International Growth: Moxy Hotel Companies
International Growth: Moxy Hotel Companies
All businesses operate in an environment that is influenced by both internal and external factors. These factors determine the overall performance of the organization in terms of revenue generation. They also determine the performance of the organization at both local and international levels (Nilsson and Rapp, 2005). Therefore, the strategic management of every organization needs to understand the business environment; therefore, it is necessary that a marketing audit is carried out in order to analyze these internal and external factors (Kumar and Sharma, 2000). These activities involve the process of carrying out SWOT (Strength, Weaknesses, Opportunities and Threats) and PEST (Political, Environment, Social and Technological) analyses. In a business environment, the external factors are those that the business enterprise does not have control over, while internal factors are those that an organization are able to control. Awareness of these factors enables the business enterprise to maximize on its strengths, while improving on its weaknesses. In an effort to expand internationally, organizations are influenced by both internal and external factors. Trends in the international hospitality sector have brought about the need for companies to expand internationally. Expansion requires the application of strategic and well calculated moves. This paper is going to present an analysis of internal and external factors that influence the ability of Moxy Hotel to explore foreign markets.
Over the past decades, there has been an increase in the globalization of businesses, resulting in an increased number of international strategic alliances, foreign subsidies, and exports, in addition to an emergence of oversea offices of international companies (Hara, 2008). Globalization has had an effect on the competitive environment within which most companies are operating. Therefore, most organizations are seeking to find new opportunities in international markets, and the hotel and tourism industry in not an exception. This has brought about the need of international expansion by major hotel chains, which are seeking to expand their global market share. The ability to gain a competitive advantage in such markets depends on the ability of an organization to exploit its strengths in order to overcome the internal and external factors affecting its growth (Hara, 2008). The creation and implementation of effective strategies to venture into international markets has presented challenges to developing organizations in the level of Moxy. This is due to the differences and changes in business environment, which present new challenges to the venture. Therefore, it is necessary for a firm that plans to engage in venturing of foreign markets to be able to assess competition and come up with appropriate and effective methods of expansion.
The process of venturing into foreign markets can be viewed from two perspectives, namely the perspective of industrial organization and the resource based perspective (Saee, 2006). These two schools of thought represent opposite ideas of whether it is actually the internal or external factors that make an organization successful. The industrial perspective looks at competition as a barrier to growth and prevents entry into new markets. With regard to this, the perspective stresses that it is the structure of the industry that determines the strategy of competition in it. On the other hand, the resource based perspective states that a competitive advantage is gained from the amount and type of resources that an organization possesses and controls (Saee, 2006). Therefore, it emphasizes on internal factors as the major sources of competitive advantage in an industry.
The reliance of one factor may assume the effects of the other; for example, in the event that an organization relies on external factors, it can under-estimate the effects roles played by internal factors. In order to strike a balance between external and internal factors affecting the Moxy Hotel’s business activities and growth, the section below is going to discuss the internal and external factors that affect the operation of the hotel chain as a business organization.
Environmental Factors in Strategic Planning
In order to record growth both at the local and international levels, businesses need to evaluate internal and external factors. The business must be able to anticipate and deal accordingly with these factors to ensure a successful process of strategic planning (Benard, 2013).
Internal Business Environment
As discussed in the previous section, the internal factors affecting the growth of a business organization are those that the strategic managements of the firms have direct control over. These factors include: assets, organizational structure, management, human resources, and organization structure. This section is going to present a discussion of the internal factors that affect the operations of Moxy Hotels as a business organization.
i. Human Resource: The characteristic of an organization’s human resource determines its ability to succeed in international markets (Benard, 2013). A highly skilled workforce drives an organization toward both local and international growth. It requires an organization to have experienced, knowledgeable, and capable employees, in order to gain a competitive advantage of other competing companies. With regard to this, the human resource of Moxy Hotels will play a critical role in the growth and success of these hotels in the foreign markets. This will be achieved because the human resource of Moxy Hotels is composed of highly skilled and qualified personnel who ensure high level of professionalism in their duties. The staffing process of Moxy Hotel pays careful attention during the recruitment of staff members in order to ensure it hires the best of the best labor force available in the industry.
ii. Organizational Culture: A successful business has a strong culture within the organization (Benard, 2013). Organizational culture is concerned with the beliefs and attitudes of the members of staff working for it. These elements are critical in the process helping an organization to go an extra mile in the industry it operates in. Positive attitudes drive the company forward, while negative attitudes drag the organization behind. In this case, the attitudes of the employees of Moxy Hotels are positive; therefore, the hotel chain is able to achieve a competitive advantage over its competitors. With a positive attitude, the employees of Moxy Hotels who will be posted in the new foreign branches can ensure proper strategic implementation of strategies for growth and expansion even in other regions. A positive attitude is important in the hospitality industry because clients are very keen on the quality of services they receive. Therefore, if members of staff of Moxy Hotel incessantly display the positive attitudes in the process of providing services to their clients, they will be able to retain their clients in the newly explored international markets.
iii. Organizational Structure: Organizational structure is very critical to the growth and expansion of business organizations, both at local and international levels. This is because it determines how to implement strategies meant to achieve the goals and objectives of the organization (Benard, 2013). The Moxy Hotels chain has an organized organizational structure that can realize a successful venture into new markets yet to be explored by this company. The team making up the committee, including the president, secretary, treasurers, and other members of staff, will be responsible for effecting the coordination of events, business functions, and other activities aimed at ensuring the success of the company in the foreign markets.
iv. Management: Management styles have a strong influence on the performance of the members of staff in every organization. The use of modern management skills is successful in leading an organization into growth. Therefore, the Moxy Hotels will have to implement modern methods of management in order to ensure that the new founded hotels are successful in foreign countries.
External Environment Factors
These are factors that affect the growth as well as expansion of business and those that the organization has limited or no control over.
Economic Conditions: The economic conditions of the country in which Moxy Hotels will be built will determine the success or failure of this business. These include factors like the rise in interest rates or the rate of unemployment in the country involved. When the population of a given country is in financial difficulty, the hospitality industry is negatively affected because there are no tourism activities and thus the hotels remain vacant and record losses.
i. Competition: Moxy Hotel chain has no control over its competitors; however, the competition will determine the success or failure after venturing into foreign markets. In a situation where there will be stiff completion from similar service providers, the new business will not easily succeed. On the other hand, in a foreign market where there will be little or no competition, Moxy Hotel will thrive.
ii. Technology: the rate at which technology is changing in the world will affect the business operations of the company. This business organization is well adapted to new technological changes and will therefore operate sufficiently in the new era of technology.
iii. Legal: The rate of taxation varies from one country to another; therefore, in countries with a higher rate of taxation, the amount of profits made will be lower than in those with lowers ones.
iv. Political: the political environment of the countries in which this business will venture into will affect the growth and expansion of the enterprise. This will be determined by the government policies regarding trade activities. Political stability, for example, the existence of a peaceful government, will encourage tourism activities in the involved country; therefore, Moxy Hotel will enjoy providing services to its clients, hence recording a good performance.
i. One of the major strengths of Moxy Hotel is that it has got highly specialized and qualified work personnel that will act as a major driving force toward a successful venture into the international markets.
ii. The Moxy Hotel normally engages in extensive research of the hospitality industry; therefore, it will be able to find new and innovative activities that will ensure it succeeds in the new international markets. Through research, the management of the Hotels will be able to come up with appropriate means that will ensure the satisfaction of clients in the hospitality industry.
- Moxy Hotel is still a small organization in the hospitality industry, and therefore, it does not have a strong and stable foundation to match the performance of huge hotels in the hospitality industry, for example, the Marriot Hotels.
- The Moxy Hotel does not have a strong international personal relations (PR) team that will engage in thorough campaign programs in an effort to promote itself in the new international markets. This will prove to be a major challenge in the marketing process of the hotel.
- Lack of a strong financial base to support the required marketing international activities, such as advertisement and sales promotion activities. This will be a major setback, because as a new and emerging player in the industry of hospitality, it needs a strong marketing campaign for it to gain popularity in the new international markets.
- The hospitality industry is under constant growth due to the rise in tourism activities across the globe (Chon and Weber, 2009). Therefore, the Moxy Hotel stands a chance of finding a wide market in the new international regions it wants to explore.
- The new technological advancements in the twenty first century are providing new solutions to the Moxy Hotel; for example, the capabilities of electronic commerce will enable this hotel to engage in online business transactions. The presence of online social platforms will also help in the process of marketing this hotel in the new international markets.
- Through an effective and well-planned segmentation, this hotel will be able to cater for the needs of all categories of clients, for example, tourists who are on adventure and for lodging services in the new international markets.
- The Moxy Hotel will encounter a very stiff competition for clients from more established hotels in the hospitality industry, for example, the Marriot Hotels, which are dominant in the market.
- Moxy Hotel is going to engage in a fierce war of prices with other existing service providers in the hospitality industry in the particular regions it will explore.
Strategic Options for Moxy
After carrying out the SWOT analysis, it is realized that the most appropriate strategic option for use by this company is the global strategy (Karami, 2007). This method will ensue that the company maintains a centralized form of control over all its branches across the globe with its headquarters in the UK. In addition to this, global strategy will help this company to engage in specialized services to meet the needs of its consumers in the respective countries it will venture into. This will prove to be a very successful method because service providers in the hospitality industry should always aim at meeting the needs of their consumers.
The most appropriate mode of entry into the international markets by this company will be through a wholly owned subsidiary, in order to remain in control of it activities even in foreign countries (Rogiers and Pauwels, 2008). Here, the Moxy Hotels will have to acquire an already existing hotel in the countries that the organization will venture into. This comes along with major advantages because the members of staff in the acquired hotels already have knowledge over the business environment in the involved country. This will play an important role in enabling the company to gain a competitive advantage over its competitors, an idea which will ensure faster growth and expansion in such foreign markets.
In conclusion, the need for globalization has been facilitated by incessant growth and expansion of major business organizations. The hospitality industry has undergone significant growth, as tourism activities continue to rise across the globe. This has prompted the need to develop more hotels to provide the much needed services to the increasing tourists. It is for this reason that the Moxt Hotel Company has decided to venture into foreign markets and provide hospitality services. Despite this need, the success or failure of the project will depend on the internal and external factors that influence the normal operations of the hotel chain as a business organization. Just like the industries in major economic sectors, there are events of industrial instability due to the incessant changes in the business environment. This requires any business, such as Moxy Hotels, to give due consideration to the ever changing business environment. Due to this, it is, therefore, necessary to combine ideas from the two above schools of thought because in so doing, one will have considered both the external and internal factors affecting the growth of a business. Before deciding on the entry strategies into the international markets, the management of Moxy Hotel is going to carry out an industry and market analysis so that the business is able to strike a balance between the external and internal factors affecting this business.
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