Entry of the InterContinental Hotel into China - Case Study Example

Entry of the InterContinental Hotel into China Introduction The InterContinental Hotel was founded in 1777 as Brass PLC that when a series of growth and development. The Brass PLC was founded as a brewing company in 1777, but later entered into hotel management services by merging with other hotel management groups. Moreover, Brass got international when it purchased numerous internationally operating and managed individual and groups of hotels. However, after 223 years of operation in brewing and hotel management and services, Brass decided sell its brewing division (Block and Collins, 2013). On June 14, 2000, Brass sold its brewing division to Interbrew for $3 billion. Following the sale of its brewing division, Brass PLC changed its name to Six Continent PLC; this is because it was now operating in the sex continents. At the time of selling its brewing division, Brass PLC was operating three different business types including brewed products, hotel management, and soft drink business. There after selling its brewing division, on October 1, 2002, it also sold its soft drink business (In Alon, 2003). Following the completion of these demergers on April 15, 2003, Brass PLC, now known as the Six Continent PLC changed its name to InterContinental Hotels Group PLC (IHG) as well as became a distinct and discrete company on the same day. Being a different company with streamlined interest, the InterContinental hotel now focused on increasing and improving its management and operations in different countries. Therefore, it focused its operation and growth in the fastest growing economy globally, China. Problem Statement Promoting the InterContinental Hotels Group PLC the fastest growth by making it the preferred choice among guests and hotel owners in China and globally. Analysis The performance indicate of the IHG in China can be determined by analyzing it current and future business position using SWOT analysis. The InterContinental Hotel has its strengths from its long period of operation; thus, it management has experience in understanding challenges that might emerge in venturing into new environment. Furthermore, it has operated in different cultural and geopolitical environments (Block & Collins, 2013). This also has equip them with the experience in handling cultural and political diversity thereby taking them to the advantage of the growth and development of the business in China. Additionally, the InterContinental Hotel has had an overwhelming reputation in its services; this will make international clients who have been using its services in other countries to opt for it when they find it in the Chinese market (Enz, 2010). Moreover, the hotel embraced technology especially in its communication with its customers. In fact, the strength here is that they have launched a website using a Chinese language that aims at improving communication and interaction with the wider Chinese society. The market through the Chinese language website will embrace this marketing platform since the society is getting digital. The InterContinental Hotel has numerous opportunities in Chinese market in that it is going to be among the few international businesses offering hotel services in an international level. Other than being an international service provider, China is a growing economy; hence, numerous investors would be travelling into the country for other business opportunities and use their services (In Alon, 2003). The hotel may use internet as its marketing platform that will increase it visibility to the local and international catchment area. InterContinental Hotel my also incorporate other languages in their Chinese website so that other people within this society so they can open their online services to their customers(Block and Collins, 2013). The Chinese market just like other Asia – Pacific hotel markets had not attained the quality of services offered by InterContinental Hotel; thus, InterContinental Hotel should continue with acquisition of facilities that it could use to expand its operations in China. The InterContinental Hotel should turn its current reputation most gained through service delivery and the awards to attract more customers and this can be done through CSR. Additionally, China that had previously closed its market to the western world has now opened it markets including tourism. Hence, the InterContinental Hotel may tap the first visitors, investors and tourists, who will market the hotel further (Enz, 2010). Therefore, the hotel management must ensure quality service delivery so that it meets it goal and objective into this market. InterContinental Hotel must also offer services that are affordable to the people. China has large population that even small profit margin will translate to large profits only if the services are giver to a large population. This strategy calls for opening numerous chains of hotels and pricing the good and services of these chains of hotels according the economic status of region (In Alon, 2003). Nonetheless, since the Chinese opened its market to the west among other parts of the world, there have been increased inflow westerners among other visitors; thus, InterContinental Hotel should tap them since Chinese food and services are not common among the West and other persons across the globe. Therefore, if InterContinental Hotel provide these services qualitatively and quantitatively, they will remain the most preferred hotel in China. The InterContinental Hotel’s main threats include the diversity in the Chinese culture and dishes. Other threats that the InterContinental Hotel can be facing are the competition of other hotels that got ahead of it into this market. For instance, Lido started operating in China years before InterContinental Hotel thought of starting its operation in this market (In Alon, 2003). Additionally, Lido provides most of the hotel managers across China thereby making it the currently preferred among Chinese hotel owners. However, InterContinental Hotel can overturn this by introducing a new brand into the hotel management that the Lido trained managers cannot offer. The main weakness of the InterContinental Hotel business in China may be their application of their local ways of management into the foreign market. Alternatives The InterContinental Hotel must ensure that they also tap the readily available market, that is, the local population. This will require that the management incorporate the Chinese foods, drinks, and services among others. This will ensure that they tap the local market (Enz, 2010). However, the research may lead to vast information that may lead to the confusion in managing and expending the business. The hotel also conduct market research to determine what opportunities are lacking or being under provided or underutilized within this market so they may feel the gap (Ma, 2006). These opportunities may turn to be threats or weakness since they might not be perfect for the market. Conducting research for the existing services and the needs of the consumers will enable InterContinental Hotel to provide the market with what market lacks thereby increasing their profitability (In Alon, 2003). The hotel should as well diversify its management to as many locations with the country as it can. This will ensure that they incorporate different aspect of services and food required by the market; however, the process of diversification may be expensive. Recommendation The InterContinental Hotel must ensure that it understand the market fully including the threats, opportunities, and challenges that the market offers to any of its operations it intend to give to the market. Implementation The InterContinental Hotel may use local or international consultation firms within the hotel and tourism industries to implement their goals. For instance, in cases where the hotel will conduct research towards understanding the market in terms of the products and services it uses and it requires (In Alon, 2003); it would be prudent that it use the local who understand the culture and language for the effective reliance of the required information or data (Ma, 2006). Additionally, the InterContinental Hotel should opt for franchising some of its services towards diversification and marketing it brands. However, franchising may be expensive if the business owners to whom the services are franchised failed to deliver. References Block, C., & Collins, R. (2013). Doing business in china for dummies. Hoboken, N.J: John Wiley & Sons. Enz, C. A. (2010). Hospitality strategic management: Concepts and cases. Hoboken, N.J: John Wiley & Sons. In Alon, I. (2003). Chinese economic transition and international marketing strategy. Westport, Conn: Praeger. Ma, R. (2006). China hotel directory. Hong Kong: China Economic Review Publishing. Read More