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					                 The University of the South Pacific
                         Graduate School of Business


       Master of Business Administration Program
  Promoting Sustainable and Responsible Business Practices

                        Course Outline for MBA 434
 SOUTH PACIFIC BUSINESS ENVIRONMENT


                                              Suva
                          Stathem ICT Park Campus
                               3rd Trimester 2011


Lecturers: Gyaneshwar Rao
                   Phone3232172
                   rao_gr@usp.ac.fj
                   Jim McMaster
                   Phone 323 1100
                   mcmaster_j@usp.ac.fj


MBA 434: South Pacific Business Environment                  1
COURSE LEARNING OPUTCOMES

This course aims to assist students to develop a thorough understanding of the business
environment in today’s South Pacific. The course views the South Pacific from both a
regional and an international perspective. Particular emphasis is placed upon the
investment climate and upon strategies to promote economic growth, employment
generation and private sector development.

Upon completion of this course, students should be able to:
    Prepare and present a report that analyses and evaluates the economic growth
      strategy and prospects of a Pacific Islands economy. The report should analyse
      the main features of the economy and growth prospects of the main industries and
      sectors of the economy, trends in investment, employment generation, small
      business development, public and private sector reform and development, public
      financial issues, national debt and economic management of the economy, natural
      resource management, education and human resource capacity development, and
      health and social sector development.
    Apply the techniques of cost-benefit analysis and the planning balance sheet
      approach to business investment decisions.
    Analyse Pacific Island industries in terms of competition, industry structure, cost
      structure, growth performance, price leadership, competitive advantage, export
      performance, regulation, and technology and sustainability issues.
    Prepare a feasibility study to select the optimal location for a foreign enterprise
      that plans to invest in an off-shore manufacturing plant in a Pacific Islands
      economy. This study will involve undertaking a comparative location analysis
      using multi-criteria analysis and a country risk assessment.
    Undertake a risk analysis of a major business investment project such as a new
      multi-million dollar tourism hotel resort project in a Pacific Island.
    Undertake a policy analysis study and review approaches to monitor and evaluate
      the effectiveness of current policies, policy instruments and alternatives.
    Evaluate the effectiveness of current policies to promote small business
      development, entrepreneurship, and private sector development.
    Review the role of business incubators and business online toolkits as measures to
      support small business development in the Pacific Islands.
    Recommend a set of appropriate policy measures to promote green investment,
      exports and stimulate sustainable economic growth in the Pacific Islands.
    Analyse the role of the World Bank, the Asian Development Bank (ADB),
      Commonwealth Secretariat, UNDP and the CROP Regional Institutions and make
      recommendations on how these organisations could be more effective in assisting
      the Pacific Islands




MBA 434: South Pacific Business Environment                                               2
METHOD OF INSTRUCTION
The course is highly interactive between students and lecturer, as well as between
students themselves. It demands active and ongoing participation by all. Students will
work in teams to do the tutorial exercises.
ASSESSMENT
Assessment in this subject is based on the following elements:
Mid- trimester test. 20%.

Individual Topic Presentation 20%
Each student will make a 10 minute presentation using Powerpoint on one of the topics
listed below.

Business Environment Analysis and Country Presentation, 20%
Groups will make a 20 minute presentation using Powerpoint on their assessment of the
business environment in a Pacific Island Country assigned to their group.
Groups should analyse the business environment of the selected country and make a
presentation using charts, diagrams, photos and illustrations. Reports should cover:
     World Bank ease of doing business survey
     Analysis of trade and investment opportunities
     Country Economic Profile and Private Sector Structure and Performance
     Economic Outlook for International Business
     Review of the growth prospects of industries
     Investment Promotion and Trade issues

Final Exams 40%
A final 3-hour exam will be held at the end of the trimester. The assessment measures
will be based on the learning outcomes outlines above. Students must achieve a minimum
of 40% in the final examination, (16/40).

Individual Presentation Topics and weekly Time Schedule

Each student will be assigned a topic to present to the class. The presentation will take
the form of a mini-lecture and will be conducted over the period from week 3 to week 8.
A powerpoint slide presentation should be prepared on the main issues to be discussed.
Students should identify two questions for group discussion. The presentation should take
about ten minutes and no longer than 15 minutes.

Week 3 Student Presentations
Role of Pacific Islands Forum Secretariat in relation to economic development, trade,
investment and private sector development.
Role of the Asian Development Bank in promoting private sector development in the
Pacific Islands
Role of the IMF and World Bank in the Pacific
Trust funds in the Pacific

MBA 434: South Pacific Business Environment                                              3
Role of remittances

Week 4 Student Presentations
Investment Promotion Agencies in the Pacific
Pacific Island Trade and Investment Portals
Fiji Momi Bay resort development project
Fiji Natadola resort development project
Grand Pacific Hotel Suva project
Yaqara Film City tax free zone project

Week 5 Student Presentations
Mining in PNG
Virgin coconut oil and cosmetic products
Case Study; Pure Fiji
Future Forest Industries and Teak plantations in Fiji
Pacific Black Pearl Industry

Week 6 Student Presentations
Review of the Fiji Development Bank
National Centre for Small and Microenterprise Development in Fiji and other PIC small
business centres: Lessons from experience.
ANZ Rural Banking and Microfinance in Fiji; Lessons from experience

Week 7 Student Presentations
Review of Business Incubators in New Zealand and Australia
Family businesses in Fiji
Ginger and agro processing in Fiji
Garment Industry in Fiji
Micro-brewery projects
Adventure and ecotourism projects

Week 8 Student Presentations
Case Study; Fiji Water
Case study; Pacific Green Furniture
Mining industry in Fiji including Namosi Copper Mine and Bua Bauxite mine
development and lessons from the PNG Mining experience
Tutu project in Taveuni, young farmer settlement schemes

REQUIREMENTS
Please read the case studies and tutorial exercises before class and be ready to participate
actively – to speak up, to ask questions, and to answer questions posed by the lecturer and
other students.
Please attend each class. This is an intense, fast-moving course in which attendance is
essential.
Work teams will be established and used throughout the course. As managers, you are
expected to manage the team efforts so that every member participates to the full extent.


MBA 434: South Pacific Business Environment                                                4
All presentations, whether verbal or written, should be clear, logical, and make good use
of evidence. In writing, errors of spelling, diction, and grammar are unacceptable and
will result in failing grades.
Academic dishonesty of any kind – cheating on tests, copying others’ work – will be
penalised to the full extent. The MBA Programme trains honourable managers.

CLASS TIMETABLE

Week 1
Lecture topic
Pacific Island Economies: an Overview
Structure of Pacific island economies
Economic features
Natural and human resource endowments
Production and trade
Education and labour markets
Review of performance of the economies by UNESCAP, AusAID, World Bank IMF
article 4 reports
Country debt levels and deficit budgets
At our first meeting the course teaching method will be discussed in detail. The class
will be formed into groups and each group will be allocated a group assignment involving
making a group presentation on the business environment in a Pacific Island country.
Also each student will select a topic on which to make a ten minute presentation to the
class.

Week 2
Lecture topic
Role of the Public and Private Sectors
Historic reasons for large public sectors
Role of government in promoting economic growth
Public infrastructure development and the role of government
Development of the private sector
Reassessment of the role of the public sector
Privatisation
Commercialisation of government enterprises
Public-private partnerships
Alternative methods of service delivery
Private sector as the engine of growth

Week 3
Lecture topic
National Planning and Economic management in Pacific Island economies:
Adapting to the Global Financial Crisis
Sustainable development and a low carbon development path
Role of fiscal and monetary policies
Prices and income policies


MBA 434: South Pacific Business Environment                                                 5
Exchange rate policies
Public sector borrowing and debt management
Micro-economic reforms and de-regulation
National sustainable development strategies
New approaches to economic planning

Student Presentations
Pacific Islands Forum Secretariat
Role of the Asian Development Bank
Role of the IMF and World Bank in the 21st Century
Trust funds
Role of remittances

Week 4
Lecture topic
Foreign and Local Investment Promotion
Investment policies and strategies
Factors affecting foreign investments
Role of investment promotion agencies
Role of incentives
Review of major investment projects and risk analysis
Environmental and social impact of large scale mining projects in PNG
Local versus foreign investments

Student Presentations
Investment Promotion Agencies in the Pacific
Pacific Island Trade and Investment Portals
Fiji Momi Bay resort development project
Fiji Natadola resort development project
Grand Pacific Hotel Suva project
Yaqara Film City tax free zone project

Week 5
Lecture Topic
Improving the Private Sector Business Environment
World Bank Easy of Doing Business Rankings
Review of Economic sectors with growth potential
Service sector development
Tourism development strategies
Role of tourism master plans
Technology and back office development
Agricultural sector development
Forestry and sustainable yields
Fisheries development and Pacific tuna

Student Presentations


MBA 434: South Pacific Business Environment                             6
Mining in PNG
Virgin coconut oil and cosmetic products
Case Study; Pure Fiji
Future Forest Industries and Teak plantations in Fiji
Pacific Black Pearl Industry

Week 6
Lecture topic
Strategies to promote Private Sector Development
Development finance
National small business development agencies/centres
On-line business toolkits
World Bank SMEtoolkit.com
Training entrepreneurs

Student Presentations
Review of the Fiji Development Bank and why development banks have failed in the
Pacific.
National Centre for Small and Microenterprise Development in Fiji and other PIC small
business centres: Lessons from experience.
ANZ Rural Banking and Microfinance in Fiji; Lessons from experience

Week 7
Lecture topic
Strategies to promote Private Sector Development
Business incubators
Innovation centres
Village factory schemes
Export processing zones, and tax free zones

Student Presentations
Review of Business Incubators in New Zealand and Australia
Family businesses in Fiji
Ginger and agro processing in Fiji
Garment Industry in Fiji
Micro-brewery projects
Adventure and ecotourism projects


Week 8
Lecture Topic:
Corporate Social and Environmental Responsibility
Promoting Corporate Environmental and Social Responsibility
The clean tech and green business revolution
Developing Green Business Enterprises
Measuring carbon footprint of business enterprises


MBA 434: South Pacific Business Environment                                             7
Waste and energy reduction measures
Pollution taxes and incentives for green business
Carbon trading systems

Student Presentations
Case Study; Fiji Water
Case study; Pacific Green Furniture
Mining industry in Fiji including Namosi Copper Mine and Bua Bauxite mine
development and lessons from the PNG Mining experience
Tutu project in Taveuni, young farmer settlement schemes

Week 9
Lecture topic
Improving Employment Opportunities
Labour markets in the Pacific
Unemployment and strategies to reduce it.
Wage rates and employment
Self-employment and subsistence sector issues
Role of non-formal education
Small business development in rural areas
The village economy and cash cropping

Pacific Islands Country review presentations by groups
PNG
Solomon Islands
Vanuatu

Week 10

Lecture topic
Trade and Export Market Development
Electronic Trade facilitation
National Single Window trade portals
Regional trade portals
Role of the World Trade Organisation
Trade policies issues

Pacific Islands Country review presentations by groups

Fiji
Tonga
Samoa

Week 11
Pacific Islands Country review presentations by groups
Kiribati


MBA 434: South Pacific Business Environment                                 8
Tuvalu
Marshall Islands

COURSE CURRICULUM

Pacific Island Economies: an Overview
Structure of Pacific island economies
Economic features
Natural and human resource endowments
Production and trade
Education and labour markets
Associated cultural features
Systems of government
Land tenure issues
Population growth and migration

Role of the Public and Private Sectors
Historic reasons for large public sectors
Role of government in promoting economic growth
Public infrastructure development and the role of government
Development of the private sector
Reassessment of the role of the public sector
Privatisation
Commercialisation of government enterprises
Public-private partnerships
Alternative methods of service delivery
Private sector as the engine of growth

Public Policy Analysis and Sustainable Development
Role of policy analysis
Tools of policy analysis, cost-benefit analysis
Policy instruments and measures
Stakeholder Analysis and the Planning Balance Sheet approach
Public Policy Formulation and participation of stakeholders
Monitoring and Evaluation

Foreign and Local Investment and the business environment
Constrains to growth
Investment policies and strategies
Factors affecting foreign investments
Role of investment promotion agencies
Role of incentives
Review of major investment projects and risk analysis
Environmental and social impact of large scale mining projects in PNG
Local versus foreign investments



MBA 434: South Pacific Business Environment                             9
Economic sectors with growth potential
Service sector development
Tourism development strategies
Role of tourism master plans
Technology and back office development
Computer programming and data entry
Using the Southern Cross cable to deliver services to world
Agricultural sector development
Forestry and sustainable yields
Fisheries development and Pacific tuna
Business enterprise development
Role of entrepreneurs
New enterprises and development
Business plans and feasibility studies
Industry analysis
Analysing competitors
Market research and consumer analysis
The legal issues
Promoting Corporate Environmental and Social Responsibility
The clean tech and green business revolution
Developing Green Business Enterprises
Measuring carbon footprint of business enterprises
Waste and energy reduction measures
Pollution taxes and incentives for green business
Carbon trading systems

Strategies to promote private sector development
Development finance
Small business development
Training entrepreneurs
Business incubators
Innovation centres
Village factory schemes
Export processing zones, and tax free zones
Export market development
Small business and Pacific culture
The legal framework and commercial law issues

Labour markets in the Pacific
Education and employment
Unemployment and strategies to reduce it.
Wages and employment
Labour market growth
Self-employment and subsistence sector issues
Role of non-formal education
Small business development in rural areas


MBA 434: South Pacific Business Environment                   10
The village economy and cash cropping

Economic management in Pacific Island economies
Role of fiscal and monetary policies
Prices and income policies
Social safety nets
Exchange rate policies
Debt management
Public sector borrowings
Trust funds
Role of remittances
Budget deficits and surplus
Controlling inflation
Promoting employment

Taxation policies issues
Trade: an engine of growth for the Pacific
Lessons from experience
Role of the World Trade Organisation
Regional trade agreements
The Lomé Convention
Trade policies issues
Protection through tariffs and quotas

South Pacific economies in a changing environment
Public Policy Analysis and Economic Reforms
Micro-economic reforms and de-regulation
New approaches to economic planning
Role of sector investment studies
Sectoral and regional plans
Public sector reforms
Sustainable development
The Pacific and World economy
Benefit of globalization
Carbon footprint reduction strategies and policy measures
PICTA and PACER
Potential policy conflicts and globalization
Corporate social and environmental responsibility
The transfer of jobs from high wage counties to low wage countries
Global coordination of social and economic policies

Role of the CROP Regional Organisations
Pacific Islands Forum Secretariat
Role of the Asian Development Bank
Role of the IMF and World Bank in the 21st Century
Multi-national corporation in the Pacific


MBA 434: South Pacific Business Environment                          11
Boom and bust cycles for Pacific commodities

INTERNET SITES
There is now a large volume of material of direct relevance to the subjects discussed in
this course on the Internet. Some important sites are:

Asian Development Bank website - www.adb.org.
ADB has many online publications on the Pacific Island countries. The work of the Asian
Development Bank (ADB) is aimed at improving the welfare of the people in Asia and
the Pacific.

 World Bank website is:
www.worldbank.org
The World Bank (WB) is a vital source of financial and technical assistance to
developing countries around the world. It is not a bank in the common sense. It is made
up of two unique development institutions owned by 185 member countries—the
International Bank for Reconstruction and Development (IBRD) and the International
Development Association (IDA).

World Trade Organisation (WTO) Website is:
www.wto.org
The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. At its heart are the WTO agreements,
negotiated and signed by the bulk of the world’s trading nations and ratified in their
parliaments. The goal is to help producers of goods and services, exporters, and importers
conduct their business.

CROP (Council of Regional Organisations of the Pacific) Agencies
Fiji School of Medicine (FSMed)
Pacific Islands Forum Fisheries Agency (FFA)
Pacific Islands Development Programme (PIDP)
Secretariat of the Pacific Community (SPC)
Pacific Islands Applied Geoscience Commission (SOPAC)
South Pacific Board for Educational Assessment (SPBEA)
Pacific Islands Forum Secretariat (PIFS)
Secretariat of the Pacific Regional Environment Programme (SPREP)
south-pacific.travel (formerly the South Pacific Tourism Organisation - SPTO)
University of the South Pacific (USP)

Forum Fisheries Agency (FFA)
www.ffa.int
The Forum Fisheries Agency was established in 1979 under a Convention signed by
twelve Members. The Convention reflects the common concern of member nations on
matters of conservation, optimum utilisation and coastal states’ sovereign rights over the
region’s living marine resources. FFA has its headquarters in Honiara, Solomon Islands.
Membership of the FFA has now increased to sixteen - Australia, Cook Islands,


MBA 434: South Pacific Business Environment                                                12
Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, New
Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and
Vanuatu.

Pacific Islands Development Program (PIDP)
www.eastwestcenter.pidp

 The purpose of the Pacific Islands Development Program (PIDP) of the East-West
Centre is to help meet the special development needs of the Pacific Island region through
cooperative research, education and training. PIDP conducts specific research and
training activities based on issues and problems proritised by the Pacific Islands
Conference of Leaders, which meets every three years

Secretariat of the Pacific Community (SPC)
www.spc.org.nc

The oldest of the inter-government regional organisations, the South Pacific Commission
(SPC) was founded on 6 February 1947 by an agreement known as the Canberra
Agreement, by the Governments of Australia, France, the Netherlands, New Zealand, the
United Kingdom and the United States of America. The SPC’s work program covers
diverse activities such as agriculture and plant protection, marine resources, environment
management, rural development, rural technology, community health, statistics,
economics, demography, women’s programs and activities, community education
training, media conservation and exchange.

South Pacific Applied Geoscience Commission (SOPAC)

www.sopac.org.fj

SOPAC, the Pacific Islands Applied Geoscience Commission is an inter-governmental,
regional organisation dedicated to providing products and services in three technical
program areas of: Community Lifelines; Community Risk; and Ocean and Islands. Its
Secretariat is based in Suva, Fiji.

Pacific Islands Forum Secretariat
The Pacific Islands Forum and its Secretariat
www.forumsec.org

The Pacific Islands Forum, formerly the South Pacific Forum until a name change in
October 2000, was founded in August 1971 and comprises 16 independent and self-
governing states in the Pacific. The Forum is established by a treaty between its members
as the region’s premier political and economic policy organisation. Forum Leaders meet
annually to develop collective responses to regional issues.

In October 2005, Forum Leaders endorsed the Pacific Plan for strengthening regional
cooperation and integration. At the regional level, coordination of the implementation of


MBA 434: South Pacific Business Environment                                              13
the Pacific Plan is, in the first instance, the responsibility of the Forum Secretariat.

The Forum’s membership has increased from the original seven founding members
(Australia, Cook Islands, Fiji, Nauru, New Zealand, Tonga and Western Samoa – now
Samoa) to also include the Federated States of Micronesia, Kiribati, Niue, Republic of the
Marshall Islands, Palau, Papua New Guinea, Solomon Islands, Tuvalu and Vanuatu. New
Caledonia and French Polynesia, previously Forum Observers, were granted Associate
Membership in 2006. Current Forum Observers include Tokelau (2005), Wallis and
Futuna (2006), the Commonwealth (2006), the United Nations (2006) and the Asian
Development Bank (2006), with Timor Leste as Special Observer (2002).

South Pacific Regional Environment Programme (SPREP)
www.sprep.org
SPREP is a regional organisation established by the governments and administrations of
the Pacific region to look after its environment.
SPREP’s mandate is to promote cooperation in the Pacific islands region and to provide
assistance in order to protect and improve the environment and to ensure sustainable
development for present and future generations. SPREP has 21 Pacific island member
countries and four countries with direct interests in the region.

South Pacific Travel
www.spto.org south-pacific.travel (formerly the South Pacific Tourism
Organisation or SPTO) is the mandated inter-governmental body for the tourism sector
in the region, with the mission to "Market and Develop Tourism in the South Pacific".
South-Pacific. Travel members include the Pacific Island nations of the Cook Islands
(Cooks), Fiji, Kiribati, Nauru, New Caledonia, Niue, Samoa, Solomons, Tahiti (French
Polynesia), Tonga, Tuvalu, Vanuatu and Papua New Guinea (PNG). The People's
Republic of China is also a country member of south-pacific.travel.

Small Islands Developing States Network
www.SIDSNET.org
Small Island Developing States Network (SIDSnet connects 43 Small Island Developing
States (SIDS) in the Pacific, Caribbean, Atlantic, Indian Ocean, Mediterranean and
African island nations. SIDSnet's main goal has been to utilise information and
communication technologies (ICTs) to link SIDS in supporting the implementation of the
sustainable development objectives of the BPoA.
Australian Development Gateway www.developmentgateway.com.au
Purpose The Australian Development Gateway is a knowledge-sharing website,
supporting people working in Asia Pacific countries to reduce poverty and promote
sustainability. It is a mechanism for Australians and others in the Asia Pacific region to
contribute knowledge and to engage in vigorous discussion.
The Global Development Learning Network (GDLN) www.gdln.org
The Global Development Learning Network (GDLN) is a partnership of over 120
learning centers (GDLN Affiliates) in nearly 80 countries around the world. GDLN

COURSE MATERIALS


MBA 434: South Pacific Business Environment                                                14
Each student will be issued with a CD containing the lecture powerpoint presentations,
and some reports relating to the course topics from the Asian Development Bank, Forum
Secretariat, AusAID , and World Bank.
Students will be issued with a hard copy of the case studies.


Green Business Websites
    www.EnvironmentalLeader.com
    www.Greenbiz.com
    www.SustainableLifeMedia.com
    www.SustainableBusiness.com
    www.Treehugger.com
    www.Worldchanging.com

TUTORIAL EXERCISES

The class will be divided into groups of four students. Each group is asked to consider
the following questions and to prepare a report on the key issues. Groups will be asked to
have a representative and to give a feedback report after they have discussed the key
issues:

Exercise No. 1

Your group is playing the role of a management consulting company. Your team has
been employed by an Australian Furniture Manufacturing Company that is interested in
setting up a factory in one of the Pacific Island countries to manufacture furniture for the
Australian market. The Company has employed your group to determine the best
location. Your task tonight is to draw up an outline of the issues that should be
considered in the feasibility study. Discuss these issues in your group and then structure
them into a table for presentation to the class. These issues will be related to the cost of
manufacturing, transport, the business environment, taxation and incentives, etc.
Brainstorm these issues and then organise the issues in a list of issues to be investigated.
Advise the investor on how you propose to go about this study. Your team will make a
presentation to the whole class at a report back session. This exercise will take the form
of a role-play. Other class members will play the role of the management of the furniture
company and will ask your team of consultants questions about your proposals and
advice to the company.
Exercise No.2

In the last few years some pacific Island countries such as PNG, Vanuatu and Fiji have
adopted an open skies aviation policy allowing new airlines to enter the market. The low
cost airlines Virgin Blue and Qantas’s low cost subsidiary, Jet Star have entered the
market providing strong price completion with the established airlines such as Air



MBA 434: South Pacific Business Environment                                               15
Vanuatu, Air New Zealand and Air Pacific. Some national airlines have gone bankrupt
such as Royal Tongan Airline and Air Nauru.
Air Pacific has been engaged with a price war with the new entrants but it has cost the
airline considerable loss of revenue. Air Pacific has just announced that it has made a
loss of $90 million over the last financial year.
      Discuss some specific measures that you recommend Air Pacific should adopt in
        order to succeed in the highly competitive market environment.
      What lessons are there from the Canadian low cost airline West Jet that may be
        relevant to Air Pacific?
      Outline the main features of the low cost airline business model


Exercise No.3
Assume that you have been appointed the CEO of a medium sized Pacific business
enterprise. The board of directors of this private company has asked you to develop and
implement a balanced score card business performance assessment system for the
company.
     Outline the main features of the balanced scorecard performance assessment
        system
     Design a balanced scorecard for the company
     List the key performance indicators that you recommend that the company adopt.
     Describe the benefits of the balanced scorecard approach.

Exercise No. 4

Assume that you are a management consultant for an international management
consulting company. Your firm has been engaged by the government to prepare a report
on a new copper mining project that a foreign international mining company is seeking
government approval to undertake. You have been assigned responsibility for
undertaking a cost-benefit analysis on this project. Details of the project are summarized
below.
     Outline the sequence of activities that you would undertake to prepare the cost-
       benefit analysis of this project
     List some of the likely positive and negative externalities that are likely to be
       generated by this project.

Summary of the project
Assume that a copper deposit has been discovered on the island of Zanadu by an
international company that now is seeking the approval of the Government to develop
and operate the mine. The landowners have given their approval based on receiving
royalties of 5% of annual revenue from the mine. The mining company plans to export all
the copper produced and processed at the mine site.

Basic Information and Assumptions


MBA 434: South Pacific Business Environment                                               16
        The Copper mine has a life of 10 years.
        The capital cost of establishing the mine is $300 million and the construction
         period is two years at $150 million per year.
        Annual revenue from the mine is estimated to be about $500 million based on the
         current world market price of copper. A high estimate is $650 million per annum
         and a low estimate based on low copper price is $350 million per annum.
        Annual total operating costs including salaries and wages are $250 million.
        In the 5th year of operation the processing plant will require a major upgrade at an
         estimated cost of $50 million.
        At the completion of the project the company will be required to restore the mine
         site and demolish the processing plant and other buildings as well as plant trees on
         the mine site. This restoration is expected to cost $ 30 million in 2009 dollars.
        The mine is an open-cut mine and the ore is processed at the mine site then
         transported to Port for export.
        The environment damage from the mine is estimated to be $680 million for the
         life of the mine. There are complex environmental impacts
        The mine will have substantial social impacts and social costs are estimated to be
         $450 million for the life of the mine.
        The mine will generate 500 new jobs at the mine-site.
        The mining company will pay company tax, a mining royalty and all other taxes
         and government charges.
        If the project goes ahead, the Government will need to upgrade the roads at a cost
         of $40 million and heavy mining truck use of the road will require extra road and
         bridge maintenance cost estimated to be about $25 million per year.
        Land owners will receive a royalty of 5% of mine revenue.
        A mine workers camp/village will be constructed close to the mine at a cost of $4
         million.

Exercise No 5

Develop a policy for Public Enterprise Reform for a Pacific Island economy.
       Formulate the objectives of the Policy and clearly summarize them.
       Summarize the performance problems of public enterprises.
       Identify and list the policy measures available to the National government.
       Select a number of policy instruments.
       Describe the policy implementation process.
       Describe how the policy can be monitored and evaluated.

Exercise No 6

This exercise involves preparation of a risk matrix for a new tourism resort investment
project.
The main features of the project are as follows: Pacific Beach Resort will be a world class
integrated tourism resort on 20 hectares of land. Government has already constructed a
high quality access road to the resort location and electricity and piped water have been


MBA 434: South Pacific Business Environment                                                17
provided by Government at a cost to the Government of $70 million. The resort will have
a variety of recreational and resort facilities located within the white sandy beach setting,
sited on the Island's East Coast.
The resort will include:
         • A 5-star resort hotel of 200 rooms located at the beach;
           A marine for 200 yachts
         • An 18-hole championship golf course;
         • 100 Residential and villa blocks of land for sale

The total project cost is $400 million. Private sector investors are investing $200 million
and the National Provident Fund is investing $200 million in an equity investment is
shares in the private company Pacific Beach Holdings. The project will promote
environmentally sustainable development. It will also draw inspiration from traditional
South Pacific architecture with traditional roof styles offering protection from sunshine
and rain. There will also be large verandas, terraces and courtyards.
Sports facilities will include swimming pools, tennis courts, archery facilities, a
multi-sports area accommodating volleyball, basketball and similar activities, and
a well-equipped fitness centre. Marine sports activities will include scuba diving,
snorkling, sailing and windsurfing.
Tasks
    Identify all relevant risks and Construct a risk matrix
    Assess each risk in terms of probability and consequences (impact) and prioritise
      from highest to lowest
    Discuss some control practices for each risk for effectiveness and cost

Exercise No 7

Assume that you have been appointed to a national taskforce charged with responsibility
for developing a new tourism policy that addresses issues of sustainable development and
is guided by a long term vision.
The new policy must address issues of concern about some of the negative impacts of
tourism on the Pacific Island citizens. These include:
     Increase in vehicle and motor bike traffic congestion and road safety issues
     Environmental impacts including: disposal of hotel garbage and impact of
        sewerage effluent on the lagoon.
     Impact of new tourism accommodation projects on land use and reduction of
        fertile land for agriculture
     Impact of tourism on public infrastructure demand particularly electricity and
        water consumption
     Social and cultural impact of migrant low income hotel workers recruited from
        other Pacific Island countries



MBA 434: South Pacific Business Environment                                                18
        Number of tourists exceeding the carrying capacity of the local physical
         environment

Draw up a list of new policy measures that could be implemented in the new tourism
policy to address these tourism development issues.

Exercise No 8
List some practical green business measures that could be implemented in 2010 to reduce
that carbon impact of tourism in the Pacific. What new business opportunities are likely
to become profitable due to a world-wide movement to sustainable development and
carbon footprint reduction?

Exercise No9

The Government is currently reviewing its foreign investment policy.
What policy measures would you recommend? Explain why your recommended policy
measures are likely to be the most effective measures for achieving the government
policy objectives.

Exercise No 10

Assume that you have been appointed as the CEO of a medium sized private company
that owns and operates three beachfront hotels. One is located at Muri Beach in
Rarotonga and one in Port Vila, Vanuatu and another on the Coral Coast in Viti Levu,
Fiji.
The chairman of the board has asked you to prepare a five year corporate plan. He has
informed you that the company has assigned NZ$20 million to upgrade the facilities of
the hotels. The company is currently making only 6% return on investment. The
average annual room occupancy rate is as follows:
Vanuatu hotel 65%, Rarotonga 80%, Fiji 50%
       Outline the processes and sequence of activities that you recommend should be
        undertaken to prepare the corporate plan.
       Prepare a checklist of criteria that could be used to assess the quality of the
        corporate plan

Exercise No. 11

Your group has been engaged to advise the Fiji government on the likelihood of the
impact on globalisation on the economy. The government has asked you provide a
comprehensive definition of globalisation and to give practical examples that illustrates
what globalisation means. You have been engaged to develop and structure a table which
identifies the impact of globalisation on varies sector of the economy. Prepare a table
and present it to the class. Your team will be allocated 10 minutes to do your
presentation.
Exercise No. 12


MBA 434: South Pacific Business Environment                                               19
Analysis of the Costs and Benefits of Alternative Types of Privatization
Objective

This exercise aims to assist participants gain a better understanding of the likely benefits
and costs of alternative forms of privatization and the appropriateness of these forms to
the privatization of different types of government activity

Task

Assume a government has announced its intention to privatize the twelve government
organisations/services listed below. Your team is required to advise the government on
the most appropriate form of privatization for these organizations. For each organization,
list the form of privatization which is likely to be most appropriate. Specify the criteria
that your group has adopted to evaluate the likely effectiveness of the alternative forms of
privatization. Select three of these organizations and prepare a list of the likely benefits
and costs of privatization. Listed below is a summary of the main forms of privatization
and a checklist of types of benefits and costs.

1       A government owned tourist hotel with 100 rooms located on the beachfront.

2       A town bus service with 30-bus fleet which has a monopoly in the provision of bus
        services in a town with a population of 10,000. Assume it has a cost recovery rate
        of 80%.

3       A coconut processing plant that produces canned coconut milk for export.

4       The national airport authority.

5       A government radio station which transmits programs across the nation and
        provides services to the remote outer islands

6       A rural electricity system which provides power to persons in and villages.

7       A urban power supply system that has a monopoly in the provision of electricity to
        consumers

8       A government shipyard with dry dock facilities for the repair and maintenance of
        marine vessels and the construction of boats and small ships.

9       A government vehicle repair and maintenance workshop which provides services
        to government departments.

10      The road construction and maintenance section of the Public Works Department.




MBA 434: South Pacific Business Environment                                                20
11      The government marine fleet which provides shipping services to government
        departments and inter-island passenger and cargo services to remote island
        communities.

12      A government plant pool of trucks, bulldozers, earth moving equipment and road
        construction equipment which provides plant for government construction and
        maintenance projects.

Summary of alternative forms of privatization

(1)     Transfer of Ownership and Control from the Public to the Private Sector.
(a)     Complete Privatization involves transferring the ownership of a government
enterprise to the private sector.

(b)     Partial Privatization involves transferring a portion of the ownership of a
government enterprise to the private sector. control may or may not be retained by the
Government depending on the percentage of the equity sold to the private sector. If the
government retains more than 50% of the equity it will maintain control whereas if the
private sector has a majority of the equity, control will pass over it.

(c)     Selective Privatization refers to the situation where the government sells or leases
to the private sector separate parts of its operations or selected services while still
retaining other services under government ownership and control. Distinct sections may
be sold as complete entities. In some situations, two or more sections may be combined
together to make a viable entity for the private purchaser.

(2)      Selling A Government Enterprise to the Workforce

(3)    Liberalization and Deregulation
This involves introducing private sector competition into areas that were previously
reserved for a government monopoly. This involves allowing private sector firms to
compete with government enterprises in areas where the public sector has had a
monopoly.

(4)    Contracting out the Service to the Private Firms and Non-Profit Organizations.
This option involves the government granting a private firm an exclusive franchise or
monopoly privilege to supply a particular service in a particular defined locality.

(6)    Grants and Vouchers
       (a)     Grants. Under a grant system the government pays a private firm a sum of
money to subsidise the cost of providing goods or services to selected consumer groups.
For example, Government may subsidise private bus companies for providing transport
services to school children.

       (b)    Vouchers. Vouchers are an alternative means of subsidizing the price of
goods and services to selected groups in the community. A voucher is a piece of paper
given by government to consumers which entitles them to purchase goods or services

MBA 434: South Pacific Business Environment                                               21
from private sector producers at a subsidised rate or in some cases for free - in exchange
for the voucher. The private firms then claim back from the government the value of the
vouchers. Vouchers are simply a mechanism for targeting publicly funded subsidies to
selected groups of consumers for the purchase of specified goods and services. Vouchers
have a set money value and consumers have choice in the spending of the voucher in the
market place.

Exercise No 13

Privatization Planning and Policy Development Checklist

Objective

This exercise aims to stimulate discussion and debate on the processes involved in the
implementation of a privatization project. Seminar members will be divided into groups
and each group will be involved in the preparation of a planning framework and policy
checklist for the privatization of public utilities and government business enterprises

Task

The group should first review the chart below which illustrates some possible phases in a
planned approach to privatization. Taking the chart as a starting point, the group should
select one of the following hypothetical government organizations and develop a
systematic set of procedures for privatizing the organization as well as introducing
competition into the market.      The group will work together to develop a checklist of
policy issues that need to be addressed in the planning stages of a privatization project for
the type of organization selected. For this exercise select one of the organizations below
and prepare a checklist that could assist the organization approach the privatization in a
logically manner and minimize unexpected implementation problems.

1       A government owned tourist hotel with 100 rooms located on the beachfront.

2       A town bus service with 30 bus fleet which has a monopoly in the provision of bus
        services in a town with a population of 10,000. Assume it has a cost recovery rate
        of 80%.

3       A coconut processing plant that produces canned coconut milk for export.

4       The national airport authority.

5       A government radio station which transmits programs across the nation and
        provides services to the remote outer islands

6       A rural electricity system which provides power to persons in small rural towns
        and villages.




MBA 434: South Pacific Business Environment                                                22
7       A urban power supply system that has a monopoly in the provision of electricity to
        consumers

8       A government shipyard with dry dock facilities for the repair and maintenance of
        marine vessels and the construction of boats and small ships.


PRIVATIZATION IMPLEMENTATION CHART

The complexity of privatization is illustrated below by considering the large number of
activities and tasks to be undertaken in implementing a program of privatization of public
authorities. The following chart illustrates some of the main steps that should be
undertaken in a well-organised approach to privatization. It is divided into four phases.

    Phase 1 - Preparing for Privatization
    Phase 2 - Detailed Planning on selected Government
                State-Owned Enterprises and Activities
                Targeted for Privatization
    Phase 3 - Implementation
    Phase 4 - Monitoring and Evaluation

    The steps involved in these phases are outlined below:


PHASE 1 - PREPARING FOR PRIVATIZATION


(1) Develop and define Privatization Policy
   . clarify objectives
   . establish task force for preparation of guidelines,
     Strategies, programs and projects.

(2) Assess opportunities, threats, and scope for
     privatization
   . assess political support and limitations
   . identify areas of highest potential benefit
   . identify major constraints and the political
      implications
   . assess political costs/benefits of alternative
      privatization strategies
   . identify legal barriers
   . assess strength/weakness of coalitions

(3) Create Private Sector Interest
   . announce privatization policy objective
   . education of public
   . consult with private sector associations,

MBA 434: South Pacific Business Environment                                             23
      chamber of commerce to develop interest
      program

(4) Develop Program Guidelines and Strategies

PHASE 2 - DETAILED PLANNING ON SELECTED GOVERNMENT STATE-
OWNED ENTERPRISES AND ACTIVITIES TARGETED FOR
PRIVATIZATION

(5) Enterprise Diagnostic Analysis
   . review of management and operating systems
   . corporate financial analysis of capital structure
     and past financial performance
   . physical condition and value of assets
   . review human resource management system
   . identify strengths/weaknesses/opportunities/threats
   . review future market demand situation and
     competitive environment
   . identify any comparative advantage of enterprise

(6) Audit of Legal Obligations
   . ascertain legal rights of existing creditors,
     shareholders, and other third parties.
   . review any outstanding government loan guarantees
     mortgages, liens, loan agreements and provisions
     prohibiting the sale of assets
   . review commitments, contracts with employees,
     superannuation, pensions, allowances, commitments
     to contractors, suppliers, customers.

(7) Examine Need for Conversion of the Legal Form of the
     Enterprise
   . review need for legal restructuring

(8) Review Need to Modify Regulatory System
   . new needs for licensing systems
   . Deregulation measures to increase level of
     competition

(9) Financial Restructuring
   . undertake balance sheet restructuring
   . write-down of assets
   . alleviation of excessive debt liabilities
   . recapitalisation

(10) Review of Situation of Enterprise Workforce

MBA 434: South Pacific Business Environment                 24
    . private sector employment opportunities
    . redeployment
    . employee participation in ownership

(11) Determine Future Ownership Options
   . partial versus total privatization
   . review scope for commercialization prior to
     privatization to increase value of entity
   . review scope for management contract, leasing
     employee buy-out scheme
   . review options with respect to foreign ownership
     joint venture ownership

PHASE 3 - IMPLEMENTATION (Privatization Transfer)

(12) Undertake any necessary legal requirements for sale of
     enterprise, or shares, franchise agreement, management
     contracts, legislation enabling change of enterprise
     form, ownership, etc.

(13) Estimate market value of entity or services to be
     performed.

(14) Issue conditions and undertake solicitation for
     transfer to the private sector.

(15) Evaluate proposals against criteria and select
     successful bidder.

(16) Negotiate with bidder and execute legal transfer.

(17) Announce transfer arrangements and educate public on
     implications for consumers.

(18) Implement industrial relations employee transfer
     or redundancy, early retirement agreement.

PHASE 4 - MONITORING AND EVALUATING PRIVATIZATION PROGRAM

(19) Refine monitoring and evaluation methodology and
     develop performance appraisal systems.

(20) Establish data base to enable the comparison of the
     quality and of service provision before and after
     privatization.



MBA 434: South Pacific Business Environment                   25
(21) Undertake surveys and collection of private and public
     sector indicator data.

(22) Compare performance data against targets, standards,
     milestones and identify shortfall and possible
     corrective measures.

(23) Evaluate effectiveness of privatization program in
    terms of efficiency and effectiveness as well as the
    degree to which consumer needs are met.

(24) Modify and adjust program and regulations in light of
     findings of monitoring and evaluation program.

(25) Continue with any further privatization projects.


Exercise No 14
Village/community/island BUSINESS PLAN

Task: Assume that your team has been engages as business consultants to prepare an
outline for a village/ community or island Business Plan for employment and income
generating business activities and projects to achieve quality of life improvement in the
village( village improvement projects). Select a village or community that you know and
develop the framework for a business plan. Undertake a situation analysis, SWOT
analysis and set business goals and objectives and develop business proposals to achieve
the goals.
You may adapt some features of the following structure for the plan.
Business Plan Outline
Executive Summary

Situation Analysis: Where are we now??

Village/ community resources
     Land
     Agricultural output
     Leadership
     Human capital, skills, capacity, motivation, experience
Unutilized resources
     Land available for development
     Youth and unemployed persons
     Development production potential
     Potential products and services
     One product per village concept

Stakeholder Analysis

MBA 434: South Pacific Business Environment                                             26
Problem and solution analysis
SWOT analysis
Goals achievement matrix
Resource assessment
Land use plan
Land use capability

Desired Future Situation
           Vision of the future stage
           Goals

Business Development Strategy
              Outline a business development strategy
              Examine the scope for increasing production of existing products and
                new products
              Review new potential business activities
              Describe alternative business propositions
              Evaluate the shortlisted business opportunities
              Select the recommended business activities

                                New Business Projects, products, services, target market,
                                 marketing strategy
                                Infrastructure requirements and capital investment
                                Financing, return on investment, budget, sources of funds
                                Training and skills required
                                Leadership and management and incentives
                                Partnerships and networks
                                Transport and communications
                                Project management
                                Implementation timetable and action program
                                Performance measures, key result areas, triple bottom line,
                                 results, goals, milestones
                                Monitoring and evaluation.

Exercise No. 15

Policy Analysis Skills Exercise
Task: Develop a policy for small business development for a Pacific Island economy.
Activities:
        Formulate the objectives of the Policy and clearly summarize them.
        Summarize the small business development problems and explain why a small
            business development strategy and policy is required.
        Identify and list the policy measures available to the National government.
        Select a number of policy instruments.
        Describe the policy implementation process.

MBA 434: South Pacific Business Environment                                                27
             In a short paragraph describe how the policy can be monitored and evaluated.

    Elect a person to report on your policy development to the class.


Exercise No.16

Task: Development of a Policy to Support Entrepreneurship and Small Business at
the Village Level in Fiji.
Activities:
             Review the current situation and past experience with small business
                projects implemented by the villagers through co-operatives and other
                means.
             Identify the constraints and the problems of small business development at
                the village level.
             Review business opportunities at a village level in areas such as
                agricultural production including the growing of chickens for Crest, Dairy
                farming, growing of export crops such as cocoa, small scale agro
                processing such as making jam from fruits or vegetables such as pineapple
                jam and ginger jam.
             Discuss the issues of business leadership and sustainability of village
                based businesses.
             Identify solutions to the problems you have discussed such as the conflict
                between kerekere culture and business culture.
        3.      Develop a policy for village based small business and describe the policy
                instruments that you recommend. Make a presentation on your policy to
                the class.
Exercise No 17.
Task: Develop a Policy for the Dairy Industry in Fiji
Activities:
    1.       Describe the policy objectives
    2.       Review the policy instruments.
    3.       Select the most appropriate policy measures.
    4.       Describe how the policy measures could lead to substantial increase in the
             self-sufficiency for Fiji in dairy products.
    5.       Make a presentation of your recommendations to the class.

Exercise No. 18

    Task: National Business Incubator Development.
    Background:
    Assume your group is an international business consultancy that has been employed
    by the Fiji Government to develop a national incubator policy and program for Fiji.
    Your task is to draw up a brief plan that illustrates the steps involved in establishing a
    national business incubator program.



MBA 434: South Pacific Business Environment                                                 28
    The following issues should be addressed:
        What criteria should be considered in deciding where to locate the business
           incubators?
        How many incubators does Fiji need and where should they be located?
        How should the program be managed?
        How should the program be financed?
        How should the program be marketed and how should the firms be selected?
        What selection criteria should be used to select firms that have applied to be
           located into the incubator?
        What services should be offered to the firms in the incubator?
        Should the incubator specialize in information technology for a particular
           industry?
        What facility should be provided at the incubator?
        How should the incubator program be monitored and evaluated?
        What lessons are there from the overseas experience for the business
           incubators?

Exercise No 19
Models of Business Development.

The Crest chicken model and its potential for applications in other industries.
The crest chicken has developed a model for the production of chickens by out growers.
Individual farmers apply to the crest chicken to be a supplier. Crest chicken provides the
technology and training. The farmers build a production facility on their land. Crest
provides the day old chickens and the feed and other suppliers. The Development Bank
provides the finance. Crest pays the Development Bank directly for the loan repayments
and pays the remainder to the farmer.

Task:
   1. Your group is required to identify how the crest business model might be applied
      successfully to other business opportunities in Fiji.
   2. Review other business development models such as the co-operative model and
       examine their strengths and weaknesses.
   3. Identify the model which may be suitable for the development of the beef industry
      to reduce beef inputs. Fiji currently imports 40% of its beef.

Exercise No 20
Development of a Policy for the Tourism Backpacker Industry (Eco-tourism and
village based tourism)
Your group has been employed by the Fiji government to develop a new policy that will
support and promote the development of backpacker tourism in Fiji. The government is
particularly interested in policy measures that will promote the village based eco-tourism
development. The government has identified $2 million per year as funds to support the
policy. Given this budget constraint you are required to design a policy that will generate
the most economic benefits to the tourism business in the rural areas. You are required to
present your policy recommendations to the Cabinet (MBA Class)

MBA 434: South Pacific Business Environment                                               29

				
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