Introduction
The world is full of competition due to emerging businesses, which requires “newcomer entrepreneurs” or those who want to enhance or expand their companies to create and apply new strategies. For this reason, the chosen area of Hospitality Management needs thorough research of its future in the international market. As a CEO of a hospitality company, I offer to expand the firm beyond the borders of the United States. The further analysis includes the main aspects of this type of business expansion, potential markets, the most optimal entry options, and the differences of Hospitality study in the locations.
Key Considerations for International Expansion
Foreign markets can hide their disadvantages for emerging businesses. For this reason, before expanding a Hospitality company, the following things should be considered but not limited to inflation, GDP, and unemployment rate (Stevens, 2019). Inflation is the indicator that shows the overall tendency of price growth in any country (Stevens, 2019).
The hospitality industry should take it into account because there is a threat of bigger expenses on the investment. GDP represents the value of produced goods and an economy’s prosperity (Stevens, 2019). For our organization, choosing a country with a positive GDP indicator is important, as the return on investments will be fast. A high unemployment rate is another crucial thing to be focused on in the foreign market because it signals an unstable economy and the threat of potential losses.
Selecting the Right Market for Expansion
After reckoning with the abovementioned aspects, the new locations should be assessed and chosen according to them. First, I would consider the markets of the following countries: Switzerland, Spain, and the United Kingdom. These regions have great capacity for tourism and customers’ purchasing power. These points are crucial for the hospitality industry because they guarantee profitability. However, a high competition rate exists, so new and efficient strategies should be applied.
Another detail that should be considered in these markets is cultural peculiarities. Before opening new companies, statistical analysis should be conducted to understand potential customers’ behavior and preferences.
Choosing the Best International Entry Strategy
Several options should be considered before entering the international area to make the business more successful. Joint ventures, production sharing, and management contracts would make the most sense in expanding the firm to the European continent. The joint venture, which combines expertise and facilities, would ensure better business integration and attract more customers (Femkeaa, n.d.). Production sharing would guarantee decreased costs through quality technology and skills in combination with cheaper labor (Femkeaa, n.d.).
Another option is management contracts, which would allow the hire of experienced employees from the home country to help set up the business (Femkeaa, n.d.). Combining these entry options would enhance firm functioning in foreign markets, decrease expenses, increase customer share, and faster demand satisfaction.
Industry-Specific Challenges and Adaptations
Hospitality in the United States of America differs from that in Europe, particularly in the chosen countries. The main aspects of difference are cultural and national, which point to American hospitality as more practical and straightforward, having updated services (Finney, 2019). European hospitality is focused more on customs, where old fashion is respected. The tendencies in these markets create a gap, which is a challenge with opportunities for new entrance.
Conclusion
The modern world is highly competitive in the hospitality industry. When entering European countries, hospitality CEOs should consider various significant aspects. It was decided to choose Switzerland, Great Britain, and Spain for business expansion to gain a significant number of customers and apply American hospitality strategies in the new market. Joint ventures, production sharing, and management contracts are the most optimal entry options. Differentiation analysis was held and provided the main demands to be satisfied in new markets.
References
Femkeaa (n.d.). Strategic management chapter 7: Strategy formulation: Corporate strategy. Stuvia.
Finney, C. (2019). Hospitality in culture: A study of differences and influences of the hospitality industry in the U.S. and Western Europe (2019). Honors College. Web.
Stevens, K. A. (2019). Global expansion: 3 factors to consider before expanding your business internationally. Harvard Business School Online. Web.