Geographical and Market Aspects of Cuba - Coursework Example

Cuba – geographical and market analysis Cuba is located between the Caribbean Sea and the North Atlantic Ocean having the US and the Bahamasas its neighbors. Cuba has tremendous market potential but due to the protectionist attitude of the government and the sanctions imposed by the US the growth of the nation has been impeded. It lacks in transportation and communications infrastructure although tourism and agricultural exports could change the economy of the nation. International marketing places great emphasis on five factors – location, place, interaction, movement and region. An analysis of these factors is essential to determine the importance and advantages that a destination offers for it to be considered for international marketing. Cuba is a small island nation about the size of the state of Pennsylvania located between the Caribbean Sea and the North Atlantic Ocean, 150 km south of Key West, Florida. It covers a total area of 110,860 sq km and has a coastal area of 3,735 km (CIA, 2008). The border countries include the US Naval Base at Guantanamo Bay (29 km) and the climate is tropical. Despite having tropical climate the country is exposed to natural hazards like hurricanes and is exposed to at least one hurricane a year. Location factors Location influences business but the US embargo has hampered Cuba’s international trade despite having the locational advantages. Cuba is concerned, it is strategically located close to the US markets and being an island nation, the waters also provide a rich source of natural gas. Cuba is dependent on imports for its energy requirements. Hence there is growth potential for energy exports from European and Latin American energy firms. More importantly, its geographic position new to the growing markets in the US and Mexico makes it an interesting destination for energy project development or construction of power stations and sale of electricity to neighboring countries (Jaffe & Soligo, 2001). Because of the huge expanse of the coastal area, Cuba also offers upstream exploration activities. It is expected that there are billions of barrels of recoverable reserves, mainly in deep waters. Being an island nation, Cuba is a very attractive destination for tourism. There are 17 international hotel chains that are operating under joint venture (Farlex, 2008, Tourism section, para. 6). Cuba enjoys several kilometers of beach front and is endowed with scenic beauty. There exists tremendous potential to operate cruise ships in the region and in today’s tourism market this segment has a huge potential. In addition, its communication and accessibility from other nations makes it a very lucrative market for tourism and the hospitality sector. Place Factors As a place too Cuba is unique. Among the natural resources are the huge water bodies which provide the facility for tourism, for electricity generation and massive power projects. The place has tremendous potential for agriculture and is globally well known for its citrus production. Citrus produce has a huge demand all over the world and it can boost the economy of Cuba if the nation can use technology and latest farming techniques to increase the produce. Cuba has 44,200 square miles of land mass and this could be effectively utilized for citrus and other agricultural production. It is the third largest producer of grapefruit in the world. The climate and the soil are both conducive for agricultural production. Cuba is rich in nickel and cobalt. Being an island area lot of other mineral deposits like gold, copper, zinc, copper, silver, lead, and magnesium can be explored for and exports of these again would help in increasing international business. Firms can tie up with the Cuban government offering them technology transfer and assisting in exploration of these minerals. This would help both the nations. The drawback that Cuba has is that it does not have proper accounting and auditing system in place. They have historically been having significant problems operationalizing the theory of accounting and auditing. If a country does not have a recognized accounting system, it poses problems for other nations to have business relations with it. People living in a place can make the region a better place for international relations. Interaction factors If a place is endowed with a combination of characteristics or features, it is fortunate and together it could lead to the economic development of the region. Cuba fortunately seems to be endowed with natural resources and all it needs the right interplay between the characteristics. For instance human characteristics and behavior can adversely affect the environment leading to environmental degradation as has been happening in Cuba. The Cuban fisheries in the past have produced at record levels and the Cuban waters contain the third most diversified variety of species of aquatic life in the western hemisphere but over-fishing and lack of management is causing serious concern over the fishing industry in Cuba. On the agricultural side, the access to fertilizers and pesticides in Cuba has reduced and hence it has become dependent on organic farming. This is excellent for the nation’s exports as globally people have become health conscious and are willing to pay a higher price for food grown organically. Sugar has been an area of major production and exports for Cuba but currently many of its sugar mills have become under productive because of lack of fertilizers, oil, parts and equipment, and production facilities. Many sugar mills have closed down which has resulted in huge unemployment thus forcing people to migrate to Florida. The economy of Cuba has depended and flourished on tourism. Despite US hostility, Cuba receives about 2 million tourists every year from 44 different nations but this has severely impacted the environment (Havanajournal, 2006). The tourism sector combined with various industries through out the country has led to pollution and high ecological risks. It has led to soil degradation, salinity, poor draining, decaying sewage system and inland and marine water pollution (Portela & Aguirre, 2000, pg 3-4). All of these combined can affect international trade of agricultural produce, fisheries and tourism. Movement factors International marketing is highly dependent on the movement and transportation of people, goods and communication of information and ideas among different places. Cuba has single lane highways connecting most of the island making it difficult t travel long distances. This affects growth of business and international trade because for the transportation of good new buses and trucks has to be introduced but since the road space is very little there is time lag and delay. The roads are insufficient and in constant need for repairs. While there are ample mechanics found in Cuba there is shortage of workshops space to repair the cars and trucks. For the growth pf international business parking space for trucks is also essential which is inadequate in Cuba. The airport has unpaved runways and 35% of the rail track is still in narrow gauge (CIA, 2008). In the information and communications sector, Cuba has developed as it has laid optical fibers and cell phones are common. Wireless service is expensive and hence limits the cellular subscriber ship. Private Citizens are prohibited from buying computers or accessing internet which makes international communication a hindrance (CIA, 2008). Even though foreigners can access the internet from the hotels there are firewall that deny free access from the country. Cuba has been unable to adapt to the changing business environment across the world. Region factors The closest country in the region of Cuba is the US and how the governments in the region coordinate impacts the economy of both the nations US has imposed sanctions on the imports and trade with Cuba. If the economy becomes open and liberal, both the nations could benefit. If the US maintains cordial relations with Cuba, Cuba being a rich source of natural gas, gas could be supplied through pipeline to Florida (Jaffe & Soligo, 2001). Secondly, Bahamas promotes sports tourism and is an angler’s dream, which benefit Cuba has been unable to derive because the waters have been under fished. In America, the most commercially lucrative sports water fish is the Largemouth Bass. In central Cuba too there are 32 sq. km of fishing with Bass and a group of US sportsmen caught 5000 bass in just five days (Farlex, 2008, Tourism section, para. 6). Because of these, it is expected that some day one of the lakes could hold the next world record for this species of fish as all factors are conducive – the climate, water quality and the lack of fishing pressure. Another important factor the region that could impact sports tourism and the fishing industry is that there is a 90-mile stretch between Cuba and the US. This has to be managed properly by the two countries because most countries impose a 200-mile barrier of protection. Conclusion Cuba enjoys the benefits of its geographical location but has not been able to reap the benefits because of a closed economic policy. It has unending miles of coastline but has not been able to promote tourism in the way it can be done. Trade is affected because of lack of transportation and communication infrastructure. A protectionist attitude has been a barrier to growth. There is immense potential for its agricultural produce especially now that it has started organic farming. The island nation is endowed with natural resources like water bodies, natural gas and minerals but human endeavor has been lacking in its maintenance and sustenance. This has resulted in salination and pollution thereby further impeding the nation’s growth. Cuba has high potential and many markets are looking towards it to benefit from the first mover advantage. The nation just needs to adopt reform measures and become attractive to the investor. References: CIA. (2008). The World Factbook - CUBA. Retrieved September 04, 2008, from https://www.cia.gov/library/publications/the-world-factbook/geos/cu.html#Geo Farlex. (2008). Cuba: potential or potential threat. The Free Library. Retrieved September 04, 2008, from http://www.thefreelibrary.com/Cuba%3a+potential+or+potential+threat-a0113563608 Havana Journal. (2006). The state of Cuban tourism with statistics. Retrieved September 04, 2008, from http://havanajournal.com/travel/entry/the-state-of-cuban-tourism-with-statistics/ Jaffe, A. M., & Soligo, R. (2001). The Potential for the U.S. Energy Sector in Cuba. Retrieved September 04, 2008, from http://www.cubafoundation.org/CPF-EnergyStudy.htm Portela, A. H., & Aguirre, B. E. (2000). Environmental Degradation and Vulnerability in Cuba. Retrieved September 04, 2008, from http://www.udel.edu/DRC/Aguirre/publications/ag70.pdf Read More