already experienced on this trip.  Through this, I began to see the cultural core differences between Asia and other parts of the world with some cultural variations specifically in service amongst these countries in Asia.  Key parts that stuck out to me were a genuine care and concern as if the guest and employee had known each other for years.  I concluded that this may likely stem from the deep roots of Buddhism that is found throughout Asia.  Interactions seemed to be shadowed with somewhat of a raw and juvenile excitement to help.  It seemed much of these service industry employees were less affected by the reality and harshness of the world, even though in some instances they were living it much deeper.  Though with a core similarity, it was interesting to see how the fundamentals of Asian service was woven through each of the regions we visited and how a better understanding of this service could be the new competitive edge in North America.

Below is a further look in my observations traveling through the various countries and regions.

China- Raffles Hotel, Beijing and The Sofitel, Xian

Key differences: A willingness to go to whatever length to solve the issue with a deeper desire to ensure customer was satisfied.  Employees sought out opportunities to interact but with some conservatism which seemed consistent through other service experiences in the country.

Hong Kong- Crown Plaza Causeway Bay and Disney’s Hollywood Hotel

What seemed to be a western influence drove a slight more reservation and refinement then in mainland China while still having a proactive approach in assistance.  Interactions seemed a little more formalized than any other regions possibly stemming from the long time British influence.

Taiwan- Pacific Business Center Hotel, Taipei

Overall a deeper excitement and willingness to go the extra length to understand the service need with follow through to ensure clear understanding of the request.  There was little to no hesitation to interact and seemed less formalized

Thailand- Conrad Hotel, Bangkok

The deepest desire to go to any length for service need was found.  People seemed to be the most sincere in their every interaction with greetings and conversations feeling warm.

 

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McDonalds Thailand

Adam Galea – McDonalds Thailand

We had the opportunity to visit with the McDonalds Thailand, a franchise company that owns and operates all of the McDonald’s restaurants and food outlets in Thailand.  This visit gave great insight into how an American rooted company adapts to franchising in another country.  Additionally, we learned of some obstacles and challenges experienced when adapting an American product to the taste of a local culture and business practices while remaining true to the original product.  As well, we got a glimpse into how an overseas franchisee conducts business with an iconic American brand.

Cohort 11 - McDonalds Academy in Bangkok, Thailand

Cohort 11 – McDonalds Academy in Bangkok, Thailand

Each culture around the world comes with its unique dietary tastes and popularity of specific food dishes.  Thailand is no exception with its strongly seasoned flavors, heat and demand for seafood based products.  What stuck out to me was how the McDonalds franchise was able to address these demands through ingredient changes and additional product offerings such as congee for breakfast or noodles during the day.  It was shared how this variety is needed to not only attract the younger generation but also encourage the entire family to come.  Even with the local specific menu adds, the familiar core items such as a Big Mac, french fries and chicken nuggets are still well represented.  Staying true to the core brand, this franchisee often has to import key ingredients which are subjected to import taxes.

In our meeting we learned more about the business challenges these international franchisees face.  Specifically in Thailand, one challenge faced is the need for low cost items to meet the income levels of his consumer while balancing the increase in expense from import taxes, resulting in the highest cost products for the lowest priced items.

McDonald's HQ Thailand - Corporate Offices

McDonald’s HQ Thailand – Corporate Offices

With all of the challenges a franchisee faces overseas there come some liberties that domestic franchise owners may not have available to them.  The ability to test products and promotions to expand business and stay competitive are often driven by corporate offices.  What was clear to me was how an 11 hour time difference and half the world in distance allowed this franchise owner to pilot different promotional items and even expanding beyond the food industry with the McDonalds name.

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Business in Thailand

Hugo Escanuela – Business in Thailand

Throughout our previous course, International Business and Finance, we spent a great portion of our time talking about culture and how it pertains to doing business in the foreign market. When dealing with different cultures it is important for one to know what is appropriate. Our business visits were all unique and offered a variety of valuable takeaways, especially the ones that took place outside of the board room. It isn’t uncommon for business to occur outside of the workplace, and often times it is important to partake in cultural activities to show trust and respect with your business partners.business_in thailand

The real side of business in foreign countries depends on building a relationship with your future business partner. The trust that is developed in these types of relationships can sometimes only be formulated outside of a professional setting. As a friend once said, “Down the hatch.”

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Culture in Thailand

Hugo Escanuela – Culture in Thailand

On our final day in Bangkok we got to experience what truly makes Bangkok such a unique city to visit. From the temples and intricate river canals to the magnificent rooftop views, Bangkok is beautiful in its own regard. Our day started off with a visit to various Buddha temples, including the famous Reclining Buddha. The respect that individuals show to these temples is awe inspiring and it presents a whole new outlook on life and religion.

temple_hugoBangkok offers such a wide variety of sight-seeing, one being the cruises through the various rivers and canals. Referred to as the Venice of Asia, Bangkok relies on canals as a source of transportation and business. However, these canals also show you the underbelly of Bangkok and the poverty that many of its inhabitants live in. As we traveled throughout the canals one would take note that the city of Bangkok had a strong emergence in its infrastructure, however many buildings, bridges and river walls are left uncompleted.
river_hugo

A city known for its rooftop restaurants and bars, Bangkok certainly offers some magnificent views. Our stay in Bangkok wouldn’t have been complete without partaking in some of the views, so what better place than Moon Bar and Vertigo on the 62nd floor. A night accompanied with close friends and faculty, our farewell dinner from Bangkok was truly memorable.

Vertigo and Moon bar roof-top restaurant

Vertigo and Moon bar roof-top restaurant

 

 

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Final Day in Bangkok

Wendy Lowe – Our last day in Bangkok

 

Bangkok Flower Market

Bangkok Flower Market

Our final day in Bangkok started with a morning walking tour of the Bangkok Flower Market which is supposedly the largest wholesale and retail fresh flower market in Bangkok. We then did an extensive tour of the city’s most famous landmark, the Grand Palace which is a combination of beautiful temples and buildings with amazing architecture. For lunch we dined on a river boat and then enjoyed a relaxing cruise

Phra Thinang Chakri Maha Prasat buildings at the Grand Palace, Bangkok - Thailand

Phra Thinang Chakri Maha Prasat buildings at the Grand Palace, Bangkok – Thailand

down the Bangkok canals getting an up-close view of several monasteries, picturesque canal homes, and  saw how many provide for their families by fishing and selling canal side gifts. We also learnt that the people of Bangkok depend on the waterways to transport their merchandise, especially rice considering the canals link the rice fields. During our canal ride we stopped and fed hundreds of fish that swarmed our boat. We enjoyed the beautiful relaxing scenery of the Bangkok canal tour.

After a full cultural day, we rested and prepared for a memorable Farewell Dinner at the Vertigo Sky Bar,  one of the most famous  and sophisticated rooftop restaurants in Bangkok with stunning view of the city. The company, restaurant atmosphere, and food were all top-notch. The skyline views were breathtaking from the 59th floor, high above most Bangkok city structures.  As we dined, reflected on our week of business visits, the bonds of the cohort were only strengthened.  Associate Dean, Yiorgos Bakamitsos provided an encouraging toast as the Executive MBA students venture into their final 7 courses of the program and the homestretch.  We return home to the US tomorrow with lifetime memories, business application ideas and strategies, and even stronger friendships.

Farewell Dinner at Vertigo Grill & Moon bar - Cohort 11

Farewell Dinner at Vertigo Grill & Moon bar – Cohort 11

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The Disparity of Bangkok

Keith Henry – Cohort 11

The first impression I had of Thailand was that this country was very developed. As the bus travelled from the airport, the towering skyscrapers were hard not to miss. These buildings elegantly towered into the clouds with their artistic designs, signaling Thailand’s financial might. Due to the sheer size and the quantity of these buildings I immediately assumed this country was wealthy and its citizens must enjoy a high standard of living.

Bangkok, Thailand 2014

Bangkok, Thailand 2014

However, as we continued our journey, I could not help but notice poverty. I saw children sleeping in the streets. I saw beggars; I noticed a sign to beware of pick-pocketing in the holy temple. I saw children swimming in water that did not appear clean.

I am of the opinion that government has a responsibility to its citizens. And just as how they might be focused on developing the business sector in Thailand (which it appears they are doing a good job at), they should also put a priority on the citizens and ways to elevate their standard of living. This disparity was most obvious to me during the boat tour. Looking straight ahead I was able to see these majestic skyscrapers, but turning to my immediate left or right, the slum houses cried for attention.

Views from Bangkok Canal Tour & Rice Barge Cruise

Views from Bangkok Canal Tour & Rice Barge Cruise

 

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Transportation in Taipei

Keith Henry – Cohort 11

I was surprised to see how widely scooters are used to get around the city of Taipei. I later found out that Taiwan has approximately 1.5 million scooters in use. By studying this course and learning how different government regulations can affect how products are utilized, I can now appreciate how companies with new technology have to do additional work with various governments in order to influence acceptance.

Scooters in Taipei

Scooters in Taipei

Asia Pacific Fuel Cell is one such company. If their technology is implemented successfully, it can lead to cost savings to the consumer because the estimated cost to refill the tanks will be $1 US Dollar (compared to $34.79 NT per liter). The cost savings can then become disposable income that can be used for other purchases.  Another big benefit of the new technology will be the environmental impact – zero CO2 emissions and a reduction in noise pollution as well.

 

 

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Leaving for Bangkok

Leaving for Bangkok

The first few days in Taipei went by very quickly with so much to experience in such a short period of time. Cohort 11 is now embarking on their next phase of their educational journey – a trip to Bangkok, Thailand. They are all so excited to learn more about the Thai culture and the way business is conducted in Bangkok.

Cohort 11 leaving for Bangkok, Thailand

Cohort 11 leaving for Bangkok, Thailand

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