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In recent years, Cuba has been the subject of much controversy in the business world. In the international business industry, companies are constantly looking for international markets that are relatively untouched, have low entry barriers and have little to no restriction. This would be the golden egg of the international industry. With the elimination of embargos, Cuba would present just such an opportunity. Over the Obama reign in office, and the transition away from Fidel Castro in Cuba, the United States made unprecedented steps towards opening up the Cuban market to U.S. businesses. However, after the 201 elections and a distinctly different political direction, there is a lot in the air over the future of this relationship. One big opportunity is the recent loss of revenue received form Venezuela by way of energy subsidiaries. Due to the recent conflict in Venezuela and complete political collapse, Cuba lost one of their biggest benefactors. (Gonzalez Alonzo & Lee, 2016). This presents an opportunity for U.S. based energy companies looking to exploit this recent change in paradigm. Paired with very low entry cost and possible offers of subsidy form the Cuban government, the energy sector could see big opportunities in Cuba. However, it is to be less of a consideration as subsidies must be taken into consideration when determining the return on investment on the venture (Hill & Hult, 2017). Pending further relief of restrictions regarding travel to the country, tourism could provide opportunity for a multitude of industries. With a wide open market and a mass influx of tourists, foreign businesses could find a good amount of success in this “no place to go but up” economy (Janzen, 2017). Despite the plenty opportunities, there are still domes obstacles that must be contended with in order to benefit from the Cuban market. Cuba is in a huge transition. From the previous regimes ran by individuals that were a party to the 1959 revolution and sequential move to a Communist government, to new political leaders that fall on the less than radical side of the spectrum. “Political risk tends to be greater in countries experiencing social unrest or disorder and in countries where the underlying nature of society makes the likelihood of social unrest high” (Hill & Hult, 2017, p. 592). Because of the recent financial crisis and loss of energy source imports from Venezuela, the Cuban people are in a state of unrest. This is an obstacle that must be carefully navigated both from a business perspective as well as a political one. Also, with the current dual-currency monetary system in Cuba, it could prove difficult for many companies to determine a proper exchange rate as well as make decisions regarding the sourcing of local materials (Hemlock, 2017). Although there are many barriers to conducting business in Cuba, some companies have found success in the new market. AT&T broke barriers in the telecommunications market in Cuba. The reason for success for AT&T is largely due to their embracing the political ties of the Cuban telecommunications market. Currently completely controlled by the Cuban government, the telecommunications market has been a federal monopoly. AT&T brokered deals with the Cuban government that would allow them to offer service within the country. (Goovaerts, 2017). Doreen Hemlock (2017), a foreign lawyer currently living in Havana, “suggests that entrepreneurs embed their projects within Cuba’s social and political priorities, while staying polite and patient”. References Goovaerts, D. (2017). AT&T Launches Roaming Service in Cuba. Wireless Week. Retrieved from https://www.wirelessweek.com/news/2016/10/t-launches-roaming-service-cuba. Gonzalez Alonzo, P., Lee, A. (2016). Doing Business in Post-Fidel Cuba. Harvard Business Review. Retrieved from https://hbr.org/2016/12/doing-business-in-a-post-fidel-cuba. Hemlock, D. (2017). From Havana, this Lawyer Advises International Companies on Deals. Cuba Trade Magazine. Retrieved from http://www.cubatrademagazine.com/2808-2/. Hill, C. W. L. & Hult, G.T.M. (2017). International business: Competing in the global marketplace (11th ed.). New York: McGraw:Hill. Janzen, B. (2017). Political Business Opportunities in Cuba. Decision Analyst. Retrieved from https://www.decisionanalyst.com/blog/cuba/.
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