Expanding Expedia Inc In Asia Pacific Region, An Essay In Progress.

Please have a close look and pay attention to the following points as you have/must apply them in your assignment 2.

• Select appropriate of potential international markets by constructing a country attractiveness/competitive strength matrix for the organisation you chose in assignment 1 using country markets of your choice (here, you should explain the criteria and information, as well as steps taken to construct the matrix).
• Develop, analyse and evaluate the organisation’s entry-modes (or operational modes) used in the new markets. Assess these entry-mode (or operations mode) strategies in light the corporate objectives of your organisation.
o Analyse and evaluate how global synergies work in light of what the organisation should implement by making considerations when selecting entry-mode strategies for the organisation in the chosen markets?
• Identify and describe the corporate structure of the organisation, and how the structure used to implement its international strategy (if available). What are the implications of using various entry-mode strategies for the organisational structure of the organisation in the chosen markets?
o What kind of control challenges are foreign firms facing in the chosen markets?
o How could the organisation use information technology to support its strategic control system? Here you must identify what kind of information could be collected, processed and presented electronically, and what kind of systems and infrastructure would need to be in place for their entry into the chosen markets?
• Provide a summary of the 5 year plan of the organisation in the new market (s).

Country attractiveness of India

Discussion:

Selection of market:

The world largest travel website that is Expedia Inc is seeking its expansion in Asia pacific region as it continues to be a growing and fast paced market with a powerful brand driving the expansion of Hotel metaresearch Company. In this regard, the selected three Asian pacific countries for expansion by Expedia Inc are India, Japan and China. In the new millennium, region of Asia pacific will be the focus of worldwide tourist industry and tourism is one of the most important sectors in the economies of such region. Some of the reasons associated with the expansion of Expedia Inc in the region of Asia pacific are rapid economic growth, increase in leisure time and income, breakdown of political barriers and stability, technological development, liberalization of air transport, themed campaigns and focused marketing and ease in restrictions of travel (Cavusgil et al. 2014).

Competitive strength matrix of Expedia:

The attractiveness of three chosen Asian companies for the expansion of Expedia is evaluated by constructing the index of business environment risk. Market comparison of the three countries is done by constructing business environment risk index as depicted in the table below:

	GDP in million	Market in million	Transparency index
India	7.2%	$ 2.3 trillion	40
China	6.8%	$ 12.3 trillion	41
Japan	2.1%	$ 5.12 trillion	73

                                                                                     Market comparison:

                                                                                 (Source: created by author)

The attractiveness of country is determined by considering number of factors in terms of economic, political, social and environmental dimensions. Factors considered are market size, competitive conditions, government regulations, economic situation, political stability and market fluctuations. On other hand, competitive strength of organization is determined by considering factors such as market share, product fit, technology position, financial results, and obtainable market share (Fannin 2016).

Measuring Country attractiveness of China, Japan and India:

Factors	Weight	Rank	Weighted score
Market size	0.3	4	1.2
Government regulations	0.2	3	0.6
Economic situation	0.3	4	1.2
Political situation	0.1	3	0.3
Market fluctuations	0.1	3	0.3

Country attractiveness of India:

Factors	Weight	Rank	Weighted score
Market size	0.3	2	0.6
Government regulations	0.2	2	0.4
Economic situation	0.3	2	0.6
Political situation	0.1	2	0.2
Market fluctuations	0.1	4	0.4

Country attractiveness of Japan:

Factors	Weight	Rank	Weighted score
Market size	0.3	3	0.9
Government regulations	0.2	4	0.8
Economic situation	0.3	3	0.9
Political situation	0.1	4	0.4
Market fluctuations	0.1	2	0.2

Competitive strength of company:

Factors	Weight	Rank	Weighted score
Market share	0.3	2	0.6
Product fit	0.2	2	0.4
Financial strength	0.2	3	0.6
Technological position	0.1	3	0.3
Obtainable market share	0.2	3	0.6

The competitive strength index of China is computed at 3.6 while that of Japan, score stood at 3.2 and that of India stood at 2.2 respectively. Competitive strength of company stood at 2.5.

Country attractiveness of Japan

From these computed figures, it can be seen that that the competitive attractive of China is more than that of Japan and India for the given level of competitive strength of Expedia Inc. Therefore, the chosen market for the expansion of the business of company is China. China is regarded as one of the largest outbound tourism market surpassing many developed countries such as America and Germany. Total outbound tourism market of China has reached around 83.3 million Chinese nationals travelling aboard (Wu and Huarng 2015).

Evaluation of Entry and exit mode strategies:

The entry mode of Expedia Inc to the foreign market so that it is well aligned with the objective of organization is joint venture. Another entry mode that is accounted by the organization is through mode of equity by way of acquisition.

Joint venture- Establishment of Joint venture is one of the popular modes of entering into another country where two businesses combines together for selling the services or products. Asia continues to be growing and fast paced market where companies partner with powerful brands. In countries such as China that is regarded as tightly controlled economies, foreign companies are often required to partner with the existing local companies in order to sell the products and services (Reiche et al. 2016). In order to reach a high valuable audience in market, entering into market such as China, employment of entry mode such as joint venture would help in reaching the target market. If the target market of Expedia Inc is China for its expansion, entering the country using joint venture would require company to integrate with any other existing company in the market for carrying out their business operations. Under thin strategy, it is required for organization to contribute resources and capital in an agreed proportion and accordingly representing the loss and profit. It is regarded as preferred way of entering into the foreign market as it creates a good trade off between returns and potential risk. Entering into country using this mode comes with common objectives such as taking advantage of political situations, sharing rewards and risk between the parties, development of joint product between parties (Zhang et al. 2015). Company will be able to have clear and ready access to the market of the country.

Acquisition- Acquisition is regarded as good mode of entry when an organization requires scale and when the industry is consolidating. This particular mode of entry is likely to be used when they are consummated relatively quickly. Acquired business entity is required to integrate for reducing the risk of failure of acquisition. If organization intends to create wholly owned subsidiary establishment in the foreign market, acquisition is the preferred mode of entry. Using this particular mode of entry comes with the advantage of providing high degree of administrative control in the operations of business and analyzing the competitive and consumer environment (Deresky 2017).

Measuring Country attractiveness of China, Japan and India

With respect to the competitive advantage, the implication of global synergies is very clear as the corporate profitability is positively impacted by it. Actualization of such synergies is done through enhanced innovative capability in the form of reduction of cost. Hence, using the mode of entry such as joint venture intends to reduce or lower the cost of productions and bringing down the cost of operations. It is required by organization to establish hierarchal control for deriving the synergy benefits in terms of increase commitment to business units and scope of economies. The various inputs must be utilized and shared jointly for achieving synergies. A room for managerial discretion is created when such inputs are utilized jointly or shared together for sorting out the performance of each transacting party (Orozco et al. 2015).

In terms of foreign direct investment, travel industry in China enjoys a comparatively high degree of favour. Some of the tourism related products and services are provided by travel agency such as arranging accommodation and transportation. Expedia can operate through country specific websites with extensive services and contents in Chinese market. Earlier, it was felt by Expedia that market of Japan was more developed compared to China, and in light of this perception, it launched its operations in market of Japan at large scale compared to China. Investment in China by Expedia was mode by using the mode of Greenfield investment. In the current scenario, it is recommended to Expedia to expand in the market of China by way of acquisition and using this particular strategy will allow the business to enter new markets on a faster pace and intends to eliminate strong competitors. In addition to this, company will be able to exploit the supply and demand side effects by drawing on tangible and intangible assets. Being a huge corporate group, acquisition strategy would help in providing innumerable number of benefits in an indirect way. The factor that will act as catalyst of growth for differentiating the product of Expedia Inc from that of its competitors is synergies from integrated brands (Binder 2016). The secular shift in the digital travel bookings will continue to benefit the country.

Organizational summary:

Corporate structure of organization includes executive leadership, team of travel leadership and board of directors. The success of firms operating at international level is impacted by the strategy that it is using for entering into the market and overall operations and design of corporate. Structure of organization can either leads to restriction, promotion and innovation. If the structure of organization is flat then this autonomy and flexibility will increase the ability of organization to be innovative. Strategy of acquisition will lead to change in structure of organization and this would have considerable impact on autonomy, flexibility, cooperative teamwork, empowerment, decentralization and formalization (Frynas and Mellahi 2015). There is a change in level of autonomy that would have considerable impact on quality and financial system of organization. Depending upon the position of executives, a distinction would be made between operational and strategic autonomy and the level of operational autonomy and strategic level of employees. Such autonomy will help in facilitating the process of innovation. The cooperative team of travel leadership would have clearer field of responsibility and the consequence of such strategy would making the structure of organization more specialized and departmentalized (Bird and Mendenhall 2016).

Joint venture

An organization can transform itself using the strategy of leveraging information technology. For dealing with the strategic management process of organization, the implementation of strategy of information technology can be divided into phases such as environmental scanning, organizational objectives, strategic control, strategic implementation and strategic formulation. In terms of information technology, Expedia Inc is required to leverage the web services for speeding up the process of several large scale projects that would assist in setting stage for agreements relating to future marketing and acquisitions. For moving the vast majority of workloads to web services, cloud migration efforts should be accelerated. It is understood by travel industry that it is required by them continually transform the experiences of customers so that they are successful in making the customer engaged and remaining competitive. Expedia Inc clearly understands the importance of implementation of information technology due to its strong presence in the market. A culture of inventors are being built by organization that continues to focus on uncovering new ways so that travellers feel delighted and would provide wide range of benefits in future (Sotiriadis et al. 2015). In order to maintain the competitiveness of business and operations of business, organization relies on information technology and the business would be harmed significantly resulting from failure to adapt to development in technologies. Expedia Inc relies on using sophisticated system and information technology that includes system and technology for communication, reservations, administration and procurement (Peng 2016). When expanding into countries such as China through the means of acquisition, Expedia Inc should continuously improve and upgrade with the growth in operations in terms of both scope and size. This would help in offering an increasing number of traveller’s enhanced features, services and products.

Control challenges faced by firms in chosen market:

Firm intending to operate in Chinese market are facing some control challenge is in area of human resource management. Until recently, the command economy and long isolation of China has eliminated functions of human resources. In an environment, where the human resource management is a priority, several problems are created for firms in terms of human resource development and staffing. Moreover, the industrial policies pursued by China intend to limit the access to market for providers of foreign services along with offering substantial guidance, regulatory support and foreign manufactures. Severe restrictions are imposed on various range of foreign information communication technology due to growing areas of region for foreign business community (Knight and Liesch 2016). This would have an apparent impact on long term goals that would lead to replacement of services and products of domestic competitors.

Acquisition

Summary of five year plan of organization in new market:

Expedia Inc will be beginning its operation in market of China through entry modes of acquisition and joint venture and would provide residents of country with a wide range of sport, adventure and travel packages. There exists opportunity for Expedia Inc because of phenomenal growth in travel industry and national tourism and the company is poised to take the benefits of growth of tourism industry in China (Skripnuk et al. 2016). Over the next five years, the growth of company is to increase its sales and revenue figures by two folds compared to current figures. Moreover, the company also intends to develop strategic alliance with other service providers at international level. The three main areas of concern for this expansion in the country include effective targeting and segmentation of adventure travellers within the large travel market. The differentiating factor of newly formed company will be communicated along with the quality of offering through media, regional marketing and personal interactions. Sufficient value of sales are planned to be created by organization via the creation of repeated and business base of royal customers (Kasemsap 2016).

The way travel companies are operating is being changed by the implementation of information technology and it is further driven by competitive market of travel companies in China. China tops the list in terms of travel spending by customers with US $ 137 billion being spend in year 2015 and it is projected that the total amount to be spend by customers would be US $ 255.4 billion by year 2025. Therefore, the plan of organization is to provide differentiating customer service in terms of providing customized service.

Real time travel is being facilitated by increase in digital connectivity on wider platform and due to proliferation of smart phones and increased access to internet. Several offerings by Expedia Inc would increasingly supplemented by online platform and the use of appropriate resources along with providing service of trip advice (Bryson and Daniels 2015). Expedia has the plan of positioning itself via the strategy of acquisition so that it helps in converting fully independent travellers into online travel agents for aggregating transportation and accommodation options. Moreover, it would also provide travellers with one or many components of their trips based on incentives and plans. Exepedia seeks to overcome the challenges posed by tourism industry by providing the travellers with low cost options for travellers and the freedom to choose and thereby facilitating the development of tourism industry (Kasemsap 2015).

Competitive strength matrix of Expedia

Recommendation and Conclusion:

The above report provides a detailed explanation of the chosen market in which Expedia Inc is intending to enter via some of strategic entry modes. It has been determined by the construction of competitive strength and industry competitiveness that China would be the suitable market for expansion of business. Expedia Inc in its earlier years entered Chinese tourism market by strategies other than discussed above. It has been ascertained from conducting the market research of country that it would be appropriate to use the entry strategy of Joint venture and acquisition. Such strategies would be basically undertaken for overcoming the country risks. Therefore, it is required by organization to take several measures for dealing with the challenges faced while conducting operations in foreign countries such as China. Using the entry modes such as Joint venture and acquisition would in influencing the structure of organization that is aligned with the corporate objectives.

In this particular assignment, the focus is on selection of appropriate potential market by constructing the competitive strength matrix of organization. The selected organization seeking expansion internationally is Expedia Inc that is a global travel company which is primarily involved in aggregating travel fares and travel metasearch engines (Expediagroup.com 2018). It is one of the leading full service online travel brand of world that assists travellers in easily planning and booking travel from wide range of vacation packages such as hotels, flights, rental cars, attraction, cruises, rail and services. The corporate objective of organization is to bring the world within the reach (Expediagroup.com 2018). Some of the strategic imperatives of organization are that it will be locally relevant on a global basis, intend to make continuous improvement in platform with technology and data, engaging and attracting the world of power suppliers and focusing on being customer centric. Company is intending expansion in Asia pacific region such as India, Japan and China. Entry modes of organization into such markets are evaluated in light of corporate objectives of organization. Moreover, the strategic control system of organization has been analyzed for the implementation of entry mode strategies. Analysis of chosen market is also done in the context of information technology that would support the strategic control system of organization.

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