Reflecetion paper - Essay Example

This memo will address strengths and weaknesses, as well as the risks and opportunities of the expansion. Opportunities 1) Market expansion through economies of scope and scale. Understandably, by expanding to Italy, we are already growing our market share without the high costs of starting a new company in Italy. Its existing revenues and market share will be added to ours. At the same time, from Italy, we can expand further in Europe too. 2) Trend of merger and acquisitions (M&A) in the tourism industry.

M&A is the trend in the global tourism industry, including hotels. The articles from Warwick Clifton, “The Global Hotel Industry: Big, Beautiful and Branded? Part One and Part Two,” highlight that M&A is becoming more prevalent across regional and national markets. International hotel chains are gobbling up local independent hotel chains, in order to rapidly expand across the world. We have to take advantage of M&A and purchase potentially lucrative chains to purchase. Threats 1) Weak Euro.

An article from Wharton shows that a weak Euro is bad for hotel business because of dampened consumer confidence. When they cut back in spending, they do so for luxury goods and services, and that includes hotel services. Furthermore, a weaker euro means lower spending power. We can see potential increases in the prices of goods and services that we need in operating these Italian hotels. 2) Damp economic climate in Europe, in general, and Italy, in specific. The economic crisis is hitting several countries in Europe hard, including Italy.

This can affect business in Italy for the next couple of years or more. 3) Mixed success in hotel business. The article “Market Conditions Tighten for Italian Hotel Industry” indicates uneven success in the Italian hotel industry. It says “Declines for the Padua, Genoa and Bologna markets highlight the difficult market conditions,” while “the seasonal market of Taormina & Messina in Sicily reported double-digit RevPAR growth (+18.4 percent) YTD” (“Market Conditions”). We cannot expect immediate high return for our acquisition because of mixed business revenues due to the slack in the business climate.

Strengths 1) Full control of how the chain should be managed. The top management can exert transformational changes that are required to raise the standards of the Italian chain. The home country management will have the power and authority to enact necessary changes to improve the quality of services in the chain. 2) Lower costs in terms of acquiring local knowledge and familiarity. Local managers and employees already know the cultural, operational, and budgetary idiosyncrasies of the host country.

It is assumed that the existing human resources are familiar with the market characteristics enough to no longer need a costly comprehensive market research. 3) Empowered organizational culture can be used to enhance quality standards. We can enhance the standards of the hotel enough to warrant higher hotel rates. We can use the empowered approach of the Italians to let them manage and own organizational changes that will benefit them as employees. 4) Acquisition expands HRM knowledge and skills for multinational operations.

If we want to be a multinational hotel business, we must not be afraid of learning from different cultural environments. This acquisition will help our home HRM gain