Question

Discuss opportunities and obstacles to conducting business in Cuba. Be sure to cite concepts from the textbook, successful international companies that are already operating in Cuba and other sources as you discuss how managers should proceed in this Post-Fidel Cuba.

Answer 1

Risks

1.Hardscapes. These include office buildings, roads, bridges, and utilities (water, sewer, electricity, etc.).Havana, Cuba’s capital and leading city, lacks the infrastructure to address a serious influx of demanding American tourists or to satisfy the demands of U.S.-type business operations on any meaningful scale. These infrastructure conditions are even worse outside Havana. The U.S. cruise ship industry is an exception. A cruise ship can “snuggle up” to dock, assuming the port can accommodate ships of this size (a big assumption). A cruise ship comes with its own comfortable sleeping facilities, fresh meals, and toilet paper—none of which exist in reliable quantities in Havana, or elsewhere in Cuba. Of course the lack of hardscapes may, in the intermediate term, offer opportunities for construction-related businesses and their suppliers.

2.Technology. In Cuba, despite certain exceptions—including, perhaps, in the health care industry—Internet and WiFi access is generally limited and erratic. The country has one of the lowest connectivity rates in the world; only 5 percent to 25 percent of the population has Internet service

3.Legal system. Cuba’s legal system is relatively underdeveloped and risky. There is no principled, robust arbiter/forum for business disputes.

Opportunities

1.We believe most hospitality opportunities will, for the short term, exist on the “marine fringe,” which refers to cruising, marinas, fishing/diving and related eco-tourism efforts. Assuming limited government interference, which is by no means a given, these endeavors are likely to prosper immediately.

2.The Mariel project has already generated a large amount of interest internationally. Brazil is footing much of the $1 billion bill to modernize the massive deep-water port that could become the largest in the Caribbean, according to a February 2015 Los Angeles Times article

how managers should proceed in this Post-Fidel Cuba

The move made it possible to imagine an end to the U.S. embargo of Cuba (which remains firmly in place) and a consequently sharp improvement in Cuba’s economic conditions.

However, in the subsequent months, Cuba has failed to advance on economic liberalization, encountered a fiscal crisis, watched the U.S. elect a potentially hostile president, and lost its revolutionary leader. It’s no longer clear whether Cuba will see either domestic reforms or greater engagement from the U.S