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Global Expansion Essay

4362 words - 18 pages

Examples of good assignments from previous years

Why do many hotel organisations seek global expansion and evaluate the factors they would need to consider in order to realise such expansion.

In the post-modern information society one is amidst, the local market seems as a relic of an earlier era -the traditional industrialised society. The technologically potent society has broadened out its arms embracing growth in trade and travel, leaving the local market appearing as an obsolete phenomenon. Defined market borderlines are dissolving and the only limitation is within the capabilities of the expanding company itself. Globalisation appears to be a general trend but there seems to be a ...view middle of the document...

The advantages of hotel chains enabled expansion and US franchise and management contract systems became dominant in the development of the major business centres in Europe in the 60s and 70s. Albeit the development became significant later in Europe, companies such as Forte and Club Med were important on the European scene. In the late 70s and 80s globalisation was at its peak with the occurrence of south-east Asia-based companies, as well as internationals expanding globally, and constructing new sites. In the 90s however multi-nationals (MNC) will have to turn away form the power centralised geocentric orientation towards a policy involving the host-country for a more healthy and vivid future for the MNC. (Go & Pine, 1995).

Hotel organisations are as any other businesses concerned with profitability and growth. As diverse as the structure and ownership of the MNC is, so is the way in which they approach the achievements of these goals. According to Go & Pine (1995: 6) there are five principles or ways to gain profit. Firstly, expanding within the domestic market. Secondly, the ethnocentric principle where expansion takes place in countries similar to the home-country. Thirdly, the polycentric principle, expansion abroad with decentralised power, where companies are managed from the host-country. Furthermore the regiocentric principle, similar to that of ethnocentrism, but characterised by a clear regional orientation. Finally the above mentioned geocentric principle, expanding globally with a standardised product, and a centralised power constellation. It is however rather simply put that an organisation selects an environment to work in, and there might be more reason to the statement that firms in industrialised slow-growth economies are forced to expand abroad due to lack of growth opportunities. (Go & Pine 1995: 3). It seems logical that it is the world economy that influences the HI and not the contrary.

Throughout history Europe has seen itself as the cradle of civilisation and economic trends have been set from here since the industrialised society was invented by the UK. (Encarta, 1995) The distribution of power however changes and the Pacific Rim has become a centre of interest. This region has seen a tremendous growth within the last four decades, a growth similar to the industrialisation process in Europe. If the development in Asia follows that of Europe one can expect a similar pattern, de-industrialising towards the service society. The result of the industrialisation in the Pacific Rim is according to Go & Pine (1995: 194) that ‘...wages go up, payrolls increase and profits decrease.’ The loss of the low-cost labour force will inevitably diminish the competitiveness of the Asian tigers. There are though, according to Robinson (1995), other emerging development opportunities. The Middle East: Lebanon, Israel and Jordan, Latin America and South Africa will all be targets for multinationals if political stable situations can...

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