Cuban Foreign Investment Legislation Economics Essay

With the new foreign act of 1995 it seems Cuba is going unfastened to planetary investing and concern. The authorities has now shown involvement in foreign concern and issued certain policies: –


Supporting long term economic growing societal establishments are made which are market compatible

Corruptness is carved down ‘

The private concern which are into export oriented concern are promoted and this helps the car industry construction to develop as that can add on to the state exports

Macroeconomic Stability

Foreign exchange growing is stabilised

Social Institutions which are market compatible

Domestic capital market is turning to pull the car sector from all over the topographic point.

Business civilization is created and strengthened

Recognition is going available to all the concerns that are little size or medium size

Business endeavors which are adept oriented in its truest sense

There are private province owned endeavors that can play important function in production at big graduated table which is what the car sector follows

Export zone are the important occasion for the Cuban concern patterns and therefore they need to be re structured for the farther development

The concern patterns of Cuba is embedded with labour Torahs and homo rights which are intended to advance labor engaging which is just and human rights. Car industry is a topographic point where labor is rather extremely needed and in such a scenario one demand to understands the jurisprudence before get downing on to the concern. The Arcos Principle is established by authorities mentioning to the human rights and labor Torahs which has the undermentioned points: –

( The followers are the rules stated under the jurisprudence )

Principle 1- The self-respect of labor be respected by Cuban people and the jurisprudence procedure

Principle 2- Basic Human rights should be respected.A Non-discrimination and equal rights of Cubans in accessA to installations and buying services and goods, A specially reserved one for aliens

Principle 3- To favoritism of engaging on the footing of race, sex, caste, age or income.

Principle 4 – Labour brotherhoods be promoted to guarantee just labour working criterions and due wage bundles

Principle 5 – Bettering quality of lives of the laborer

Management Practices

For whatever industry is puting in a state and runing the norms of authorities and regulations and ordinances plays an built-in function in specifying the concern. Previously have mentioned about labor Torahs & A ; human right which plays a important function in enlargement of the concern as for car concern the demand for a labor is immense.

Now lets discuss on some direction patterns of Cubans which plays an of import function infact the major function in puting a concern.

In Cuba the State plays the cardinal function in executing of any undertaking. The construction is like a Lan in computing machine nomenclature whereby there is a cardinal computing machine which is surrounded by as many Numberss of computing machines. Now when information is needed the cardinal computing machine acts as the database from which all the nodal 1s get the information. Similar the province acts as the cardinal hub with nodal endeavors being regulations by governments of the cardinal authorities. It is regulator and accepts which is to be kept and which is to be thrown out at entry every bit good as issue degree.

There is no free labor market as such and every employee belongs to the province. In such a scenario the car industrial construction somewhat depends on the regulations of province. It is the sate that decided where and how much of resources is needed for the industry set-up and its processs.

Now it is the clip when the state is heading towards a Nascent Entrepreneurialism which involves an espoused thought that revolves around Bolshevism and equalitarianism. For different people each is referred as companeros and everyone has the mission to lend on societal well being of the state. The corporate ethos revolves around the basic mission to set up a societal well province with all its officials at its right degree. Therefore taking to a displacement from Socialistic organisations to Market orientated houses which means states concern scenario is reflecting some bright visible radiations for the approaching sectors and major participants. For understanding the scenario one demand to understand the construct endeavor honing which stared in someplace around 1987 and is purportedly “ the first enterprise in footings of way and organisation of the endeavor ” ( Refer Dieste, 1997, p.46 ) . The plan is on its manner to accomplish the proper execution of the different facets of decentralized operation, the expansion of factors of assorted relationships amongst markets and some nice use of fiscal indexs.

In sum the direction of Cuba is heading towards two different constructions one leads by the State in the hub construct and another perfeccionamiento empresarial construct. The car industry need to leap this barrier for puting up an industry for long tally in Cuba.

By so we cant dismiss the fact that some of the sectors environing the Cuba Economy is so demoing a growing towards improvement. With touristry industry booming at a good degree the demand for car will increase manifolds which will coerce the State to be sync with different market participants and aid in doing a growing in the state.

Employment and hiring policies

For any concern to turn you need workers, employees who will run from top degree to the bottom degree of organisation construction. For state like Cuba where the population is scarceness you need to outsource many a thing including laborer that besides supplying adequate employment for the people of Cuba who are under fiscal hurt. Though Government have made the regulation of Right to work for all the citizens of Cuba they do n’t guarantee proper employment for them.

Employment contract

All the employees of Cuba are someway linked to the province and are covered by certain contract before fall ining their several occupations. They have provided the brotherhood and the colleagues participate in employment procedure for the province owned organisations. There is a strive against feeling to work against restraint to demo justness to your brotherhoods who plays an of import function in engaging.

Technical Training

As mentioned earlier every rose has irritants. Thought there are countless jobs in Cuba but yet there is a Cuba shinning. The Cuba work force is high educated batch when we compare it to other states. Most of them have completed their instructions at the secondary and primary degrees with nine old ages of instruction. They easy grasp thoughts and therefore proficient preparations are easy for them to learn.

Health and Safety

They give extreme importance to wellness and safety and therefore will non hold to work in inauspicious scenarios for some excess money unlike other African states or 3rd universe states.

Corporate Bargaining

Thankss to an nonionized procedure at topographic point there is a voice for all the employees in Cuba whereby they can stand against justness and raise their concerns. A platform is built for them therefore giving them a fairer and secured life.

Social Security and Job Benefits

For long term sustainability and development of any state they need to fulfill their workers with basic comfortss and even more than that. Benefits are provided in many signifiers which can be loosely one ) In footings of accident, unwellness, or losing one ‘s income compensation is provided consequently, two ) Reimbursement for infirmaries and other medical for all the citizens of Cuba, and three ) Food aid for those who needs it. Due to retirement age is reasonably low the demand for a good retirement strategy is up for demand and authorities is seeking to integrate that and it is in their precedence list.

Challenges to Cuba in footings of Foreign Business

One of the prominent job that is faced by foreign concern in Cuba is that though employers pays the cardinal authorities for workers in assorted Fieldss the State seem to pocket the bulk sum therefore go forthing into a province of loss for both employers every bit good as common employees.

The other job faced is the issue of high public-service corporation in Cuba and transit cost is sky high. This is another factor that people prefer bike and Equus caballuss for transit.

When Government plays a cardinal function and intervene into judicial system there is a job for foreigners in the state as the jurisprudence is biased and manipulated.

Then there is jobs of larceny job which restricts from people from outside to come and settle at that place. Added to it is the job of low productiveness and besides the service provided to client is weak.

The major job for foreign participants is the herculean undertaking which they need to undergo to regenerate visas every clip and besides the needed work license.

The Automobile market scenario

Cuba is a immense potency market for car industry to bloom. With a immense population and that besides a turning one with 11 million at this minute Cuba is naming the car production houses.with every rose there is a throne. You can non anticipate everything to fall into topographic point and the same goes with Cuba besides. Though it has a possible immense population of 11 million yet it is reeling with merely 1 % family holding a vehicle to drive. That seemingly a little figure yet that attract the US to construct in a capturing market in Cuba. But one thing you wo n’t believe is that Cuba has the possible to jump over US in approaching hereafter. The substructure of the little auto participants are universe category adequate to come with a true technological auto that can be cheaply yet effectual giving volt-ampere industry all over the universe a tally for its money. The universe will be different with fuel cells, intelligent transit systems, computer-coordinated, incorporate multi-modal systems, collaborative vehicle pooling, etc.

Society plays a important function about how a individual perceives a whole state and how selling is done in it. Be it a production house or selling research house how it operates depends on how the society is structured. Indeed for the last 50 old ages Cuba is seeking to portray with some bold experiments in car and other sectors in forepart of the universe therefore giving us the feeling that Cuba is turning from its nascent backward phase towards improvement. Rather I should n’t state car but whole transit system with the merchandises and the services. The fact is agreeable that car is non the turning sector of Cuba as still people move in dorsum of carts and their are Equus caballuss in rural countries to transpose. The construct of the Italian Neo realistic film which currenlt ranks at the top place of the best World film “ The Bycycle Thief ” by Vittori DeSica came from the Cubas fetish for bycycle which for them involves luxury every bit good as comfort at the same clip. Bicycles are everyplace and it attracts people from all agaes unlike in other states where it is a agency of game for kids or otherwise athleticss partisans use them. Traffic conditions in metropolis like Havana is pleasaravle plenty for people populating in large metropoliss in other parts of the developed universe. And in there you will happen the best assortments in a little sphere. Where on universe will you happen bikes with some side autos heading towards the chief route and in the same way you will acquire to see jelly-bean shaped taxis which are like our cars with three wheels. Then vintage autos like Detroit, pedi cabs can be seen in the route along with Russian built Ladas along with bantam Polist Fiats. This shows how they are intrigued by the cars they possess. They have a sense of pride in having them. Now imagine a tractor and so thing of three coachs which are welded together from start to complete giving a tractor like form. This is popular public vehicle for commercial intent. This shows how the Cubans love to hold different manner and forms for even normal conveyance. Like rural trucks in India Cuba have camels and around 400 of them gets into 1 camel believe it or non for 4 Peso ( Cuban Currency equivalent to one cent ) . But the bulk of the conveyance is owned by authorities with people holding small disposable income to afford a luxury and keep it. Besides half of vehicles are belongings of MINTUR, which is the the Ministry of Tourism of Cuba. The private autos that are seen in the route are American classics. This is shows that there is certain subdivision ( though little ) who can afford to purchase a auto and for them heritage symbol and category affairs instead so regular agencies of comfort.

Then for them driving a auto is luxury because of the rigorous policies of authorities. The authorities do n’t let private autos. Geting a licence to purchase a auto is really hard for the Cuban people. Very few acquire the permission and there is thousand of faux pass between the cup and the lip. Actually this is due to the currency job scarceness in the state. With high monetary values of oil & A ; gas the supply is really limited and the monetary value is high for paying imported oil & A ; gas from other states. That ‘s the ground authorities do n’t promote mass drive. Coming to single degree they besides do n’t hold pick either. With fuelling a armored combat vehicle going tantamount to two months ‘ salary what else can they make but to maintain down their involvements.

But everything has its pros and cons. It is seldom the cons are highlighted before the pros. The positive side to holding fewer vehicles is less traffic jam which I already mentioned earlier. For everything there is practical re-cycle installation at its castle. The aliens who stay there are allowed to drive and for them there are traders at high degrees who are acquiring a good earning due to scarceness of resources ( read autos ) . When you will acquire a $ 2300 minimal monetary value for a auto in US it will be someplace around $ 5000 for a lower limit which is besides a low type imported theoretical account from South Korea.

The selling patterns which are used by the car companies do n’t fall under the general model and constructions that is implemented by the companies in remainder of the universe. Looking at the restraints the range for selling patterns is minimum unlike other African states like South Africa. The companies that will come in the market should utilize Green selling construct which will salvage the environment and be a important factor to draw citizens towards the usage of this auto under consciousness. The initial phases will hold every market in an nonsegmental order but bit by bit the cleavage needs to be done for the aiming client. The mark should be chiefly household oriented with proper use of outside stashing to pull the people of Cuba. Primary cleavage should be based on monetary value of Car providing to assorted classs under income groups and other social differentiations which are specific to Cuba.

A Porters Five forces for come ining car market in Cuba

Barrier to Entry: – Looking at the province construction it seems the barrier to entry is high as the market is regulated by province and therefore the participants who will be at that place in the market must add on to some benefit for the province. Therefore for a foreign participant to come in the market they need to properly enticement the authorities of Cuba with strong benefits from their concerns. Besides the import responsibility being high the natural stuff sourcing will be hard for the participants.

Dickering Power of Supplier: – The bargaining power of provider is low looking at the current scenario. For them if some new participants are added to the market it would profit their concern and some little endeavor can add variegation to their current concern by being providers to the large car companies.

Dickering power of Buyers: – The purchasers dickering power is besides low. Thankss to little disposable income and authorities regulations against owning of vehicles auto is still to traverse its barrier from a luxury section to necessary section.

Menace of Substitute: – Because of the policies against having vehicles and high monetary value already bicycles and Equus caballuss and other manners of conveyance is popular. But so if the sufficient figure of autos are available adding to the turning disposable income of purchasers the menace to replace look to be negligible.

Furthermore there are few participants in the market taking to nil competitions. Therefore if a company can make up one’s mind on puting up an car mill it has a good opportunity of a growing chance albeit the procedure is clip devouring looking at present scenario. But with steps taken by State and policies altering the scenario seem to be bright in the close hereafter which can guarantee a big sum of Automobile companies puting their houses in Cuba.