Greecec-Hoteling Industry

Political Analysis

International Business Management

Najeeb Mirza Khan

Roll No: BB15137

Morning 8th (B)

Submitted to:

Sir Rehan

Punjab University Gujranwala Campus

Contents
Greece ............................................................................................................................ 2

Macro factors ................................................................................................................. 2

Type of government ................................................................................................... 2

Judicial system ........................................................................................................... 2

Government Corruption ............................................................................................. 3

Micro Factors ................................................................................................................. 3

Taxes .......................................................................................................................... 3

Local Laws ................................................................................................................. 4

Industrial Regulation .................................................................................................. 4

Public transport ...................................................................................................... 4

Smoking ..................................................................................................................... 4

Indecent behaviour ................................................................................................. 4

Drugs and Alcohol ................................................................................................. 5

Political Risks ................................................................................................................ 5

Taxes .......................................................................................................................... 5

Corruption .................................................................................................................. 5

Expropriation Risk ..................................................................................................... 6

Devaluing Currency ................................................................................................... 7

Counterfeits ................................................................................................................ 7

Terrorism.................................................................................................................... 7

Strategies ........................................................................................................................ 8

Integrative strategies; ................................................................................................. 8

Defensive Strategies................................................................................................... 8
 Political Analysis of Greece

Greece
The economy of Greece is the 51st largest in the world with a nominal gross domestic
product of $200.288 billion per annum. It is also the 56th largest in the world by purchasing
power parity, at $297.008 billion per annum. As of 2017, Greece is the seventeenth-largest
economy in the 28-member European Union.

Macro factors

Type of government
The government of Greece is a parliamentary democracy. The people elect 300
parliamentary deputies who form the parliament which conducts the legislative duties of the
government. The political party which can collect 151 seats or more in the parliament
assumes the duties of the administration. The party president automatically becomes Prime
Minister and he then appoints people to become cabinet ministers. There is a President but he
is not elected by the people. Instead, he is elected by the parliamentary deputies for 5 year
terms at a time.

Judicial system
The 1975 constitution designates the Supreme Court (Areios Pagos) as the highest
court of appeal. It consists of both penal and civil sections. A Council of State does not hear
cases but decides on administrative disputes, administrative violations of laws, and revision
of disciplinary procedures affecting civil servants. The 1975 constitution also established a
Special Supreme Tribunal as a final arbiter in disputes arising over general elections and
referenda, in addition to exercising review of the constitutionality of laws.

Other elements of the judicial system include justices of the peace, magistrates'
courts, courts of first instance, courts of appeal, and various administrative courts. Judges of
the Supreme Court, the courts of appeal, and the courts of first instance are appointed for life
on the recommendation of the Ministry of Justice. The president has the constitutional right,
with certain exceptions, to commute and reduce sentences.
Government Corruption
Corruption severely affects Greece’s business environment, distorting market
competitiveness. A common form of corruption in Greece is known as ‘fakelaki‘, translating
to small envelopes and signifying bribes passed on to officials or other recipients to obtain
some form of benefit.

The Corruption Perception Index 2018 stated the following figures;

Rank 67/180
Score 45/100

Micro Factors

Taxes
In Greece, the sales tax rate is a tax charged to consumers based on the purchase price
of certain goods and services (Katherine Doggrell, 2018). The benchmark we use for the sales
tax rate refers to the highest rate. Revenues from the Sales Tax Rate are an important source
of income for the government of Greece. The Sales Tax Rate in Greece stands at 24 percent.
Sales Tax Rate in Greece averaged 20.95 percent from 2000 until 2019, reaching an all time
high of 24 percent in 2016 and a record low of 18 percent in 2001.

Greece implemented a 'stayover' tax on Jan. 1 that goes into effect just as the country
wrapped up an auspicious 2017 with a 9-percent increase in tourism arrivals, bringing the
total to more than 30 million visitors. The Overnight Stay Tax was introduced by the Greek
Ministry of Tourism with the aim of driving revenue to help cut the country’s debt.

The fee runs between €0.50 and €4 per night, based on the official rating of the
accommodation booked, and guests are required to pay the tax at check-in.

Local Laws
Tourism is a central pillar of the Greek economy, and by many analysts it is
considered to be the export champion for Greece (Jena Tesse Fox, 2011). Even during the
recent crisis, the tourism industry in Greece has been one of the mainstays of economic
growth and employment, with a continued growth in tourist arrivals and revenues driven
mainly by the determined efforts of the Greek tourism authorities and associations to upgrade
the tourist product offering; and the development of new key markets, such as Israel, India,
Middle East, China and strengthening of existing ones, such as Russia and United States
(GOV.UK, 2017).

Industrial Regulation
Greece is a democratic nation which has most laws similar to other European nations,
but some major local laws include:

 Documents of identifications need to be carried with you at all times

 Smoking is illegal in indoor public places
 It is illegal to photograph military personnel and institutions.
 Be aware that all areas of Greece enforce a public quiet time between 3 pm and 6 pm
for siesta. Police may be called to enforce this custom.

Public transport
It’s sometimes necessary to time stamp or validate your ticket on public transport for
it to be valid (Travel to Greece Weebly , 2015).

Smoking
It’s illegal to smoke in all indoor public places. The penalty for violating this law is a
fine of up to €500.

Indecent behaviour
The police will make arrests and the courts are likely to impose heavy fines or prison
sentences on people who behave indecently. Some fancy dress costumes may be regarded as
offensive and therefore against decency laws. Possession of even small quantities of drugs
can lead to a long prison sentence. The plant Khat is an illegal narcotic in Greece.

Drugs and Alcohol

Don’t become involved with drugs of any kind, and don’t bring drugs - including
‘class C’ drugs - from the UK. Possession of even small quantities can lead to a long prison
sentence. Alcohol, drugs and use of nitrous oxide can make you less alert, less in control and
less aware of your environment.

The Greek authorities are clamping down on the sale of nitrous oxide as it is illegal to
buy or sell for recreational use in Greece. You will be liable for arrest as well as a possible
fine. You should also be aware of the health risks associated with its use.

Political Risks

Taxes
The country is all set to increase the tax rates on foreigners as well as non-foreigners
to boost the country’s tourism industry. As the General Secretariat of Public Revenue on
Thursday issued a circular that includes details on how a new levy will be charged to Greek
accommodation units.

The new levy — or the so-called “stay over tax” — will be imposed as of January 1,
2018, to hotels and furnished rooms/apartments for rent and calculated based on the number
of overnight stays and the category of the accommodation unit, ranging from 50 cents to four
Euros per room.

One- and two-star hotels will be charged 0.50 Euros, three-star hotels 1, 50 Euros,
four-star hotels 3, 00 Euros and 5-star hotels 4,00 Euros.

One- and two-key furnished rooms/apartments will be charged 0.25 Euros, three-key
furnished rooms/apartments 0.50 Euros and four-key furnished rooms/apartments 1, 00 euro.

Corruption
Greece scored 45 out of 100 on the 2018 Corruption Perceptions Index reported
Transparency International. Corruption Index in Greece averaged 43.75 Points from 1995
until 2018, reaching an all time high of 53.50 Points in 1997 and a record low of 34 Points in
2011.
 Moreover, the corruption is considered as a barrier in doing business and has highly
affected the business of hotels and restaurants in the Greece country. It underlines the effect
of widespread corruption in the public sector that could have an impact on firm performance
according to firm managers. Similarly it have a huge impact on the hotels business as 17% of
the firms consider it a moderate or major barrier, while 27% view it as a minor barrier.

Expropriation Risk
(1=low, 7=high): For that indicator, Credendo Group provides data for Greece from
2014 to 2018 (The Global Economy, 2018). The average value for Greece during that period
was 2 index points with a minumum of 1 index points in 2014 and a maximum of 2 index
points in 2015.
Devaluing Currency
Safe heaven for Greece is Euro. Euro membership allowed Greece to borrow heavily
at low interest rates and then, when it ran into difficulty, it could not devalue its own currency
to get out of trouble (Stephen Beard, 2018).

The country’s eurozone partners, along with the International Monetary Fund, moved
in and, in return for more, low-interest loans, demanded steep cuts in public spending. That
austerity helped tip Greece into a deep recession, and over the past eight years, the economy
has contracted by a quarter.

Counterfeits
Legal framework

Provisions on the enforcement of IP rights and anti-counterfeiting measures are set

out in various legal instruments, including the following:

 Patents and utility models – the Technology Transfer, Inventions and Technological
Innovations Law (1733/1987), as amended, and Chapter 4 – Industrial Property Issues
of Law 3966/2011, which implements the EU IP Rights Enforcement Directive
(2004/48/EC) (World Trademark Review, 2018).
 Industrial designs – Law 2417/1996 on the implementation of the Hague Convention
for the International Registration of Industrial Designs and Decree-Law 259/1997, as
well as Chapter 4 – Industrial Property Issues of Law 3966/2011.
 Copyright – the Law on Copyright, Related Rights and Cultural Issues (2121/1993),
as amended, which implemented the IP Rights Enforcement Directive in 2001.
 Acts of unfair competition – Law 146/14, as amended.
 Border measures – the Customs Code and the EU Customs Regulation (608/2013),
which is directly applicable.
 Torts and protection of personality – the Code of Civil Procedure and the Civil Code.
 Infringements that constitute a criminal offence – the Criminal Code and the Code of
Criminal Procedure.

Terrorism
Our main focus in the study is on hotel business in the Greece, which is very capital-
intensive. Holders of such investments are aware of the possibility of a terrorism risk and
they deal with it as with other types of business risks—they identify it, evaluate it and then
manage it. Terrorism is a low probability—high impact risks and the results of existing
research indicate that foreign property owners usually underestimate the vulnerability of
buildings to a terrorist attack. This risk is comparatively low in the country especially in the
hospitality sector. However, such reactions are expected, as data from the hotel and tourism
industry point to the fact that hotel business returns to normal three months after an attack, as
long as there were no further attacks.

Strategies

Integrative strategies;
 To overcome or lower the Tax rates in the host country, the business can build strong
and close relations with the host government.
 High rate of corruption in the country is a great help to reduce the burden of the tax
rate. The tax rate can easily be reduced by giving bribery to the system.
 Integration can be through acquisition or merger.
 Try to submerge in local industry or especially the competitive one to avoid the risk
of counterfeits.

Defensive Strategies
 Corruption in the country is helpful for the business, but it can cause a great problem
when it is within the organization or business, therefore the business should not hire
the local labour as they are also a part of the corrupt system.
 Bibliography

GOV.UK, 2017. Foreign travel advice-GREECE. [Online]

Available at: https://www.gov.uk/foreign-travel-advice/greece/local-laws-and-customs
[Accessed 2019].

Jena Tesse Fox, 2011. Why Greece needs new hotel investment now. [Online]
Available at: https://www.hotelmanagement.net/own/why-greece-needs-new-hotel-
investment-now
[Accessed 4 March 2019].

Katherine Doggrell, 2018. Greece's new tourism tax is reckless. Here's why.. [Online]
Available at: https://www.hotelmanagement.net/development/greece-s-new-tourism-tax-
could-hurt-hotel-growth
[Accessed 05 March 2019].

Stephen Beard, 2018. The euro is a mixed blessing for Greece. [Online]
Available at: https://www.marketplace.org/2018/08/17/world/euro-mixed-blessing-greece
[Accessed 08 March 2019].

The Global Economy, 2018. Greece: Expropriation risk. [Online]

Available at: https://www.theglobaleconomy.com/Greece/Expropriation_risk/
[Accessed 05 March 2019].

Travel to Greece Weebly , 2015. Greece. [Online]

Available at: https://travel-to-greece.weebly.com/local-laws-and-customs.html
[Accessed 2019].

World Trademark Review, 2018. Procedures and strategies for anti-counterfeiting:

Greece (Alkisti-Irene Malamis). [Online]
Available at: https://www.worldtrademarkreview.com/procedures-and-strategies-anti-
counterfeiting-greece
[Accessed 2019].