RESPONSIBLE TOURISM AS THE KEY TO ETHICAL TOURISM PRACTICES
Responsible tourism is one of the key areas related to ethics and marketing in the tourism sector. In the article, Tourists’ Accounts of Responsible Tourism, Caruana et al. (2014) define responsible tourism by looking at the benefits gained by the host country, the ability to minimize impacts, engagement of the local community in decision making, and conservation of cultural heritage. The definitions aid in enforcing responsible tourism among the consumers.
Some of the major issues raised by the article about ethics in tourism were: participation in responsible tourism, social economy and environment, ethical marketing, and motivations factors for ethical tourism. Findings from the article revealed that responsible tourism is a concept involving market of heterogeneous consumers. By participating in responsible tourism, consumers and marketing firms can significantly improve ethical tourism behavior while promoting development, social interaction, and understanding with the host country.
Participating in Responsible Tourism
The accounts of tourists on responsible tourism can be defined using their experience and degree of involvement in responsible tourism. According to Winchenbach (2013), one of key strategy for developing ethical tourism is human capacity building. However, current literature pays little attention to operations factors that have a direct role in tourism.
Winchenbach notes that trainee’s personal motives, attitudes and the capacity to transmit knowledge can significantly improve transparency within communities. According to Salazar (2012), the society will be fully equipped to influence tourists and firms to practice responsible tourism. Affirmative action and active cooperation at the community level can go a long way in enabling the local community to overcome barriers to responsible tourism.
Consumer’s involvement in ethical tourism is usually dependent on the perceptions of an ideal culture that the consumers identify with. Albeit many tourists expressing participation in responsible tourisms, some engage in low level or no participation at all. It all depends on the attitude, the perception of the host country and moral obligation of the consumers (Liu, 2003).
Some tourists have no business with the commercial or cultural issues of the community around. For example, one might say that relaxing or breaking away from work is what that concerns them and therefore fail to engage responsible tourism activities.
The government and tourism firms have a role in promoting responsible tourism. Drivers, tour guides, and advertisers have a title role in creating awareness to the consumers, supporting the local county and begun obedient to the regulations of tourist’s authorities. The administration should be involved in zone divisions, issuance of licenses to guides and promoting cooperation amount different players.
Murphy (2013) as cited by Breugel (2013) stressed the numerous benefits of local community involvement in the development of responsible tourism. He argued that the industry can be destroyed if tourism and development planning fails to align with the expectations and capabilities of the host country. Although there is no literature in support of realistic ways of engaging the community directly in tourism development, there are several means and discussions on how they can be part of responsive tourism.
Some of these participations range from decision making and involvement in benefits so the tourism, showcasing of the society’s culture and assisting in tourism awareness campaigns (Bramwell, B. and Sharman, 1999; Stamboulis and Skayannis, 2003).
People will be more inclined to take part in ethical tourism activities like marketing if they are involved in discussion and decision-making process to voice their opinions (Holden, 2003). They will also volunteer in information sharing, interpretation and other tourism related activities and events. It is recommended to articulate the community values and generate local support for tourism development.
Factors to consider while planning for community involvement range from assessing the current commitment procedures, making first meetings with members of the community where issues of responsive tourism can be addressed, and gathering information. Collecting of data is done by reviewing the existing materials about trusts and determining whether there is sufficient information available for tourist interests.
Community meeting should also be conducted where proposals, opportunities, plans and feedback can be presented. The results of the meeting can be distributed to the public using relevant media while soliciting citizen’s feedback.
Social economy and environment considerations
There are a variety of economic, social and environmental factors associated with tourism. Understanding responsible tourism will help organizations and governments plan for sustainable tourism that takes care of the environment, economy and the social aspect of the host country (Stynes, 1997). Tourism leads to increased sales, the creation of job opportunities, tax revenues and income (Briedenhann, and Wickens, 2004; Frechtling, 2000).
Some of the direct effects on the economy are emergence and sustenance of lodgings, restaurants, and entertainment and transportation sectors. There are more direct impacts of tourism on the community that are quite clear. Nonetheless, responsible tourism is the key to productive and increased economic activities in an area (Wang and Davidson, 2010).
A transportation firm that attracts about 50 tourists every day can get more consumers to positive results from responsible traveler’s practices. The firm, for example, might get new 50 visitors in a day and double its daily income. If each visitor spends $50 for transport, the business will experience a positive change from $ 2500 to $ 5000. If let’s say the new boom is sustained for the next 100 days, the region will, therefore, accumulate half a million in cash sales.
While the amount will be distributed among retailer’s owners, restaurants, and entertainers proportionally, another fraction will be channeled to cover for goods purchase and allow a significant amount of growth development of the region.
The importance of culture is critical in the ethical marketing of tourism (Gurel and Yaman 2006). In support of this idea, Fleckenstein and Huebsch (1999) argue that cultural difference is one of the top issues of international tourism. It may have a disproportional impact while making ethical and fruitful business decisions in a global setting (Payne and Dimanche (1996).
Variations in the perceived importance of ethical marketing and social responsibility as the key determinants of a tourists firm’s effectiveness can be explained by the country difference. As Singhapakdi (2001) notes, these perceived variations include cultural differences and the variances in the economic environment as well as the firm’s climate, gender, and age.
Marketing ethics in tourism has been complicated by the idea that marketers must deal with a heterogeneous audience who possess different cultural attributes. The failure to apply ethical marketing may lead to two extremes. First, there will be the breach of ethics that will end to consumer contempt of the product, and the firm will suffer long term consequences. The next extreme will be immediate damage to both the individual and the host country.
Motivation factors for ethical tourism
The article indicated that tourists engage in moral tourism where ” Our respondents also involved in what we might refer to as ‘morality plays,’ wherein the ethicality of their holidays was dramatized into tensions around nature, culture, and economy” (Caruana et al. 2014 pg. 125). This engagement was categorized into fundamental or extrinsic goals. The former refers the type goals meant to make money and are directed from the inside.
They are aimed at controlling people and achieving self-esteem needs such as social recognition. The later refers to outer directed ends that include achieving real social interactions, making contributions related to the development and helping others. Intrinsic goals also encompass delighting in volunteer programs and personal growth efforts. The interviews carried out revealed that tourists demonstrated a wide variety of themes and the respondents could position their experiences of responsible tourism as directed to immediate personal growth and family unions.
Extrinsic goal direction
There were several cases where tourists expressed self-interest motives as the reason for participation in responsible tourism. These motivations were partly connected to the issue of responsible tourism in ethical marketing. The details and information presented to tourists through advertising were seen to have a huge impact on the role and motives of tourists in taking part in responsible tourism.
Ethical marketing was cited as one of the factors that attracted respondents to taking part in meaningful activities. Consumers see the message and feel compelled to act. They believe what they hear and see and understand what to expect from it. According to Debicka and Jastrzabek (2014), responsibility is depicted as a conduit of personal assurance and a way of avoiding commercialization.
It links to personal benefits of a quality holiday filled with good value. Instead of using commercial links to access services such as food and accommodation, some tourist prefers to explore on their own and seek out new places. While they might be sensitive about ethical issues related to such endeavors, they are comfortable spending money on services that looked decent and appropriate.
Responsible tourism (Ford and Acott, 2015) presents consumers with a good value proposition and serves them individual goals. Notably, a lot of tourists look for services that fit their individual needs and tailored specifically to meet their expectations. Mass marketing (Goodwin, 2001) is not favorable due to its perceived failure to offer customized information.
Consumers will always seek out things that can be well planned and pertains to their unique tastes. If the tourists desire to portray individuality and difference similar to their inner motivations that make them concerned about mass marketing (Ford, 1994). The construction of extrinsic goals is shaped by situational factors such as children, friends, and spouses who the consumers have duties to live up to.
For example, a tourist who brings along her husband and children will have obligations to them and therefore seek out to engage in responsible tourism. This motivation would be different if she came alone. By bringing their husband children, people will effectively be ethical, take part in community engagement, prove to be good parents and take part in educative initiatives.
Tourists explicitly express more intrinsic and outer directed goals within responsible tourism. In this type of ethical marketing, some consumers will seek to participate in conserving the environment, share the wealth and help others access quality life. One respondent interviewed in the research, Tourists’ Accounts of Responsible Tourism by Caruana et al. (2014) stated that going as responsible travelers will benefit the host country a lot.
Some will participate in responsible tourism to raise awareness of the positive and adverse effects they might have on the economy and the vulnerable social community. It’s conversely difficult to interact with the local community and tourists are advised to remain in the hotels if overcoming the challenges looks impossible. Meeting the locals is one of the most effective ways of understanding one’s impact on that community.
Responsible tourism has a broad range of cultural, economic and environmental benefits varying from job creation, revenue generation, to increased sales. The article on responsible tourism revealed that consumers do not have fixed perceptions of ethics, marketing, and social issues on travel products. The market is heterogeneous and defines responsible tourism about aspects of their behavior, interactions with local community and their impacts on the host country.
There were several themes identified by the article ranging from motivations for engagement in ethical and responsible tourism, marketing and experience. Consumers take part in ethical issues by being part of responsible tourism. Tourists’ involvement in ethical tourism depends on their perceived notion of the culture they identify with. Some take part in high-level issues of marketing, social and moral matters while others do not participate at all.
The motives could be extrinsic, meaning they are personal in nature. They could also be intrinsic where people engage in ethical tourism to help others, spread cultural values and be part of development agendas. Ethical issues in tourism should not be left to policy makers, governments and marketing firms alone. All players including tourists, members of the local community, marketers, environmentalists, government agencies, and businesses should take the time to part of ensuring tourism is conducted in a responsible, social friendly and ethical manner.
Briedenhann, J. and Wickens, E., 2004. Tourism for the economic development. Tourism Management, 25(1), pp.71-79.
Caruana, R., Glazer, S., Crane, A. and McCabe, S., 2014. Tourists’ accounts of responsible tourism. Annals of Tourism Research, 46, pp.115-129.
Debicka, O. and Oniszczuk-Jastrzabek, A., 2014, January. Responsible tourism in Poland. In Faculty of Tourism and Hospitality Management in Opatija. Biennial International Congress. Tourism & Hospitality Industry (p. 189). The university of Rijeka, Faculty of Tourism & Hospitality Management.
Fleckenstein, M., and P. Huebsch 1999 Ethics in Tourism-Reality or Hallucination. Journal of Business Research 19:137–142.
Ford, A. and Scott, T., 2015. Responsible tourism: A guide for tourism and sustainability in small-scale fisheries and agri-food.
Ford, R., and W. Richardson.,1994. Ethical Decision Making: Review of the Empirical Literature. Journal of Business Ethics 13:205–211.
Frechtling, D.C., 2000. Assessing the Impacts of Travel and Tourism-Measuring Economic Benefits’. International Library of Critical Writings in Economics, 121, pp.9-27.
Goodwin, H., 2001. Responsible tourism and the market. International Centre for Responsible Tourism
Holden, A., 2003. In need of innovative environmental ethics for tourism?. Annals of Tourism Research, 30(1), pp.94-108.
The Hospitality Industry: Strategy for Global Meetings and Events
The hospitality industry is competitive today. Factors such as globalization and the internet are increasing the demand for hospitality services. Organizations in the hospitality industry are implementing various strategies to attract customers and gain a competitive advantage. Olympia London is a conference center, exhibition center, and event space. The company has shown drastic financial improvement in the last three years.
The financial crisis affected the economy of United Kingdom. Many companies performance was negatively affected by Olympia. Olympia has experienced hard financial times since 2008, but it has started showing an improvement. Olympia must continue improving financially and generate huge amounts of profits. It must continue to be financial sufficient. Olympia is facing stiff competition from other exhibition and conference centers in London and around the world. Olympia was established 130 years ago.
It is one of the oldest exhibition centers in London. It has a lot of experience, but competition poses a great threat to the company. Olympia must make use of its years of experience and competencies to gain an edge in the market. Being one of the oldest companies, it must start looking at the bigger picture and start targeting new markets. To gain a competitive edge, the company will now employ the concept of strategic management. Strategic management focuses on establishing a game plan for winning the market.
Strategic management ensures that a company outwits the competition, and attracts new customers to increases market share. The company must come up with an effective strategy that inspires and informs the actions of the management team and mobilizes employees. The strategic plan comes up with the long-term direction of London Olympia and indicates how the company will gain a competitive edge to become the leading organization in the next five years.
Olympia London strategic plan vision is to be industry champions and continue providing clients with extraordinary moments through innovation. The vision statement indicates the plans of the company in the next five years. The vision statement indicates that the company plans to be the pace setter in the industry ( Shahmehr & Safari 2014). It is focused on improving customer experience to become the leading company and bring in new ideas in the hospitality industry.
The mission statement is to pursue new opportunities that reward the stakeholders. The company will be driven by its core values, and it will be committed creating an extraordinary experience to guest, clients, employees and community. The mission statement includes the various stakeholders of the company. It indicates that the company will focus on improving the welfare of the employees and the community. It brings the social responsibility aspect of the organization. Additionally, it indicates the commitment of the company to provide customers with good customer care services.
Olympia London encourages innovation through teamwork. The company will encourage the generation of new ideas that will not only benefit the company but the hospitality industry as well.
The company plans to become the pride of London. The company strives to be the best and contribute to the development of London through economic benefits.
Olympia London holds stakeholders accountable for actions. Integrity is a core value, and all stakeholders are expected to uphold integrity in all activities.
Olympia provides customers with similar quality products. The company services are consistency, and all focused towards creating extraordinary experiences.
The company understands the importance of local community. The company will give back to the community by participating in various community development programs. Additionally, it is committed to sustainable development hence it is at the forefront of environmental protection.
3.0 Strategic Direction
Strategic direction indicates the position that the company plans to be in the next five years. When developing strategic plans, it is important to come up with a solid strategic direction in order to identify the right strategic options to achieve the goals of the plan.
In the next five years, Olympia should be financially sufficient. Olympia financial performance brings out certain concerns. The company made losses from the year 2006 to the year 2012. In the duration of six years, the company registered huge profits after tax. The company needs to understand the factors that caused poor financials. Additionally, it is important to understand the reasons the company took a long time to recover.
One of the factors that have caused poor company financial performance is economic conditions in the UK. Rise in in interest rates, and inflation rates have caused the cost of living to be very high in the United Kingdom. The high cost of living discourages people from choosing London as the destination to hold meetings and conferences. The hospitality industry has experienced a reduction in demand for conference services in the United Kingdom.
Low sales caused the company to perform poorly. The company internal processes contribute to poor financial. The company is largely financed through loans. The company has a high gearing ratio of 19 indicating that a large part of the company assets are financed through debt. Relying on debt puts the company in a risky position. The company is affected by changes in interest rates.
High interest rates increased the expenses of the businesses reducing profits that the company would have otherwise enjoyed if it had used different sources of finance. The company is now recovering, and it has shown a drastic change in financial performance. For instance, the profits of the company drastically increased from 1,822,000 in 2013 to 45,383,000 in 2014. The changes indicate that the company is in the right financial direction.
However, Olympia must ensure that in the future it is financial sufficient and it is not susceptible to change in the economy and environment. The company will identify new sources of finance. In the next five years, the debt of the company should be lower. The company will now focus on suing equity to finance products. The company can raise more equity issue shares in the stock market. It can become a publicly traded company to increase equity. This way the company will not rely on debt as it will raise a huge amount of capital that can finance long-term investments.
Olympia will be a leader in the convention industry in London in next five years. Olympia can make use of SWOT analysis to gain a competitive edge in the market. Based on SWOT analysis; the company strengths include space, location, and strong brand (Anton, 2015). To top it up, the company has years of experience. It has operated in London for 130 years making it the most experienced exhibition centers. The company designs make use of historical architecture making it an attractive site for clients. London is a city that appreciates culture and history.
Art and culture are an important part of life. Olympia needs to market itself as a company that supports culture and art in London. It must inform customers how the business is a representation of London ways of life. As a result the company will appeal the population and encourage people to use the facilities. The company must take advantage of the opportunities that the market is offering. It must take advantage of the rise in demand for conference centers. The organization can expand its services to ensure that consumers can easily get a conference center.
When businesses are planning events, they are forced to make bookings ahead of time to ensure that the venue is secured. Olympia can increase its capacity to ensure that business can get location even on short notice. Increasing the capacity will reduce the chance of the place being booked to capacity and the organization will always have space to accommodate many conferences and exhibitions (Antràs & Chor 2013).
The company must deal with weaknesses to improve performance. The company must address the change in leadership. The company must ensure that the change in leadership does not interfere with the performance of the company. The change should be managed by involving various stakeholders and communicating the goals of the change to them to ensure that they embrace the change.
Lastly, Olympia must minimize the impacts of threats. The company must ensure that it has put the right security measures. It should start conducting comprehensive background checks of employees. Additionally, it should strengthen security by increasing surveillance system, training employees on security threats, and continue working together with local law enforcements.
In five years, Olympia should offer improved customer services. In the hospitality industry, customer experience is determined by the quality of services offered. Olympia can make use of various models to improve customer services. The company will use the events came model to improve customer experience. So far the company has used various eventscape variables to improve customer services the company has established spacious conference halls, it provides ample parking space, and considers people with disability.
The company must continue to implement new variable to improve customer service sin the next five years. Adapting new and improved technologies will play a great role in enhancing customer experience. There is an increase in demand for digitalized exhibition centers. Young people want to visit an exhibition center that is digitalized. The company must start taking a holistic and comprehensive view of the customer service journey.
Olympia will now start being involved in all experiences of customer beside events. It will be more involved in the travel plans of customers to look for ways to reduce psychological and cognitive costs. The company will also be involved in accommodation and catering of customers. Olympia will have to develop restaurants and increase accommodation facilities to ensure that it can provide customers with a holistic experience.
Olympia should have brought numerous economic benefits to United Kingdom economy. Improvement in customer service and financial capabilities will attract customers from all over the world. Holding international events will bring people from outside the United Kingdom. The people will demand for services in the hospitality industry such as catering, accommodation and entertainment services.
Olympia will create jobs and also create new jobs in the hospitality industries. The retail industry will gain from the new customers, and it will create new jobs opportunities. Olympia improvements will contribute to lowering the high rate of unemployment. The company will increase social responsibility activities. Currently, the company is involved in sustainable development. It encourages the use of public transport to save on energy.
Additionally, the company encourages employees to save water and electricity usage in the company. The company must increase social activities. It can start supporting artist from less fortunate families to enhance exhibition centers (Jennings 2014). It will open up exhibition centers to young and upcoming artists and allow them to sue the centers at a low cost.
4.0 Strategic Option
Strategic option indicates the game plan that the company will choose in oder to gain a competitive advantage. Olympia London will make use of combination of Porters generic strategies and Ansoff growth matrix to achieve objectives. The first strategy is cost leadership. Based on Porters five forces model, cost leadership will be an effective strategy. It will minimize the threat of new entrants.
By lowering prices, Olympia will deter potential entrants from entering the market. New entrants will not be able to provide quality services at the low prices. Additionally, lower prices will give the company a competitive advantage. The companies will offer better price compared to competitors attracting many customers. The low price will defend the company from threat of substitution.
Olympia should focus on lowering service prices. The company can manage to lower its prices through partnering with suppliers. Partnering with suppliers will enable the company to get supplier at low cost hence it lower services prices to attract consumers.
The second generic strategy that the company will use is differentiation. Olympia will focus on adding certain values to its services to differentiate services from competitors. The company will differentiate its products by giving services a technological advancement touch. The company will adapt new technological system that will enable the company to continually adapt new technologies.
Additionally, the company can differentiate services by providing combination of services in one destination. It will develop free space and build restaurants and accommodation services to ensure that customers can use the same facility to get all service that they need. Differentiation will improve the performance of the company (Hill et al. 2014). It will lower the threat of substitution by ensuring that customers enjoy the attributes leading to customer loyalty.
Customer loyalty will reduce the threat of new entrants. Unique service attributes will enhance brand loyalty and customers will be willing to purchase the service even at higher prices reducing the threat of competition.
The third strategic option the company will use market penetration. Market penetration focuses on improving existing market. Olympia must increase its market share in the United Kingdom. Olympia intends to attract young consumers in the United Kingdom. The young population is increasing around the world hence it is very important to target the young clientele.
The young people have been brought up in era of technology (Mok et al. 2013). They are looking for flexible businesses that have embraced technologies. The company must start embracing the increasing demand for the new technologies. It must adopt interactive technologies.
The fourth strategy is market development. Olympia must start identifying new markets to increase customer base. The company must start embracing diversity and move into new markets. Branding and marketing will be an effective way of acquiring new markets. The company should start using various marketing campaign such as social media to advertise services around the world.
Additionally, the company can start using the adaptation strategy. For instance, if it wants to attract consumers from the Middle East, it can start developing conference centers that meet the cultural needs of these communities. For instance, it can ensure that the people are provided with a place of prayer close to the conference halls.
5.0 Strategic Goals
5.1 Improve Customer Services
The main goal of the plan is to improve customer services. Customer service is heart at of the hospitality industry. Companies that have managed to attain large market share achieve this through providing quality customer services. Olympia aims at exceeding the expectations of the customer when it comes to the services it will provide. To improve customer service, the company will have to focus on support activities of value chain.
The company must start developing human resource to improve customer services. Employee development and training has a positive impact on customer services (Rogers & Davidson 2015). Providing employees with the right skills and information will lead to improved customer services.
5.2 Become Financially Sufficient
Financial performance of a company is important to stakeholders. Companies that perform well attract investors hence they have the ability to invest in long-term activities. Olympia must address various financial issue it is facing to become financially sufficient in the next five years. Olympia should address debt issues. The company should now start focusing on paying its current debts from the return for investments. The company should lower debts. It should start using new financing options such as issuing shares, capitalist ventures and retained profits to finance activities.
5.3 Increase Economic Benefits
Olympia should continue developing the economy of United Kingdom. In the next five years, Olympia plans to have created 1000 jobs directly and indirectly. Olympia plans to expand its services. As a result, it will be hiring new employees every year to meet. The company plans to establish a graduate recruitment program that will hire 100 employees every year. By 2022, the company should have hired 500 new employees (Bowie and Buttle 2013). The company will create job opportunities in other industries. By expanding services, it will attract new customers increasing demand for accommodation, travel, and restaurants (Bowie and Buttle 2013). Increased business activities will create new jobs and provide young people with new opportunities to start new businesses.
5.4 Increase Social Responsibility
Olympia aims to be involved in development of welfare of the community. Olympia plans to establish an artist support program. Olympia wil emphasize on supporting children from less fortunate families. It will support education and assist them to develop careers. Additionally, the program will provide exhibition centers for young and upcoming people at low costs to enable them to showcase their talents.
6.0 Resource Allocation
The implementing plan mandates Olympia to ensure that it has the right resources. Resources that are required to meet the objectives of the plan include assets, human resource, and finances. The company must ensure that it has the right personnel to achieve the goals of the company. Additionally, it must have adequate finance to finance various company projects directed towards the achievement of the goals.
The main projects that the plan develops are developing the free space, employee training and development and digitalizing exhibition centers. Developing the free space will require a large amount of capital. The company can work together with real estate develops to come up with the right development plan for the areas.
Real estate developers can get the company investors who will be involved in developing the area by building restaurants and accommodation places (Bowie and Buttle 2013). The company can also focus on using capital to build new conference centers and exhibition centers. The company will outsource information and technology services to save on cost of digitalizing exhibition centers.
7.0 Risk Management
Business risks are unacceptable for any organization. Risks limit the ability of a company to meet its short-term and long-term goals. It is important to identify various risks and come up with ways of minimizing the risks
7.1 Financial Risks
1. Liquidity Risks
A company that is in a good liquidity position has adequate current asset to cater of its short-term liabilities. Olympia is a good liquidity position based on quick and current ratio. New short term investment directed towards meeting the five years strategic plan poses liquidity risks to the company. The company expects creditors will increase liquidity risks. Olympia must ensure that it increase liquid asset to ensure that current asset at all particular time are higher than current liabilities
7.2 Cyber Security Risks
Investing in new technologies will expose the business to cyber security threats. New technologies create loophole for hackers to attack the system. Cyber security attacks lead to loss of company information. Confidential company information can be exposed to competitors. Moreover, Olympia can face legal issues if personal customer information is exposed. Olympia should ensure that it has protected system from cybersecurity attacks. The IT Department should closely monitor system, and in case it identifies suspicious activities; it should take measure to protect the system.
7.3 Implementation TimeTable
Person In charge
Development of Free Space Building Conference centers, exhibition centers and restaurants
2 years. it should commence immediately investor provide funds
Chief Financial Officer, Operations Manager, and Chief Executive Officer
Training and Development Employees
After every 6 Months starting November 2017
Human resource manager and Training and Development manager
Introducing interactive technology Digitalizing Conference and Exhibition Centers
8.0 Monitoring and Control
Monitoring and controlling are import aspects of implementation. Through monitoring and control, Olympia is able to evaluate the progress of achieving goals and come up with corrective measures. The company will establish a customer service feedback system to evaluate customer satisfaction. The feedback system will be used to monitor how changes the company is making are influencing the performance of the company.
The company will assess financial performance in 2020. The company will evaluate its financial performance in the next three years. It will check if it has increased profits and lower expenses. Additionally, the company will evaluate its liquidity and gearing performance. It will check if it is in a good liquidity position. Additionally, the company will assess if the debt ratios have reduced and the company is not heavily relying on debt to finance projects.
The company will conduct and survey to asses if it has acquired new markets and clients. The survey will focus on evaluating market penetration and development. The company will use the survey to determine the new markets that it has acquired.
London Olympia is operating in a competitive market hence it must come up with ways to become a leader in the convention industry. The company intends to be financially sufficient, improve customer service, and increases social responsibility in the next five years. The company will achieve these goals by embracing various strategic options. The company will focus on cost leadership, differentiation, market penetration and market development. The company is likely to face liquidity and technological risks. The company will monitor the plan through customer feedback system and conducting a survey.
1. PESTEL Analysis
The politics influence business operations. Civil wars in a country discourage establishment of businesses whereas a good political climate boosts business operations encouraging investments. London Olympia is influenced by the political climate in the United Kingdom. One of the political aspects that will influence the activities of Olympia is Brexit.
The exit of United Kingdom from EU will have various business implications on Olympia. Olympia will now stop enjoying the benefits of businesses operating in the EU. Previously, the EU community was operating as one trading bloc hence businesses benefited from increase in market (Peng 2015).
Analysts estimate that the exit will lead to a rise in travel cost. The United Kingdom will have to come up with policies on travel and immigration. As a result, the cost of travel is likely to increase. The increase in travel cost reduces demand for facilities in the United Kingdom.
A stable United Kingdom Government supports the business operation of Olympia. A stable government provides Olympia with a good environment to conduct businesses. People are willing to use Olympia because it is located in secure and stable country. The stability of the government contributes to increase in demand for conference and exhibition services in the United Kingdom.
There are various economic factors that influence the business environment. One of the factors that influence Olympia is high cost of living in London. Cost of living in the United Kingdom has increased. Though the United Kingdom is a developed country, it has a considerable percentage of people who are poor due to the high cost of living.
The high cost of living means that there is inflation hence there is a general rise in commodities (Ackermann & Audretsch 2013). The hospitality industry is experiencing the rise in cost hence services are offered at high costs. Olympia London targets corporate clients. Corporate clients consider prices when choosing venues to conduct businesses.
The high cost of living has increased hotel rates in London forcing corporate clients to choose other destinations that offer lower rates. The high cost of living is impacting negatively on Olympia causing it to lose customers to other companies that can offer similar services at a lower cost.
The rise in interest rate in the United Kingdom is impacting on London Olympia. London Olympia mainly finances its activities through loans. A rise in interest rates is forcing the business to pay high interest rates. The high interest rates impacts on the purchasing power of the consumers.
The increase in cost of borrowing discourages borrowing lowering money supply (Ackermann & Audretsch 2013). As a result, there are minimal business activities lowering demand for products and services. The rise in interest contributes to a reduction in demand for exhibition and conference services in the country.
The preferences and needs of consumers keep changing with time. Olympia London must understand the needs of consumers to provide the services that are being demanded (Cohen 2014). In the United Kingdom, the young population is looking for digitalized exhibition and conference centers. London Olympia must provide young people with digitalized services to continue being relevant in the market. The population supplies Olympia with labor services. Olympia provides numerous job opportunities for the local population directly and indirectly. Olympia operates in a less diverse population hence mots of employees are white.
Technology has influenced the hospitality industry. New and emerging technologies have opened geographical boundaries. Through the internet, people are able to learn about other countries and products and services they can get. Opening up of geographical borders creates a good opportunity for Olympia. Today, consumers around the world know about Olympia.
Olympia is able to get consumers from the globe. Olympia is embracing new technologies to improve customer services. New technologies improve conference halls and make it easy for business to hold meetings. Olympia must continue to embrace new technologies to attract young consumers.
Sustainable development has become an important part of every business. The world is working towards minimizing population to lower the rate of global warming. Olympia is committed to sustainability development. The company works with the public transport system to encourage people to use public transport to save energy. The company is green company. It has adapted various go green strategies such as ensuring lights are off in conferences that are not in use.
Olympia is subjected to international and United Kingdom laws. The company is subjected to hospitality standards regulations. It must ensure that it meets the hospitality standards in the United Kingdom. Additionally, it is expected to meet taxation responsibility. Olympia London holds international event hence it is subject international trade laws. Olympia is expected to comply with various local and international laws.
2. SWOT Analysis
London Olympia has been in the market for over 100 years. Olympia is one of the oldest establishments in London. Years of experience give the company a comparative advantage the company has already established itself in the market. It understands the dynamics of conferences and exhibition market in the United Kingdom. It has held various events from which it has managed to come up with ways to improve customer services.
Consumers are looking for conference and exhibition service that offers spacious conference halls. Consumers want the conference center to be part of the travel experience. Olympia has great advantages over other exhibition center regarding space (Olympia London 2017). It owns 14 acres of plot, and 4 acres have not been developed. The availability of large plot allows the company to develop conference centers that are spacious and meet the requirements of consumers. Additionally, the company has free plot that it can use to expand business activities.
Olympia is located in West Kensington. It is located near overground railway station that makes it easier for people to access the place through public transport. It is at the center of the public transport system in London (Devney 2015). Consumers can access the place from different points using the transport system.
Being located in London is a major strategy of the organization. London is a town that is rich in history and culture. Culture and art are important way of life in London. Consumer exhibition services are required in London. London is served by five main airports. It becomes a good destination to hold international conferences (Cameron 2014). Access to five major airports makes it easier to receive delegates from around the world without any delays at the airport making London a suitable location for conferences.
Olympia is situated near restaurants, bars and accommodation places. Olympia is well connected to other hospitality services that clients demand. Clients will choose Olympia because of its closeness to other services that they will require to use.
Olympia has hosted various famous international conferences putting it in the limelight. Fashion industry thrives in the United Kingdom, and it was a major milestone for the company to hold miss world competition. Holding international events markets the company and improves the brand of the company (Davis et al. 2013). As a result, corporates clients are willing to hold conferences in Olympia.
Poor Financial Performance
Since 2008, Olympia has shown slow financial progress. The company made losses between 2008 and 2011. The poor financial performance was caused by reduction in sales. Poor financial performance limits the ability of the business to make huge investments. It fails to get the right capital to make long-term investment. However, the company financial performance is improving, and it is important to come up with strategies to support financially sufficiency.
Lack of Cultural Diversity
Olympia operates in less diverse culture. The company must start marketing itself as a global conference and exhibition center. It must prove that it is culturally diverse to attract clients from across the globe. Being less diverse limits the ability of the company to capture the global market.
Olympia London was put on sale in 2015. The owners estimated the value of the company was 300 million euros. When the company started showing financial improvements, the sale was put on hold. This year Olympia London was sold to Deutsche Finance International and Yoo Capital at 296. Changes in ownership can affect the stability of the company. With the new owners, various changes are likely to be instituted in the organization. Changes in status quo can impact on the morale of the employees if it is not well handled.
Increase in demand for Conference Centers
The travel industry has grown in the last few years. Today, businesses are looking for places to hold meetings away from the workplace increasing the demand for travel and conference centers. Additionally, most companies have exploited international markets. Global companies look for a central meeting place where all business partners and stakeholders can meet. Thus, there is a rise in demand for conference centers. London Olympia should take advantage of the rise in demand for conference centers. It can expand to accommodate more customers.
New and Emerging Technologies
One of the trends in the hospitality and tourism is the availability of new technologies. New technologies are offering companies with an opportunity to become efficient and offer quality services.
The rise in terrorist activities in Europe has reduced tourist activities (Hall 2013). Terrorist attacks discourage people from traveling. Olympia must provide customers with secure place to hold meetings. The company has invested in security. It has surveillance system. Additionally, customers are inspected before being allowed to get into the building. When it is holding international events, Olympia works with police officers to ensure that the location is secure.
Olympia faces stiff competition from Kensington Exhibition Centre, Central Hall Westminster and Barbican Exhibition Facilities. According to Shone (2015), most conferencing organizations are well known in London and also enjoy strong brand. Olympia must come up with unique services to attract consumers and become leading company in the competitive industry. Competition is a big threat to the performance of the company. Increased competition is causing the company to lose market share to organizations that have rebranded to attract more customers.
Olympia must focus on strengths and competencies to identify ways that it can gain a competitive advantage. Olympia already has an advantage of location and space hence it can use these comparative advantages to attract customers and gain a large market share in the United Kingdom.
3. Five Forces Analysis
Threat of Substitution
The threat of substitution measures the rate at which consumers can change from one product to another (Sadler 2016). The conference and exhibition centers offer similar services. Consumers can move from one service center to another without incurring high costs. The threat of substitution is high in this industry. As a result, London Olympia must provide quality services to enhance customer loyalty. They should exceed expectation of customers in delivery of services to ensure that customers are willing to use the services (Rahimi 2017).
Olympia London faces stiff competition from companies in London and international companies. The hospitality industry is very competitive with every company trying to capture a large market share. Competition has contributed to poor financial performance. Other conference companies such as Barbican are rebranding to attract new customers (Dinnie 2015). As a result, Olympia is losing its customers to other companies that are coming up with new services that meet the new customer preferences. Olympia must come up with new strategies. It must understand the consumer needs changes come up with new services such digitalized exhibition centers to attract new customers.
Threat of New Entrants
According to Rogers (2013), developing a conference and exhibition center requires a huge amount of capital. The threat of new entrants is small since new entrants require large capital base. Additionally, London Olympia has been in the market for over 130 years. It has the advantage of experience over new entrants. The brand is well known, and the company understands the market (Simerson 2016). As a result, new entrants cannot compete with Olympia which is more experienced and has a large capital base.
Suppliers determine the type of services and products that a business requires. A business must choose suppliers carefully to ensure that they provide the business with quality materials. Olympia has moderate supplier power. There are many suppliers in the industry hence Olympia has a variety of options to choose from. As a result, suppliers strive to provide the best services in order to maintain close business relationship with Olympia. Additionally, Olympia is a large organization hence it purchases services in large quantities. Suppliers will work towards working with Olympia.
Buyer power is high in the tourism industry. Conference and exhibition center offer similar services hence consumers can choose from any of service providers. Providing quality customer service is critical. Olympia has already developed various customer services to provide it with competitive advantage (Horner & Swarbrooke 2016). It has ample parking spaces and is ensuring that its premises are internet enabled.
4. Financial Analysis
From the financial report, Olympia has a rough time dealing with financial performance. The income statement clearly indicates that the company suffered huge losses since 2006 to 2012. The financial performance of the company began improving in 2013. In 2013, the company recorded profits after tax of 1.822 million and this increased in 2014 to 45.383 million. The company financial performance improved in 2015 and recorded profits of 53,0007,000.
The company is in the right direction when it comes to financial positions. The balance sheet indicates that Olympia is in a good liquidity position. The current assets can cater for its current liabilities based on the positive working capital. To summarize financial information and get a clear picture of the financial position of the company it is important to look at various financial ratio.
Return on Total Assets
The return on total assets is a profitability ratio. The ratio is used to measure how the assets of a business are contributing to the profits of the company (Bradshaw, 2015). Total assets include the current and fixed assets. Currents assets are easily turned into cash and include inventory, cash at hand, debtors, and cash at bank. The fixed assets include the equipment and buildings that the company owns.
The return on total assets checks if the current and fixed assets are generating profits. The return on total asset is 21.2. Olympia return on assets is low. Olympia is not utilizing total asset towards generating profits. The total assets are being underutilized, and the company has the capability to use assets into more use to increase company profits
Return on Capital
Olympia returns on capital 37.5. The return of on capital is moderate. Olympia has the capability to get a high return on capital compared to other companies, the return on capital is relatively high, and this makes it an attractive companies for investors. Investors can get a high return on capital invested in the company.
Pre-tax profit margins indicate the profits that accompany generates before taxation. Olympia pre-tax margin is 4606. A positive pre-tax profit margin indicates that the company revenues are totally catering for the expenses of the company and yet the company is making profits. The high pre-tax indicates that Olympia sales and revenues are higher than its expenses hence it is a good financial position.
The current ratio is a good measure of the liquidity of a business. It compares current asset to current liabilities to indicate the ability of the business to cater for its short-term liabilities. The current ratio of Olympia stands 1.39. The low current ratio indicates that the company has currently invested in long-term activities. It is a good liquid position since current asset can cater current liabilities. Additionally, the current asset has been focused on achieving long-term goals.
The quick ratio subtracts inventory in current asset. Inventory is not as liquid as other assets. It takes time to turn inventory into cash. Olympia has the same current and quick ratio. This indicates that Olympia is not holding high amounts of inventory. Its current liabilities are liquid, and the company can easily cater for current liabilities.
Total Debt Ratio
Total debt ratio shows the amount of debt that used to finance company assets. London Olympics has a high total debt ratio of 77. The high debt ratio indicates that most of the company assets have been financed through debt. This increases the risk of the business.
Equity gearing ratio indicates the proportion of capital from debt and shareholders’ equity. London Olympia has a high equity gearing ratio of 129. The company is financed through debt. The gearing and total debt assets indicate that the company relies on debt to finance its activities. The company is at high risk since a rise in interest rate will greatly increase the interest that the company will pay back.
5. Value Chain
The value chain focuses on how a business can make use of business activities to gain a competitive edge in the market. The value chain separates business activities into two the primary activities and the supporting activities. The primary activities directly influence the creation of a product. The secondary activities increase the effectiveness and efficiency of a company.
Understanding the value chain is useful in establishing areas that Olympia London can improve to enhance efficiency and effectiveness. Slack (2015) points out that some of the primary activities that convention center can improve on to gain competitive advantages include conference halls and exhibition centers.
Conference halls must be spacious and located in quite a place to provide business with a good environment to conduct business. Olympia has spacious conference halls, but if it plans to increase customers, it must increase its conference centers to ensure that it can accommodate many customers at the same time.
The company has the advantage of availability of free space. It can build large conference centers that can hold international events. The company can further digitalize exhibition centers. Improving exhibition centers will attract artist from all over the world. It will create a great opportunity for Olympia to host fashion companies.
The supporting activities that the company can improve include human resource. The company must improve the skills of the employees to improve customer services. The human resource can be improved through training and development. Additionally, the company must embrace diversity.
It will start hiring employees from diverse background in order to attract consumers from around the world. The second support activity that the London Olympia focuses on is technology. Olympia should invest of new technologies to ensure that it meets the new technological demands in the industry.
6. Corporate Social Responsibility
Corporate social responsibility is a god way for business to increase competitive advantage. Consumers are conscious about various factors of a business. Consumers are demanding for businesses that are socially responsible. A business operates in the environment. It benefits from general population. Businesses have a responsibility of taking care of the environment that they operate and benefit from.
Companies are not only supposed about the short-term but also about the long-term of the activities of the internal organization and the environment. Sustainable development is the development that meets current needs without destroying future generation’s ability to meet their needs (Swayne, Duncan, & Ginter 2015). Sustainable development treats the world as a system that connects space and time. Actions in one part of the world have an impact on another country.
Decisions made today affects tomorrow and actions of an organization have an impact on the whole world thus sustainable development has become a critical strategy for all companies (Williamson, Jenkins, & Cooke 2013). Businesses should aim to have minimal effects on the global and local environment, economy, and community Olympia London meets the triple bottom line by offering environmentally friendly products, incorporating sustainability strategies, and showing commitment to environmental principles when conducting business operations (Ferrell & Fraedrich 2014).
Corporate social responsibility will be an important strategy in gaining a competitive advantage. Olympia will have to start engaging in new activities that improve the welfare of society. The company will use social activities to market the company. Additionally, participating in community welfare programs creates a positive image hence the company will attract more customers.
7. Events Scape Model
Events scape model focuses on tangible elements that influence the environment of an event influencing the emotional, and experiences of the stakeholders. Event scope model focuses on looking at the tangible elements that can improve the experience of the attendees, employees, and stakeholders (Newlands 2013). The variables that an event can make use are external variables, internal variables, human variables, layout and design variables and event specific design elements. Olympia has so far made use of scope model to improve experience of clients.
The company makes use of exterior design to create a good first impression. It has established spacious conference centers that are well arranged. The company considers the comfort of the clients and ensures that the chairs available are comfortable and customers can seat for hours without discomfort (Robinson & Picard, 2016). Olympia has further improved parking spaces. The company has ample parking space to reduce congestion.
The company security is on point. It has surveillance system, and various security officers are located at different locations of the building. Being at the heart of the transport system ensures that customers can easily access location using public transport. The combination of the eternal events cape variables improves the customer experience. Olympia London makes use event-specific designs to further attract customers.
Event specific designs consider the theme of customers when preparing conference centers. Consumers will have different themes, and when they hold their meetings in a place that is specifically designed to meet the theme, it increases customer satisfaction. Eventscape model provides Olympia with an opportunity to provide consumers with unique event experience (Robinson & Picard, 2016).
The company must focus on looking for new ways to increase customer satisfaction. Olympia must ensure that the objectives of events are met. The company will focus on embracing new technologies to enhance customer satisfaction. The company can introduce new interactive technologies.
Table and Chart Analysis
Porter’s Strategies and Five Forces
Differentiation StrategyProvide one stop destinationDigitalize exhibition centers
Cost LeadershipLook for lower supplier to lower costIncrease customers and use economies of scale to lower price
Threat of Substitution
Increase customer loyalty
Low price prevent threat of substitution
Threat of new Entrants
Customer loyalty will discourage new entrants
Low prices prevent new entrants
Increase brand loyalty and make product preferable compared to competitors
Ahead of competitors by lowering prices
Company will limit the alternatives of buyers
Company will offer buyers lower prices
Differentiation will ensure services are still demanded even at high prices hence company can pass supplier price increase to buyers
Company rely on supplier to lower price hence supplier will have more power over business
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The Korean honey market is having a challenge giving their customers quality honey. The market is flooded with poor quality honey and this does give the Korean Food a chance to penetrate the market if they focus their production on quality honey. The cost of quality honey in the market is also so high reaching a price range of $ US 100. The introduction of cheaper quality honey from the Korean Food company will increase their market share in the industry (Lee et al., 2010, p. 25).
Moreover, the Korean’s who have visited Canada often send to their families 20 to 30 kilograms of honey when they visit (Tavares, 2014, p. 22). This is an indication of positive reception of the Canadian honey by the people in Korea. It therefore, means that entry into the market will work in favor of the Korean Food as they already have a ready market for their product.
On the unfavorable aspects, the Korean government still has a restriction on open trade policy, especially when it comes to the agricultural sector. This policy does make it hard for the company to venture into the country, despite the optimism that the Korean government is considering withdrawing the restrictions (Hayakawa et al., 2013, p. 499). Moreover, the Korean honey producers have enjoyed a monopoly in the market and may place a lot of hurdles that will make the market unfavorable for Korean foods.
The uncertainties in the strategy arise from the fact that the company has limited experience in the export market in Korea. This does pose a huge challenge for the company as they need to conduct an intensive market research before they step into the country. This will cost them a lot of finances, considering that the maximum amount of profit that they are to make from this venture is by a margin of 20%. The Korean market is centered on their culture where most of the consumers consider honey as a medicinal rather than a food product (Sydkorea, 2017). This will pose a challenge for the company when it comes to extending their market share from the hotels to selling the products to the consumers.
Additionally, the Korean market does work on the perspectives that the company will require an intermediary to be able to penetrate the market (Yoon, 2017, p. 387). The involvement of the middleman does pose an uncertainty on the manner to ensure that the company does achieve the objective of making a profit. The company has been working directly with the suppliers, and the changes of the operations structure to relying on the middlemen to foster their agenda will force affect the management of the company.
Lastly, despite their being hope that the Korean government will open up the agricultural market to allow imports, there is uncertainty on the resistance of the Korean honey producers (Hayakawa et al., 2014, p.499). The Korean honey producers have a monopoly in the honey market and they, therefore, have the strength to influence the government not to open up the honey market (APHIS’ website, 2017). Moreover, they might consent the opening of the market, but place a lot of hurdles for the new entrants an aspect that will uneven the competition making the market unfavorable.
The uncertainties can be reduced by identifying a company in Korea and entering into a joint merger to enable them to penetrate the market. The merger will be a shield for them as they understand how the market operates and will provide them the needed information to venture into the market (De Mooji, 2013, p. 36). Additionally, it will enable the company to navigate any hurdles that will be posed by the Korean honey producers in a bid to protect their influence in the market. Furthermore, the merger does reduce the cost of market research that the company will have to incur in their bid to penetrate the market.
I believe that the company has an opportunity to achieve immense success if they apply the suggested solutions in reducing the uncertainties. The company will be able to increase their margin and market share from a maximum of 20% and 60% respectively. This is an opportunity that will be effective for the company.
Canadian honey: Marketing
In looking for ways to improve the marketing plan to make it acceptable to all the management team members, the 3 phases that form the foundation of the plan will be evaluated. In the first phase, the distribution strategy needs to be altered to involve using the networks established by the company they decide to merge with to penetrate the hotels. The local company has been in operation in the country they, therefore, have connections in different sectors of the economy like the hotels. This will make market entry easier for the company instead of having two salespeople positioned in Seoul (Lee et al., 2015, p. 32).
Additionally, the advertising strategy in the first phase will cost the company a lot of finances. To ensure that the company saves money, the use of free samples to the hotels coupled with media advertising is sufficient. The provision of recipe booklets and carrying out person-to-person advertisement will cost the company a lot of money.
In the second phase, the company needs to focus on regulating the prices of the honey with time as they extend their control of the hotel honey market. The penetrating price strategy is used to enter the market but needs to be readjusted to ensure that the company can make more profit from this sector (De Mooji, 2013, p. 12). The minimum price is an introduction to the Korean hotel industry to the purity of the Canadian honey. Increasing the price will not alter the purchase, as they would have managed to create a customer base in the industry that is attracted to the new flavors of the honey.
Additionally, the distribution channel is effective, but the involvement of the company that they will merge with will inject efficiency in the operation. The partner comprehends the Korean honey distribution network this will, therefore, ensure that the products can reach the target customers on time.
Furthermore, the company needs to concentrate more on introducing the Canadian honey as food rather than a medicinal product. This will play a role in increasing their target market more effectively. The Korean’s already have had a negative conception of honey due to the poor quality that is present in the market. Their culture compounded with the bad honey experience has made them consider that the product can be used only as a medicinal product (Lee et al., 2010, p. 18). Emphasizing on the other uses of honey will not only revolutionize this perception but also provide them with mileage in the industry.
In the third phase, introducing different qualities of honey in the market will cast doubt on the type of honey that the customers are purchasing for medicinal purposes. It will cast a shadow on the qualities of the Canadian honey that the company is introducing in the market, hence reducing their penetration. The company needs to concentrate on high-quality honey solely to get the customers goodwill in their product (Tavares, 2014, p. 25). I will recommend the company to use the warehouse of their partner as this will save them the cost of setting up one. They can then capitalize on the sales representative of their partner to increase their market penetration in the country.
Kevin Lee at the beginning of the case study identifies pertinent issues that are linked to the difference between their way of operations and the new marketing plan. The company has immense knowledge in importing business and limited knowledge in the exporting business. They have managed to comprehend the needs of the North Americans when it comes to the Asian foods which have enabled them to raise the business to $30 million. The exportation of the Canadian honey to Korea is a new business venture as they do not know how to navigate the Korean industry with its restrictions (Anania, 2013, p. 25).
Additionally, despite the fact that the Canadian honey is loved by Korean visitors who send it to their families, this is not a guarantee that they will penetrate the market with ease (Tavares, 2014, p. 12). On the other hand, the Asian product is loved by North America and the company has managed to create a customer base that loves their products (Shaw, 2017). The company encountered challenges but managed to establish a reputable brand. Contrariwise, the only similarity is that the company has dealt with Korea on an international business level as discussed in the essay.
Anania, G., 2013. Agricultural export restrictions and the WTO: What options do policy-makers have for promoting food security. Draft paper prepared for informal ICTSD policy dialogue on, 25.