Each individual student will write a 2,500 word report on a critical strategic management issue for an organisation of their choice in the Tourism and Hospitality industry.
Students are encouraged to engage with a Tourism and Hospitality business identified in the course or draw upon their own industry experience to uncover a key strategic management issue for a business in the Tourism and Hospitality industry. Some key areas of strategic management in the Tourism and Hospitality industry that may be of interest could include the following; competition, resources, competitive advantage, business level strategy, corporate level strategy, organisation structure and controls, globalisation, entrepreneurship, leadership
This assessment seeks to develop the critical thinking skills and abilities of students through the identification of a relevant strategic management problem for a Tourism and Hospitality business and the development of a viable strategic solution for that problem.
The essay is an analysis of Marriott International Hotel’s globalization strategies to determine the challenges faced by organizations in the hospitality and tourism industry and in the end, propose a viable solution. The tourism and hospitality industry is an international business venture, making globalization strategies a necessity for success. Marriott is an international organization in the hospitality industry, with its headquarters in Bethesda, Maryland USA. The hotel started as a root beer stand in the year 1927, and has grown to having over 3,000 hotels globally. The common globalization challenges facing the industry include cultural and ethnic diversity in the destination country, security threats, political and economic stability. The industry is affected by slight changes in the above attributes, requiring effective entry strategies. Since most challenges are associated with the existing diversity in the destination country, employing a diverse workforce would be an immediate solution. However, a long-term solution is through foreign acquisitions and joint acquisitions, which saves the company from the challenges associated with new startups.
The Tourism and Hospitality Industry
The hospitality and tourism industry is among the rapidly growing sectors of the world economy. As the income of individuals grows, the demand for leisure services also rises, considering that people can afford to pay for luxuries. As countries develop economically, a state is reached when a greater percentage of the population can afford leisure services, and since the demand gives rise to business opportunities, countries and entrepreneurs have significantly benefited by working towards satisfying the demand by developing vibrant hospitality and tourism sectors that act as a source of revenue (Knowles, Diamantis, & El-Mourhabi, 2004.). The tourism and hospitality industry is an international business venture. The growth of international trade and business expansions has a significant link to the internationalization of the hospitality and tourism industry. The aspect that makes the two sectors international is the fact that people travel to foreign destinations as tourists in pursuit of leisure activities, and in reaching their goal, they receive tourism services which include hospitality services (Praporski, 2008). Due to the growing international interactions associated with the industry, globalization became a need for businesses within the industry so as to harness new markets in various tourist destinations around the globe. Most organizations within the industry have realized that there has been saturation in the local markets and hence, the best way towards maintaining profitability is through international ventures. By globalizing, businesses in the hotel and tourism industry expand their operations into new markets, increasing opportunities for sales, which translate to higher revenues and higher returns on investment (Vesna Peric, 2005). However, the process of globalization is a demanding process, considering that effective strategies should be adopted by the management towards conquering new markets with other organizations having established themselves (Jin-zhao & Jing, 2009). The research considers a case study on the Marriot International Hotel to determine the challenges faced by agencies in the hotel and hospitality industry during their globalization ventures.
The Marriot International Hotel
Marriott is an international organization in the hospitality industry, with its headquarters in Bethesda, Maryland, USA. The hotel started in the year 1927 as a root beer stand, and has grown to having over 3,000 hotels globally (Marriott International, 2012). The growth of Marriot is attributed to its continuous invention strategies that aimed at providing the best services to their customers, growing the business and creating opportunities to its associates. Its core values include; putting customers first, embracing change, serving the world, pursuing excellence and acting with integrity. By 2016, the organization had over 57000 assets in over 11 states around the world (Marriott International, 2012). The rising demand for hospitality services around the globe and the local flooding markets created the need for Marriott to expand internationally like many other organizations in the industry. However, the aspect of globalization came with its associated challenges due to an increasing diversity index characterized by different languages, cultures, religions, and ethnicities (International Labour Organization, 2010). The growing diversity of the work environment and the customer base presented numerous challenges as far as the operations of the organization were concerned, as misunderstandings and miscommunications were common. The organization was obliged to provide cross-cultural competencies, which would enable all stakeholders to understand the differences, hence appreciating the multicultural and multilingual diversity benefits towards achieving better outcomes (Gong, 2008). The globalization challenges are common to all the organizations within the industry, and hence a study of Marriott represents all the other organizations. For the company to survive the threat of the challenges towards achieving competitive advantage, it is important that various strategies are adopted, thus converting the challenges into strengths.
Challenges of Globalization in Tourism and Hospitality
Through globalization, businesses can expand their operations internationally. However, the host countries are characterized by different cultural, economic, political, and legal practices under which the new ventures must adapt to succeed. Due to cultural differences between people from different countries, practices that are acceptable in one country may be culturally prohibited in other nations. It is thereby necessary that the complexities associated with globalization be well understood and accommodated in all business structures and strategies towards achieving a common goal (Knowles, Diamantis, & El-Mourhabi, 2004.). Marriott International is a US-based hospitality organization. However, its globalization policies have enabled the hotel to explore new markets in Asia, Africa, South America and Europe, regions characterized by different religions, ethnicities, and cultures. In international markets, the organization is faced with a need to manage a diverse workforce and a diverse customer base, all from different cultures, religions, and ethnicities (Grobelna, 2015).
Communication is an important aspect of doing business, and language is the core facilitator of the undertaking. As hotels adopt globalization strategies to expand their businesses, they are faced with the challenges of language barriers. Most countries in the world have distinct ethnic compositions characterized by different languages. The local workforce majorly made of American people speak English, but on investing in foreign countries like China, Japan and many other Asian Countries where the English language is not common, the company struggles to enter the new market (Grobelna, 2015). The workforce in hospitality industries is always expected to be divergent, considering that tourists and visitors requiring the services come from various countries around the world. Effective communication can only be achieved by appreciating the different workforce towards serving a different customer base.
Culture and Religion
Countries and its people have different religious beliefs, whereby something that is accepted by a group in the US may be prohibited culturally in Asia. As Marriott was expanding its operations in Asia, cultural differences dragged its entry as it was necessary that the needs and expectations of the people in the region were well understood with the aim of satisfying them, thus enhancing the organization’s productivity (Gong, 2008). Also, the customers requiring hospitality and tourism services are far much more diverse in cultures and needs, and since the success of any businesses or companies are dependent on customer satisfaction, enterprises in the hospitality industry are required to invest considerably in diversity management. On the other hand, the aspect of religion is critical towards customer satisfaction. Muslims, for example, do not eat pork or meat from an animal slaughtered by a non-Muslim (Jin-zhao & Jing, 2009). Considering the case, Marriott had to ensure that it adopted a diverse workforce who understood the needs of all the client groups towards providing products according to their preferences, making more sales and profits.
The travel and hospitality industry always depend on the tourist activities, which are dependent on security issues. Secure destinations have been noted to attract more visitors in a given season compared to insecure places. Acts of terrorism have been the biggest threat to global security and hence, the entire tourism industry (Knowles, Diamantis, & El-Mourhabi, 2004.). When a terrorist attack occurs in a particular region, the number of visitors into that area drastically drops, affecting travels and hospitality organizations. The bombast attack that happened in Indonesia in 2002 led to travel advisories prohibiting citizens of most European countries from visiting the country until it was considered safe (Goyal, 2010). By reducing the number of people who travel, the tourism and hospitality industry was significantly affected. The hotels were almost recording up to only ten percent occupancy. Marriott and other hotels in the region greatly suffered massive losses. Although international markets have been noted to be more profitable, cases of insecurity make the markets uncertain. Therefore, security should be an aspect of consideration during all international business expansions.
Solutions to Globalization Challenges faced by Marriott International
Undertaking a Comprehensive Feasibility Study
When venturing into an international market, it is necessary that Marriott invests wisely in feasibility studies with all factors taken into consideration, since the results determine the success of the ventures and minimizes the challenges associated with globalization strategies. It is through feasibility studies that an organization can generate enough information concerning the destination markets, project on future trends in the industry and outline the best entry strategy into the new market (International Labour Organization, 2010). The political and economic state of a target country is critical in decision making. Politically unstable countries are always insecure and hence prone to terrorist and other attacks, influencing the demand of hospitality and tourism services. The growth potential of the destination country is also important so as to project the future state of the industry. Factors associated with inflations and lending regulations determine the financial growth of the business (Knowles, Diamantis, & El-Mourhabi, 2004.). The environmental sustainability measures adopted by a company determine its access in prime markets around the globe. Some countries have strict regulations on environmental sustainability, and for Marriott to enter into such new markets, then its operations should be environmentally friendly. For example, Aruba has strict regulations for Hotel businesses, requiring proof of environmental sustainability in order to be allowed to operate within the region (Goyal, 2010). Information on the customer diversity is also necessary before venturing into new markets, hence avoiding dissatisfaction by the clients who may feel offended by the operations which go against their beliefs. Religions also determine the type of food being consumed at all times. Examples, Muslims do not eat pork, Buddhist are majorly vegetarians and western cultures like processed foods.
Adopting a Diverse Workforce
Maintaining or exporting the native workforce by an organization to international markets proves to be a technical mistake. The native employees would be faced with challenges associated with culture, religion, and language. To counter the problem, Marriott and other organizations in the industry will have to embrace a diverse workforce within the destination country, who quickly identify their personal goals and global business goals and help in aligning them with the culture (Grobelna, 2015). During the recruitment of new employees, the management should consider employing groups from the various ethnic and cultural diversities within the region of interest, and also based on the customer base. Employees from diverse cultures help the company in adopting techniques and approaches that result in the satisfaction of clients from the respective cultures. The best approach is to send only the top management to the new markets, and then builds a workforce from the communities within the locality (Vesna Peric, 2005). The issues associated with culture would then be easily avoided. On the matter of religion, having a workforce comprising of all religions will aid in determining the best approaches towards satisfying all clients without others feeling offended (Gong, 2008). The middle level and low-level management also need to be recruited from the host nation to achieve excellent management of employees and operations based on the cultural and legal expectations of that particular country. In the administration of a religiously diverse workforce, it will be necessary to set out strict rules to avoid compromising time for religious activities. This is in line with the fact that Muslims pray up to five times in a day, which may affect the operations of the business if not controlled.
Embracing Foreign Acquisitions and Joint Ventures
Foreign acquisitions and joint ventures are a key strategy towards overcoming globalization challenges by Marriott and other organizations within the industry. Taking up an already established investment is far much useful in a new market environment compared to a new startup. The approach towards new market entries saves the organization of finding solutions to emerging challenges due to entry into a new market (Finkelstein, 2016). Existing businesses have worked over time towards solving the problems within their locality, and by acquiring them, Marriott will only need to introduce its management into the business and achieve the desired objectives. Foreign acquisition easily adds into the brand mix of an organization, in addition to spreading of risks which is essential for business growth and development. Through acquisitions, organizations can expand their operations efficiently and faster within a shorter time span compared to starting new businesses in new markets. The challenges that would have risen due to differences in cultures and beliefs would not be experienced when a company acquires an already established business, considering that the firm will have what it takes to succeed in the particular environment (Praporski, 2008). In cases where a complete acquisition is not possible, the company can embrace partnership through shareholding with an already established business. In so doing, they can integrate various strategies by bringing in new approaches and retaining other operations with an aim of avoiding prevalence to associated challenges (Adamoua & Clerides, 2009). The native partners always provide the required knowledge and information on the internal markets, legal requirements and existing challenges, which is essential towards building a successful business abroad.
The tourism and hospitality industry is an international venture, thereby organizations within the industry have to adopt globalization strategies in order to attain success in the global markets. Marriott hotel being a hospitality based business needs to understand the trends of the markets before venturing into international markets. Considering that local markets have flooded with the existence of opportunities in foreign countries, it has to adopt globalization strategies. However, globalization comes with its challenges which make it harder for the organizations to expand abroad. Challenges include security threats, cultural diversities, and political and economic instabilities, which affect the industry negatively. Despite the existence of the challenges, adopting the correct strategies will help to attain success in the international markets. Underrating a comprehensive feasibility study will greatly help the organization in making informed decisions in determining the best entry strategy. Since most challenges of globalization are associated with diversity, employing a diverse workforce will greatly help in managing the associated challenges. However, the best strategy for the company towards going international is through foreign acquisitions and joint ventures, which will substantially reduce the prevalence to the associated challenges.
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