Introduction
The time when companies operated only on the local markets has passed. Today is the age of international corporations, which involve thousands of people around the world and include numerous affiliates in different countries. Such companies are giants in the markets where they operate and expansion of the new market becomes possible for them, or even essential in case of their intensive growth and extension.
Today many international enterprises conclude, that it is important to take advantage of the markets situated in less developed countries of Asia, Africa, and South America. The level of development of these countries is not necessarily connected with the attractiveness of its market. So, this is a wise decision to expand to these countries and try to become the leader in it after a while.
Marriott and the market of Kenya
Marriott, the world’s well-known company, is an example of such a company, which has ambitious plans to enter the market of Kenya and in some time gain a large share of this market. (Field, 1996).
So, it is essential to analyze the current economic situation in Kenya, its peculiarities of the conditions, to forecast the chances of Marriott becoming the leading company in this country. On the other hand, it is also important to conduct deep and thorough analyses of the company, its internal and external environment, which will certainly affect the overall performance of Marriott in the perspective market of Kenya. In the end, it is essential to conduct a forecast on the opportunities and threats for Marriott in Kenya.
The current economic situation in Kenya
So, Kenya is a presidential representative democratic republic with the President, who is the head of the country and the government and who is chosen in the process of free and democratic elections. International observers in Kenya highlight that after 2002, when the coalition of different parties has won the elections, Kenya is on the steady democratic way of development. The government of Mwai Kibaki aimed to focus on the future economic stability and growth, on the improving amendments to the constitution, and struggle against corruption and poverty. So, overall the government is working on the advancement of the country’s welfare and stability, which is a very positive tendency for all companies in Kenya.
The administrative division of the Kenya
It is also important to analyze the administrative division of the country. Kenya consists of eight provinces, and there is a Provincial Commissioner in charge of every province. Moreover, these provinces are divided into smaller districts, and then into divisions, also called Tarifa. The city of Nairobi is a perspective market for many companies since it has gained the status of the full administrative province.
Kenya is an exotic country with rich wildlife, including such animals, like lions, elephants, buffalos, and leopards, also a great variety of birds and reptiles. There are many national parks and reserves, which preserve the wildlife and the landscapes. SO, overall Kenya is a perfect place for tourists who like hot weather and safari adventures.
In terms of the economic development of the country, the government of Kenya promotes the development of stagnating agriculture, encourages public investments in the developing industries. The assistance of such global financial organizations like the International Monetary Fund (IMF) World Bank helps Kenya on the way to financial stability. Kenya’s government’s focus today is on the anti-corruption measures and the adoption of the laws and judicial procedures which will ensure the transparency and profitability of the economy.
The exports of Kenya are approximately 2 billion dollars, including such products, as tea and coffee, various petroleum goods, cement, pyrethrum, and oil. In fact, in 2006 an oil exploration contract was signed between Kenya and China because China is interested in discovering significant sources of oil in Kenya and then transporting the black gold into its booming economy. Furthermore, Kenya’s most profitable markets are Uganda, Tanzania, the Netherlands, South Africa, and the United States of America. The imported quantity of products is higher than the quantity exported; the most popular imported goods are vehicles, iron materials, paper products, and wheat. (Throup, 1998).
So, overall, the level of development of Kenya in all spheres of the industry is high enough, and this market contains many benefits and opportunities for Marriott.
Researching the environment of Marriott
Moving on to the next section of researching the environment of Marriott, it is important to analyze its performance to ascertain its chances in the market of Kenya.
Marriott is an international company, which is one of the global leaders in the hotel market. Marriott is also called an international hotelier, due to the variety of hotels, lodgings and services, and even products provided. (Townes, 2005).
Marriott involves more than 200 000 employees around the world, who join their efforts on the way of the profitable future of the empire of Marriott. (Marriott, 1996) According to the statement of the Chairman and Chief Executive Officer J.W. Marriott Jr – one of the main assets of the company is its employees, and this is one of the reasons why the company takes care of the well-being of the employees, awarding them through various development programs. (Marriott, 1997).
It was reported, that the net income of Marriott has increased and made up more than two hundred forty-seven million dollars; the stock price of the hotel giant has risen 36 percent this year. So, the stakeholders of the company are also satisfied with the results of their investments. ( Allerton, 2002).
Marriott has already received wide access to numerous markets in the world, such as the United States of America, Eastern Europe, Latin America, China, and Russia. According to the article, Marriott operates today in more than fifty countries around the world. (“Business Asia”, 1999).
The Chief Executive Officer J.W. Marriott believes that Marriott International Inc. should expand further to the new markets, like Central America, South America, and Africa. Moreover, globalization is a positive process, which stimulates the growth of tourism at the rate of four to six percent per year, involving new customers, who use the service of this international group. (Marriott, 1997).
An executive summary for Marriott in the market of Kenya
These two analyses should be used to write an executive summary for Marriott in the new market of Kenya.
First of all, the service which is offered by Marriott company will be in demand in Kenya. Though Kenya is not a rich country, where the level of people living in the poverty is still very high, the tendency of globalization, which brings new tourists to Kenya, is one of the main encouraging factors for Marriott. Tourists from such developed countries, like the United States of America or Western Europe, will be able to pay for the hotel and will be satisfied with the premium level of service in Marriott hotels.
So, the target audience for Marriott in Kenya should be tourists and representatives from the high-paid class of Kenya. Customers should receive all standard services, which are offered in other Marriott hotels, at the standard price. On the other hand, the premium or VIP rooms should be also available at a much higher price, in order not to lose such clients.
It is also important to conduct SWOT analyses to ascertain all possible strengths and weaknesses of the company in this market, potential opportunities, and threats there.
The undeniable strength of Marriott International Inc. is its well-organized structure and orientation on the consumers. This company has many years of experience of being in the market of hotel service, which will help it overcome all first-time difficulties and drawbacks. One more strength of this group is its worldwide fame and vast group of loyal customers, who are willing to pay more for the premium quality and are looking for their favorite chain of hotels in the country they are visiting.
Despite the numerous advantages of this company, there are certain weaknesses, which might become significant obstacles. For example, this is the great number of hotels in different countries, which makes the process of management rather complicated. The tendency of expanding to the new markets increases the income of the company; however it can lead to the fact, that some important internal problems will be overseen. The increasing quantity of hotels may not necessarily lead to the prosperity of the company but may make its operations much more complicated.
Marriott has a great variety of opportunities in this market, like gaining a major part of a share of the market, then becoming the leader in this industry, and providing more service at lower prices for the less affluent population of Kenya. On the other hand, there is a threat that Marriott will face intensive competition from the companies, already existing in this industry and willing to give up their share of the market. There can be another threat, that Marriott will be accused of the size of the hotel market in Kenya and being a foreign monopolist. To avoid this problem, Marriott should be positioned as the company, which activities are based on the promotion of the wellbeing of the region where it is operating. This statement should be supported by the programs of Kenya’s welfare advancement, like a struggle against unemployment in this country by employing local people or investing in the development of agriculture and many other programs.
Using the tool of five Porter’s forces, which helps determine the overall attractiveness of the market, it is essential to ascertain the impact of different forces on the performance of Marriott. The market growth is relatively high due to globalization; the customer power is not very significant, because they are ready to pay extra money for the high-quality service in the hotel. The entry barriers in this market are also quite high due to a large amount of investment, which should be used to enter the market. This chain of hotels will be positioned as an expensive, but perfect place for the tourist and guests, who want to enjoy the same level of comfort as in their home countries. Summarizing the influence of all these forces, it can be concluded that the market of Kenya is attractive enough and Marriott should enter this market.
To give the final answer to the question of should Marriott expand to the new market of Kenya or not, there should be macroeconomic forces studied. The economic situation of Kenya should not be an obstacle to the launch of the new chain of hotels. The political situation is rather stable and if Marriott conducts social responsibility programs the government will support the activities of this company. Marriott is a company that always adopts innovation and applies new technologies, so this company will promote the application of innovations in Kenya. Such factors as the nature and geography of the country should only contribute to the profitability of the company, as there are many national parks with rich wildlife. So, this factor should be taken advantage of, and excursions to the parks or safari should be organized for tourists.
Conclusion
In the end, it can be concluded, that Marriott should expand to the market of Kenya. After the deep analysis of the forces and factors, which might influent the performance of the company, it can be said that despite the fierce competition and local peculiarities, Marriott is going to succeed in this new market and after some time can become the leader of providing hotel services in one more country. Marriott is ready to face all unexpected problems and though the investments in this project might be higher than expected, it is still worth expanding and establishing a new level of service and innovation in Kenya.
References
Allerton, H. E. (2002, July). A Cool Learning Space: Design Conveys Vision at the Center for Association Leadership’s New Marriott Learning Complex. T&D, 56, 36.
Field, D. (1996). Bill Marriott Offers Rooms with a View – of the Future. Insight on the News, 12, 38.
Marriott, A. (1996). Marriott Looks South in Bid to Double Size. The Washington Times, p. 11.
Marriott, A. (1997). A Deluge of Deals: Marriott Purchase Widens Its World Reach. The Washington Times, p. 7.
Marriott, A. (1997). J.W. Marriott Jr. Caring for Employees Helps Marriott Create an Empire. The Washington Times, p. 8.
Marriott Seeks Taiwan Hotel Deal. (1999). Business Asia, 7, 18.
Throup, D. W., & Hornsby, C. (1998). Multi-Party Politics in Kenya: The Kenyatta & Moi States & the Triumph of the System in the 1992 Election. Oxford: James Currey.
Townes, G. (2005). Marriott Hotels: The International Hotel Chain Is Committing $1 Billion to Attract More Minority Partners. Black Enterprise, 36, 58.