We are a consultant company, named ABC, asked to investigate where a MNC hotel group' corporate should invest abroad and advise how it should manage internationally. The main purpose of this paper is to enhance the level, scope, and detail of global strategic management information under the current hotel management models for MNC hotel groups' international development especially in China, Vietnam and Taiwan market. This investigate general about luxury hotel group's development in Asia based upon the analysis of ???hotel&resorts company Expansion Strategy in those 3 emerging countries which have been already mention above, in the way through international issues(such as economic, social, cultural, political factors etc.) to identify ??? company's strategic development. So that international companies can realize their full potential/risks by inculcating right branding practices and other effective business strategies to manage and develop abroad better.
KEY WORDS: Consultant, investigate, hospitality, strategic development, international management, globalization, emering market etc.
International management, in another way, it can define as the practice of managing business operations in more than one country. In today's business world, global competitive world, we must contract our business towards global configuration, more and more corporate are confronted with the need of globalize or die, specially those MNCs.
The hospitality industry in China, Vietnam, and Taiwan has entered into a period of rapid development in recent years. In the past thirty years, most of the international hotel groups have emphasized their business in the Asian market due to the booming tourism development in this area. The rapid growth of tourism has been pulling the hospitality industry forward considerably.
The hospitality and leisure industry is highly risky and intensively competitive. First of all, demand in the hotel and resort industry is determined or affected by several factors, either internally or externally, such as the economic, social and political conditions, seasonal factors, epidemics and natural disasters etc.; External events such as terrorists' attacks, epidemics and natural disasters also affect demand for resorts and hotels, although the degree of impact of such events depends on the location of the particular hotel or resort, as well as its target customer markets.
Supply in the hotel and resort industry is determined by the amount of hotel and resort construction and expansion conducted within a particular market which in turn is affected by factors such as demand for potential resort and hotel sites.Based upon ???company integrated business model, operation in a niche market will definitely face certain relatively high barriers to entry, even though it has occupied a leading position with its strong competitive strength
According to internationalization model, incremental commitments manifests themselves in the sequence of modes of operation used by the firm and the sequence of foreign markets entered by the firm; MNCs would start and continue to invest just in one or a few neighbouring countries, rather than to invest in several countries simultaneously; That the investment in specific country are carried out cautiously, sequentially and concurrently with the learning of the firm's people operating in that market. Companies are expected to follow a sequence from low to high commitment modes of operation and to enter new markets with successively greater psychic distance.
The business environment has been greatly changed in last decades of the 20th century. Such a dramatic change on MNCs theories, and has called for the exploration and development of new MNCs theories that conform to MNCs practices in the era of economic globalization -"Emerging Globalization MNC Theories". And those countries are like China, Vietnam, Taiwan all called as emerging market now.
Emerging Markets Opportunities
- Most western managers only see untapped market opportunities;
- Stagnant economic growth in current markets force nations to seek alternatives;
- What makes an emerging market attractive?
- Started economic reform programs
- Achieved steady GNP growth
- Emerging Markets act as markets, sources, and competitors
- Resource Seeking Opportunities
- Efficiency Seeking
- Strategic Seeking
- Reduction of risk by spreading markets.
- Location to low-cost markets within regional groupings
- Competitive advantage of local companies;
- Data may be unreliable or difficult to obtain - market, competitor, financial, economic, socio-demographic, political;
- Higher incidence of corruption;
- Financial crises;
- Cultural differences;
- Political and legal risks e.g. contract enforcement more difficult;
- Different skill and education levels
- Nature disasters/disease(flood, volcano, H1N1 etc)
XXX company, the leading international operator in the boutique resort and spa industry, it is based on Singapore market, is a renowned Asian brand that is synonymous with prestige and luxury. As a company with a global focus and instant brand recognition, XXX company has joined the flow of Asia expansion with its few department, ranging from hotel investment, hotel management, spa operations, gallery operations, property sales, to design and others project managements. So far, XXX company has a significant presence in Malaysia, Thailand, Indonesia, Japan market etc. More exciting projects are coming to perform on the stage of China Bei Jing, Vietnam, Tai Wan and so on. XXX company's strategic presence in Asia is an indication of its confidence in the region's growing outbound, inbound, and wholly domestic tourism markets, as much as its affirmation to bring to these areas its own innovative luxury brand.
As XXX company targets itself at the mission to constantly surpass guests' expectation, creating opportunities for further growth and financial success for their investors and esteemed partners, therefore, it is really worthwhile to analysis its strategy for the customer market, especially for most countries among Asia areas, the continuously fast growing emerging market.
Globalization push many companies choose to do business or invest in other country. However, there are many problems that company would be face and dealing with. Different countries have different regulations, norms and culture. It is essential that the company have to develop full strategies before any investment.
Absorbing the foreign investment in China is the basic national policy of China for opening to the important content. And since the China joined in WTO, the door of the overseas markets are widen than before. It is now a good time for foreign major industry doing investment in China territory.
When the United Nations World Tourism Organization released a report in 1999 that China would emerge as the world's No. 1 tourist destination by 2020, and that upwards of 130 million people would be visiting that country every year, the international hotel and tourism industry could almost be seen scratching its collective head and saying, "This can't possibly happencan it?" Today we are seeing that not only will this happen, but that's it's likely to happen long before year the WTO's projected year of 2020. Many hotel-and-tourism officials now believe China will be world's No. 1 tourist destination by 2011 or 2012.
In 2007, vacation adjusting policy made hotel industry nervous. Release of paid vacation activated tourism hotels field and it was a big cake for hotel and tourism industry and made hotel and tourism industry enter the golden "increasing price-volume" period of investment. Meanwhile, upgrading of domestic consumption promoted the domestic tourist numbers to grow in step with average expense, rapider and more comfortable transportation service made the bottleneck restriction effect of traffic on tourism smaller and smaller, which made sightseeing tourism develop continuously and leisure vacation rise gradually. Tourism market introduced related products and many resort hotels seized the business opportunity and did related adjustments to the changes of the market. And for the business hotel located in big cities, the release of paid vacation was also popular news. Because of the cancellation of golden week "May 1st", business hotels won't experience the embarrassing situation "vacant room" even "depreciation" caused by the golden weeks again. Normal working during "May 1st" made business hotels have normal "business" value. And aslo with 2008 Beijing Olympic Games and coming 2010 Shanghai Expo, hotel industry will develop rapidly. It is estimated that profit growth situation of hotel industry will rise up straightly in 2008 and 2010.
The public economy is consists not only the state-owned economy and the collective economy but also the state-owned and collective component in the mixed-ownership economy. The leading function well to be showed in its controlling power. It means as long as the public ownership plays a dominant position, the State which controls the lifeline of the national economy, the controlling power and competition forces of the state-owned economy are strengthened. Under these conditions, less state-owned economy will not be affected the socialist property of China. The collective economy is a potential part of the public sector of the economy. And the collective economy can show the common prosperity policy, absorb separate capital in the society, lessen the employment pressure and also can increase the public accumulation and the state revenue.
Stockholding system is a capital organization system of modern enterprises. It is easy for separating the ownership from managerial authority and improving the operation efficiency of enterprises and capitals. It is also can be applied in the socialist market economy in China. By using this system, government can improve the ownership structure of state-owned enterprises, develop a mixed-ownership economy, achieve diversification of investment subject and property rights, establish and improve the modern enterprise system, form an effective corporate governance structure and enhance the energy of enterprises.
China's economic power is exemplified by the fact that it is expected to be the fifth largest source of outward foreign direct investment during 2004- 2007 (Buckley, 2005). In addition, China has become the largest global recipient of foreign direct investment in recent years (UNCTAD, 2003). China has many resources, among those is a population of 1.3 billion people with many low- rage workers. As a result, it has become an attractive location for many large foreign manufacturers (Li & Hitt, 2006).
Turning to economics, I would like to highlight the importance of China's ongoing economic transformation. Not only has this transformation resulted in economic growth and expanded commercial ties with other countries, but it also has contributed to China's political evolution to a more liberal society. China's economic growth is a bright spot in the global economy and today China accounts for about 4% of the world economy. Per capita income has increased at an annual average rate of almost 9% since 1980. China attracted $52.7 billion worth of foreign direct investment, in 2002 becoming the world's top destination for foreign direct investment.
Political and Society
It is essential to unify the upholding of the Party's leadership, process the people's administration and obey the rule of laws. The leadership of the Party is an important guarantee of the people's administration and the law. The administration of people is the nature requirement of the socialist democracy. And the rule of law is the basic policy of the Party for leading the people's administration. Building a socialist harmonious society is proposed by Central Committee of the Communist Party. In order to make the general layout of China's socialist modernization from the three-in-one of developing the socialist market economy, socialist democracy and socialist advanced culture must expand to the content which include harmonious socialist society, achieve the leap of four-in-one.
FDI in China
Letting foreign investment into China is an important and basic principle to open up the door to the outside world and also by Deng Xiaoping Theory. China is a late starter in tourism. The government adopted a so-called "open door policy" in the late 1970s and began welcoming international visitors. Besides, it is one of the great practices of building up socialist economy with Chinese characteristics. The Law of the People's Republic of China on Chinese Foreign Equity Joint Ventures has been set by the Reginal Congress in 1979. The work of utilizing foreign capital as an important content of opening to the outside world is the basic principle of China. And after twenty years by great efforts, the scale of absorbing foreign capital is expanded as well as the level is increasingly upgraded. The China's law and managerial system on foreign investment have been gradually perfected. The achievements got the whole world's attention which effectively promoted the continuous, fast and healthy development of national economy.
n the past several years around the many countries have emerged in a variety of spa hotels and spa resorts. It is a national trend of the large-scale development and application of hot springs. The concept of spa with hot springs being used and development of tourism has become a very broad one situation. Some scholars report shows that the urban leisure travel of China was increased from 16.8% in 2002 to 21.1% in 2003. On the other hand the Chinese leisure travel is still very irregular and not become large-scale pattern formation yet such as beach vacations, ski vacations, golf holiday, etc. These are just the formation of embryo, I think the spa and leisure products is the fastest growing, most growth and market awareness with the highest one of the products. We are in a Spa tourism development time though it is relatively short but very fast pace of development. We understand that every country provinces, autonomous regions and municipalities, provinces are found in hot springs, according to information found across the country, many in hot springs total in 4000.
The Spa development has grown rapidly by the economically developed regions in central and western regions to fast development. It is already became a boom of creating a national hot spring and spa leisure travel boom. Moreover, from a consumer point of view, because of the health spa resort relatively high proportion of leisure so that it have a great market. It can be seen as a popular tourist state of being the hot spring resort during the weekends or holidays. Beijing currently has more than 40 hot-scale enterprises and some of the big industry already had some hot items.
In my point of view, it is different between resort and hotel which traditional Chinese consumers think. The Room in the spa resort set is more and more nationalized, localized and personalized. From the hot spring resort catering we can now see it is more focus on leisure and family dining habits and more focus on the combination of hot spring resources and food habits. The characteristic is more and more individually. Another aspect is the hot spring bath method. Without learning from Japanese hot spring, there are still a lot of hot spring bath methods which we can innovate and improve. This will lead the direction of hot spring resorts, these two projects, may give hot holiday market a smooth plate.
XXX company is committed to do the world top-end luxury hotel and resort. The company has been successfully investing their projects in other countries. Each of their hotel and resort are all design and operated by the local features. After a series of assessment, XXX company will plan to set up a business resort spa in Beijing.
The allocation will be decided in the Changping district where is near the six-ring of Beijing. The transportation is very convenient. It only takes 30 minutes from the airport to get there and it is also one of the nearest resorts from the center of city.As XXX company has a distinctive architectural concept, the culture of the localization is one of their main considerations. The place which called Xiaotang Shan in Changping district is the year of history of spa town. The National Palace Museum is located on the axis and it is the capital of upwind land in the theory of Sheung Shui. Because of underground geothermal energy has a leading light of domestic hot spring, so the tourism industry developed rapidly in recent years. Yuan Dynasty, there were opened as the Royal Gardens; Kangxi 5 years, the construction of the mineral springs in this palace.
The nature resource is unique. It is a year-round stream of spring water; the temperature is always 40 degrees. The clear yellow water is rich in minerals and vast majority of trace elements. People who take a spa in the hot spring can beauty the skin and strong the body system.
As Beijing is a fast-growing, dynamic metropolis capital of China. Courting foreign businesses and visitors all come to the place to take a chance of doing things. The XXX company position their hot spring resort in a luxury business type is because of they have high tastes in designing and structuring and they also have build their relationship among the high society.
Spa Hot Springs Resort is a symbol of engineering. To break through the traditional hot spring bath concept, highlighting the "Men and women bath" concept of health bath, facilities in the traditional functions on the premise of the bath and the introduction of advanced services need to be improved to grade level. To lay out the hot spring culture, focusing on absorbing the East, West, hot springs culture, a collection of many long, set of fitness, leisure and culture to enjoy in one of the excellent service, simply changed the traditional hot spring "bath" and "treatment "concept.
The issues of cross-culture will be showed in the labor operation. Although XXX company takes foreign direct investment step into the market, they still need local people to help their top managers communicate with local staffs. To the policy, tax regulation and the rule of laws, they need the local consultant to negotiate and give advices too.
As Xiaotang Shan area have many natural scenic spots, the tourism has driven up obviously. There are nearly more than ten resorts in surrounding. And through our research, it is luckily that only XXX company can make a five star standard business resort in this area. The strategic development of XXX company may need to more focus on the type of their resort instead of be busy in developing entertainment project. XXX company should use their global brand and relationship fully and negotiate for with the cross-culture approach to make a high-end business resort is the ways that strengthen the position of resorts in Beijing area.
Vietnam has been becoming a potential market for developing resorts in recent years in Asia. The advantage of over 2000 kilometers long beach together with a diverse culture and political stability and security, sea travel has always been the strength of Vietnamese tourism. The increase of foreign tourists to Vietnam together with the high demand of recreational resorts from domestic market have encouraged the development of many types of sea business, especially the birth of many coastal beach resorts in some of cities and places like: Phan Thiet city, Hoi An city, Ha Long Bay, Phu Quoc Island, Nha Trang city, etc.
Therefore, for a company doing business in hotels and resorts like XXX, Vietnam should be a big, new and potential market in Asia for investing. However, there are also so many factors that need to be concerned about by XXX when investing in Vietnamese market like: culture, social, government policies, competitors, etc. A successful in managing and dealing with these factors will help XXX achieve the goal and success in investing a potential market of resorts like Vietnam. As one of consultants of XXX company, I would like to make some researches on market of Vietnamese resorts, and also point out some factors which can be considered as consultancies of how XXX should manage its international market.
Current Stage of Vietnamese resorts
In 1997, the first resort named Coco Beach resort was built and went in operation in Mui Ne beach of Binh Thuan city. It was invested by a couple from Europe. Since then, it has opened a movement of developing resort business in Vietnam. According to a research and statistics to March of 2010, Vietnam has registered 98 resorts operated with 8150 rooms, including 60 resorts which have been classified with: 6 resorts of five-star, 27 of four star, 20 of three-star, 3 of two-star, and 4 of one-star. Most of them generate in Mui Ne beach of Binh Thuan city with 68 resorts currently in operation.
And now dozens of other projects of resort business have been implemented. Many famous brands such as: Raffles, Four Seasons and Banyan Tree are all planned to open the resorts in Da Nang city. Singapore's Banyan Tree Company is planning to build a large entertainment center with 7 continuous resorts in an area of 300 hectares with investment of 270 million dollars in just north of Da Nang. This project will be called Laguna Vietnam, a hint to remind Laguna Resort Phuket in Thailand.
Besides that, there are also some of famous resorts in Vietnam like: Furama, Vinpearl Land, Evason Hideaway, Victoria, Coco Beach, Terracotta, Sea Horse, Palmira, Pandanus, etc. Each of them has own characteristics, strengths and weaknesses of resort design, services, the way of marketing, etc. But they also have a common point of diversity entertainments and services.
Current advantages and disadvantages of some resorts in Vietnam
For the forms of business organization, most of resorts were built mainly in the form of joint ventures or foreign companies with 100% foreign capital investment. Thus, professional corporations in resort business have brought the experiences in running and managing resort business in order to create conditions for improving the quality of the resort operation.
For the technical facilities, the resorts often were built close to the seas or other places with strong tourism resources. Therefore, the design of the resorts always close to nature environment and the average square is usually from 1 hectare to 40 hectares and even could be expanded to 300ha. Each of resort often has extensive natural space, while the construction area usually takes a small proportion.
The management organization of resort in Vietnam is usually applied by standards of foreign corporations. In fact, some resorts have adopted the division of environmental management work.
Most of resorts in Vietnam are quite high standard (level of 3 to 4 star), so the quality of labor will be concerned. Most of employees should be selected carefully based on high standard of working skill. This factor could help the company remain and develop a good service and good business performance.
The resorts are located near the natural resources for tourism like seas and mountains. Therefore, they are often far from the city center and this also causes the limited access to clean water sources as well as the ability to provide quality foods. The transportation costs of food and drinks are also very high.
The capacity operation of some resorts is not high, because it is influenced by the seasonal nature of business. Not like the South of Vietnam where generated most of famous resorts and with hot weather all time, the North of Vietnam has four seasons, so some resorts from this part just can attract a big number of travelers in summer or some special occasions.
The people live in the area far from center often express the weaknesses in working skills and experiences and they may not be educated properly. In some resorts, the percentage of local employees is high, so there is a difficulty in training as well as improving their foreign language.
There is a tendency from most of resorts is that, they do not concern enough about investing and implementing environmental protection such as wastewater treatment systems, waste treatment systems. Therefore, the pollution in some of sea areas is increasing more and more.
Because of a long distance from center of the city, so it's will be difficult for a new resort in transporting building materials and choosing professional builders. This will affect the quality and professionalism in facilities of the resorts, especially the ones of private ownership
Vietnam now become one of the fastest developing country in the world, with the averaging around 8% annual Gross Domestic Product (GDP) growth from 1990 to 1997 and 6.5% from 1998-2003. From 2004 to 2008, it grew over 8% annually with 90.7 billion USD at the end of 2008. In 2009, although be influenced by economic crisis, Vietnam also remained the GDP growing with 6.2%, it was the highest rate compare with countries in Southeast Asia like Thailand, Malaysia, Laos, etc.
In 2009, Vietnamese tourism has developed strongly and its revenue accounted for a significant portion with 13.1% of total income of Vietnam. This also contributed to increase the Vietnamese GDP in 2009.
Through the research above, we can see that Vietnam is really a new and potential market for developing resort business. So it will be a good destination for investing abroad of XXX company. Besides developing plans to go international market, XXX company should be aware of some factors that could influence strongly to its plans such as: factor of culture, social factor, government policies, etc. Understanding these factors also help the company go on the right track in order to come out the best strategy for investing abroad.
Vietnam is always known as a country with a long history and lots of manners of customs. There are more and more people coming to Viet Nam for travelling and doing business. So, understanding the Vietnamese business culture and Vietnamese people is an important factor for any foreign organization which is planning to invest in Vietnam market.
Vietnamese business culture may be a barrier for the companies like: different language, different behaviors and thinking, the way of doing business, etc. So, before entering Vietnamese market XXX Company should make a research on the culture of Vietnam in order to find out Vietnamese people's desires and their behavior. A resort with services close to Vietnamese culture can create the intimacy to the local people. The relationship will be built, this the factor can help XXX remain the loyalty and profits as well as attract more local customers.
The rules and frameworks are created by governments, and they will be changed from time to time. All kind of businesses are forced to follow these rules and policies. Sometimes, it affects to the company operation or makes the company change the way they operate.
Economic policies which including taxation policy, interest rates, spending policy will also influence the business performance, business costs. Therefore, when XXX Company would like to invest abroad, it needs concern about the government policies as well as economic policies. Because, when there are some changes from these, it will lead to some different things that may affect positive or negative to the business performance.
XXX Company should understand that, success is not just financially but also socially and environmentally. Sustainable development as a socially responsible business is a core value that needs to be achieved by the organization.
XXX should create an enchantingly memorable experience for the guests and customers through the services and products. Providing its associates with fair and dignified employment which enhances each associate's ability in the long term to contribute to the company's growth as well as elevate their job prospects with XXX Company. Enabling long term societal prosperity for the communities in which the company operates. Besides that, the company also should exercise caution with respect to the environmental impacts of its operations, and taking an active role in the protection and remediation of its global ecosystem. Conducting business with suppliers and vendors in a dignified, fair and transparent manner, while working in partnership to enhance societal benefits and reduce environmental impacts.
Identify who will be the company's competitor when is enters global market is very important. A good research on competitors will help the company understand what their strengths, weaknesses and their competitive advantages are, in order to develop the best business strategy for the company.
There are so many resorts that entered Vietnamese market before XXX Company. So they should have the certain competitive advantages like get used to the Vietnamese culture, more experiences, and they also have their existing customers.
To be success in taking the advantages over the competitors, it also will take time for XXX Company. The Company should analyze its strengths, weaknesses, threat and opportunities. Besides that, making a comparison with its competitors, this will help the company have an overview of the standard in Vietnamese resort market. From this analyze, XXX Company can develop strategies and plans to remain and develop the services that may attract the customers.
XXX Company is running a business in spas, hotels and resorts. A Strategic marketing will help the company to deliver its image to public, and also increase the competitive advantages over its competitor, especially the local companies.
To cross-promote the company's spas, hotels, and resorts to a wider, global audience, The XXX Company should identify and form relationships with strategic marketing partner during the year. Among pre-and post-opening sales, and marketing activities should be introductory offers for in-house guests at the hotels or resorts, e-direct mailer campaigns targeting the local database, commissionable rates through tour operators, special rates for nearby businesses, and direct tie-ups with the hotels to create visibility.
Given the fierce competition in most location, revenue, growth should be highly dependent on increasing capture rate from in-house guests, regulars and members. In order to differentiate the company itself from the competition, XXX should emphasized its service consistency.
Attractive discounts and promotion in some special occasions will help to maintain and secure the business prior. At the same time, XXX should develop a department which is in charge of creating rewards programmes to attract customers and build loyalty.
Strategic Market Development
It's always a big challenge for a company to enter a new international market. Besides a lot of factors that need to be concerned like: culture, government policies, competitors, social responsible, the company also should develop a clearly strategic development for the beginning as well as for the further future of the business.
When entering the Vietnamese market, based on the requirements, taste, behavior of customers, and culture, XXX Company should create clearly vision and mission that could cover and show its development tendency and the company's goal. A vision should be presented as a picture of the business in next few years. A mission will indicate the purpose and activities of the company's business. These should meet the expectation of Vietnamese customers.
A good strategic development will help XXX company catch up with its local competitors. Based on these strategies, the company should build the customer database, target the potential customers in the market area, communicate with the customers in a cost-effective manner, and enhance the brand by differentiating XXX Company from its competitors.
On the others hand, XXX Company also should improve the operation system as well as services perfectly in order to fulfill the various requirements from customers.
All of these factors should help the XXX to go on the right track with its strategic plans. A successful business of a new market will come when XXX Company can achieve its goal.
Through the discussion above, as one of the consultants of XXX Company, I strongly believe, Vietnam will be a new potential market for investing and developing resorts despite of there are also some of challenges from the culture, competitors, government policies, etc. A successful investment in Vietnam market should be an objective of the company in delivering its image to global. The demand from local people and also from foreign travelers in Vietnam market is very high, so XXX Company should be one of the suppliers for this potential market.
Why choose Taiwan
The selection of country would be the first thing to decide. It requires stable government, country business environment and open-minded society are considered the target country spread its arm to welcome investors. Therefore, the overall country analysis, and other analysis are needed. There is a brief history of Taiwan below.
The island of Taiwan (called Republic of China after World War II in 1945) is located east of the Taiwan Strait, off south-eastern coast of mainland with about 23 million people (Taiwanese) who lives on an island called by colonizer Portuguese " Formosa" literal meaning 'beautiful island'.
The northeast is the main islands of Japan and the southern end of the Ryukyu Islands of Japan; Philippines lie to its south. There are geographic advantages of linking country or be a stepping-stone to other countries. Japan had controlled Taiwan for a long time, therefore, Japan's culture have influenced until now.
Other European countries had been to Taiwan as well such as Portugal and Dutch. During the governing, they had set regulations and buildings, some are still well reserved.
The governor's power reformed from Lee Teng-hui who is selected by Chiang Kai-shek's son Chaing Ching-kuo after successful regain Taiwan's liberty, a party called DPP (Democratic Progressive Party) to current legislative president Ma Ying-jeou who is leading a party called KMT (Kuomingtang).
In late twentieth century Taiwan's quick industrialization and rapid growth has been called the "Taiwan Miracle" or "Taiwan Economic Miracle" alongside with Singapore, South Korea, and Hong Kong are industrialized developed countries known as the "Four Asian Tigers"
In twentieth first century, the political democratization, economy liberalization and globalization trend, Taiwan is facing a new political situation and global competition. But the well established public infrastructures, convenient transportation and well developed telecommunication system to overcome many crisis.
Taiwan is located on the Asian and Pacific geography key position, to West Pacific Ocean main 7 cities, the average of the shortest fight time approximately 2.55 hours. From Taiwan biggest international port Kaohsiung harbour to overseas five big major ports (Hong Kong, Manila, Shanghai, and Tokyo, Singapore), the average of marine transportation about 53 hours. After the cross-strait direct flight, Taipei is situated the Asian and Pacific double gold route central committee, may link Tokyo and Seoul to the north, west Shanghai, south meets Hong Kong, Singapore and Association of Southeast Asian Nations various countries capital continually. Taiwan is situated the Asian economic strategic position, becomes European, US-Japan and the Asian and Pacific emerging market linked key position and the industrial strategy important bridge, is also the transnational enterprise in the Asian and Pacific area transport business headquarters first choice status.
Skilful and well educated human resources foster Taiwan competitive advantages. According to the WEF published on "World Competitive Report' in 2008, Taiwan ranks number 8 in the world because of abundant R&D talents.
Political conditions and government regulations would affect the business strategies and benefits. Taiwan's government has been devoting in Tourism industry by building good relationship with China and developing programs to attract foreign investors.
There are several reasons why Taiwan will be an optimal country. For example, the website called 'Invest in Taiwan' provides information about Taiwan's country profile, advantages and investment information as well as the Ministry of Economic Affairs (MOEA). After implementing market economy, no matter the investment, the expenses or the deposit all the free choice, many large the large-scale state-operated bank and the enterprise advance to the privatization gradually. In the past 30 years, the average of annual economic growth reached 8%, and export orientation policy earns foreign exchange provides the fund guarantee for the industrialization. Taiwan's foreign exchange rate is the 4th of the world. According to Republic of China Executive Yuan Planning headquarter statistics indicated that Taiwan area average per person gross national product, in 1961 was 153 US dollars, in 2008 grew to 18000 US dollars.
Taiwan's economic structure is replaced by high tech industry from initially labour intensive industry and the GDP of agriculture industry is decrease 2% from 35% in 1952. Therefore, it forms an unbalance situation that service and high tech industry add total portion is more than half.
The status of Tourism & Recreation Industry development in Taiwan
Recently, tourism industry which is called 'Green industry' is prevailing in Taiwan. There are abundant natural resources and splendid scene across all over in Taiwan. In additional, Taiwan's special location on centre of the Asia gave the geography superior, easy to access to the world.
Since 1996, global tourism industry trend had been increasing sharply. Except global economic recession in 2001, Iraq war in 2003 and SARS cause tourism industry suffered setbacks for a while. As a whole, global tourists and the tourism-related expenditures are increasing every year. According to World Tourism Organization (WTO) and World Travel & Tourism Council (WTTC), more than 70 million were direct employed by industry in 2006 and the number of global travellers reached 840 million. The industry output value comprises 10.4 % of global GDP and 12.2% of global export output value.
According to WEF declare in ?2008 Travel & Tourism Competitiveness Report?, Taiwan ranked 52nd among 130 countries evaluated and the 7th in Asia behind, Hong Kong, Singapore, Japan, Korea, Malaysia, and Thailand. It is a great decline compared to 30th in 2007 and 4th in Asia.
Taiwan tourism and recreation market can be divided to two categories based on domestic demand (leisure recreation) and foreign demand (tourism). As a whole, although foreign tourists market has been increasing more than 5% per year, even more than 10% annual growth, but until now, still more than 60% of the market comes from domestic demand. The foreign tourism market, 43% of visitors for sightseeing and 27% come for business purposes.
Taiwan tourism and recreation industry is aim to attract higher spending power of global visitors spending in Taiwan and the increasing tourists from China in 2008 will great boost industry development. Hotel and Resort would be one of the optimal investment items for foreign investors. There are 60 international tourism hotels, 29 conventional tourism hotels and 3,218 other hotels in Taiwan. The multiple investment environment offer opportunities to investors, such as the north of Taiwan is 'life and culture of Taiwan' orientation for the arts and fashion; the centre of Taiwan is 'Industrial and Fashion of Taiwan' orientation for leisure and civilization creativity; the south of Taiwan is oriented for history and ocean of Taiwan as historical buildings, ocean and ecology and in the east of Taiwan focus on 'Leisurely Living and Nature Taiwan' emphasis on bicycles, aboriginal life. In future government would more focus on tourism development to enhance domestic tourism as well as global.
The xxx Hotel & Resort Company enter in Taiwan; the Joint Venture is one of the entry modes. The double growths of China visitors every year facilitate Asia tourism industry. The foreign banks are aggressively focused on Taiwan large-scale tourism development document by financing to Hotel owner. It both benefit to local people and the company. Beside financial problem, xxx company can join venture with local government to enhance local development. Meanwhile, xxx company should develop a environmental protection program to minimize the damage to environment.
The xxx company target on upper income segment and offer luxury services. They should locate at the capital of Taipei where those people care more about lifestyle and willing to pay more on recreation and leisure item. Another place xxx company may consider in term of the scale of hotel and spa need more place and nature landscape, eastern Taiwan possess nature landscape, coast shore and many place merely been developed. Those people in city may desire a place less noisy, more privacy and luxury services.
The management team and employee workers selection is important. The regional directors may hire local people and may attend meeting annually in original headquarter, he should be training at headquarter before hiring as director. In order to perfectly transfer knowledge and culture, employees in Taiwan hotel and resort may training at headquarter as well. The advantage of hire local people can better understanding local market, however, the degree of knowledge transfer from headquarter may be a setback and limitation.
Sometimes, joint venture may failure because both parties strategic objectives, lack of trusts and understanding and insufficiently support. It is essential that both parties must have the same vision and objectives, planning carefully on business strategy and consistent communication.
According to government policy implement, Taiwan currently planning related-infrastructure development and attract business and facilities renovation, and complementary industries development. As a whole, the primary incentives policies include tax exemptions for investment costs, incentive loans, incentives for land rental, etc. however; these policies applied differently in different area and industry.
Taiwan is consists of hybrid cultures with Han culture, Japan, European and American culture, local and Taiwan aboriginal culture with traditional and modern side. Culture differences are unavoidable, in two company joint human resources and value and attitude. Therefore, understanding and respect to different culture is important, communication is significant as well. If xxx company want to recruit local people, the firm should build good reputation and image make the firm engage in public relations such as sponsor universities of sport events; offer career prospects and training opportunities and provide fair salaries as well.
It is feasible for investors enter Taiwan because it's rich natural and human resources, unique business environment. However, it is complicated visible and invisible problems the company may face. Therefore, the company must do research thoroughly and planning carefully before doing any investment.
Conclusion and Recommendations
As above analyzes, there are several constraints to success for ??? company as a MNC hotel group who has step into the fast-growing emerging countries, factors concluded as following:
By carrying out the expansion strategy , ???company should avoiding all those factors intends to develop new resorts, hotels, spas, resort residences and serviced residences in the future.
The company's operation of hotels, spas, resort residences and serviced residences in new locations, many of which could be considered locate in geographic regions where the company has limited operating experience, and out acquisition of land and/or existing hotel or resort properties could present operating, marketing, financial and legal challenges that are different from those that it currently encounter in other existing locations. There can be no assurance that ??? company could succeed in implementing the expansion strategy into new geographic markets to become succeful among global market. In the ongoing expansion of ??? company in worldwide, the striving forces lies in many respects referring to the recommendations as following:
- Focus on growing business through new management agreements and selective resort and hotel investment
- Keeping on its Branding Strategy and Diversification of Business Positioning among the countries
- Integrate featured HR system, so may lead the Improvement of international management level skills, from local/domestic market spread into worldwide markets
- Increase geographical presence by expanding resort and hotel operations into new strategic locations
- Focus on M&A Strategy. In the way can helps company huge cost-saving, such as R&D research cost, outsource, time efficient&effective
- Obtain the necessary financing on competitive terms and the requisite regulatory and/or government approvals
- Good practice of social responsibility, enhance to ensure the company reputation/image
- Continue residential development and sales to reduce resort and hotel investment outlay
- conduct the rules/regulations due to country issues, different country may set with different system
- Expanding and upgrading company's existing resorts is a cost-efficient way to increase its revenue base and enhance profitability. Building new rooms or villas at the existing resorts allows the company to provide its guests with new product offerings/services while expanding its revenue base.
Accordingly, it has been found that Asian companies do not realize the importance of branding. Asian business leaders treat branding as an expense and not an investment. Further, many Asian companies still prefer building up tangible assets rather than strategic intangibles such as brand equity. The important implication of this paper is that branding should no longer be delegated to the lower echelons of the company but rather managed by the CEO. Companies must focus on building long-term strategic assets such as brand equity rather than tangible assets such as buildings, factories and the like.
As for future research in international hospitality group with MNC brands, to be pointed out, hospitality business is one of the sustainable developments in worldwide, it is full of potential. We could work more on the stategic development and conglomerate in hotel business based on realization of industry chain. Through this model, chain layout, customer basis and well-controlled standard will be three golden roles for hospitality industry.
VIETNAM - PEST ANALYSIS
The Vietnamese government's policies tend to promote the development of economy with open-door policies in attracting Foreign Direct Investment. Besides that, The tax policies, employment laws are also adjusted to guarantee the benefits of country, company, and labors. Vietnamese governments also try to setup strategic plans to reduce rate of unemployment and enhance people's knowledge. Besides that, the environment protection is priority issue that needs to be concerned. The basic standard of protecting environment will be applied as the policies that most of the companies have to follow.
Vietnam has been recovering as a developing country with large population after 30 years being influenced by of ravages of war and the loss of financial support from the old Soviet Bloc. The authorities of Vietnam have reaffirmed the commitment to promote the international integration and economic liberalization. They have planned to implement the necessary structural reforms in order to modernize the economy. In January 2007, Vietnam joined the World Trade Organization (WTO) after a decade of negotiation process. Being one of WTO membership has provided Vietnam an anchor to enter the global market as well as promote the reform process of domestic economy. Vietnam has declined the poverty and unemployment significantly by working hard to create more jobs to meet the challenge of a labor force that is increasing by more than one million every year. In 2009, Vietnam was also influenced by the World Economic Crisis with the reduced productivity in some industries like import and export. To deal with this problem, the government has considered adjustments of tariffs in order to limit the trade deficit, and giving some development strategies for Vietnamese economy in 2010.
Vietnam is a developing country with diverse culture. The culture in doing business of Vietnamese tends to be different from the people in European countries. Sometime, the success of business of a company in Vietnam may depend on the social relationships between people and people. The rate of bribery in Vietnam is quite high.
The population of Vietnam is around 90 to one hundred million. There is a redundancy in number of labors every year and it leads to the low cost of labor in Vietnam.
Vietnam is a quite safety country with low rate of criminal compared to Thailand, Laos, Cambodia, and China.
In several years ago, Vietnam's transportation system is quite poor, and it needed to be modernized and expanded. From 2008 to 2009, the quality of transportation was improved, but there were still some remaining problems like: traffic jams, pollution, and motorcycle is still the main popular vehicle. In 2010, there are more and more projects that being planned by authorities and governments in order to make a better transportation in Vietnam.
Apart from Vietnam's telecommunication market, it is considered as the second fastest growing after China in the world. Vietnam came quite late to the internet and the first service being offer in 1997. The internet users increased strongly from 10,000 in 1998 to around 21 million at the beginning of 2009.
CHINA - PEST ANALYSIS
The leadership of the Party is an important guarantee of the people's administration and the law. The administration of people is the nature requirement of the socialist democracy. And the rule of law is the basic policy of the Party for leading the people's administration.
In order to make the general layout of China's socialist modernization from the three-in-one of developing the socialist market economy, socialist democracy and socialist advanced culture must expand to the content which include harmonious socialist society, achieve the leap of four-in-one.
The public economy is consists not only the state-owned economy and the collective economy but also the state-owned and collective component in the mixed-ownership economy. The collective economy is a potential part of the public sector of the economy. And the collective economy can show the common prosperity policy, absorb separate capital in the society, lessen the employment pressure and also can increase the public accumulation and the state revenue.
Stockholding system is a capital organization system of modern enterprises. It is easy for separating the ownership from managerial authority and improving the operation efficiency of enterprises and capitals. It is also can be applied in the socialist market economy in China.
There are three types of ownership: state-owned enterprises. Private domestic enterprises and foreign-invested firms which have given rise to firms by the reform of economic and market.
It is one of the important principles for China related to the overseas markets. Besides, it is one of the great practices of building up socialist economy with Chinese characteristics.
After twenty years by great efforts, the scale of absorbing foreign capital is expanded as well as the level is increasingly upgraded. The China's law and managerial system on foreign investment have been gradually perfected. The achievements got the whole world's attention which effectively promoted the continuous, fast and healthy development of national economy.
TAIWAN - PEST ANALYSIS
The strait controversy between Taiwan and China has been influenced for a long time. However, Taiwan still governing by current party KMT therefore, how to manage the relationship with China is important. It may influence Taiwan join some international organization such as WTO or UN. Because many political issues may be a risk for foreign investors.
Taiwan' economic is capitalist and many large state-operated organization transform to privatization gradually. The average of economic growth rate reached 8% before 1988 and the average of economic growth rate 4%~6% after that. In 2008, the transform of political party more focus on the relationship and strengthen trade exchange with China. But because the global economic recession impact Taiwan's economic cause the decline of export, high unemployed rate and demand of domestic market.
Taiwan consists of diverse culture and religions. The main culture still Han and the majority religion is Buddha. Some traditional festivals still influence deeply to Taiwanese, such as lunar Chinese New Year and lunar calendar is important as well. Taiwan also influence by foreign culture such as Japan and western culture, for example, teenagers in Taiwan prefer Japan's comic, costume, karaoke and food; western religion such as Catholicism and Christian and western education style as well.
The transportation and telecommunication facilitate quite well, including two international airports, seven international harbors; in domestic transportation such as railway, highway and domestic railways enhance the convenience of travel and time saving. For telecommunication and electronic supplier in Taiwan provide good and cheap services compare to 26 countries according to Energy information Administration of the US and the Malaysia Power Company survey conducted in 2005 and 2006; internet is also covered all over the island. Seventy percent of household access to internet, 80% of household possession computer and 90% of household use 2Mbps broadband.
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