Paper should be typed in font size 12 and Times New Roman, double-spaced. The limit is 4 pages. Outside Sources, Use "Internet Sources."
**You should take the perspective of either being the person who has to make the key decisions in the case, or of a consultant who has been hired by this person to provide expert recommendations. Either way, you should identify the key issues (problems), list relevant alternative actions that can be used to deal with these issues, analyze them, and finally select the best one as your recommendation.**
Start your report by writing the case title. Then, follow the pattern of the following example:
1. Sales have declined by 10 percent over the last 12 months
List of alternatives:
1. Increase advertising by $5 million annually
2. Drop the brand
3. Redesign the brand by increasing R&D expenses by $3 million over the next 18 months
Analysis of the alternatives:
1. (here you will list the advantages and disadvantages of alternative #1, i.e. the increase in advertising)
2. Advantages and disadvantages of alternative #2, i.e. dropping the brand
3. Advantages and disadvantages of alternative #3
Recommend alternative #1, because… (You need to explain why you think that based on your previous analysis alternative #1 is superior to the others due to its more favorable ratio of advantages to disadvantages.
Keep in mind that sometimes you may decide to combine more than one alternative in your recommendations, as long as they are not mutually incompatible. In the above example, one cannot combine alternatives #1 and #2, but one could combine alternatives #1 and #3. In case you decide to combine more than one alternative in your recommendation, you will still need to prioritize them, i.e. explain which alternative should be implemented first, and which one should be implemented second.
Keep in mind that when you list your alternatives, they should be specific actions. Avoid generalities such as “improve quality”, “rethink strategy”, etc. You need to explain exactly what to do to achieve the objective. Do not confuse the goal with the means to achieve it. The goal is dealing with the issue, and the means are the alternatives. Sometimes, you’ll find out that you may have more than one issue.
For example, you may have:
1. Sales have declined by 10 percent over the last year.
2. The sales force turnover is 25 percent above industry average
Whenever you have more than one issue, you need to ask yourselves if these issues are independent or interdependent. If they are independent, then you need to deal with each one separately. Thus, you report should look like that:
Note: At this point you need to explain to the reader of your report if the issues are related (interdependent) or not related (independent). If they are independent, you proceed as follows dealing with each issue separately:
Alternatives for issue #1
Analysis of alternatives for issue #1
1. Advantages/disadvantages of alternative #1
2. Advantages/disadvantages of alternative #2
3. Advantages/disadvantages of alternative #3
Recommendations for issue #1
Recommend alternative #2, because …
Alternatives for issue #2
Analysis of alternatives for issue #2
1. Advantages/disadvantages of alternative #1
2. Advantages/disadvantages of alternative #2
3. Advantages/disadvantages of alternative #3
4. Advantages/disadvantages of alternative #4
Recommendations for issue #2
Recommend alternative #3, because …
If on the other hand the issues are related, then you need to explain why they are related. For example, in the above case we could come to the conclusion that both issues are related because poor sales force management has increased the sales force turnover, and that in term has deprived the company of experienced sales people, which in turn has resulted in lower sales. Thus, both issues can be traced back to poor sales force management. By dealing with this, we can take care of both issues. Our two issues can be collapsed into one, in this case poor sales force management. We can proceed then in listing alternatives, analyzing them, and coming up with a recommendation just for this one.
Case Study: Mongolia Adventure Inc.
A Tourism Professional
Oyun Ganbaatar, a 29-year-old tour guide is just finishing his lecture about the famous Mongol Amursanaa, who in 1757 led a great Mongol uprising against the Manchu’s. He is standing near the Amursanaa statute in Khovd city, about 850 miles west of Ulan Bator, the capital Mongolia. His audience is a group of European tourists who have come to explore one of the last frontiers of international terrorism: Mongolia. As he finished his presentation and answers all their questions, he starts thinking again about his career and the possibilities that are opening for him in the growing tourism industry of Mongolia.
An Undiscovered Destination
Mongolia is indeed one of the new countries in the world that is remote and unexplored enough to be considered from a tourist perspective as a “terra incognita.” Mongolia is a huge country about three times the size of France with a population of only 2.6 million people. During the time of Genghis Khan and Kublai Khan it was even larger, stretching from the Pacific Ocean to Central Europe. Back then it was the largest empire in human history. Even in its reduced size today, it remains vast, empty, and wild. Traveling through Mongolia, one has a feeling of being in a place before humans managed to dominate and domesticate nature. Huge deserts, snowcapped mountains with glaciers, expensive steppes with grassy hills, and dramatic climate changes make Mongolia an extreme and intriguing destination. Mongolia has one of the highest average elevations in the world at 1580 meters (5180 feet). The highest mountain is Tavanbogd Uul, rising to 4370 meters (14,350). Among the high peaks are high plateaus and deserts, so dry that it almost never rain. At the same time, there are plenty of both salt-water and fresh-water lakes. Among the ones that are a must see for the tourists is the Khovsgol Nuur, containing 2 percent of the world’s fresh water. Most of the high mountains are to the west. The southern part is mostly the Gobi desert. Although a desert, there is enough grass to support nomads with their sheep, camels and goats. The central and northern parts consist mostly of rolling hills with grassland. This is the home of the Mongolian takhi horses that were the foundation of Genghis Khan’s famous cavalry. In addition to all that, its location in the center of Asia far away from Europe and North America, the two main source markets for international tourists, make it is easy to see why Mongolia is one of the least “discovered” places on earth. Another challenge for the average tourist is the climate. Mongolia is also known as the “Land of the Blue Sky” given that there are about 260 sunny days per year. However, this is deceiving. The winters are extremely cold, practically sub-arctic from October to April. It is not unusual to encounter snow in the Gobi Desert in April, and some of the lakes in the mountains stay frozen until June. The temperatures in January and February in the capital city of Ulan Bator can drop to -30 Celsius (-22°F). Springtime is short only last two months (May and June), and it is then that brutal dust storms often hit the country. The rainy season is during a brief summer/fall period from July to September, but the rains are of short duration and intensity. In the middle of the summer, up to 40°C (104°F) in the Gobi Desert.
Political and Socio-Economic Influences
During the Cold War, Mongolia was a Soviet satellite and almost completely isolated from the rest of the world. After the collapse of the Soviet Union, Mongolia started a long process of opening up to the rest of the world in trying to integrate itself into the global economy. By all accounts, the results have been impressive. Unlike other Central Asian countries such as Turkmenistan, Uzbekistan and the other “stans,” Mongolia has been moving in the direction of South Korea, according to the opinion of several independent experts, such as John Poepsel, an American political adviser. In the 15 years since the collapse of communism, Mongolia's ruling party has moved the country from communist orthodoxy to the mainstream of the international Socialist movement. Foreign investments have been welcomed, and the pursuit of free market policies has transformed the economic landscape. Ulan Bator used to be a sleepy city in the middle of nowhere. Nowadays, it is a city that can be best described as a booming, sprawling capital. Construction is a nonstop activity, and population due to the heavy traffic jams is a new reality. A number of automobiles have been expanding at almost 20% a year, and whenever a driver's are stuck in a traffic jam, they can look at billboards promoting everything from international brands to the local political parties. Competitive and free elections are in fact, and a mostly very literate population makes a sophisticated electorate. At the same time, Mongolians are quite all wear and proud of their heritage, their nomadic tradition, and their Buddhist spirituality. The huge, rugged, and almost empty landscape and a fascinating culture in the process of transformation is a potent combination for making Mongolia an intriguing tourist destination. Mongolians are devoted Tibetan Buddhists and thus have deep links with Tibet. It is a requirement that during his/her lifetime a devout Mongolian Buddhist should visit Lhasa, the holy city of Tibetan Buddhism. Since freedom of religion was reinstated in 1990, thousands of monasteries have reopened, and many of them have become major tourist attractions. Dance, music, painting, and all arts have been influenced by Tibetan Buddhism in having this thinks thou not found anywhere else.
Traveling Around Mongolia
Getting around Mongolia is not easy, given in as size and sparse infrastructure. There are few roads, and as a result, air transportation is the preferred way. There are about 80 airports linking Ulan Bator to many provincial cities. Even so, many small airport runways are not paved. The national airline, MIAT, is not well organized. It is using a two-tier pricing system that charges tourists high prices that Mongolians. In addition, schedules change often, and without much warning. It is also almost impossible to the round-trip tickets. One buys a one-way ticket to a location, and once there one has to buy a return ticket as another one-way ticket. All these factors are further impediments to tourism. Most trains travel a north-south route that is part of the Tran-Siberian railway linking Moscow to Beijing via Mongolia. Buses are old and not well organized, and many people wishing to avoid traveling by air use minibuses or taxis. Most taxis that take tourists to remote locations are Jeeps and often come with a guide in addition to the driver.
A Tourism Entrepreneur
Oyun has been working for 4-years for a Mongolian travel agency as a tour guide. He is one of the top guides of the agency because he speaks English well, no Mongolia’s tourist sites and history very well, and has a friendly, extroverted personality that makes him popular with customers. In a country where the annual average salary is less than $500, he earns about $100 a month. Oyun expects tourism to grow and Mongolia, and he feels that there are opportunities they are for somebody like himself who will combine know-how with an entrepreneurial spirit. Like most travel agencies in Mongolia, the travel agency he works for is a small operation. It has a small office and offers services primarily to tourists. Who stop for a few days in Ulan Bator while traveling on the Tran-Siberian railway. Another type of tourists is those who come to Ulan Bator by plane. They usually travel in groups and expand their itineraries to visit some of the prime tourist locations in Mongolia beyond the capital. These are the groups that Oyun accompanies as a tour guide and his success in dealing with them and providing them with excellent service has given him the idea to work for himself, rather than for somebody else. Most of these foreign tourist groups come to Oyun’s employer through contacts with overseas travel agency. During his conversations with the tourists, Oyun has found out roughly how much the overseas agencies charge them, and he has been developing some new ideas about revenues and costs that will be part of his business plan. Opening a business is always a risky proposition. Oyun has the technical know-how to provide tourist services of the highest quality, but he has never run a business. He needs to develop a business plan, determine the risk, and make a decision if he should go forward, or if he is better off staying at his current job. Oyun’s combined earnings of his salary, bonuses, and tips average $1200 per year. He also has about $3,000 in a savings account that provides a 10% interest and adds another $300 to his annual income. (Note: the currency that Oyun uses in the calculations for his business plan in the $US since he will have to use his currency to quote his prices to foreign customers. Given that the annual inflation rate of the domestic currency is 44%, using the $US makes it easier to have a business plan that does not need updating every few months.)
The Cost of Doing Business
Oyun begins estimating some of the costs of opening a tourist business. He wants to target well-off foreign tourists as his primary target segment, so his office will need to reflect his image. Location, equipment, and decoration should be of the highest quality. After looking around town, he comes up with the following estimates:
•office rent: $110/month
•computer hardware: $900(expected economic life is 4-years)
•computer software: $450(expected economic life is 5-years)
•web site design: $300
•Internet connection: $50/month
•web site maintenance: $150/year
•office furniture: $2800 (expected economic life is 10-years)
•other maintenance: $30/month
•first year start-up expenses, including business licenses: $150
In terms of personnel, Oyun decides that he needs a secretary to deal with bookings and day-to-day activities. Although 90% of all tourists visit Mongolia during the five-month tourist season (May - September), he plans to keep his office open during the whole year. The Secretary will be a permanent employee. She/he will need to speak English well and be familiar with computers and terrorists/travel-related software. Oyun estimates that he will have to pay this person $70-$80/month. Oyun also needs to hire at least one more tour guide, possible more depending on how fast the business grows. The guide/s will be employed part-time, working during the 5-month tourist season. Oyun fills that he can handle the small numbers of tourists that might show up during the rest of the year on his own. The tour guides will have to be high caliber, Oyun himself, to guarantee a consistent level of service to the customers. The monthly salary of a part-time guide with those kinds of skills will cost close to $175/month.
Oyun’s Tourism Products
Oyun has spoken with several US tourists and has gotten an idea of a different packaged tours offered to them, as well as the prices. Prices charged by the US to her company's usually included a 30-35% profit margin. As a rule, the prices cover the cost of domestic flights or other device to transportation, twin accommodation in a three-star hotel, three meals a day(alcoholic beverages not include), an English-speaking guide, and other miscellaneous expenses, such as sightseeing. The following is a synopsis of the most common tours:
1.Great Lakes of Mongolia Tour: This is a 10 day tour starting in Ulan Bator, then visiting the Khongo Khan Mountain, Karakorum, the ancient capital, the province of Khangai mountains, the Khuvsgul Lake, and the burial grounds of Moron, and finally returning to Ulan Bator. Price per person is $1500 for groups of at least 8 persons.
2.Khentii Wilderness Ride: This is a 10-day trek on horseback through the Khentii National Forest in the most remote areas of the Khentii mountain range. The Khentii National Forest is a 3-hour drive from Ulan Bator, and most of the 10-day trek is on horseback. The price is $1600 per person for groups at least 8 persons.
3.Gobi Desert Expedition: This is a 15-day trek that explores various parts of the Gobi Desert, including the famous dinosaur excavation sites, sand dunes
, ancient monasteries, caves with Bronze Age walls paintings, and petrified forests. Part of the trip includes camel rides. The price is $2,200 per person for groups of at least 8 persons.
Oyun knows that for a foreign tourist traveling alone, the combined daily expenses of hotel, 3- meals, tour guide, and private Jeep rental are about $80. Obviously, sharing a Jeep lowers the cost even more. Accommodation and food per day in a place like Ulan Bator range around $15/$20 day, and in smaller towns the prices are even lower. Oyun’s idea is to have his tour company contact foreign travel agencies and offer them packages similar to the previously-mentioned ones. His tours would be offered at attractive prices and with excellent service. He is also thinking of adding a new tour to a place that has been neglected by other tour companies. He is considering a trip to experience the Kazakhs’ eagle hunting in western Mongolia. The Kazakhs continues only 2% of Mongolia’s population. They are related to the Turks and are Sunni Muslims. They lived mostly in the Altay Mountains in the Bayan-Olgiy region, Mongolia's westernmost province. They hunt with golden eagles, a tradition that is more than one-thousand years old. They used female eagles because they are better hunters than the males. The eagles weigh about 15 pounds and have a wingspan of 7 feet. As they drive on their prey, they can reach speeds up to 100 miles/hour, and when they strike, the tips of their talons exert thousands of pounds of pressure. The favorite prey for Kazakh hunters using golden eagles is the fox due to its valuable fur. Given the remote location of the Kazakhs and their hunting grounds, Oyun estimates that the tour would take about a week, and the cost to his agency for organizing it would be $120 per customer, per day, for groups of at least 8 people. Oyun needs to consider if he should start his business and how to proceed. He would like to concentrate on the upper-income adventure travelers of North America and Europe.
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