Please read the Case study AMEX, Hungary in Chapter 15 page No 574 and answer the following Questions 1. What are the issues confronting Thomas in this case?2. How well is Thomas dealing with these issues?3. What suggestions would you have for Thomas in managing this project? AMEX, HungaryMichael Thomas shouted, "Sasha, Tor-Tor, we've got to go! Our driver is waiting forus." Thomas's two daughters were fighting over who would get the last orange forlunch that day. Victoria (“Tor-Tor") prevailed as she grabbed the orange and ran out thedoor to the Mercedes Benz waiting for them. The fighting continued in the back seatas they drove toward the city of Budapest, Hungary. Thomas finally turned around andgrabbed the orange and proclaimed that he would have it for lunch. The back seatbecame deadly silent as they made their way to the American International School ofBudapest.After dropping the girls off at the school, Thomas was driven to his office in theBelvéros area of Budapest. Thomas worked for AMEX Petroleum and had been sent toBudapest four months earlier to set up business operations in central Hungary. His jobwas to establish 10 to 14 gas stations in the region by purchasing existing stations,building new ones, or negotiating franchise arrangements with existing owners of sta-tions. Thomas jumped at this project. He realized that his career at AMEX was goingnowhere in the United States, and if he were going to realize his ambitions, it would bein the "wild, wild east" of the former Soviet empire. Besides, Thomas's mother wasHungarian, and he could speak the language. At least he thought he could until hearrived in Budapest and realized that he had greatly exaggerated his competence.As he entered the partially refurbished offices of AMEX, he noticed that only threeof his staff were present. No one knew where Miklos was, while Margit reported thatshe would not be at work today because she had to stay at home to take care of her sickmother. Thomas asked Béla why the workmen weren't present to work on finishing theoffice. Béla informed him that the work had to be halted until they received approvalfrom the city historian. Budapest, anxious to preserve its historical heritage, requiredthat all building renovations be approved by the city historian. When Thomas askedBéla how long it would take, Béla responded, “Who knows-days, weeks, maybe evenmonths." Thomas muttered “great" to himself and turned his attention to the morningbusiness. He was scheduled to interview prospective employees who would act as sta-tion managers and staff personnel.The interview with Ferenc Erkel was typical of the many interviews he held thatmorning. Erkel was a neatly dressed, 42-year-old, unemployed professional who couldspeak limited English. He had a masters degree in international economics and hadworked for 12 years in the state-owned Institute for Foreign Trade. Since being laid offtwo years ago, he had been working as a taxicab driver. When asked about his work atthe Institute, Erkel smiled sheepishly and said that he pushed paper and spent most ofthe time playing cards with his colleagues.To date Thomas had hired 16 employees. Four quit within three days on the job, andsix were let go after a trial period for being absent from work, failing to perform duties,or showing a lack of initiative. Thomas thought that at this rate it would take him overa year just to hire his staff.Thomas took a break from the interview schedule to scan the Budapest BusinessJournal, an English newspaper that covered business news in Hungary. Two itemscaught his eye. One article was on the growing threat of the Ukrainian Mafia inHungary, which detailed extortion attempts in Budapest. The second story was thatinflation had risen to 32 percent. This last item disturbed Thomas because at the time only one out of every five Hungarian families owned a car. AMEX's strategy inHungary depended on a boom in first-time car owners.Thomas collected his things and popped a few aspirin for the headache he wasdeveloping. He walked several blocks to the Kispipa restaurant where he had a suppermeeting with Hungarian businessman Zoltán Kodaly. He had met Kodaly briefly at areception sponsored by the U.S. consulate for American and Hungarian businesspeo-ple. Kodaly reportedly owned three gas stations that Thomas was interested in.Thomas waited, sipping bottled water for 25 minutes. Kodaly appeared with a younglady who could not have been older than 19. As it turned out Kodaly had brought hisdaughter Annia, who was a university student, to act as translator. While Thomas made anattempt to speak in Hungarian at first, Kodaly insisted that they use Annia to translate.After ordering the house specialty, szekełygulas, Thomas immediately got down tobusiness. He told Kodaly that AMEX was willing to make two offers to him. Theywould like to either purchase two of his stations at a price of $150,000 each, or theycould work out a franchise agreement. Thomas said AMEX was not interested in thethird station located near Klinikak because it would be too expensive to modernize theequipment. Annia translated, and as far as Thomas could tell she was doing a prettygood job. At first Kodaly did not respond and simply engaged in side conversationswith Annia and exchanged pleasantries with people who came by. Thomas becamefrustrated and reiterated his offer. Eventually Kodaly asked what he meant by franchis-ing, and Thomas tried to use the local McDonald's as an example of how it worked. Hementioned that Kodaly would still own the stations, but he would have to pay a fran-chisee fee, share profits with AMEX, and adhere to AMEX procedures and practices.In exchange, AMEX would provide petroleum and funds to renovate the stations tomeet AMEX standards.Toward the end of the meal Kodaly asked what would happen to the people whoworked at the stations. Thomas asserted that according to his calculation the stationswere over-staffed by 70 percent and that to make a profit, at least 15 workers wouldhave to be let go. This statement was greeted with silence. Kodaly then turned the con-versation to soccer and asked Thomas if it was true that in America girls play "foot-ball." Thomas said that both of his daughters played AYSO soccer in America andhoped to play in Hungary. Kodaly said girls don't play football in Hungary and thatAnnia was an accomplished volleyball player. Thomas pressed Kodaly for a responseto his offer, but Kodaly rose and thanked Thomas for the meal. He said he would thinkabout his offer and get back in touch with him.Thomas left the Kispipa wondering if he would ever see Kodaly again. He returnedto his office where an urgent message was waiting from Tibor. Tibor was responsiblefor retrofitting the first station Thomas had purchased for AMEX. The new tanks hadnot arrived from Vienna, and the construction crew had spent the day doing nothing.After several phone calls he found out that the tanks were being held at the border bycustoms. This irritated him because he had been assured by local officials that every-thing had been taken care of. He asked his secretary to schedule an appointment withthe Hungarian trade office as soon as possible.At the end of the day he checked his e-mail from the States. There was a messagefrom headquarters asking about the status of the project. By this time he had hoped tohave his office staffed and up and running and at least three stations secured. So far hehad only one-third of his staff, his office was in shambles, and only one station wasbeing retrofitted. Thomas decided to wait until tomorrow to respond to the e-mail.Before returning home Thomas stopped off at the English Pub, a favorite hangoutfor expats in Budapest. There he met Jan Krovert, who worked for a Dutch company

The above case study shows how T has to set up his office with having many obstacles.

Answered: Please read the Case study AMEX,…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Please read the Case study AMEX, Hungary in Chapter 15 page No 574 and answer the following Questions 1. What are the issues confronting Thomas in this case? 2. How well is Thomas dealing with these issues? 3. What suggestions would you have for Thomas in managing this project?