Hotel Ivory Harvard Case Solution & Analysis

Introduction

Hotel Ivory is in Assinie at the seaside founded in 1998 by a French couple. It covers land of 1.5 hectares of waterfront property and had 28 individual bungalows of 40 square meters each.

The owners Hotel Ivory wants to sale their hotel and wants to retire. Mr. Cheick Sanankoua wants to make an investment in the hotel but he is unable to fully pay for the hotel. He is looking for an investor that can make investment with him in the hotel and take the control of the hotel.

Mr. Cheick Sanankoua is unable to find any investor who is interested in such an investment and he only has a last opportunity to convince Asdar capital. If Asdar capital will not make the investment, Mr. Cheick Sanankoua will lose the agreement with the owners.

Question 1

Attractiveness of the investment after political instability

Political unrest:The country was in a state of political unrest and was facing civil war. The political instability ended in 2011, when Gbagbo was arrested and later on convicted by the international court for crime against humanity.

Political stability and economy of Ivory; after the political instability ended and the country came into a stable state; many countries are looking forward to invest in the ivory economy. The most forward looking country in investing in the ivory economy was France. The French prime minister came up with more than a 100 representatives of the investment companies who were interested in investing in this economy.

Attractiveness in the economy; the most attractive thing about this economy was that the country just came up from a civil war and the economy was low. The people were unemployed and wanted to work for their survival. The coasts of ivory are beautiful and attract the tourist, which makes the investment look more attractive. The economy was facing an average growth rate of 3% in the 1960’s when the country was in a stable state. This makes the economy attractive for the investors.

Support from the world;Following the French companies many other companies around the world invested in the ivory economy. The World Bank and the Bank of China were the largest debt providers, which mean that the economy contains something in it which is worth wile.

The economy after the exit of political instability has come up with great potentials. Different companies have looked forward in investing in the economy. Moreover the companies have critically accessed the economical return from the country. Different head of states have visited the country to encourage the investors to invest in the economy.

Since the economy is in the development phase, the capital investment in the country will be of low cost making the investments striking.

Question 2

Foreign direct investment considerations

Foreign direct investments mean the mergers and acquisitions made by a company in another country other than the country in which it operates. It means that the investment is based on more than a 50% investment in another countries economy, which makes the investing company the controller of the company in which it invests.

Major investors;The investments made after the political instability are on a large scale through foreign direct investment. The companies which were in the front row of making investments through foreign direct investments are Samsung, Hyundai, General motors and Hydrolysis. The investments made are in millions of dollars.

The economy is attractive because it carries a low cost capital investment as the value of its currency is very low against dollar, making the investment for foreign investors more attractive.

Tourism; The hotel business is attractive as the tourists will want to discover ivory as it was not being visited for many years of unrest. The political stability and a peaceful environment will encourage the business in ivory to boom and will be profitable to invest. The multi national companies are investing in ivory which will make the country attractive for tourism.

Hotel Ivory Case Solution

When an economy is in the growing age, it can be considered as the most effective time to invest to earn handsome returns from the investments made.

Question 3

Capital structure, other options to raise capital

Capital structure;The capital structure of a company is set by the management of the company and the ability to take risk by the management. The more debt financing the more will be the risk involved. The capital structure is the debt to equity ratio of a company.

The investors try to invest on the basis of the debt to equity ratio of a company, when purchasing a company the assets is valued on the basis of market value. The purchasing price should be critically accessed to gain a competitive advantage..........................

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