project report spain

8/3/2019 Project Report Spain

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SOTC - India's Leading Tour operator

Opportunities of Expansion in SpainBatch: 2010-2012 Section: D Group

No: 6Country: Spain

Group Members

Sr. No Name Roll No:1 Debashish Bagg 20102982 Priyank Dalal 20101673 Rishabh Maheshwari 2010179

4 Rohan Mehra 20101845 Sahil Malhotra 20101956 Samarth Bharadwaj 2010198


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P a g e | 2 Project Group 6Project Report Feasibility study of SOTCs diversification to Spain

Abstract:

ECO Forecasters has been approached by SOTC Indias key outbound travel brand, to

conduct a study on Spanish economy, and comment on feasibility of its expansion in Spain. This

report starts up with brief introduction of client and Host Company and presents terms ofreference of the project. It would then brief on the project methodology and data sources thus

arrive at structural features of Spanish economy and then assess future position of SOTC if

diversified to Spain.

Table of Contents

Abstract:......................................................................................................................................................1

Introduction of SOTC..................................................................................................................................2

ECO Forecasters..........................................................................................................................................3

Diversify to Spain........................................................................................................................................3

Objective of the assignment.....................................................................................................................3

Reporting.................................................................................................................................................3

Deliverables and timeframe.....................................................................................................................4

Financial compensation...........................................................................................................................4

Required qualifications and experience...................................................................................................4

Data source and Methodology of study:.............................................................................................. ........4

Structural features of Spanish economy:.................................................................................................... .5

Current State of Spanish Economy..............................................................................................................8

Interest rates:...........................................................................................................................................8

Credit Availability:..................................................................................................................................8

Stock Market:..........................................................................................................................................8

Assessment of the Future Economic Scenario.............................................................................................9

Recommendations.............................................................................................................................. .......10

Reference:..................................................................................................................................................10

Reference:


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Introduction of SOTC

SOTC[1], Indias largest outbound tour operator was acquired by Kuoni Travels - World's

leading premium Tour Operator in the year 1996 and is a leader in all segments, namely Escorted

Tours, Free Individual Travel, Special Interest Tours and Domestic Holidays. SOTC has escortedover 4 lakh passengers across the globe to various destinations including Europe, USA,

Australia, New Zealand, Far East, Africa and many more. SOTC has been voted "Best Outbound

Tour Operator" five times in a row by the Galileo Express Travel & Tourism Awards

Committee. The company has not only fully utilized the existing market potential but has also

created new markets through innovative packages namely BhramanMandal brand which is

dedicated for the Marathi speaking population and 'Gurjar Vishwadarshan' brand that is

dedicated for the Gujarati speaking population.

ECO Forecasters

Eco Forecasters have in the past conducted feasibility study for expansion of ICICI to

Turkey, Bharat mills to China etc. Most of these predictions have worked in favor of the

company. Eco Forecasters have been approached by SOTC on 2nd January, 2011 to conduct an

economic survey on Spain and thus comment on feasibility of its move to Spanish economy.

Diversify to Spain

With such an extensive growth that SOTC had in previous years it is expanding to all

favorable tourism destinations, Spain being fifth sorted destination in the world according to the

World Travel and Tourism Council[2], the fifth highest tourism direct industry GDP after the

United States with $510.8 billion, Japan $172.5 billion, China $113.4 billion and France $107.6

billion. SOTC also runs a short tour of 6 days in Spain at present but would like to startup a

franchise to milk booming Spanish tourism industry.

Objective of the assignmentThe objective of the assignment is to develop a concept review of Spanish economy and

particularly structural features of Spanish economy and its current changes that are critical in

deciding feasibility of SOTCs above move:

Comprehensive study and analysis of structure, growth rate and performance of Spanish

economy.
http://www.wttc.org/eng/Home/http://www.wttc.org/eng/Home/


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Government and trade deficit in the economy and its effect on Spanish tourism industry.

Credit availability and situations of credit crunch or interest rate that is prevailing in the

economy, also on labour and other laws that may make the venture unfeasible in Spanish

economy.

Analyse growth of SOTC in Spanish and its future opportunities.

Reporting

The consultancy has been directly reporting its status to CEO of SOTC, India. The

consultant has submitted four stage reports on health of Spanish economy and the present report

is summarization of the same with suggestions and analysis of opportunities and threat in its

Spanish venture.

Deliverables and timeframe

Deliverable and time frame of this project is as follows.

Table 1: Time Schedule for Deliverables and Project Reports

Group Activity Topic of deliverable with respect to Spain Date of Delivery

Deliverable 1 Structure, growth and performance 20/1/2011

Deliverable 2 Government Deficit 5/2/2011

Deliverable 3 Interest rate and Credit Availability 25/2/2011

Deliverable 4 Trade and capital account deficit 4/3/2010

Final Project Report Feasibility report of SOTCs move 15/3/2011

Financial compensation

The consultant is promised to be paid a lump sum fee at the end of assignment and on

acceptance of the work by SOTC, India.

Required qualifications and experience

Education: Masters Degree in Business Economics, Economics, other related discipline.

Experience: 4 years of relevant experience in a similar area.

Skills: Proven record of similar consultancy assignments accomplished. Strong analytical

and drafting skills in preparing reports/concept papers.

Computer skills: Proficiency in usage of computer and MS office software package.


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Date of initiation: 02nd January, 2011; Closing date: 24th March 2011, 18:00

Data source and Methodology of study:

The study is based out on data sourced from Instituto Nacional de Estadstica[3]

, IMFdata-mapper[4], Bank of Spain[6], Macroeconomic Indicators of Spain[7], CIA Factsheet[8], OECD

stats[9], Spanish financial Market[10] and Eurostat[11]. This data that is obtained from different sources

is collated and used to study on feasibility of SOTCs business decision in purview of Business

environment theory and concepts. Indicators considered are GDP, inflations, unemployment

level, taxation level & formation of capital for tourism sector. We have also considered level of

customer sentiment and capital availability in Spanish market that can be pulled in by SOTC.

Structural features of Spanish economy:

Table2 shows shift in structure of Spanish economy over the years and that employment

is moving towards service sector at rapid pace. Fig1 shows that the Spanish GDP is a more open

economy.

Fig2,3 shows how Spain was successful in keeping away from 2008 slowdown and also

keeping inflation under control. Fig4 shows volatility of unemployment level in Spain, which

also signifies that employment at a low wage rate, is available. Spain's budget deficit3,9 post

2008 worsened, making it vulnerable to financial contagion from highly-indebted euro zone

members. Fig5,6 shows growth in real value of trade and budget deficit in Spanish economy.

Fig7 depicts Spanish deficit and its contribution to GDP, showing that Spain has been

following contractionary fiscal policy since it joined European Union16 in 1995. Fig8 shows


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income tax as part of GDP being constant over the years, though total tax has increased over

years due to increase in employment and in tourism tax which forms a major part of Spanish

economy.

Fig9 shows that Capital formation (formation of asserts in tourism industry) is increasing

steadily from 1995 and as it increases unemployment has been steadily brought down till 2008s

slowdown. Fig10 shows increase in government revenue income and capital asserts over the

years, showing causes of Spans surplus.

Current State of Spanish Economy

Interest rates:

Fig11,12 show that interest rates both in money and capital markets have been reducing

over the years also cost of capital in primary and secondary markets are reducing, showing that

funds are available at relatively lower interest rate.

Credit Availability:

High unemployment rate post 2008 had a toll on existing market sentiment & also isincreasing unrecoverable loans, creating credit crunch for Spanish banks[6]. High government

deficit due to global recession[2,6] has constrained credit availability for public sector too.

Worsening present situation is news of plausible collapse of Spanish democracy[8], which is

stopping other European governments come to its rescue.

Stock Market:

Fig13 shows variation of sentiments due to prevailing global economic scenario. Fig14

depicts fluctuation in Spanish Stock market which follows trends of internal economic

sentiments which inter also coincides to unemployment rate & internal interest rates[4]. Recent

labor laws[5] have induced positive sentiments in the economy thus pushing Stock prices high.


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Single Currency). However, policies which attempt to increase the size of the Union may be met

with caution by Spain; enlargement may mean a slowdown in structural funds flowing into Spain

and movement of foreign investors presently in Spain to other low-paying, better educated, labor

markets in Eastern Europe. Notwithstanding these potential challenges, Spain will continue to be

one of the engines behind deeper integration and, along with Germany and France, will attempt

to ensure that the EU remains an important player in the world economy.

Recommendations

The consultancy would like to conclude the report saying that though Spain is one of the

greatest tourism center of world, but moving into Spanish economy at this point of time may

result in many sever problems or hurdles. Credit is not freely available, market sentiments are

still low, and though labor is available the amount of taxation charge to company and also

individually is high. Starting operations in present situation would not be a proper move

depending on the above macroeconomics factors. SOTC needs to allow Spanish market to settle

down and then try to penetrate it market for success of its venture.

Reference:

1. SOTC, http://www.sotc.in/

2. World travel and tourism council, http://www.wttc.org/

3. Instituto Nacional de Estadstica(INE), http://www.ine.es/

4. IMF Datamapper, http://www.imf.org/external/datamapper/index.php5. Economy of Spain, http://en.wikipedia.org/wiki/Economy_of_Spain#Employment_crisis

6. Bank of Spain,http://www.bde.es/webbde/es/

7. Macroeconomic indicators, Spain, http://www.meh.es/

8. CIA Factsheet, https://www.cia.gov/library/publications/

9. OECD stat extracts,http://stats.oecd.org/Index.aspx.

10. Spanish financial Market, http://finance.mapsofworld.com/finance/market/spain.html.

11. Eurostat:http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/dat

a/main_tables#

12. Luis.R.T, Jues.S.S, Coefficient stability and structural change in the Spanish economy,

Economic Change, 2007, pg 387-409.

13. Spanish Credit crunch,

http://online.wsj.com/article/SB10001424052748704324304575306471722364404.html

14. Interest rate for small business,

http://www.thaindian.com/newsportal/business/spain-to-cut-taxes-on-small-

business_100468205.html

15. Spanish democracy in trouble, http://www.dailymail.co.uk/news/worldnews/article-

1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.html

16. Maastricht Treaty, http://en.wikipedia.org/wiki/Maastricht_Treaty
http://www.bde.es/webbde/es/http://www.bde.es/webbde/es/http://stats.oecd.org/Index.aspxhttp://stats.oecd.org/Index.aspxhttp://stats.oecd.org/Index.aspxhttp://finance.mapsofworld.com/finance/market/spain.htmlhttp://finance.mapsofworld.com/finance/market/spain.htmlhttp://online.wsj.com/article/SB10001424052748704324304575306471722364404.htmlhttp://www.thaindian.com/newsportal/business/spain-to-cut-taxes-on-small-business_100468205.htmlhttp://www.thaindian.com/newsportal/business/spain-to-cut-taxes-on-small-business_100468205.htmlhttp://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.htmlhttp://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.htmlhttp://en.wikipedia.org/wiki/Maastricht_Treatyhttp://www.bde.es/webbde/es/http://stats.oecd.org/Index.aspxhttp://finance.mapsofworld.com/finance/market/spain.htmlhttp://online.wsj.com/article/SB10001424052748704324304575306471722364404.htmlhttp://www.thaindian.com/newsportal/business/spain-to-cut-taxes-on-small-business_100468205.htmlhttp://www.thaindian.com/newsportal/business/spain-to-cut-taxes-on-small-business_100468205.htmlhttp://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.htmlhttp://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.htmlhttp://en.wikipedia.org/wiki/Maastricht_Treaty


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17. Reporting of Government Deficits and Debt Levels in accordance with Council Regulation

(EC) N 479/2009, and Statements contained in the Council minutes of 22/11/1993

18. Future trends in Spain, http://www.nationsencyclopedia.com/economies/Europe/Spain-

FUTURE-TRENDS.html
http://www.nationsencyclopedia.com/economies/Europe/Spain-FUTURE-TRENDS.htmlhttp://www.nationsencyclopedia.com/economies/Europe/Spain-FUTURE-TRENDS.htmlhttp://www.nationsencyclopedia.com/economies/Europe/Spain-FUTURE-TRENDS.htmlhttp://www.nationsencyclopedia.com/economies/Europe/Spain-FUTURE-TRENDS.htmlhttp://www.nationsencyclopedia.com/economies/Europe/Spain-FUTURE-TRENDS.html

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