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Hospitality Industry Analysis

Discuss about the Undertaking an Assignment on International Trade.

Currently, most business organizations face a broad range of setbacks. Besides environmental extreme, the fierce competition has featured as the most challenge affecting most businesses. Due to the relaxed legal provisions for the entrance of new organizations into the hotel industry, the level of competitions has intensified forcing some companies to employ various techniques in managing the stiff competition. Interestingly, the more the entrance of new firms into the industry, the better services provided to the clients. The success majorly depends on the management experience and administration skills (Hemmatfar, et al. 2009).

The new technology has created efficiency in the management and administration of hotel industry. The benefit begins with the cooking, storage and sales and promotion (Rainer, et al. 2009). Since the incorporation of the company, the company has always recorded an increase in profit margins. As a result of its distinguished services, IHS has clients all over the world and is therefore trusted by many world best hotels. Just to mention a few, some of its customers include Conrad, Armani, Peninsula, Ritz-Carlton, Mandarin Oriental, Hilton, and MGM. The company has managed to operate in United States, Europe, South Pacific, Middle East and Asia.

For a business to enter and survive in a new geographical area, various activities need to be conducted. Among the necessary things organizations are supposed to perform includes but not limited to demographic studies, cultural aspects, legal considerations, consumers behaviour, the level of competition in the industry and others. It is imperative for the management to support strategic plans that enhance the achievement of goals. Furthermore, the companies are obligated to facilitate the activities through the provision of adequate funds. Sufficient funding of programs allows acquisition of other factors of productions. In fact, it enhances to the deployment of the experienced, qualified and determined workforce. Such kinds of employees are capable of diligently discharging their roles and works as teamwork in propelling the company towards prosperity.

For the case of IHS, the study aimed at establishing the possibility of the company succeeding to operate overseas.  Although other players were still pursuing the same agenda, competition is an inevitable factor that can’t be avoided at all. For example, some restaurants ventured only in the production of food catering services. But of late, they have incorporated other services like major conference halls thus increasing the level of competition in the industry. Also, the paper has identified the challenges the management should prepare to meet in the new market areas (Hubbard, 2011, p. 77). A critical analysis of these problems was addressed to get a deeper understanding of the hospitality industry.

Business management problems

In the search for the solution to these challenges, various theories and business models were applied. As earlier noted, the SWOT analysis and Porter’s five forces were used to give an insight of the hospitality industry. Also, it aided in the establishment of a strategic and operational plan to be adopted. Finally, the report ends with a conclusion on the possible measures the company should apply for execution of the project (Raible, 2013, p. 128-150).

Hospitality Industry Analysis 

Business enterprises that seek improvement and growth face many challenges. Most of these growing companies work towards venturing into more services to achieve business development and growth. The business environment keeps changing all the time. Methods used to handle opportunities and challenges in a given business environment also keep changing. A system that worked a few years back could not be the best approach at present (Daneshvar, et al. 2010). Again what used to work for a given business venture could not work for the other. It’s, therefore, important for companies to be on toes to cope with the changing business environments to achieve growth and attain business continuity.

The identification and analysis of the management business problems are essential for the growth of any business enterprise. It gives a deeper understanding of the situation on the ground and assists in developing an appropriate solution to these challenges (Sonia, 2012, p. 410-427). The analysis is also important because it helps a business enterprise to take proper steps which cannot cause additional future problems and therefore make the most out the opportunities, to achieve growth and business continuity. IHS Global Alliance being one of the companies that are working towards its improvement, growth and continued internationalization must also be on toes to succeed in its goal.  Notably, the hospitality industry requires a careful attention from the management and perfect plans to succeed. Despite the business exposure to inflation risks, the few that have implemented their programs have to withstand pressures in the industry (Maria, 2012, p. 67-70). 

The new investment program will expose to different challenges. Since there will be a change of the environment and business operation, will be substantial for the IHS to identify and analyze these business management problems in the new countries.

Firstly, there is a challenge of uncertainty. It poses a significant threat to the success of organizations. Uncertainty could be due to government rules and regulations in the countries where IHS will be operating since no one can tell how the new government regulations will affect a given business enterprise. The company should thus examine the legal framework of the new country to avoid operating on the wrong side of the law. In managing or overcoming the challenge, legal experts should be employed to offer advisory services to the company. Consequently, IHS will comply with legal postulations thus avoiding legal penalties (Chen, et al. 2006).

Factors to consider for successful entrance into a new market

Another challenge that the IHS is likely to face is government policy and regulations.  The government policies keep changing. Some policies may negatively impact on foreign investment. Notably, those policies adopted to promote local investments. The difficulty in predicting future policies and regulations can complicate decision making in IHS business enterprise (Chen, et al. 2006).

The policies and regulations may adversely impact on the financial position of the company. For instance, the increase in corporate tax on the business will consume a significant percentage of the net profits.  It’s, therefore, important for IHS to get a good understanding of the problems and implications caused by the government policy and regulations and draft a plan on how to handle such issues.

Furthermore, globalization is also another challenge that IHS should seek understanding. Using information strategies and analysis methods to gain a good understanding of the international cultures and markets is the big problem associated with globalization. It’s important to understand foreign cultures to possibility and ability to enter a new market. The understanding of the culture of peoples in the new territories will enable the business to avoid clashes with the potential customers. For instance, the company should understand the nature of stuff and services to offer to the Islamic and Christian community.

Lastly but not least, language barrier will be another challenge that the management should just ensure it overcomes. The difference in wordings may force the company to rely on the sales persons of the inhabitants entirely. Since the real relationship is facilitated through communication, the company may in the short run find it difficult in dealing with the challenge. But in the long term, the knowledge of the people’s social practices and cultural norms will be accompanied by understanding of the language.

Factors to consider for successful entrance into a new market

Besides culture, technological and legal environment porter’s five forces models and SWOT analysis will be instrumental for the discussion of the key metrics to enhance the success of HIS in the effort of surviving new market areas.

"Porter's models" is a tool used to assess and provide understanding on how organizations interact with each other. Also, it provides crucial information to find out where power and weakness lies. The hotel industry has experienced various kinds of competition. The entry of business enterprises that offer major conference halls into the market causes a significant challenge for IHS.

Porter presented five elements that affect the success of business. To start with, he identified powers of suppliers among the fundamental forces. He suggested for the analysis of the bargaining power of the vendors. The manager should find out the number of business players who deal in the supply of the main conference halls materials and the ability they have to influence the prices. Also, the reliability of suppliers should be identified and avoid unscrupulous vendors who regularly change terms for their personal gains. Familiarization with different prices changed with suppliers will enhance contracting ones who can sell vendor products at the reasonable price.

Secondly, the researchers should establish the bargaining powers of buyers. The study of the bargaining power of the customers at various areas in the world where IHS will operate shall give an insight of the client’s characters. Finding out the number of buyers in the market, their control and influence over the prices will aid in the formulation of operational and strategic plans (Kitchen, 2015, p. 212-216). . Since these are individuals that the organization will focuson to impress, the nature of products, meals, and services will be based on their preferences. Also, the analysis of the clients bargaining powers will enable the management to determine an appropriate marketing strategy that can generate the desired impacts. It will thus aid the company to realize the fundamental objective of profit maximization.

Thirdly, the management should conduct the analysis of Substitutes on the market. The knowledge about substitutes from potential competitors will assist in determining the nature of marketing strategy to apply. Since the clients in the hospitality industry are flexible in deciding on the kind of restaurant to dine in. It is, therefore, essential to analyze the ability of customers get the alternative product or service that they can prefer the organization products than the substitutes. The company should ensure they charge a fair price on standard products (Belch, 2014, p.31-34). Fixing of these factors in practice will significantly enable the company in retaining old customers and even tapping new ones.

Also, the Potential entrants of other competitors should be considered. The process involves the examination of the ability of other players to enter the market. If there are barriers for others to enter the market, then few people will be willing to get into the market. However, the case with IHS, allow the entrance of new players into the market limiting the powers of the company. But the most differentiation will come in from the nature of services offered, financial viability, strategic positioning, the intensity of marketing activities and others. The entry of new firms into the market is facilitated by the development policies adopted by most developing states in promoting investment activities in their countries (Ireland, et al. 2008). Therefore, if any organization will discover the potential of the investment doing pretty well in any new state where IHS has established its venture, the competitor will be free to join thus intensifying the level of competition.

Lastly but not least, before reaching a decision of making an investment, one must explore the level of market competition. The analysis will base on the number of competitors and their capabilities in the market areas where IHS is likely to join. The more the number of competitors in the market with the same product or offer the same service, the less the power you will have. However, competition on the market cannot be desired by sellers, but have some importance. For instance, it gives room for new brands, will provide room for point of differentiation in the major conference halls, and assisting in the inter-organizational link-up (Grant, 2011, p. 46-100). Conversely, it causes saturation on the market and reducing the competitive advantage of an organization. But for the study team, it is economical to weigh the possibility of their services surviving the competition. Most importantly, the test of the marketing strategy to adopt that overpowers the competitors should be established at this particular level. The diagram below shows a summary of porter’s five forces to be considered before making the investment decisions (Peng, et al. 2008).

Authorsadaptation

Source: Authorsadaptation of Michael, P. (2008).

Therefore, the company should decide on proceeding with the plans if all or most of the noted factors are kept in the desired range. Contrary to the most, then the management should think twice before actualizing on a particular investing idea in any other Territory.

SWOT is an acronym word for Strength, Weaknesses, Opportunities and Threats. SWOT analysis is a very powerful technique used in evaluating the business situation. It is important because it helps a given a business enterprise to realize some of its unexploited opportunities that exist in a market environment thus key for the growth of any business enterprise. By a smart look into IHS Global Alliance using SWOT analysis, one can identify the weakness and threats to its operation. It presents a clear opportunity to do what is necessary to the business in handling operational challenges to improve the service. It is, therefore, important for IHS Global Alliance to analyze the business environment in order to realize an efficient way for succeeding overseas.

Strengths and weakness are factors that are examined internally in a given organization and can, therefore, be referred to us internal factors. The examination looks at the business and comes up with the positive factors it has, giving it strengths and then the challenges that the organization faces internally thus the weaknesses. Opportunities and threats are factors that come out of the organization and therefore referred to us external factors. These are the possible positive factors from outside the organization that favours the business operation, thus opportunities and on the other side the negative factors from the outside that does not favour the business process thus the threats. Just, SWOT analysis is sometimes called the internal-external analysis (Fleisher, et al. 2003).

To start with the strengths, it looks into factors that favour IHS Global Alliance over other competitors. Regarding this aspect, IHS Global Alliance should seek to find out what advantages they have over other players in the market. It should also identify what it can do best than anyone else in the market thus giving the business enterprise. The company should apply unique input resources that it has that others do not have (Simons, et al. 2007). It is, therefore, important for IHS Global Alliance to analyze the strengths they have in the hotel industry that has to make it realize the current success.

On the other side, weaknesses are the other factors of consideration in SWOT Analysis. It is important for IHS Global Alliance to identify its weaknesses as a player in the market. It is much better to face the bitter truth and see how to address them than keep them and eventually kill the business enterprise. To identify weaknesses, IHS Global Alliance will have to find out what can be improved in the current business operation.

Further, the management should assess the opportunities. These are much related to external factors that favour the performance of the business enterprise. It involves knowing the lucrative opportunities that can be sported. The interesting trends that are identified could also give the strengths for a business operation. It is also good to be keen to determine the opportunities that may happen to the organization due to change in technology (Rugman, et al. 2008). Change in the government policy and regulation that relates to the field could also present some opportunities to the entity. A keen eye should also be put on social and lifestyle changes because this also can offer opportunities to the business enterprise.

And finally, the management should put a keen eye on threats. It is important to identify what could be the dangers to the business operation. It involves a good look at the external hindrances faced in operation thus preventing the growth of the business enterprise. It is essential to know what the competitors are doing in the market. In addition to this, it is important to know whether the organization has cash flow problems and then consider them as threats. Changing technology could also be a source of threat to the business enterprise (Armstrong, 2006, p. 256-260).   Lastly, it is important to know whether the organization’s weaknesses could be a source of threat to itself.

Conclusion

In conclusion, The IHS Global Alliance, have the potential of performing well in new territories. And the identification of business management problems and fixing the explored issues using known models and theories as above could guarantee a reasonable success for IHS Global Alliance. Besides, the organization should ensure legal, social-cultural, and political factors are given equal consideration to avert contradicting the provisions.

References

Armstrong, M. (2006).  A handbook of Human Resource Management Practice: (10th edition), Kogan Page, London p. 256-260

Belch, G.E., (2014). Advertising: An integrated marketing communication perspective. McGraw Hill. P. 31-34.

Chen, H., David, G., and Michael, H. (2006). “The Influence of Liability ofForeignness on Market Entry Strategies: An Illustration of Market Entry in China”.  International Marketing Review, 23 (6), pp.636-649

Daneshvar, P., & Ramesh, H. (2010).  Review of Information Technology Effect on Competitive Advantage –Strategic Perspective: International Journal of Engineering Science and Technology, 2(11), 6248–6256

Fleisher, S., and Babette, E. (2003). Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. Upper Saddle River, NJ: Prentice Hall, P.59

Grant, R., & Butler, B. (2011). Contemporary strategic management: An Australasian perspective, John Wiley and Son Australia, 5(21), 46-100

Grundy, T. (2006). Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15(5), 213-229.

Hemmatfar, M., Salehi, M., & Bayat, M. (2010). Competitive advantages and strategic information systems: International Journal of Business and Management, 5(7), P158.

Hill, W., & Jones, G. (2008). Strategic Management: An Integrated Approach. Cengage Learning, p. 423-440

Hubbard, G. & Beamish, P. (2011). Strategic management: thinking, analysis, action, Pearson Education Australia, P.77

Ireland, R. D., Hoskisson, R., & Hitt, M. (2008). Understanding business strategy: Concepts and cases. Cengage Learning, P.345-380

Kitchen, P., & Burgmann, I. (2015). "Integrated marketing communications: Making it work at a strategic level". Journal of Business Strategy, 7(13), p.212-216

Karagiannopoulos, G., Georgopoulos, N., & Nikolopoulos, K. (2005). Fathoming Porter's five forces model in the internet era. info, 7(6), 66-76.

Maria, A. (2012). Modern Methods of Risk Identification in Risk Management: International Journal of Academic Research in Economics and Management Sciences, Vol. 1, No. 6, p.67-70

Lev, V and Michael, T. (2012). Project Decisions: The Art and Science: Management Concepts. Vienna. Oxford: Oxford University Press, p.123-130

Michael, P. (2008). "The Five Competitive Forces that Shape Strategy", Harvard Business Review, p.86-104

Mohapatra, S. (2012). IT and Porter’s Competitive Forces Model and Strategies: In Information Systems Theory. Springer: New York, (pp. 265-281).

Peng, M., Denis, W., and Yi, J.(2008). “An Institution-based View of International Business Strategy: A Focus on Emerging Economies”. Journal of International Business Studies, 39, pp.920-936

Queiroz, Leonard (2002). "Risk Management Strategies for the Hospitality Industry," Hospitality Review: Vol. 20: Iss. 1, Article 3

Rainer, K. and Turban, E. (2009).  Introduction to Information Systems.(2nd edition), Wiley, pp 36–41.

Raible, M. (2013).  Industrial Organization theory and its contribution to decision-making in purchasing: Harvard University Press, p. 124-150

Rothaermel, F. T. (2008). Competitive advantage in technology intensive industries: Advances in the Study of Entrepreneurship, Innovation & Economic Growth, 3(18), 201-225.

Rugman, Alan and Alain Verbeke ((2008). “ARegional Solution to the Strategy and Structure of Multinationals: European Management Journal, 26 (5), pp.305-313

Sonia, B., David, M. (2012).Risk identification and analysis in the hospitality industry: Practitioners' perspectives from India. Worldwide Hospitality and Tourism Themes, Vol. 4 Iss: 5, pp.410 – 427

Simons, L.P., Bouwman, H., (2007). “Designing a marketing channel mix”, International Journal of Information Technology and Management, vol. 5, No 4, pp 229-248.

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