Globalization is a concept that aims at encapsulating the processes operating on a global scale. It makes reference to the constantly tightening connection networks which cut across boundaries of nations, integrating various communities in emerging space-time combinations. Globalization thus has had the impact on a number of sectors of the economy and many other aspects of the society. In all these aspects, adjustments are being made towards globalization to enhancing function ability and the ability to cope with changing trends (Hall, 1992, pp. 34-88). This has not left behind hospitality industry which is also adjusting to globalization according to Bauman (2000, pp. 77-85). Thus, this essay seeks to discuss the competitiveness of international hospitality business in the context of the processes of globalization.
World maps define boundaries of nations although those boundary lines belay the ever-increasing nature of the economy globally. Globalization is characterized by the fast movement of information, people and capital across borders of nations universally in methods that would have been proved difficult to envisage in the recent past. Nevertheless, globalization has been embraced as a modern force and a big concept which needs a careful description. In many States and countries where the industry of tourism and hospitality has been proved a major area in the export industry, the hospitality sector is ever a core point for globalization processes to begin unearthing. For sure, tourism and hospitality has now become the largest industry of export in the universe. It involves huge flows capital and people across borders (Busby, 2001, pp. 29-43).
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Hospitality and Globalization
The hospitality industry is, therefore, one of the biggest employers in the world and arguably among the largest foreign currency traders. It is usually a center point for the local society and a center of the transfer of opinions and ideas and culture-cross fertilization. At its center, the hospitality industry has played a very imperative role physically in bringing individuals in one place in a global society. The nations which suffer from trade imbalances as a result of high imports usually look to hospitality and tourism as measures to close this gap and strike a balance in the economy (Crafts, 2004, pp. 25-44). Hospitality is therefore not merely an industry but a concept and a great force in the swiftly emerging global market region. Hospitality industry is therefore at the very focal center of international business globalization.
Companies in the hospitality industry thus need to make a consideration of the implications of the global nature in which operations are being carried out and should be ready to deal with issues that emerge from this ever-changing environment. Such things include the tangible trends that are driven by an inter-connected global market region expected to shape the future of the hospitality industry. Another issue would be the matter concerning the meaning of globalization for the hospitality company which is oriented internationally together with the operations of hotels that compete in the local set up and in the region with the organizations. Business globalization and lifestyles is defined by communicating over long distances in international languages, occasional travel abroad, dealing with a lot of currencies as well as coping with different social and political systems, environments of regulation, customs and cultures (Becton and Graetz, 2001, pp. 105-113).
Whilst these globalization aspects can easily be identified, comprehending the underlying present and the future trends can be difficult. However, the analysis shows that these some of these matters are changing the shape of the global hospitality industry even though there are clearly some other difficult questions that need a resolution. These include: the international expansion together with common brand and product position; programs of marketing and sales that capture the global economies of scale entirely; structures of organizations that permit universal service delivery together with control of local operations; the training of employees across borders to help in supporting operations and finally the utilization of the capital markets in the world as a funding source.
The companies in the hospitality industry with the belief that they can increase and retain a market niche position even without making an acknowledgement of the significance of globalization thus need to have another view. In other words, many of the hospitality business will require a global thinking if they are to stand the competition in the global arena. This is more especially for the organizations in competition in the mature markets of the United States of America and Europe. These nations are now facing very stiff competition from other regions of the world and more especially from Asia (Lam and Xiao, 2000, pp.291-95). The sheer magnitude of the wide market of the U.S specifically can enhance an insular viewpoint although the hotel companies engaging only with the dynamism in the domestic field need this awakening call.
Globalization will consequently tough significantly all the facets of the hospitality industry. Customers, employees, capital sources, products and processes of management will increasingly be competed for and this will be experienced across boundaries. Companies which are not ready for this are likely to lag behind. Regional or local entities could believe that globalization does not concern them. However, that perception could be wrong. Competition in the near future is expected to emerge from universal entities with the merits that globalization will come with. Globalization is an ordinary trend outgrowth that has evolved in the past half a century. International chains of hotels came to existence years following WWII and came to the full establishment in the 1960s. They later expanded immensely in till the 1980s. Economic and Industry trends have further ignited the growth of hotel companies which are oriented internationally for different reasons. Severe extra-building of markets of hotels especially in America in the 1980s stopped the emerging development almost wholly, whilst the scarcity of development and growth opportunities in the markets all over the world have again supported the move towards the consolidation of industry (Smith and Cooper, 2000, pp. 90-95).
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Many industries which have made a commitment to growth have realized that opportunities behind them have been limited due to the overbuilding and now have been forced to see beyond mature markets domestically to opportunities offshore. The pressures of expansion beyond boundaries of nations have greatly come up from the desire of hotel companies and organizations to target Critical mass. This is the point at which property network is sufficiently available to meet the travel needs of the hotel company’s most esteemed customers. For a variety of companies, with different locations and products, critical mass will change in scope. A hotel company according to Daurer (2001, pp. 1-12) could reach a stage in which there is no other option which is viable other than expanding across boundaries of nations if there is a desire to grow, attain critical mass as well as benefit from the economies of scale that are incorporated in it.
Well, if it happens so, management will be required to reorganize the importance of organizing as an international company. Taking an example of an international facility company that is already established in Europe and America (Leslie and Richardson, 2000, pp. 489-98). In modern global market, company leadership and management could draw attention to the potential of getting away to Pacific or Asia markets to compete with the regional companies which are already established. Companies and organizations which make see such an option are likely going to make progress against strong regional and local competitors but only when they capitalize on the merits gotten from being an international company. Whilst the large international chains are increasingly expanding on a global trend, there are some brand names in the United States of America that are yet to attain the critical mass needed for success in marketing.
The question presented her to the hospitality industry can simply be stated. Will the globalization demands encourage continued consolidation as smaller organizations and companies that have not gained the critical mass are obtained or put away from business? The desire for hotel organizations to attain critical mass together with the attendant economies of scale asserts that there will be a decreasing number of big companies in the prospect as the global expansion imperatives persist. Economies of scale are authentic, not thought about, and marketing on a universal basis enhances a crucial competitive edge. It is for sure that products and brands will be largely marketed on a truly universal basis. Development and growth functions will therefore be even more important for the organizations that have not attained a critical mass (Drucker, 1986, pp. 768-91).
Companies and organizations going after a global strategy and used to management contracts of hotels, relationships of franchising and non-recourse funding, noteworthy adjustments would need to be aligned with model of growth and development. In various markets around the globe, ownership bifurcation from management and similarly management from marketing is an aspect which is yet to receive actual maturity. The process that enhances these facets is a gradual one and companies which a global perception are expected to respond appropriately (Went, 2000, pp. 24-32). The differencing in owning, financing, marketing and operating hotel facilities will thus ultimately narrow in a more universal environment. The issue for companies which are still growing into markets where local alliances and partnerships are needed for success will ever be to convince counterparts in the foreign arena of the merits of structures that have been efficient in the home countries. A company or an organization that is going offshore with a concept of business, however, cannot make an assumption of being fully accepted. Michael et al (2009, pp. 523-41) assert that differences will slowly break down although for now, it could be important to make adjustments to the realities in the local market.
Brands and Products
Customers in the hospitality industry are looking for services that are predictable and that can support their capacity to move easily and quickly around the globe. Actually, the lifestyles and businesses of these multi-cultural travelers have taken shape in accordance to the processes of globalization. The concept of looking and making use of single brands universally is therefore alluring together with being completely within the touch of quite a number of the hospitality organization and companies. Nevertheless, there is a consistent uncertainty concerning the importance of establishing a particular brand in the global market region, different from responding to the different conditions at the regional level. That challenge was dealt with by an executive in a different industry in the study of Economist Intelligence Unit where he stated that companies that realize the way to organize and disburse their global experience to the local needs will be victors in the future.
Various international hotel companies have found out the attendant economies of scale to develop single products and brands and offering them with a uniform fashion to many markets within their capability around the globe. There is a trend that countervails in that many individuals both business travelers and tourists seek the unique customs and qualities of an individual locale. While responding to this, a number of the internal hotel organizations have made an effort to reflect a local culture in a manner the hotels are operated and designed. There is indeed a platform in which there is no one correct answers but instead a balance of tough factors needed. For instance there is a universal accord that “global travelers” who usually travel whether for recreation or for business, normally make preference to a uniform product since they need to have convenience and predictability comfort and they require a service which is of a higher degree.
The people who do not travel frequently but have a relatively high sophistication level could avoid such dominant global product and brand concepts. Another group comprises the people which look for the things they are accustomed to, and are strongly attached to brands which are familiar to them; in reality, they make preference to staying in environments reflecting their experience at home. The expectations of customers are linked to the level of offered product, as well as hotel product at the lower end of the range apparently are easier to standardize in a global aspect, in part due to these properties which are clearly described by the physical features, which have a possibility of being duplicated. At the upper end of the spectrum of product quality, the customers’ search for subtle variety in services together with quality cannot be replicated easily.
With such awareness, organizations like McDonalds have signified the spread of global capitalism. McDonalds has over 26,500 restaurants in 119 countries whose staff is expected to present themselves in particular ways by having designed uniforms and a particular way of reception through greetings, smiles and such like attributes. What could be termed as “McDonaldization” is the manner in which the organization operates uniformly in the various countries. This is a process of which the principles of the McDonald fast-food restaurant are coming to dominate many more society sectors. The main premise apart from the choice appearance apparently offered by consumption is becoming more standardized and globalized. McDonalds supports the opinion that they are leading to a global homogeneity and standardization. There are three typical pillars upon which McDonalds outlets operate on: efficiency, Calculability and Predictability (Ritzer, 1993, pp. 10-56).
Modern hospitality organizations like McDonalds seek to be efficient by coming up with an optimum way of getting from a particular point to another point of efficiency by satisfying needs in a pre-designed procedure and process. With globalization, there are many diverse needs which need to be addressed. It is therefore the responsibility of the leadership and management to establish good procedures which effectively tackle the issues that come along with globalization. Calculability is a quantitative approach used to relate the quantity of product sold and the quality thereof. Any hospitality organization or company that is making a realization of this aspect is bound to succeed in the future to come.
Working with predictability will also enhance the business efforts. Services and products will be the same for a particular period of time in all locale employees behave in ways which are predictable. Standardization as provided in the principles of Globalization and McDonaldization leads in the direction of highly standardized commodities and products. Holiday Inn, Brand Image Travel Lodge must bear the same appearance regardless of the location on the globe. Any hospitality company should therefore lessen the distinctions as much as possible. As a result, food becomes standardized and can easily be accepted both locally and globally (Ritzer, 1993, pp. 10-56).
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For the bigger and well established hotel organizations like McDonalds that have circled the universe in the quest for new chances, globalization has been a concept of strategy for many years now. International Hotel organizations were forced to confront all the matters facing international enterprises globally. Unlike what a manufacturer with a plant overseas, a hotel organization should export its entire business of operation to function in assorted geographic and cultural settings. Hotel organizations should have the ability to establish a whole concept of business in dramatically various local environments. While the new century approaches, coming up with other structures of organization that can put together particular business in a seamless global form will be an everlasting challenge. Information technology in fact is one of the major factors that shape opportunities for the way global hotel organizations structure themselves, providing the ability to converse with customers in an electronic way and making contact of the far-flung processes and operations (Fischer, 2003, pp. 1-30).
Again, the global companies also benefit through becoming flatter, contrary to pyramid-shaped organs with strong centralized authority. Such organizations which are decentralized can narrow the emotional and physical distance between employees and employers, while putting the staff and management close to the esteemed customer. Structures of organization founded on systems of hierarchy with centralize authority at a location in the headquarters consequently, may be absolutely obsolete based on the distance of the customer from the management. At the same time the failure to empower the staff and line management responsible for service delivery can add up to the shortcoming. Luckily, “flatter” together with an organization which is more decentralized are largely facilitated through the ever-increasing sophistication of communications and technology (Rupert, 2000, pp. 23-45).
Moreover, hotel organization employees make a representation of a melting pot of customs, languages and culture which require other skills of management and visioning to be able to effectively manage and show a commitment to training and education that is exceptional in its breadth. Modern schools of hotel will require an increased focus on matters that need to do with universal environment like international marketing, communications, social studies, international law, language and geography (Airey and Tribe, 2000, pp. 23-45). Wide training of a company in a global unit of organization to assure effective leadership, service delivery and skills of operation are also a representative of a relative challenge.
All the factors enlisted in here are a suggestion that companies in the hospitality industry that are expanding globally can greatly benefit through the formation of strategic alliances. Some companies are going towards such kind of alliances with partners in the regions as a major strategy to offer entry into relatively unfamiliar and new markets and assure higher local knowledge level (Kusluvan and Kusluvan, 2000, pp. 251-69). By expanding and entering alone can be a risky and more expensive process. Considerable amounts of money can be used in making efforts of conquering a region, and there could be substantial wisdom in establishing alliances with the regional and local partners. Foreign groups of hotels have long realized difficulties in establishing a presence of U.S and a system of distribution, for instance, and will certainly require entry into alliances, instead of establishing new services and products from the scratch in a market that is extremely competitive.
At their best, the forged alliances can major on the strengths of the big, multinational corporations whilst drawing the advantages and profits that accrue to smaller and more differentiated organizations. Forming an integrated organization in such alliances come along with challenges though. The overriding matter in terms of operations is maintaining fixed center which is firm while at the same time encouraging proactive approaches and flexibility to local situations. Additionally, partner choice is also an issue to be addressed at the initial stages. A shared philosophy of operation and orientation to customer/product are significant if the combined whole is to remain successful than the total parts’ sum. Therefore globalization is widening up the context of hospitality industry and much communication is needed that highlights the importance of organizations and/or companies in the industry to re-align themselves with these changes.