Unit 43: Tapping Into New And International Markets Assignment Sample

Introduction Unit 43: Tapping Into New And International Markets

This report is based on global business development; it is a process of expanding business practices to the new market worldwide. International business development includes trade, capital flow, and foreign direct investment. This report analyzes the opportunities and threat a company faces in the global environment. To understand it better a Hilton hotel is taken as a case company in the whole report. A PESTEL analysis is done with a discussion on country similarity theory for a better understanding of threats and opportunities in the global market. The report explained what trading blocs are and what advantage a company received from them. The report also contains different tariff and non-tariff hurdles faced by companies in worldwide trading. The report also includes the import and export process as well as the ways available for Hilton Hotels to tap into the international market.

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Hilton Hotels is the most well-known name in the hospitality sector and Conrad Hilton founded the initial business. As of December 30, 2019, there were 216,379 rooms spread among 584 Hilton Hotels & Resorts establishments in 94 nations and territories. It is renowned for its excellent customer service and several brands that are found all over the world. The business performs an excellent job of upholding its values and mission. Its hotels can be found in practically any place within its range, including major cities, remote roadside locations, commercial hubs, and exotic vacation spots. The term HILTON, which stands for Hospitality, Integrity, Leadership, Teamwork, Ownership, and Now, is frequently used to refer to Hilton's core values. Hilton is a wonderful site for both guests and employees since it provides the best customer service and ties its name together. To increase market share, Hilton's business strategy focuses on having the most all-inclusive, incorporated, and current auction energy in the sector.

The opportunities and risks for businesses that are affected by a more international economy

To analyze the opportunity and threat for Hilton hotel this section includes a PESETEL analysis of the hotel's external global environment, as well as an explanation of the country's similar theory, is done.

PESTEL Analysis

Political, economic, social, technical, environmental, and legal factors are all included in Hilton Worldwide's PESTEL / PEST Analysis of the macro environment elements that have an impact on hotels are explained below:

Political factors: the political factors in developed countries create opportunities for growth of the company, while developing country's political factor create threat. The best hotel chain worldwide is Hilton Hotels and Resorts. As hotels be required to deal with the political climate in a lot of nation where they manage, the political constancy of the nation become a crucial constituent (Mekhruza et.al. 2022). As a consequence of its international operations, Hilton Hotels is subject to the diverse political risks that approach with each nation. A current example is the UK's conclusion to depart the European Union, which will effect in smaller amount travelers coming to the country and lower hotel earnings. In addition, the existing trade conflict among many nations will change the operations and revenue of the hotel.

Economic factors: The macroeconomic environment on a national and international level, and also the variables and events affecting it, are the main elements affecting Hilton Hotels & Resorts business. For example, the greater parts of hotels were filled during the 2012 Summer Olympics in the UK. However, after the Olympic Games were done, everything changed significantly this was a threat for company.

Social factors: International travelers are well familiar with the Hilton hotel brand. As people's lifestyles throughout the world are improving, which is also a very good indicator of hostel profitability in the future, this create opportunities for Hilton hotel(G'ofurjon qizi Abdullabekova, 2022). hotel finance is influenced by different social elements including consumer lifestyle, buying behavior, population increase rate, ethnicity, sex ratio, etc.

Technological factor: Hilton has successfully integrated technology to provide a high level of examine customization. The beginning of digital hotel room key that are included into consumer smart phones, the opportunity to choose rooms and personalize the hospitality experience via smart phones, and other initiative fall beneath this category. Hilton still holds the first mover improvement in this crucial area, regardless of rival hotel Hilton hotel appear to be subsequent suit.

Environmental factors: environmental factors are creating threat for the hotel but Hilton it trying to manage environment factors. The Hilton Hotel is making an effort to address climate change, water use, trash reduction, and energy efficiency (Song et.al. 2017). In line with climate science, Hilton is dedicated to guiding the hospitality sector forward into a net-zero economy and cutting its carbon dioxide emissions. Hilton takes pride in being the first large hotel chain to establish scientific-based carbon reduction goals that are in line with the Paris Climate Agreement and the field of climate research.

Legal factors: Hilton has to follow rules and regulations of every country in which it operates its business, this is the main factor that is impacting Hilton hotels. legal factors are the biggest threat for the company For instance, Some Hilton Hotel staff members take confidential documents from the chain of Starwood properties (Pan et.al. 2017). The court ruled in favor of Starwood, and Hilton was controlled to pay a 75 million dollar fine. In addition to driving away a lot of stockholders, the case sustained for several years and resulted in a extensive fine payment.

Theory of international trade (country similarity theory)

Global trade hypothesis are the universal term for the large number of justifications for world commerce. Buy and sell is the idea of swapping products and services across more than two parties. Intercontinental trade is the thought of this association between citizens or companies in two dissimilar nations.

Swedish economics Professor Steffen Linder suggested the country likeness concept in 1961 which is an attempt to clarify the theory based on inter trade (Viner, 2016). Users have equivalent choices in nations that have reached the similar or a comparable development level, As per theory provided by Linder. The firm-based ideology of Linder holds that companies should produce goods principals for internal consumption.

Companies that are opinion about sell overseas usually uncover that their maximum probability of accomplishment are in markets with customers that share their home market's tastes. As per Linder's country similarity theory, the most of trading in finished supplies would take position among different countries, companies with identical per capita expenditure, and based on inter trade will be common. (Feenstra, 2015). When it approach to considerate the buy and sell of goods, this hypothesis is regularly most useful when trademarks and service status play a major role in client's judgment and buying behavior. By using this theory, it is determined that the UK is the most similar country to the US. So SMEs in the US can plan to expand their business in the UK because there are more chances of getting success.

International Trading blocs and barriers

International trading blocs and agreements.

Nations that band together to increase commerce with agreements form trade blocs. Increasing taxes on products supplied from countries outside trading bloc, keeping a unified currency, or easing trade barriers could all be examples of how to do this (Geyer, 2019). Trade groupings can also be divided into four fundamental categories.

In a free trade area, several or multiple nations decide to abolish all trade restrictions, but every nation still imposes its own tariffs on quasi of the group; NAFTA is an example of this. A customs union is alike to area of free trade, except its associates have a general tariff with its quasi. The European Union is a superior model of this since the tariff is identical no matter which country is buying. A common market is present when there is without charge movement of capital, labor, ground, and business across the nations; for instance, there are no visa requirements for working abroad (Scott and Baird, 2015). Mercosur is one example of this, which has eradicated domestic trade barriers while allowing at no cost mobility of capital and manual labor. The premise of the economic union is similar to that of the common market, with the exception that it uses the same currency and has a same tax structure.

Figure 1 Trade blocs

Advantages of trade blocs

• A bigger market: Without having to worry about security, Hilton Hotels can boost its sales to other member nations. They can benefit from economies of scale because of the bigger market (Kathuria, 2018).
• Increase direct investments: Under economies of the common market and union, capital may move freely, which encourages hotels like the Hilton to boost their investments and add jobs in some of the member nations.
• Access to more affordable and plentiful capital: Hilton Hotels can benefit from economic unions where members have more established financial markets to operate the hotel business.
• Promote specialization: As trade grows, member nations can specialize more, leading to the development of the most productive industries including the hotel industry.
• Good impact on knowledge transfer and abundance: Free movement of capital and skilled laborers among members of a single market or economic union has a positive impact on knowledge and technology (Croft al. 2015). Hilton Hotel can use this knowledge and technology to grow its business worldwide

Trading blocs and agreements done by the US which help the Hilton hotel

The Marrakesh Treaty creating the WTO , of which the United States is a participant, specifies the rules for trade between its 154 members. In addition, the United States has a number of bilateral investment treaties (BITs) that support market-oriented policies in partner nations and private investment protection. The Doha Development Series global trade negotiations are now being participated in by the US and other World trade organization Members. The United Nations has active agreements for free trade with 20 countries (FTAs). The structure of these FTAs builds upon the World Trade organization ( wto), and they contain more stringent and comprehensive norms than just the WTO Agreement. The majority of FTAs are unilateral deals between two nations. However, the Doha Agreement's market openness for both commodities and services should benefit the company Hilton and contribute a huge amount to resolving the global financial recession and reviving trade's role as a primary engine of development and prosperity.

Figure 2 Free Trade Agreement by US

A range of tariff and non-tariff hurdles exist in the global trading environment

limitations, quantitative check (like quotas), value restrictions, permit supplies, goods labeling principles, and privacy regulations are merely a few forms of the barriers (De Melo and Nicita, 2018). There are two types of trade barriers which are given below:

Tariff barriers: On product imports and exports, states impose tariffs. Such tariffs have the potential to increase for the cost of foreign products, lower the cost of inputs for domestic firms, and boost government income. (Macedo et.al. 2020).

When member sides trade goods, a predetermined sum is assessed as a duty in arrange to generate income for the administration and boost the price of buying goods so that home country items, like the Hilton hotel, without difficulty compete by imported ones. A tariff hurdles is a charge that acquires the shape of duty.

The cost of the import is increased by the quantity of tax or obligation charged as a tariff, which raises the price of the imported items, which is ultimately paid by the consumer (Ronen, 2017). The tax and other charges paid to the country's customs by Hilton while products are sent . It contains:

• Export Fees
• Revenue Tariffs
• Single column Tariff
• Import Fees
• Transit Fees
• Ad-valorem Fees
• Specific Fees
• Compound Fees
• Protective Tariffs
• Countervailing and Anti-dumping Fees
• Double column Tariff

Non-tariff barriers: these are non-tax dealings engaged by the administration of the country to edge imports of goods from other country (Beghin et.al. 2015). It comprises those boundaries that effect in prohibition, formalities, or necessities, make it tough to import goods and decrease the market possible for goods. These legal tender controls and quantitative actions have an shock on trade volume, price, or both.

The government may denote it in the form of rules, legislation, practices, conditions, hassle, etc. to restrict import. Consequently, it includes common trade-distorting activities like:

• Canalization of imports
• Formalities imposed by consular
• Restrictions related to quantity
• Inspection done at pre-shipment
• Origin rules
• Quotas for import of goods,
• Voluntary Export Restraints,
• mechanical staff policy,
• Cost Caps,
• Forex Restrictions,
• Customs Procedures,
• Price Control,
• Foreign Exchange Regulations

The importing and exporting process involved the practicalities

The procedure of trading is challenging. It covers both the countries of origin and destination as well as any applicable trade laws for each. Before making any commitments, a firm that is considering international expansion as its next business venture needs to understand what the company is getting into. The most prevalent elements of import/export businesses are covered in this section.

Merchandise Importing and Exporting

Merchandising relates to products and has two goals. The first involves increasing customer demand, while the second involves distributing goods in a way that balances demand and supply.

Many small businesses find it difficult to succeed without the necessary equipment or expertise, but it's fantastic for occupations like manufacturing apparel locally and overseas or delivering items domestically and internationally (Lin et.al. 2020). Export agents can be useful when navigating obstacles including such tariffs and other costs on either end of the trade transaction at customs checkpoints. Nonetheless, transportation should be considered before beginning an import or export operation.

Service Importing and Exporting

International service importing and exporting is a subset of the services sector. Imports and exports are monitored or under the authority of an authorized government agency (Ariu, 2016). Here is a breakdown of what a company would need to do next if considering Canada as an export market if hotel Hilton planned to do service exportation:

Finding out about all admission requirements and applying for recognition by the Canadian government. Acquiring the necessary licenses by trade agreements with other nations, rules from both, and quotas imposed by one nation that restrict imports of goods from another one.

Advantages of Import and Export

• Importing and exporting provide up a tone of work opportunities, making it among the quickest ways to engage in global commerce.
• Is less expensive and time-consuming than alternative methods of engaging in international trade.
• In comparison to other methods of entering the global market, it is somewhat less risky (Afolabi et.al. 2017).
• Imports and exports are crucial to a nation's existence and growth because no nation can ever be entirely self-sufficient.
• Can help countries acquire access to the best products, services, and innovations.
• Compared to forming a market, the risk is far smaller, and the deal can be controlled better.

Disadvantages of Import and Export

• It comprises added expenditures for shipping, security, and indemnity that add to the whole cost of the goods.
• If imports are outlawed through foreign countries, exporting goods and services will be impossible.
• Local businesses that are near the client may be able to better serve them than companies working outside of home country. (Seretis and Tsaliki, 2016).
• It can be challenging and frustrating to acquire the essential permits and formalities for intercontinental trading.
• The company risks trailing control of the domicile market and the company's recent clients if it is not vigilant.

Ways by which SMEs can enter into global markets

Small and medium-sized commerce have right of entry more worldwide markets (SMEs). However, the process of global expansion presents many challenges for these companies. They could lack in the means or expertise required to penetrate new markets, which could cause them to fail before they even begin. following are some ways by which companies can tap into an international market

Licensing and Franchising

In this scenario, a corporation grants permission to a third party in another nation to utilize its intellectual property in exchange for royalties. In most cases, it entails giving third-party permission to manufacture or market things under its name. The licensing process includes franchising. With little time or financial investment, it enables a new revenue stream and a presence in a market. Without stringent oversight of the licensee, the business is still at risk of damaged brand reputation and the potential creation of a new rival.

Joint Ventures

An arrangement called a joint venture enables two or more companies to work together on a single project (Killing, 2017). This is one of the important ways of entering the international market.

Direct Sales

A direct sale can be done with the help of the export of goods and services where demand has been established. This is an easy and affordable approach to accessing international markets, but the amount of time and money a company has to devote to making sales visits will determine how much it may earn.

Recommendation for Hilton Hotel

The hotel industry is dominated by franchising, with most hotels using it as a growth strategy to break into the international market. The report suggests that the franchising model should be continued by the Hilton hotel to achieve greater success in the international environment. The most well-known hotel brands are operated and franchised by Hilton Worldwide, a well-known international hospitality company, including Hilton, Honors Hilton brand, Hilton Garden Inn, Embassy Suites, Doubletree, Hampton, Homewood Suites, Conrad Hotels ,Home2Suites, and the Waldorf-Astoria. Hilton included original opportunities for brand name expansion with its other major expansion values. Hilton should adopt a customer-focused strategy by launching its loyalty program, to increase market share.

Conclusion

The report highlights the various threat and opportunities faced by the Hilton hotel in the international market. The Hilton hotel is performing best in technological advancement in their hotels and other facilities and it has the threat of various legal factors in the international market. The report also concluded that the UK is the most similar country to the USA by using the international theory of country similarity. The report also discussed the trading bloc and agreement which helps the Hilton hotel and other companies in the worldwide market. The biggest advantage of a trade bloc for Hilton Hotels is accessing a larger audience and low-level tariff and non-tariff barriers compulsory in partner nations. The report also explained the import and export process in the international market and concluded that Hilton Hotels being in the hospitality business focuses on the import and export of services. To sum up, the report concludes, the various way are given how Hilton hotel can expand its business in the international market, the best way suggested in the report is expansion by Licensing and Franchising.

Referencing

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