Decisions in Paradise Paper - Essay Example

Issues Kava is an island located in the South Pacific. The country has certain social problems due to the fact that the region has a very diverse ethnic and cultural background. Diversity can lead to problems of segmentation between the populations. Another issue with the population of Kava is that the age composition is extremely low. In Kava over 50% of the population is under the age of 15. For business a population with such a low median age is bad because minors are not a part of the labor force of a nation.

There are health concerns within the population of Kava. The country has been hit hard by the HIV/AIDS epidemic. If a lot of the employees are infected with the HIV virus this could have a negative impact on the company because the insurance costs are going to be high. Another issue with the population of Kava is that a large portion is indigenous. Indigenous cultures tend to have lower levels of formal education in comparison with urban cultures. A major business risk of doing business in Kava is that the region is susceptible to multiple natural disasters scenarios including earthquakes, tsunamis, tornados, floods, fires, volcanic eruptions, and hurricanes.

The Kava territory is also susceptible to terrorist threats from internal and external sources. Problem Statement Kava is a country that has had troubles attracting foreign investment due to the underdevelopment of the region and the high risk of natural disasters. There is nothing the people of Kava can do about the inherent business risk that nature poses to companies that penetrate this marketplace. Environmental Analysis Doing business in Kava is a high risk proposition for Starbucks Cafe.

The country is susceptible to many kinds of natural disasters. To offset the risk of this proposition the company can invest in insurance, but the premiums are going to be high. Despite the country’s susceptibility to natural disasters the country has valuable strategic agricultural crops for Starbucks Cafe including coffee and cocoa. Due to the high unemployment and necessity of the region Kava would be a perfect location to implement a fair trade coffee plantation. Stakeholders Perspective There are numerous stakeholders that must be considered in any expansion plan into Kava.

As a company investing in a foreign market the firm must act in the best interest of the shareholders. The shareholders of Starbucks Cafe expect expansion projects to generate a profit. To accept the project its net present value (NPV) must be higher than cero (Besley & Brigham, 2000). A second stakeholder group that must be considered is the government of Kava. The government of Kava is looking for ways to decrease the unemployment rate and increase its tax revenues. The only way for the government to achieve those goals is by attracting foreign investment.

A third stakeholders group that has to be considered is the population of Kava. There are a lot of children living in Kava. Employing the adult population will enable the parents to be able to provide food, medicine, and shelter to the innocent children. A large portion of the population of Kava is composed of indigenous people. Protecting their unique culture and identity is important. The diversity of the population