Harvard Case - Rosenbluth International Mexico (Abridged)
"Rosenbluth International Mexico (Abridged)" Harvard business case study is written by John Kamauff, David L. Ager. It deals with the challenges in the field of Business & Government Relations. The case study is 8 page(s) long and it was first published on : Mar 1, 1995
At Fern Fort University, we recommend Rosenbluth International Mexico (RIM) adopt a multi-pronged strategy to navigate the complex Mexican business environment. This strategy should focus on: (1) leveraging existing strengths in international business and technology to secure government contracts and public-private partnerships, (2) building a strong foundation for corporate social responsibility (CSR) and sustainable business practices, and (3) actively engaging in business diplomacy and stakeholder management to foster a positive and collaborative relationship with the Mexican government and society.
2. Background
Rosenbluth International, a leading travel management company, entered the Mexican market in 1994 with hopes of capturing a significant share of the growing business travel market. However, RIM faced several challenges, including:
- Political instability: Mexico was grappling with the aftermath of the 1994 peso crisis and the rise of organized crime.
- Economic uncertainty: The Mexican economy was experiencing economic cycles and trends marked by volatility and uncertainty.
- Government regulation: The Mexican government was enacting government policy and regulation that impacted foreign investment and business operations.
- Competition: RIM faced fierce competition from both local and international players.
The case study focuses on the challenges faced by RIM in navigating the complex Mexican business environment and explores strategies to overcome these challenges.
3. Analysis of the Case Study
Strategic Framework: We can analyze RIM's situation using Porter's Five Forces framework to understand the competitive landscape:
- Threat of new entrants: Low, due to significant barriers to entry in the travel management industry.
- Bargaining power of buyers: High, as large corporations have leverage to negotiate favorable prices and service levels.
- Bargaining power of suppliers: Moderate, as suppliers are diverse, but some have significant market share.
- Threat of substitute products: High, as alternative travel arrangements (e.g., online booking platforms) are readily available.
- Rivalry among existing competitors: High, as the market is fragmented with numerous players vying for market share.
Key Observations:
- Political and economic risk: The Mexican political and economic landscape presents significant challenges for foreign businesses, requiring careful political risk analysis and risk management.
- Government relations: Building strong business and government relations is crucial for navigating the complex regulatory environment and securing opportunities.
- CSR and sustainability: Demonstrating commitment to corporate social responsibility and environmental sustainability is becoming increasingly important for businesses operating in developing countries.
- Innovation and technology: RIM's expertise in technology and analytics can be leveraged to differentiate its services and gain a competitive advantage.
4. Recommendations
1. Government Contracts and Public-Private Partnerships:
- Leverage expertise: RIM should leverage its expertise in international business and technology to bid on government contracts for travel management services.
- Build relationships: Develop strong relationships with key government officials and agencies through business diplomacy and lobbying strategies.
- Public-private partnerships: Explore opportunities to partner with the Mexican government on projects related to infrastructure and urban development, leveraging RIM's expertise in travel management and logistics.
2. Corporate Social Responsibility and Sustainability:
- Integrate CSR: Develop a comprehensive corporate social responsibility strategy that aligns with Mexican social and environmental priorities.
- Sustainable practices: Adopt sustainable business practices throughout its operations, focusing on reducing environmental impact and promoting ethical sourcing.
- Community engagement: Engage in community initiatives that support economic growth and poverty reduction in Mexico.
3. Stakeholder Management and Business Diplomacy:
- Build trust: Develop a transparent and ethical approach to business dealings with government officials and stakeholders.
- Communicate effectively: Engage in open and honest communication with government agencies, local communities, and other stakeholders.
- Proactive engagement: Actively participate in industry associations and forums to advocate for policies that promote foreign investment and business growth in Mexico.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies: RIM's core competencies in international business and technology provide a strong foundation for success in the Mexican market.
- External customers: Government agencies and public-private partnerships offer significant growth potential for RIM.
- Internal clients: A strong focus on CSR and sustainability will enhance RIM's reputation and attract talent.
- Competitors: Differentiation through government contracts, CSR, and business diplomacy will help RIM stand out from competitors.
- Attractiveness: These recommendations are expected to generate significant economic growth and return on investment for RIM.
6. Conclusion
By adopting a strategic approach that combines international business expertise, government relations, CSR, and business diplomacy, RIM can navigate the complex Mexican business environment and achieve sustainable success. This strategy will enable RIM to capitalize on the opportunities presented by the Mexican market while contributing to positive social and economic outcomes.
7. Discussion
Alternative Options:
- Focusing solely on the private sector: This approach may limit RIM's growth potential, as the government sector represents a significant market opportunity.
- Adopting a purely transactional approach: This approach may lead to short-term gains but could damage RIM's long-term reputation and hinder future opportunities.
Risks and Key Assumptions:
- Political instability: Political instability could disrupt RIM's operations and impact its profitability.
- Economic uncertainty: Economic downturns could reduce demand for travel management services.
- Government policies: Changes in government policies could create new challenges for RIM.
8. Next Steps
- Develop a comprehensive strategy: RIM should develop a detailed strategic plan outlining its approach to government contracts, CSR, and business diplomacy.
- Build relationships: RIM should establish strong relationships with key government officials and agencies.
- Implement CSR initiatives: RIM should implement its CSR strategy and engage in community initiatives.
- Monitor progress: RIM should regularly monitor the effectiveness of its strategy and make adjustments as needed.
By taking these steps, RIM can position itself for success in the dynamic and challenging Mexican market.
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Case Description
Enrique Felgueres, Jr., general manager of Rosenbluth International's (RI) Mexican operations, had recently been given the task of transforming Bancomer Travel Services, a small Mexican-owned agency, into a branch office of RI. The Rosenbluth service concept has contributed to RI's success in the U.S. and Canadian business travel industry, but the U.S./Canadian success does not imply that the Rosenbluth service concept can be taken carte blanche into Mexico. This case challenges students to consider if and how to adapt the service concept for the Mexican market, the Mexican business traveler, and for travel in Mexico.
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