Reference no: EM132392396

Sunspot Resorts, Incorporated, is a publicly held international hotel firm that specializes in luxury resorts in exotic locations. Sunspot has in the last 20 years focused on oceanfront development all over the world in locations such as Greece, Cyprus, Mexico, Indonesia, Australia, and South America. It has opened three resorts in the Caribbean region over the last several years and is hoping to begin construction of another property in Barbados in the near future. Real estate negotiations for the purchase of a seafront location have stalled, however, because of complaints from environmental groups and local citizens. These groups are protesting because they feel that development will disrupt the fragile relationships of life on the reef that is immediately offshore. The environmentalists say they have seen many instances in which developers destroyed pristine land and exploited native populations. They are determined not to let this happen in Barbados, and they have assembled the people and financial support to put up a major battle if necessary. The local residents have seen many changes in their island in the last several years. They are not totally opposed to development because it provides employment opportunities and tax revenues, but in the past developers have made promises they have not kept and, as a result, many parts of the island have been ruined.

Sunspot has handled similar situations in the past by emphasizing the poor economic conditions in the host country and by promising jobs that will benefit the local community, even though it has often had difficulty in providing these jobs. Sunspot management has found that the skill level of the local labor pool has typically been low, and the firm has found it easier and less expensive to import most managerial and supervisory personnel from the United States or Europe rather than training the local people.

This time, however, the strategy does not seem to be working, and the local community is resisting Sunspot's advances in order to retain the pristine nature of the area. To date, several hundred thousand dollars have been invested in the planning and design of the resort at corporate headquarters in Seattle. The Corporate President of Sunspot has made it clear that he wants a resort in this locale because of its unique environment and profit potential, and the annual bonus of the Regional Vice President (RVP) is based on progress on the proposed development. The RVP has been in contact with the government of Barbados to push the economic perspective, and he has hired an attorney to attempt to portray the environmentalists as radical obstructionists.

Several local businesspersons have approached him, suggesting that they might know a way to overcome the resistance to the project, but they have implied that some sort of bribe might be necessary to do so. Sunspot stock has recently gone up several points on the New York Stock Exchange (NYSE), based on anticipated profits from this highly publicized development that was enthusiastically presented in Sunspot's annual report and meeting, where it was announced that the opening would take place in 18 months.

1. What are the important issues in this situation?

2. Who are the primary customers of Sunspot?

3. What recommendations would you make to Sunspot management?