Entrepreneurship and Small Business Development for the Hospitality and Tourism Industry - Essay Example

Tourism Entrepreneurship and small business development for the hospitality and tourism industry A critical analysis The advent of international market has brought numerous changes in the social and economic environment of the Chinese business and tourism industry. The tourism industry has gained substantial boost from the government and also from the numerous associations of the hotel and tourism industry. Moreover, the Chinese government is attracting lot of foreign venture capital across all industrial and service sectors. The small scale entrepreneurs have gained to a great extent from these investments. The advantage has been for both the large and small scale ventures. Here we need to understand the change in the Chinese economy. The capitalist economy has undergone a paradigm shift and has opened its economy to the international market. This has changed the way the entrepreneurs look at their business. They have become more competitive in the global market and are keen in expanding their spread across the international market. China also has a huge pool of natural resources, with excellent options for the travel and tourism industry. Hence, China has a deep rooted heritage with the wisdom of the new world economy, and this combination has generated huge revenues for the Chinese economy. The small businesses are making breakthroughs in their own domains. Their businesses have received great support not only from the government but also from the local people and the society at large. The education and industrial development is also a key factor in this growth. The quality of education and the business ideas have made great breakthroughs in making the small business successful. This is satisfying the requirements of the national and the global economy at equal ease. Tourism 2 Now let us see the business strategies of the small business in the tourism and hospitality industry and then we will analyze the macro and micro level aspects of these businesses. When we discuss about the business strategies, we need to keep in mind the internationalization of the Chinese economy and its growth in the past decade. We need to understand that with internationalization comes a brand image, and higher expectations. The other countries will expect China and its entrepreneurs to be competitive, efficient and cost effective, while providing excellent customer service. And being in the service industry the entrepreneurs in the hospital and tourism industry has direct interaction wit the foreign nationals, who not only take back their experience but also act as a viral advertisement for these businesses. At this juncture, these small entrepreneurs face the language barrier and communication difference while attending the foreign nationals. But this can now be countered by employing young graduates, fluent in foreign languages and are more aware of the international market and culture. The education is hence playing a great part in overcoming this unique problem. This is also being combined with several multinational companies setting up their offices in China and is employing large number of local talents who know the culture and can speak the language as easily. This has made the government of China internationalize their education and which is becoming a backbone for these small scale business units. Another barrier that the small business community faces is primarily marketing their services to the international market. This is vital for the expansion and growth of the hospital and tourism industry in China. So how does this problem can be overcome? The solution lies in the hands of Tourism 3 both the government and the local community. The government always does its bit to encourage inflow of more foreign currency. This is done through international conventions, trade shows, advertising and promoting the country to the whole world by allowing foreign companies invest in China. The investment process has also become more flexible and lucrative. The benefits and support that these multinational companies receive in China is really noteworthy. The options of IPO, offshore marketing and various other sops are influencing the foreign companies to invest heavily. This has impacted a huge boom to the tourism sector. Huge amount of foreign currency are getting into the economy, thus strengthening it to the core. Though there are a lot many norms and approvals that need to be taken while starting a business here, yet this does not discourage the companies, as the cost of production is very low and one can earn great profit from it. Also, the Chinese government has stepped up their effort to improve the infrastructure of the country, yet some parts of it are still not easily accessible. The local community is friendly and helpful and has the warmth to welcome the foreign nationals. This is substantiated by their mind boggling cuisines and local festivals. The next hurdle that the entrepreneurs face is that of the understanding of the culture of the foreign nationals. China attracts tourists and businessmen from around the globe, from Europe, United States and Africa, each with its unique identity and cultural heritage. This becomes a bit tough for the local entrepreneurs, but with international hotel chains tying up with the local resorts and tourism industry, this difference is easily negated. Various major chains of hotels and restaurants have come to China and have invested heavily. The well known brands are Holiday Inn, Hilton, Sheraton and Shangri-La which can be seen in various Chinese cities doing a thriving business. This has not only created opportunities for the local entrepreneurs but the competition has improved their service offering. They have become more cost efficient and Tourism 4 dynamic in their business approach. The feel and the look of the small and medium entities have changed with strong emphasis on customer service and economy to scale. The above three points are the significant part of the business strategies, undertaken by the entrepreneurs of the tourism and hospitality industry. These strategies have definitely helped the business to flourish and gain its foothold on the international business arena. Now we need to look at the various micro and macro level aspects of the business. Here also we can visualize a sea change in the both these areas. The Chinese entrepreneurs can now understand the lacuna they have while selling their services to the international market and are gearing up to overcome such hurdles. And it is not only limited to the entrepreneurs, even the universities and the government are giving emphasis in understanding the scenario. The universities have introduced specialized courses based on the present tourism business. These courses include: 1. Courses on food and beverage, where the students learn the various ways to use food and beverage in different hospitality sector and also to learn contemporary styles in international cuisine 2. Knowing about the economics in tourism industry is beneficial to understand the micro and macro level aspects of the hospitality industry. The students also get to know the tourism economy of the China and the international market 3. Marketing is an important aspect in the hospitality industry and to know the way to market this service is crucial. It is now more customer centric and one must be ready to face any sort of challenges while selling the Chinese tourism to the world Tourism 5 4. Understanding the consumer in the hospitality sector is the key to its success. Each consumer has their specific needs and behavioral aspects. How the consumer chooses their services, foods, restaurants or view their products and services requires thorough understanding of the consumer’s mind. This will help to formulate different marketing strategies to develop and manage the tourism market 5. After all these aspects of consumer behavior, service orientation, one also requires to know the nuances of controlling the finances of the business. Understanding the requirements of funds and allocating it is a difficult task, especially for the small entrepreneurs, because they usually do not have adequate funds and the cash flow is not very regular. Hence, it is of utmost importance to know the way to use the money 6. We are aware of the service is the keyword in the hospitality industry. Hence, understanding it and implementing it efficiently is important for the tourism sector. 7. Last but not the least knowing the theories and practices of entrepreneurship is important to be a successful businessman in the field of hospital and tourism industry. Not all people can be successful entrepreneurs. Some have the insight, while some learn it over a period of time The Chinese government has also made substantial contribution in developing this sector and has reaped good revenues from such promotions and marketing. This covers the macro part of the tourism industry. We have understood the developments and the way ahead for the small entrepreneurs and what aspects they need to concentrate upon to be successful in their ventures. Tourism 6 Now we need to look into the micro aspect of this sector. When we talk about the micro portion of this line of business, we look into the operational side of the business. This will constitute the opportunities and hurdles that these entrepreneurs face while running their small scale business units. The foremost problem that they face is during the start up. To begin the business one needs the necessary capital and licenses, but it is not easy to get in China, which has years of communism behind it. The banks are not liberal in granting loans to the businessmen and do not have a proper process in place to provide the requisite money. The laws are not very strong either; hence the system is not uniform for all banks. Only if you have connections or your existing business has a quota of loan, then only you can avail this loan facility. Else, you need to fend for yourself. With your life savings and taking loan from your friends and relatives is another prudent way to startup. But, now things may look a bit different. With foreign companies coming in China, the attitude is changing and the availability of funds has become a bit easier. Another aspect that can be looked into is the partnership of foreign companies with the local businesses. A lot many foreign SMEs (Small and Medium Enterprises) are setting up their shop in China and since they are not much aware of the Chinese market, they look for a Chinese partner. But, at the same time they need an entrepreneur who has the requisite skills and expertise to understand their business and operate it successfully. This arrangement also helps the Chinese entrepreneurs, since they have sources to the requisite funds and also an exposure to the international markets. More than 100s of such SMEs have made a bee line Tourism 7 for the Chinese market from Finland, Sweden and Germany and the opportunities are increasing for the Chinese businessmen. While discussing the various aspects of China’s tourism and hospitality industry, we need to keep on mind that the international tourism only geared up here in the 1970s after the open reform policy of the Chinese government. Hence, it is still in its early stage. Moreover, China has emerged from a heritage tourism destination to a contemporary tourist destination. In the early years travelers came here to see its architecture, natural resources and scholarly writings and preaching. Emperors, monks and scholars were its regular visitors. But, now the scenario has changed. China is now marketed not only as a hot tourist destination, but also as an investment option for foreign companies. The branding and packaging has changed dramatically. In the late 1980s China put the tourism industry under its national plan and gave emphasis in its development. The revenue figures itself speaks volume for this change. In the 1980s China was ranked 40th among the major tourist destinations. But after 1990s it has been steadily climbing up and in 1998, with 24 million foreign tourist arrivals, China reached the 6th position. This figure actually counts up to 3.85 per cent of the world’s total. In the same year China earned whooping revenue of $12.5 billion and was ranked in the 7th position. The figures have remained quite steady over the years. In 2004 the number of foreign national visitors was 16.93 million a change of almost 48.50% from 2003. Initially China was unable to cope with this boom, as it was not ready with the adequate infrastructure and meeting the demands of the tourists. But now the scenario has changed completely. The sellers market has become a buyer’s market and there has also been a substantial growth in the domestic tourism. The Chinese people are now keen in traveling and discovering their Tourism 7 own country and this has become possible due to the increase in par capita income and affluence in certain section of the people. The monopolistic way of business has given way to the competitive business environment and China is utilizing this opportunity to the best of their results. Read More