This paper will be about how the Debt Ceilings from nations around the world can affect international management, Hospitality, and Aruba. The paper will look at the United States Debt Limit. From the beginning of the United States, up until 1917, Congress would vote and decide on each time they would issue bonds or make deals with countries that would leave the United States in debt. Since then Congress has set limits to this Governmental debt known as debt limits, and has also since then passed over their limit multiple times over. This paper will discuss how these debt limits may affect international managers in the future, while showing examples of past debt crisis situations. The paper will try to answer the following questions
• What is a debt ceiling?
• What are the potential dangers?
• What can be done to try to solve these issues?
• How does this relate to international management?
There will be two main parts with subsections under each. The first part will cover mostly the history of the debt limit mainly in the United States. Then it will look at the most recent debt ceiling that was passed in the United States, and its possible consequences and possible solutions. The second section will cover the relevance of the topic to International Management and Aruba.
Relevance to International Management:
When speaking about debt limits, usually we mean the debt of governmental bodies. These debts although not belonging to International Managers, may affect the ways that they look and/or work their jobs. Depending on if a manager is deciding on a new location or already in a location they may look at this in different ways. As mentioned before main problem found in the research was a default on debt. Other problems such as increased interest rates from investors may stem out before a default or even because of a default. Looking at interest rates, the international manager may have to begin to deal with higher governmental taxes due to money constraints on part of the government. As the interest rates increases for the government, it affects how much money is at hand to use for resources, which in turn may affect the efficiency and/or quality of your product and/or service. In a business such as hospitality, the quality of your hotel and satisfaction of your customers are what are important. If the business’ quality is being affected by government taxes, it may affect the satisfaction level of clients you were looking for, affecting profitability. Some other effects may include a reduction of reputation of a nation. If a country is continuously failing to pay its debts, other nations may begin to look down on said country. This negative view towards a country could affect how well your business does; it’s possible that potential business partners avoid you solely on the fact that the country you’re in no longer has a good reputation. The next possibility of danger is a default by a country. If a country defaults on a...