Assignment: Case 16.1 AMEX, Hungary continue: and only one station was being 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 hangout for expats in Budapest. There he met Jan Krovert, who worked for a Dutch company that was building a large discount retail store on the outskirts of Budapest. Thomas and Krovert often talked about being “strangers in a strange land” at the pub. Thomas talked about the interviews and how he could just see in their eyes that they didn’t have the drive or initiative to be successful. Krovert responded that Hungary has high unemployment but a shortage of motivated workers. Krovert confided that he no longer interviewed anyone over the age of 30, claiming that what fire they had in their bellies was burned out after years of working in state-run companies. QuestionsWhat are the issues confronting Thomas in this case?How well is Thomas dealing with these issues?What suggestions would you have for Thomas in managing this project? Chapter 15 International Projects 569CaseAMEX, HungaryMichael Thomas shouted, “Sasha, Tor-Tor, we've got to go! Our driver is waitingfor us." Thomas's two daughters were fighting over who would get the last orangefor lunch that day. Victoria (“Tor-Tor") prevailed as she grabbed the orange andran out the door to the Mercedes Benz waiting for them. The fighting continued inthe back seat as they drove toward the city of Budapest, Hungary. Thomas finallyturned around and grabbed the orange and proclaimed that he would have it forlunch. The back seat became deadly silent as they made their way to the AmericanInternational School of Budapest.After dropping the girls off at the school, Thomas was driven to his office inthe Belvéros area of Budapest. Thomas worked for AMEX Petroleum and hadbeen sent to Budapest four months earlier to set up business operations in centralHungary. His job was to establish 10 to 14 gas stations in the region by purchasingexisting stations, building new ones, or negotiating franchise arrangements withexisting owners of stations. Thomas jumped at this project. He realized that hiscareer at AMEX was going nowhere in the United States, and if he were going torealize his ambitions, it would be in the "wild, wild east" of the former Soviet em-pire. Besides, Thomas's mother was Hungarian, and he could speak the language.At least he thought he could until he arrived in Budapest and realized that he hadgreatly exaggerated his competence.As he entered the partially refurbished offices of AMEX, he noticed that onlythree of his staff were present. No one knew where Miklos was, while Margitreported that she would not be at work today because she had to stay at home totake care of her sick mother. Thomas asked Béla why the workmen weren't presentto work on finishing the office. Béla informed him that the work had to be halteduntil they received approval from the city historian. Budapest, anxious to preserveits historical heritage, required that all building renovations be approved by the cityhistorian. When Thomas asked Béla how long it would take, Béla responded, “Whoknows-days, weeks, maybe even months." Thomas muttered "great" to himselfand turned his attention to the morning business. He was scheduled to interviewprospective employees who would act as station 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 whocould speak limited English. He had a masters degree in international economicsand had worked for 12 years in the state-owned Institute for Foreign Trade. Sincebeing laid off two years ago, he has been working as a taxicab driver. When askedabout his work at the Institute, Erkel smiled sheepishly and said that he pushedpaper and spent most of the time playing cards with his colleagues.To date Thomas had hired 16 employees. Four quit within three days on thejob, and six were let go after a trial period for being absent from work, failing toperform duties, or showing a lack of initiative. Thomas thought that at this rate itwould take him over a year just to hire his staff.Thomas took a break from the interview schedule to scan the Budapest Busi-ness Journal, an English newspaper that covered business news in Hungary. Twoitems caught his eye. One article was on the growing threat of the UkrainianMafia in Hungary, which detailed extortion attempts in Budapest. The second 5 International Projectsstory was that inflation had risen to 32 percent. This last item disturbed Thomasbecause at the time only one out of every five Hungarian families owned a car.AMEX's strategy in Hungary 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 asupper meeting with Hungarian businessman Zoltán Kodaly. He had met Kodalybriefly at a reception sponsored by the U.S. consulate for American and Hungarianbusinesspeople. Kodaly reportedly owned three gas stations that Thomas wasinterested in.Thomas waited, sipping bottled water for 25 minutes. Kodaly appeared with ayoung lady who could not have been older than 19. As it turned out Kodaly hadbrought his daughter Annia, who was a university student, to act as translator.While Thomas made an attempt to speak in Hungarian at first, Kodaly insistedthat they use Annia to translate.After ordering the house specialty, szekelygulas, Thomas immediately got downto business. He told Kodaly that AMEX was willing to make two offers to him.They would like to either purchase two of his stations at a price of s150,000 each, orthey could work out a franchise agreement. Thomas said ÅMEX was not interestedin the third station located near Klinikak because it would be too expensive to mod-ernize the equipment. Annia translated, and as far as Thomas could tell she wasdoing a pretty good job. At first Kodaly did not respond and simply engaged in sideconversations with Annia and exchanged pleasantries with people who came by.Thomas became frustrated and reiterated his offer. Eventually Kodaly asked whathe meant by franchising, and Thomas tried to use the local McDonald's as an exam-ple of how it worked. He mentioned that Kodaly would still own the stations, but hewould have to pay a franchisee fee, share profits with AMEX, and adhere to AMEXprocedures and practices. In exchange, AMEX would provide petroleum and fundsto renovate the stations to meet 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 theconversation to soccer and asked Thomas if it was true that in America girls play"football." Thomas said that both of his daughters played AYSO soccer in Americaand hoped to play in Hungary. Kodaly said girls don't play football in Hungary andthat Annia was an accomplished volleyball player. Thomas pressed Kodaly for a re-sponse to his offer, but Kodaly rose and thanked Thomas for the meal. He said hewould think about his offer and get back in touch with him.Thomas left the Kispipa wondering if he would ever see Kodaly again. He re-turned to his office where an urgent message was waiting from Tibor. Tibor wasresponsible for retrofitting the first station Thomas had purchased for AMEX. Thenew tanks had not arrived from Vienna, and the construction crew had spent theday doing nothing. After several phone calls he found out that the tanks were beingheld at the border by customs. This irritated him because he had been assured bylocal officials that everything had been taken care of. He asked his secretary toschedule an appointment with the Hungarian trade office as soon as possible.At the end of the day he checked his e-mail from the States. There was a mes-sage from headquarters asking about the status of the project. By this time he hadhoped to have his office staffed and up and running and at least three stations se-cured. So far he had only one-third of his staff, his office was in shambles, and

BUSINESS MANAGEMENT: This is the process of handling and managing the business operations so that…

Answered: What are the issues confronting Thomas…

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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What are the issues confronting Thomas in this case? How well is Thomas dealing with these issues? What suggestions would you have for Thomas in managing this project?