The hospitality industry is highly competitive with new players coming up and old ones developing new working strategies or approaches; to be competitive in the industry mostly in an international market, then there is need to have strategic decisions and ensure that scientific methods of decision-making are adopted[1].
Latin American countries are offering a good market for the hospitality industry thus Burswood Entertainment Company, an Australian base entertainment company wishes to venture in the country: Brazil is the largest economy in Latin America and offers low barriers to entry. Despite the favourable entry environment in the country; a market entry strategy need to be developed; an effective entry strategy assists a company tap the new market potential successfully.
When developing an internal marketing entry strategy, a company need to undertake an external environment analysis using situational analysis tools like P.E.T.L.E. and an internal analysis using analysis tools like S.W.O.T. This paper undertakes a P.E.S.T.L.E. analysis of Brazilian market and S.W.O.T. analysis of Burswood Entertainment for the purposes of the company’s expansion.
Burswood Entertainment Company
Burswood Entertainment is an Australian based entertainment industry that has various entertainment industry modern facilities, they include Casinos, Sauna, massage parlours, restaurants, Gyms, bars, hotel, golf course, day spa, night clubs among others; it is situated in Swan River near the city of Perth, Western Australia. The company has a strong brand name and wishes to diversity its services and line of business to Brazil.
When in Brazil, the company will aim at offering similar services but will be offered by Brazilians who have undergone training and hand on experience in Australia; however for the introduction stage of the venture, Australians will be the main service provider so as they can set pace for the business.
P.E.S.T.L.E. Analysis
Political situation
The country has a democratic governance policy with three main arms of the government, the States, the Municipalities and the Federal District, each of the arms work for the general good of the country. The country has all its executive and legislative members elected while the judiciary members like judges are appointed after passing an exam.
When it comes to business, the administration of the country has made policies to facilitate fair trade among domestic and international companies. There are some businesses that are given incentives when venturing the market while others only enjoy industrial deduction relieve from taxes payable.
The growth of the country population and need for social amenities have necessitated the government to attract international hospitality industries entertaining companies; it does this through incentives like easy licensing, tax relieves and tax holidays and intellectual rights protection[2].
Economical
The economic growth rate is expected to grow at a rate of 7% in 2010, the country economy is driven by export sector is well developed and deals with items like iron, aircrafts and foodstuffs. The country has well developed telecommunication and transport system with the internet and mobile communication rated as one of the most efficient[3].
Looking at the economic situation, when Burswood Entertainment ventures in the market, then the company is likely to enjoy a well-developed infrastructures and the economic growth rate offers the company a bright future. The expansion of the economy and international trade will also work for the benefit of the company.
Technological
Scientific invention and innovation has lead to new hardware and software that assist in conducting business; Brazil has adopted the new technology from other countries and it is inventing and innovation of its own systems. Computers are used in different sectors in the hospitality industry; Brazil has the infrastructures and human resources to develop in-house software for the benefit of Burswood Entertainment, which depends on modern technology for its operations.
Social
The country is undergoing a positive population growth rate with the population expected to have been 190 million in 2009; the rate of population growth is expected to be at 1.05% with about 84% living in urban areas. Over sixty percent of the population are under the age of 45 years. Brazilian is known to be soft and not hostile to foreigners[4].
The society is classified to have a low tolerance to uncertainty; in the past, the countries has had an Uncertainty Avoidance (UAI) of 76; this indicates that the people are risk averse, they are guided by laws and have high value for truth. In families, the most noble element of a society and the society itself, there is high levels of inequality in power distribution; Power Distance Index (PDI) is high. This means that head of the family, the man who has control over all other members of the family.
The people of Brazil have minima ties among them, they interact for particular reasons and handle do they stay in groups; it is an Individualism (IDV) country. The country has men as the dominant group, they are perceived to be superior to women; their roles are different from those of men, because of their perceived Masculinity (MAS).
The county has a Long-Term Orientation (LTO); this means it aims at respecting their tradition today as they prepares future generation to adopt and respect the cultural practices learnt [5].
The countries improved social economic status is likely to benefit the Burswood Entertainment venture since it will offer market for the company’s products ; the success of the entertainment industry is dependent on the prevailing social economic situation in the market thus with an increasing young population, the company is more likely to benefit.
Legal
The country supreme source of law is the constitution, which every person is expected to respect: it supports for respect of human rights in fields like employment, retirement and environment. These legislations are meant to facilitate free and fair trade among different players in the country.
The hospitality industry has a union where it advocates for its rights and the rights of employees. Taxation laws are flexible in the country and have numerous deductions that will benefit Burswood Entertainment. Burswood Entertainment has no option other that respects the rule of law operating in the country.
Ecological
The world has embarked on massive environmental conservation mechanism; Brazil has policies administered by its ministry of environment that aims at ensuring that the county’s ecology is protected by firms, companies, and individuals. The policies set are attainable so Burswood Entertainment should not have a problem in respecting the set standards and policies[6].
Analysis
Looking at the external environment as portrayed above, the Brazil has untapped market in the entertainment industry, the country has an effective governance system that is actively involved in the development of the country; with economic developments comes the issue of improved living standards of which will form a market for entertainment industry.
Burswood Entertainment has minimal pollutants in case of some they are manageable, so the factor cannot limit the company’s development. The management should go ahead and diversify in the economy.
S.W.O.T. Analysis
Strength
In the entertainment industry, Burswood Entertainment is one of the most renowned restaurants that offer quality and competitive products and services; it thus has taken strong roots in the industry. Its brand strength can be seen from the growing numbers of executives, business people, politicians and international customers continued support to the company.
To maintain the high quality and not to disappoint their customers, the restaurant have embarked on quality foods, high tech Casinos, pleasant environments, high tech customer service and always aims at giving its customers a memorable experience.
Other than employees, the company has vision-ally management teams willing and with the knowledge and expertise to drive the company to a completely new level. Financially the company has a strong financial base and good credit policy; this will assist the company access to loan facilities to finance its diversification.
Weakness
Though the entertainment industry is as old as humanity, the target customers that the company has are only the high-class people in the society: it thus loses market of the greatest population, middle and lower class people. Secondly, the company is skewed to one line of business, entertainment. It misses an opportunity to enjoy the goodies that are brought about by other sectors like accommodation
Opportunities
The main opportunity that the company has is the increasing world living standards, people are developing fast and the demand for recreational services is on the rise. In Brazil, the countries youthful population will offer market for the company’s products; the most important thing in the market is to differentiate ones products among the many players[7].
Threats
The world is recovering from financial crisis that started in 2007, Brazil is not an exemption to these effects and as a result, it is experiencing a slowed growth. The hospitality industry specifically the entertainment industry is undergoing massive changes, innovations and inventions: this has created an increase in competition in the industry, as the companies search for competitiveness strategies[8].
Analysis
Burswood Entertainment financial standing, reputation and its brand name are strong elements that it can ride on in its expansion strategy, when these internal forces are tapped to take advantage of opportunities in Brazil, and then the company is likely to benefit a successful venture and an increased business.
The company has little to do to eliminate threats by the external world but can develop strategies to mitigate any losses. With expansion, the company can develop products targeting the middle and lower class so as it can enjoy an increased market.
Recommendation
From the analysis conducted, Brazil has an untapped market that Burswood Entertainment can tap, the most important thing that the company should have is an effective market entry strategy and be open minded when in the community: being open minded will assist it adjust it strategies to fit the needs of the Brazilian market.
Success in the entertainment industry depends with the quality of services that the country will offer as well as how updated its services will be, however; Brazil may be ahead in the sector or lagging backwards, this should be interpolated to assist the company fit the level of the county. Being a new company, then research should be embarked on to assist in product development and differentiation.
Conclusion
To develop an effective market entry strategy as well as making business strategic decisions, Burswood Entertainment needs to understand its internal strengths and weaknesses. The Understanding will help it tap opportunities offered by Brazilian market as it mitigates against possible threats in the market, Using management tools for internal analysis (S.W.O.T.) and external analysis (P.E.S.T.L.E.), will assist the management make sound decisions.
Brazilian P.E.S.T.L.E. analysis revealed that the country has a potential in the entertainment industry which Burswood Entertainment, on the other hand Burswood Entertainment has a strong financial standing and a strong brand name that can assist it enter the market effectively. Internal weakness can be solved through research and development whereas strategic measures are developed to mitigate external environment threats.
Bibliography
Brazil Federative Republic of Brazil. 2011. Brasil. Web.
Burswood Entertainment Company Official website. 2011. Burswood Entertainment . Web.
Geert Hofstede –itim. 2009. Geert Hofstede Cultural Dimensions. Web.
Hooley, Graham, and Saunders, John. 1993. Competitive Strategy: The Key to Marketing Strategy. New York: Prentice Hall.
Kotabe, Masaki, and Helsen Kristiaan. 2004. Global Marketing Management.New York: John Wiley & Sons.
Luiela-Magdalena, Csorba, Ţligan Eugenia, and Brînzan Oana. 2008. “INTERNATIONAL MARKETING STRATEGY.” Annals of the University of Oradea, Economic Science Series 17, no. 4: 848-850. Business Source Complete, EBSCOhost,.
Schrage, Michael.2010. Design, Innovation, Organizational Behavior. New York Times, A4.
The Brazilian Institute of Geography and Statistics (IBGE). 2011. IPCA of February was 0.80. Web.
Zahra, Shaker A., R. Duane Ireland, and Michael A. Hitt. 2000. “INTERNATIONAL EXPANSION BY NEW VENTURE FIRMS: INTERNATIONAL DIVERSITY, MODE OF MARKET ENTRY, TECHNOLOGICAL LEARNING, AND PERFORMANCE.” Academy of Management Journal 43, no. 5: 925-950. Business Source Complete, EBSCOhost.
Footnotes
- Schrage, Michael. 2010. Design, Innovation, Organizational Behavior. New York Times, A4.
- Luiela-Magdalena, Csorba, Ţligan Eugenia, and Brînzan Oana. 2008. “INTERNATIONAL MARKETING STRATEGY.” Annals of the University of Oradea, Economic Science Series 17, no. 4: 848-850. Business Source Complete, EBSCOhost.
- Kotabe, Masaki, and Helsen Kristiaan. 2004. Global Marketing Management.New York: John Wiley & Sons.
- Burswood Entertainment Company Official website. 2011. Burswood Entertainment . On-line.
- Geert Hofstede –itim. 2009. Geert Hofstede Cultural Dimensions.
- The Brazilian Institute of Geography and Statistics (IBGE). 2011. IPCA of February was 0.80.
- Zahra, Shaker A., R. Duane Ireland, and Michael A. Hitt. 2000. “INTERNATIONAL EXPANSION BY NEW VENTURE FIRMS: INTERNATIONAL DIVERSITY, MODE OF MARKET ENTRY, TECHNOLOGICAL LEARNING, AND PERFORMANCE.” Academy of Management Journal 43, no. 5: 925-950. Business Source Complete, EBSCOhost.
- Hooley, Graham, and Saunders, John. 1993. Competitive Strategy: The Key to Marketing Strategy. New York: Prentice Hall.