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Market entry refers to the process of expansion of a business organization to a completely new market after analyzing the internal and external factors associated with the market entry process. A proper analysis of the new market can only help the organizational leaders make plans for implementing effective actions to enter the market. In this report, the internal and external markets of India have been described to build understanding. With the help of Porter's generic strategy effective strategy has been chosen, that can be suitable for the organization to make positive growth in the new market.
India, being a country where diversity is unity, is equipped with various tourist destinations, spots, historical places, and also a vast population. For operating a business the most predominant thing about a country is to analyze the business potential the country can provide to the business. As the recommendation for The White Hart Royal Hotel for opening a new market in a country, India can be a good marketplace for market entry in the field of the hospitality industry. Now the analysis will be done on the basis of getting necessary information about the market strategy for opening a market in India.
The internal market of Indian hospitality dsector can be idedntified by the SWOT analysis that can help the White Hart Royal Hotel make effective strategies to eneter the market of India (Satghare and Sawant, 2018).
India has a huge geographical diversity that has provided the opportunity to extend the hospitality industry in the market. Geographical diversity and a variety of heritage places can easily attract travelers and customers that can generate sales in the hospitality industry (Satghare and Sawant, 2018). The country is a large market that provides a large number of geographical zones situated in the market. It is a great strength of the hospitality industry. By establishing hotels and restaurants in the beach areas, diverse geographic areas, and near the heritage sites, can also be a good perspective for setting a business for The White Hart Royal Hotel in the country. These areas attract tourists and travelers from all over the world (Kaushik et al., 2021).
Labor cost in India is low and also the area is highly populated and which will provide a huge opportunity to solve the issue of labor. As the labor cost is low, the company can earn a profit margin. For operating all the organizational operations in the hotels and restaurants, the White Hart Royal Hotel can find sufficient workers and employees for a minimum labor cost.
India has also acquired a good position in the hospitality marketplace by contributing approximately 9% of the total GDP. The county has ranked 3rd position in the country’s GDP contribution coming from the tourism sector (Prasuna, 2020). Therefore, the new business organization can earn high development and growth in the hospitality industry. It is also another great strength.
The cost of land is high in the country which can consume a large amount. Another weakness is that the country has a dependency on the season which can lead to many issues like a decrease in economic activity in the remaining periods of the whole year.
There are many opportunities in the country to open a hospitality industry. As technological advancements are growing rapidly in the whole world. India is also improving its infrastructures, technological use, and development which is the main opportunity in the country to boost the organizational growth in the new market of India. Online hotel booking, online transactions, social media marketing are already at a performing stage in India (Lv et al., 2020). It will therefore provide a huge opportunity to the White Hart Royal Hotel to reach a maximum number of customers. Medical tourism has also been encouraged in the country by the government. The country has a high employment rate in the tourism and hospitality sector.
There are some threats that the new business industry can face. The major threats of opening a new business are that the government of the new country will impose different rules and regulations for operating a new business in the country. For the new business to be operated in the new market, the leaders and managers need to maintain all the government rules and regulations. Apart from that, the new tax rates, GST, the inflation rate of the country, employment rate, and per capita income can also bring many difficulties in the financial sector of the new business organization (Rathi, 2018).
(Source: Satghare and Sawant, 2018)
The government has had a huge impact on the hotel and hospitality industry in India. As the government plays a very significant role in the hospitality industry of the country, a small decision and action were taken by the Indian government can directly impact the organizational operation (George, 2021). The political factors include the government rules and regulations, tax rates, and interest rates. The huge tax rates in the GST collection has also a huge impact on the economic sector of the hospitality industry (Wiencek, 2017). The government charges a huge amount of tax from luxury and big hotels. Only the government support and help can provide necessary assistance to the newly formed organization to survive in the new marketplace.
Economic factors are also an important factor that needs to be analyzed before entering a new market. Economic factors are the changes in tax rates, inflation rates, interest rates, economic growth, and exchange rates (Leemput and Wiencek, 2017). Changes in these rates can bring a huge economic impact on the newly formed hotel of the White Hart Royal Hotel in India. When the economic factors change, the organizational behavior also changes.
The social factors that have a direct impact on the business operations include the demands of the customers. The needs and requirements of the customers and travelers change as per the geographical areas. The demands for the rooms also depend on the preferences of the customers that also influence the revenue collection. For opening a new hotel in India, the organizational managers of the White Hart Royal Hotel need to understand the demands, trends, preferences of the customers, and also the market pattern before opening the hotels.
As technological advancements are growing at a rapid speed. The hotel and hospitality industry is not behind. The customers choose a destination by analyzing the various spots and places with the help of technology, social media, and other digital media services that impact the interest of the customers. The customers prefer the areas that have been technologically improved. The customers also choose the hotels that have provided every detail of the hotels on the websites or social media pages. It thus has a huge impact on customer management. Therefore, for operating a new hotel in India, the managers and leaders of the White Hart Royal Hotel must consider technology as a great influential tool to attract customers and gain a huge profit margin (Parvez et al., 2018).
The new hotels and restaurants of the White Hart Royal Hotel also need to maintain the legal factors of the country where the company is thinking of opening new branches. The legal factors that Indian business organizations need to maintain include anti-discrimination laws, safety, and health laws, employment laws, consumer protection laws, and environmental laws. These legal factors impact organizational operations (Kara, 2018).
The hotels and restaurants are focusing on the agenda to become green by using eco-friendly materials, environmentally friendly activities. The government of India is also implementing effective environmental strategies and policies to bring sustainability to the industry. Therefore, for entering the market of India to open a new hotel or restaurant, the organizational leaders need to follow all the environmental rules and regulations (Streimikiene et al., 2021).
(Source: George, 2021)
Market entry has many forms and modes used in the organization. The three modes of market entry include exporting, ownership and licensing, and franchising.
This is the most important and crucial mode of market entry in which the main strategy is to maintain the existing business model of the organization and also the production channel when the goods and services are sent to the foreign markets. Exporting follows a very insignificant amount of cost and also a very low risk is associated with the operations of exporting. It also allows low cost in the implementation process (Chirapanda, 2019). By exporting the produced goods and services in the foreign market, the company can enter a new market. Exporting the products in a completely new market also helps the organization make a decision on how the products can be sold and they can also judge whether any modifications are required to be done to reach the maximum performance in the new market (Linder and Trachuk, 2018).
Ownership is another mode of market entry that the new business organization can choose as a way of operating its services in the new market. Ownership can be of direct ownership in which the organization owns the company or firm in the foreign market. There is also another form of ownership in which the company starts operating in the foreign market by opening new stores or physical organizations. This is a form of greenfield investment that goes under direct investment. This form of ownership provides facilities to be operated through physical operations. In this mode of market entry, the company can impact the market in the long term way by producing many job opportunities in the market. It thus helps the new market increase its economic growth and development. When the organization starts operating its services in the physical operational forms in the new market, the organization needs to grow its strength by increasing its employees and activities which in terms generates economic activities in the new market as new employees are employed in the new market. Thus, the company can also receive many incentives and tax benefits from the government for generating economic growth and employment in the new market (Kim and Lin, 2021).
Licensing and franchising
This is another most required form of market entry that also can be a good option for opening the hotel and hospitality industry in India. It allows an organization to enter a foreign market without physically entering the market. In licensing, an agreement and a license are given between two countries. The foreign country provides grants to a domestic company to operate the services in the domestic market by granting the license or agreement. Licensing helps a foreign company sell the products and services by the domestic company after getting a license from the foreign company. This is how a foreign company enters the new market by simply providing a license to a domestic company in a new market. Licensing can be provided to a domestic company in India by providing a right to use the productive procedures, services, and other assets of the foreign company in exchange for a certain amount of money or royalty (Zhao, 2018). Franchising is the form of market entry in which the existing company extends its services to the foreign market. It works when the business model has a repeated model and the services are unique. It is associated with unique and different products and services (Terry et al., 2017).
Therefore, throughout the entire discussion of the three modes of market entry, it can be stated that for opening a hotel in the Indian market, ownership is the most suitable mode of market entry. The main reason for this form is that the owner will provide the White Hart Royal Hotel with all the rights to operate the services physically. It does not need any intermediary in this mode of market entry. In this form, the White Hart Royal Hotel opened in the new foreign market in India can impact in a long term by providing new employment opportunities to the Indian people. It can thereby increase the competitive advantage of the White Hart Royal Hotel. Ownership can also provide opportunities to increase the brand image of the White Hart Royal Hotel. In India, labor cost is low so the White Hart Royal Hotel can gain a good profit margin for operating its services in the Indian market by employing workers at low cost which can increase cost savings and can be used for other organizational services.
Standardization in the hospitality industry is the most crucial strategy for the company that attracts customers and also helps in retaining customers. Standardization and branding of the hotel industry are directly connected as the branding of the hotel services and standardization of the hotels can easily attract customers and travelers. It also directly impacts the reputation of the hospitality industry. Standardization also impacts the travelers and guests by enhancing a sense of familiarity to them and gradually it turns into loyalty and trust of the customers. Thus, it helps in increasing brand image. Standardization of hospitality can be brought in various ways (Butkevich, 2017). Customer satisfaction is the most appropriate approach to increase the standardization of the hotels in the market. Customer satisfaction can be developed in the hotels by providing amenities and improving the interior designs and other hotel facilities.
By increasing the satisfaction of the guests and providing the guests the amenities that a particular location needs. It can help in increasing the feelings of special among the customers. It will thereby help in meeting the customer's satisfaction of the White Hart Royal Hotel. Providing amenities to the customers can help boost the standardization of the hotel that will be a crucial point for the hotels while operating in the Indian market (Moreno-Perdigon, 2021).
Developing the interior design of the hotels can also be a good option for standardization in the hospitality industry. The interior design attracts the customers and also boosts the brand power of the hotels. Thus, by developing the interior design of the hotels, the hotel's managers and leaders can boost the standardization of the hotel. It thereby can increase the interest of the customers and they can also recommend others to visit the hotel.
Good customer service is also another important part of the standardization of the White Hart Royal Hotel while entering a new market. By providing the best customer services, regular monitoring the needs and requirements of the guests, providing all the amenities in the hotels and providing flexible routines and procedures for hotel booking, checking-in and checking-out, and maintaining the safety and security of the guests in the hotels can also help in increasing the standardization of the hotels in the new market (Guzman-Perez, 2021).
Standardization will help the White Hart Royal Hotel increase its brand image and brand value. It can also increase customer satisfaction and loyalty. The standardization can help the newly entering White Hart Royal Hotel to enter the market of India and gain a huge market share by developing a competitive advantage of the hotels. Thus, standardization is the most important factor for the market entry for the White Hart Royal Hotel and achieving the organizational goals and objectives.
Porter's generic strategies are used for increasing competitive advantage in an organization. Porter's theory suggests organization how using cost-leadership, differentiation, and focus an organization can develop and survive to attain sustainability. The theory helps the hotel industries increase competitive advantage in the marketplace by using a cost-leadership strategy. The main theme of the theory is to provide sufficient support to hotels to grow by increasing their market competition. For entering the market of the Indian hospitality sector, the organization can use Porter's generic strategies as this strategy focuses on describing the range of competitiveness in the hospitality industry (Mustafa, 2020).
The company can make effective decisions for maximizing the performance of the hospitality industry by utilizing the resources for entering a new market.
Porter’s Generic Strategies
(Source: Mustafa, 2020)
It simply suggests how the costs of the company can be reduced by effective strategies. The strategy is to reduce the costs of the services than that of the rival companies to increase its competitiveness. The targeted market price is lowered to attract the customers with the lowest product price. With the help of this strategy, the White Hart Royal Hotel can make maximum utilization of the resources and services by also drawing huge attention from the customers. The hospitality industry can make a huge profit as the resources are utilized to a large extent though the price is lowest (Subrahmanyam, 2019).
Cost leadership in the hospitality industry can be used through three approaches, utilizing high assets, attaining indirect operating cost and low cost, and controlling the value chain in the financial, marketing, inventory, the supply chain for lowering the costs. It can provide the new organization achieve a large market share as the cost leadership can help in attracting customers who are cost-sensitive. The White Hart Royal Hotel can reduce the price of the services in the hotel while entering the new market of India. It can increase the attraction and interests of the customers. This is how by engaging the customers, the White Hart Royal Hotel can increase the market share and competitive advantage (Subrahmanyam, 2019).
The strategy focuses on making the products or services different and unique for competing in the market. This strategy also focuses on the market in which the customers are not price-sensitive. The market increases competitiveness as the products are unique and the specific needs and requirements of the customers are met. This is why is strategy is not applicable to small industries. The main thing about this strategy is to increase value creation. Making different products needs to operate expensive products and services for increasing competitiveness and it needs a huge amount of capital for making unique or different products. But it can be attained in the utilization of the intangible features of the hotel like the cultures. The White Hart Royal Hotel can make brand differentiation for increasing its reputation and competitiveness rather than using differentiation in products or services (Azad, 2019).
For market entry the differentiation strategy cannot help the organizations as for entering a new foreign market in the White Hart Royal Hotel the product differentiation in the hotels and restaurants can attract a few customers and it is only applicable for the large market. As the company is new and focusing on providing its services in the international market, only product differentiation in the new marketplace can face many challenges. It is because differentiation needs huge investment in the sector to improve the features and services and for an entirely new market in the foreign market, investing a huge amount for product differentiation is a matter of concern. Therefore, differentiation cannot fully work on the market entry of the hospitality industry of India (Subrahmanyam, 2019).
Focus strategy suggests that building effective and proper areas to develop and grow is the main thing for increasing competitiveness in the organization. Focus strategy aims at the most appropriate factor that can provide the desired outcome by increasing competition. It does not focus on the entire market for serving better the requirements of the customers but on the most suitable part of the market. In simple language, it can be stated that the focus strategy focuses on the selection of a narrow area for increasing competitive advantage within a selected industry. By selecting one area the organizational leaders of the White Hart Royal Hotel tailor all their efforts to make strategies for developing the area (Mustafa, 2020).
Throughout the entire discussion on porter's generic strategy, it can be stated that the Cost-leadership strategy can be implemented in the White Hart Royal Hotel for entering a new market and achieving a great profit margin in the industry. The White Hart Royal Hotel can lower the price of the services in the hotels to attract customers and tourists by providing them with good quality services. When the hotels provide low prices, maximum customers can be provided with the hotel services and that helps the hotel in utilizing a maximum of the services. It thus helps in maximizing the profit collection and thus the White Hart Royal Hotel can bring good revenue collection in the Indian hospitality market industry. The customers always traveling various palaces want hotels at a reasonable price with good quality services. By maintaining the prices at reasonable and comparatively low prices can automatically draw customers' attention (Nyokabi, 2019). Thus, the cost-leadership strategy can help the company while entering a new market and increase competition in the marketplace.
The company focuses on delivering hospitality services in the Indian market.
Indian market is well-established in the hospitality sector. As the country has many geographical places, historical areas, heritage sites. These areas are visited by domestic and foreign tourists which can therefore become a positive side of the hospitality company to enter the market of India. The Indian hospitality market has a large contribution to the GDP of the country and the demands of the customers for the hospitality industry.
Organization and management
The White Hart Royal Hotel will be formed in the form of a functional structure in which the sales, marketing, Human resource management, and research and development these functions will be performed for attaining a desired outcome from the company. In the new market, all the department tasks will be performed by the specific managers.
Product or service
The services in the hotel will be based on the customer requirements and needs. Eco-friendly products will be used in the company which will not only attract customers but also makes cost savings.
Marketing and sales
The marketers of the White Hart Royal Hotel will use social media, advertisements, broadcasting, newspaper, and magazine as the mode of marketing for the company.
Social media marketing has a huge impact on the increasing rate of tourism in the country. It will be a good option for the company to reach the customers to promote the services.
A 3-year financial plan will be made. The company is targeting the
The White Hart Royal Hotel is focusing to make 20mn $ revenue generation in the Indian market in the first three years of its entry into the market.
The funding and investment for the organizations will be requested from the private and public sector enterprises.
The goal of the White Hart Royal Hotel is to acquire a market share in the Indian market by achieving its target. The company will provide the best quality services with a low cost of hotel rooms that can help the company in maximizing its utilization of resources. It will help the White Hart Royal Hotel attain a great profit.
By bringing technological advancements the company is focusing on developing better customer service that can identify the needs, requirements, and demands of the customers. The customers will avail of online booking, online transaction, and online booking cancel facilities. The description of the rooms and facilities will also be available on the website of the company. Thus, the customers will get all the information about the services online. It will attract more customers and thus the revenue collection of the company will increase.
Therefore, it can be concluded that market entry is associated with various steps and actions. Proper strategies and effective implementation of the strategies can only bring success. Market entry is a vast thing and needs a proper analysis of the pattern of the new market, its trends, and customer's demands. Apart from that, the market entry can be successful by using the standardization process, cost leadership strategy and properly utilizing the strategies.
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