Excerpt
Contents
1.0 Introduction
2.0 Market Entry Strategy
2.1 Separating Ownership and Control
2.2 Two Dimensions of the Foreign Market Entry Strategy
2.3 Other Factors
2.4 Final Decision on the Market Entry Strategy
3.0 Marketing Plan
3.1 Situation Analysis
3.2 SWOT Analysis of Burj Al Arab
3.3 Competitor Analysis
3.4 Segmentation, Targeting and Positioning
3.5 Marketing Mix
4.0 Organisation Structure
5.0 Logistics, Supply Chain and Other Features
6.0 Conclusion
REFERENCES
List of Figures
Figure 1: Separation of Ownership and Control
Figure 2: Two Dimensions of the Foreign Market Entry Decisions
Figure 3: Indian Hospitality Industry
Figure 4: Key Players in the Indian Hotel Industry
Figure 5: Clientele Break-up: Five Star Hotels in India
Figure 6: Average Room Rent: Five-Star Hotels in India
Figure 7: Proposed Organisation Structure.
1.0 Introduction
Burj Al Arab, the world’s only seven-star hotel based in Dubai, is looking to expand its presence internationally. In the previous task, it was discussed why there is a need for Burj Al Arab to expand internationally and go global. A research was carried out in the previous task and India was selected as the market for this international expansion.
The hotel is managed by the Jumeirah group. The hotel is at the 12th position in the world’s 15 most costly hotels. It is located in Dubai on a man-made island with state-of-the art facilities. The hotel targets the most affluent people from all over the world. Burj Al Arab is a name synonymous to “royalty”. All these things need to be considered when laying out a plan to start operations in the international market (Council on Tall Buildings and Urban Habitat, 2013).
This report discusses the optimum market entry strategy for Burj Al Arab to enter the Indian market. It also discusses the marketing plan, the marketing mix and the organisational structure that will be most suited. Burj Al Arab is a big brand name known across the world for its luxury and high-profile customer base. The market entry plan to launch the organisation in the Indian market should strictly be in accordance with the image that it has built in the international luxury hotel market over the years.
2.0 Market Entry Strategy
Burj Al Arab is the only seven-star hotel in the world (Council on Tall Buildings and Urban Habitat, 2013) and when it decides to expand in the highly competitive international market like India, it needs to consider a strategy that would help the hotel maintain its brand value and competitive advantage that it has in the home country. A market entry strategy should be selected such that the strengths of the hotel and the advantages of the international local market selected (India) complement each other and help the hotel to maintain the service standards, its commitment to its customers and the reputation that it has in the global market.
Hotels like Burj Al Arab, contemplating to enter an international market, have to consider many parameters to decide on the most appropriate market entry strategy. The hotel should separate the ownership decision from the control decisions. There are various questions which need to be answered before finalising the entry strategy:
Firstly, the hotel should decide whether it should own the property in the local market or not. Secondly, whether the operations of the hotel in the international location will be outsourced to a management company or should it be managed locally with control in the hands of the promoters. The hotel should expand its knowledge about the local market in order to lay a strong plan both for entering as well as operating successfully in the Indian market (Doole and Lowe, 2008).
The knowledge is divided in two parts, the tacit knowledge and the codified knowledge. Tacit knowledge implies the knowledge of the hotel culture, workplace routine, and the business processes whereas the codified knowledge is something which can be easily perceived like the design of the hotel, the signature offerings and the like. Transfer of both kinds of knowledge plays a crucial role in selecting the right market entry strategy (Khan, 2012).
2.1 Separating Ownership and Control
illustration not visible in this excerpt
Figure 1: Separation of Ownership and Control.
Source: Ghoshal and Bartlett, 1996
Figure 1 above shows the various factors which affect the separation of ownership and control in different business functions when first deciding to enter a foreign market. There are certain sections where the company can have greater ownership but at the same time, there are some functions which will have higher dependency on the local partner (Ghoshal & Bartlett, 1996). For example, branding would be handled majorly by the hotel promoters in this case but the pricing of the rooms would be largely decided by the local management of the hotel keeping in consideration the market trends and the economy.
While entering the Indian market, Burj Al Arab should take care that the ownership remains with the hotel firm while the local expertise could be milked to have the maximum benefits. Ownership strategy will be used where the parent hotel firm, Jumeirah International, has managerial control over the hotel’s marketing and operations whereas the local partner has the facility ownership and helps the hotel with local market knowledge and expertise. This way the promoters can avoid heavy investments in the new market at the same time maintaining control over the operations (Fraser et. al., 2007).
2.2 Two Dimensions of the Foreign Market Entry Strategy
Figure 2 below shows the different strategies which some renowned hotels have followed to enter international markets. The ownership of physical facilities is divided into two groups, high ownership (Sole) and no ownership. Similarly the second dimension shows the extent to which the entrant can develop its own marketing and operations strategy or has to rely on the local networks for the same (Buckley & Casson, 1998).
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