Feasibility Of Spain As A Tourist Destination

Feasibility Of Spain As A Tourist Destination

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In this report, Tourist Australia, a service organisation in the field of tourism was chosen.
Spain has been identified as a potential target for Tourist Australia’s global operations. Hence, research into the factors related to the political, legal, economic, socio-cultural, and technological environment of Spain were conducted. This was combined with a SWOT analysis of Tourist Australia to make the appropriate recommendations. This report is the compilation of the steps above and is aimed at assisting the Senior Management team of Tourist Australia on the feasibility of Spain as a possible location for global operations.

Tourist Australia
Since 2001, Tourist Australia has been providing satisfied customers with holiday packages, accommodation, transportation requirements, tourist information and excellent after sales support.Tourist Australia has gained many loyal customers and increase business through promotion by word of mouth (About Tourist Australia, n.d.)

Political Environment
The political structure of Spain is of a parliamentary monarchy, as structured upon the 1978 Constitution (M, 2007).
The Constitution states the King (currently Juan Carlos I) to be the Head of State (M, 2007).
In addition, the Constitution established three powers as the form of government: the Legislative, the Executive and the Judiciary (Political and Economic System in Spain, n.d.). Judiciary powers are discussed in the following section, Legal Environment.
The Legislative powers are manifested in the form of a bicameral parliament with a lower and upper chamber. The lower chamber is known as the Congress of Deputies which has 350 members while the upper chamber is the Senate, which is consists of 259 members but with little influence (Political Structure, n.d.).
On the other hand, Executive powers lie within the Council of Ministers (Cabinet), which in turn, is headed by the President of the Spanish Government, or Prime Minister. (Political Structure, n.d.).

The Prime Minister is nominated by the monarch, but is subject to approval by democratically elected Congress of Deputies (Political and Economic System in Spain, n.d.).
At this point, Spain is led by the Prime Minister Jose Luis Rodriguez Zapatero, leader of the Spanish Socialist Workers' Party (PSOE), who was re-elected Prime Minister in March 2008.
Based upon the lack of information pertaining to any notable events which signifies political turmoil and instability in Spain, after extensive research, it can be inferred to a great extent that Spain does not experience significant political disturbance, indicating a diplomatic political culture and the presence of effective management at all governmental levels.

Legal Environment
According to Nadal and Salvatore (2000, 318), the Spanish constitution ensures equal distribution of authority and power amongst the central government and the autonomous communities.

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The Spanish court system, which is of the civil law system, is territorially divided into district, provincial, autonomous community and national courts, with district courts being the lowest level and national, the highest. Each territorial court has jurisdiction over subject matters concerning civil and mercantile, criminal, administrative and labor and social.
The main difference between the various courts are marked by the authority a higher level court has over the lower level court i.e. the national level court has jurisdiction over the country while a provincial court only has jurisdiction over its province (Nadal and Salvatore 2000, 318).

Economic Environment
2008 marks the economic downturn in Spain. Growth is slowing sharply and unemployment is rising. The housing bubble has burst and residential construction has seized up. Prices of petrol, electricity, and food have all gone up sharply, as did euro-area interest rates (¿Crisis? ¿What crisis? 2008).
It is predicted that the current slump would cause a significant deterioration in the government accounts from a surplus to a deficit over the forecast period (Economic Data 2008). This is evidenced in Table 1 below, whereby the budget balance has reduced from a surplus 2.2% to -1.1% deficits.

Table 1: Spanish Economic Indicators (Economic Data 2008)
Key indicators 2007 2008 2009 2010 2011 2012
Real GDP growth (%) 3.8 0.6 0.7 1.8 2.4 2.4
Consumer price inflation (av; %) 2.8 4.6 3.0 2.1 2.2 2.2
Budget balance (% of GDP) 2.2 -1.1 -2.1 -1.7 -1.4 -1.4

Based on Table 1, the Spanish GDP growth fell from a high 3.8% in 2007 to 0.6% in 2008. Growth is then forecasted to steadily increase from 0.7% in 2009 up until 2.4% in 2012 (Economic Data 2008).
In addition, it can be seen that consumer price inflation would be the highest in 2008 at 4.6% and then, reduce to 2.2% well into 2011 (Economic Data 2008).
In conclusion the lowest point of the economy would be in 2008, whereby the pace and growth will pick up with the onset of 2009 (Economic Data 2008).

Socio-Cultural Environment
Spain has a steady flow of immigrants into the country, mostly for the purpose of working (Schmidt-Nowara 2003, 167-169). In a sense, Spain is place with multinationals such as Africans, Latin Americans and Asians among its native citizens as stated by Schidmt-Nowara (2003, 167-169).
Sanchez (2001) states that Spain itself is a melting pot of different cultures such as the Basquean, the Catalan culture and Galician, each with their own language.
Despite the culture and language differences in Spain, most Spaniards speak and understand Spanish. Moreover, the majority of values are shared by everybody. Overall Spain is a homogeneous country, where people don’t have any cultural or language barrier to understand each other or treat each other. The little, innocent culture clashes such as dialect differences and rituals, which occur all the time is due to the historical, political, economical, and cultural backgrounds that exist in different parts of Spain (Sanchez, 2001).
Matlack and Tarzian (2007) also states that, of Spain’s 44 million residents, More than 11% foreign-born. The socio-cultural environment of Spain is encapsulated by Matlack and Tarzian (2007), saying “Stroll through Tetuán, a vibrant multiethnic neighbourhood in north central Madrid, and you'll find an Ecuadoran bakery, a Moroccan furniture shop, and a 1euro store called Los Chinos because its owners are Chinese.”.

Technological Environment
Of importance in this area is communication and transportation infrastructure.
In terms of communication, Burns (2008) states that the internet users of Spain number at 15,015,872 and internet penetration is 34.17% as of May 2008. In addition, there are 46.152 million cell phone users, 224 television broadcast stations and 18.385 million telephone lines (land line) as of 2006 (Central Intelligence Agency, 2008).
Transportation wise, there are 154 airports (96 with paved runways and ready for international and domestic flights), according to the Central Intelligence Agency (2008). Other than that, Sanchez (2001) states that the train network plays a significant role in the economy as well as being one of the most widely used mode of transportation. Also, intercity travel from one city or town to another by car, train, and plane are still the most efficient and popular way of moving (Sanchez, 2001).

1. Top level management involved in day to day operations.

Management has clear understanding of business strengths and weaknesses, able to plan for the best possible outcomes for the company.

2. B2C concept.

Besides face to face, business is run online as well. Sales can be made anytime and the Internet is a good platform for advertising. Also, reviews by other websites helps with the company’s reputation and attracts potential customers.

3. Reputation.

Customers feel confident about services offered and prices can be raised. Customers would patronize the company as they feel guaranteed with reputation garnered.
1. Lack of international experience.

Only one office in Australia and two representative offices in sri lanka and Vietnam. Productivity may be low as management might not be able to anticipate every single scenario.

2. Privately owned company, limited capital.

Capital is limited to the amount which company owner has invested and outstanding profits; a public listed company can raise more capital by selling more shares.

In addition, the company may find it hard to reel back from setbacks.

3. Heavy dependence on hotel and event operators.

The company do not have control or solutions to problems arising from the hotel or event operator’s part.

1. 2nd most visited country in the world (International Tourist Arrivals by Country of Destination 2008, 8).

There is a market for in Spain and setting up base in Spain would attract customers to travel to Australia.

2. Spain is a leader in European sports.

This could be used as a marketing tool to promote sport tourism,as Australians are sport lovers.

1. Spanish economy.

Slumping in 2008 and expected to pick up in 2009. Bad economy generally brings down a country’s demographics, unsettling it as a tourist destination.

2. High unemployment rate.

May result in higher incidences of crime, deterring tourists and also would not reflect well as a tourist destination.

3. Increasing inflation and euro.

The two factors would cause expenditure to increase, causing tourists less willing to travel or spend.

The PLEST factors were positive except for Economy. The political and legal environment is stable and does not appear to be an obstacle. The different cultures of Spain and rich heritage would be an attraction for tourist. Also, the relative peaceful coexistence between the multicultural societies would be most welcoming and comforting for a tourist foreign to Spain or Europe. Communication in Spain is excellent with extensive telephony and mobile coverage, enabling the company to liaise with the customer should the need arise. Transportation in Spain is fast and efficient, relieving tourist of the transportation troubles. It is the slumping economy, marked by high unemployment, inflation, and the crash of the housing boom. Expanding into Spain during an economic downturn would cost much more and also lower sales targets. In addition, with soaring jobless rates and high euro exchange rates, it would prove to be more of a deterrent than encouragement for tourists to travel to Spain.
It is recommended that the company does not expand its operations internationally into Spain.

References List

1. About Tourist Australia. n.d. http://www.touristaustralia.com.au/about.htm
(accessed 10 August, 2008). WWW REFERENCE

2. Burns, E. 2008. Active Home Internet Users by Country, May 2008 http://www.clickz.com/showPage.html?page=3630197 (accessed 10 August, 2008). WWW REFERENCE

3. Central Intelligence Agency. 2008. The World Fact book: Spain https://www.cia.gov/library/publications/the-world-factbook/print/sp.html (accessed 10 August, 2008) GOVERNMENT STATISTIC

4. Economic Data.2008. http://www.economist.com/countries/spain/profile.cfm?folder= Profile%2DEconomic%20Data (accessed 10 August, 2008). CURRENT AFFAIRS MAGAZINE

5. International Tourist Arrivals by Country of Destination. 2007. UNWTO World Tourism Barometer 5(2): 8 – 9. http://www.unwto.org/facts/eng/pdf/barometer/unwto_barom07_2_en.pdf
(accessed 10 August, 2008). ELECTRONIC DATABASE

6. Matlack, C., J. Tarzian. 2007. Spain: Immigrants Welcome; How Spain’s open-border policy is driving an economic and social revival. http://www.businessweek.com/magazine/content/07_21/b4035066.htm (accessed 10 August, 2008). CURRENT AFFAIRS MAGAZINE

7. M.P. 2007. Spain – Political Structure. http://www.typicallyspanish.com/news/publish/article_10044.shtml (accessed 10 August, 2008). POLITICAL

8. Nadal,S. , D.T. Salvatore. 2000. What you always wanted and need to know about the legal environment of Spain. Defense Counsel Journal 67 (3): 318-331. Proquest.http://proquest.umi.com.dbgw.lis.curtin.edu.au (accessed 10 August, 2008). PROQUEST
9. Political and Economic System in Spain. n.d. http://www.barcelona-tourist-guide.com/en/general/spain-political-system.html
(accessed 10 August, 2008). WWW REFERENCE
10. Political structure.2008. http://www.economist.com/countries/spain/profile.cfm?folder= Profile%2DPolitical%20Structure (accessed 10 August, 2008). CURRENT AFFAIRS MAGAZINE

11. Sanchez, J.S. 2001. Spain: Economic Policy Analysis. http://www.mkeever.com/spain.html (accessed 10 August, 2008). WWW REFERENCE
12. Schmidt-Nowara, C. 2003. After “Spain”: A Dialogue with Josep M.Fradera on Spanish Colonial Historiography. In After the Imperial Turn: Thinking with and through the nation, ed. A. Burton, 167-169. Durham:Duke University Press. EDITED BOOK
13. ¿Crisis? ¿What crisis?.2008. http://www.economist.com/world/europe/displaystory.cfm?story_id=11670664 (accessed 10 August, 2008). CURRENT AFFAIRS MAGAZINE
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