Case Study Analysis: Inkaterra and Hilton Hotels and Resorts

This assignment content consists of various academic sources on tourism management, marketing strategies, and case studies. It includes articles from Routledge and Advances in Information Sciences and Service Sciences journals, as well as online resources from Learnmarketing.net, PEST Analysis, Porter's Generic Strategies, and others. The content also features illustrations, models, and frameworks, such as SWOT analysis, PEST analysis, Porter's five forces model, Value chain analysis, and more.

To increase the demand of tourism
in Peru by using effective marketing
strategies: A case study analysis of
Inkaterra

ACKNOWLEDGEMENT
I am thankful to all those individuals who have provided guidance and assistance as well
to accomplish the dissertation. Firstly, I owe my thanks to mentor who gave me chance to
undertake this dissertation and motivate me to do it in ethical manner. Furthermore, I am
thankful to my team members, family and friends who helped me in all possible settlements.
This leads successful finishing point of dissertation and achievement of meaningful results.

ABSTRACT
In the contemporary ear, hospitality industry is growing very fast. It this situation it can
be said that when an industry grow with exponential rate then the organizations of that sector
start of face competition and same thing has found in the present research. The following study is
based on to increase the demand of tourism in Peru by using effective marketing strategies by
Inkaterra. The entire investigation has based on secondary research where different types of
models related to international marketing, strategic management and international business has
taking into the consideration. The reason of applying all these frameworks is because Inkaterra
has various kinds of problems related to marketing. Application of 9 models have helped in
analysing the issues of the organization and find the solution of those to minimize the impact on
the business operations. Along with this, it has also explored that Inkaterra has used lower
pricing and profit level strategies to increase the sales of the services. From the case study, it has
found that the buying behaviour of the customers have changed with the time. At last in the
investigation, it has been some recommendations have also given with respect to Inkaterra so
that organization can effectively use marketing strategies and increase demand of tourism in
Peru.

TABLE OF CONTENTS
ACKNOWLEDGEMENT...............................................................................................................2
ABSTRACT.....................................................................................................................................3
CHAPTER 1- INTRODUCTION....................................................................................................1
Background of the study.........................................................................................................1
RESEARCH PROBLEM (MARKETING MANAGEMENT OF INKATERRA, LOW
DEAMND OF TOURISM IN PERU, INTRENATIONAL BUSINESS OF INKATERRA)........2
RESEARCH QUESTIONS.............................................................................................................3
RESEARCH AIM AND OBJECTIVES:.........................................................................................3
STRUCTURE OF CASE STUDY ANALYSIS:.............................................................................3
CHAPTER 2 - CASE BRIEF..........................................................................................................1
Description of the situation....................................................................................................1
Scope of the study..................................................................................................................3
Chapter 3: Problem statement and plan of analysis.........................................................................1
Marketing management problem of Inkaterra and models.....................................................1
Tourism and hospitality strategy in global market place of Inkaterra and models................6
International hospitality Management of Inkaterra and models.............................................9
Research Methodology.........................................................................................................13
CHAPTER 4: ANALYSIS AND FINDINGS...............................................................................17
CHAPTER 5: PROPOSED SOLUTIONS TO PROBLEMS/ RECOMMENDATIONS AND
LIMITATIONS OF THE ANALYSIS..........................................................................................31
Solutions...............................................................................................................................31
Recommendations................................................................................................................37
Action plan...........................................................................................................................38
Limitations............................................................................................................................39
Implication............................................................................................................................39
CHAPTER 6: FUTURE APPLICATION OF RESULTS.............................................................40
About Hilton Hotels and Resorts Group..............................................................................40
Application of models on the identified problems on Hilton Hotels and Resorts................42
TRANSFER OF LEARNING.......................................................................................................52
REFERENCES..............................................................................................................................55

LIST OF ILLUSTRATION
Illustration 1: Structure of case study analysis................................................................................4
Illustration 2: Sales performance of Inkaterra Financials in 2011...................................................2
Illustration 3: Gross income of Inkaterra Financials in 2011..........................................................3
Illustration 4: Research Problem and relevant models....................................................................1
Illustration 5: SWOT analysis.........................................................................................................2
Illustration 6: Online marketing strategies......................................................................................4
Illustration 7: Core Competence model...........................................................................................5
Illustration 8: Porter’s Generic Strategies model.............................................................................7
Illustration 9: PEST Analysis..........................................................................................................8
Illustration 10: Value chain analysis model.....................................................................................9
Illustration 11: Porter’s five force model.......................................................................................10
Illustration 12: CAGE framework.................................................................................................11
Illustration 13: Foreign Market Entry Modes................................................................................13
Illustration 14: SWOT analysis of Inkaterra.................................................................................17
Illustration 15: Marketing issues faced by Inkaterra.....................................................................19
Illustration 16: Porter's Generic Strategies Model of Competitive Advantage for Inkaterra........21
Illustration 17: PEST analysis of Inkaterra....................................................................................23
Illustration 18: Porter’s Five Forces Model of Inkaterra...............................................................26
Illustration 19: CAGE Framework of Inkaterra.............................................................................29
Illustration 20: Foreign Market entry issues faced by Inkaterra....................................................30
Illustration 21: PEST analysis of Hilton Hotels and Resort (Source : Tribe, 2015)......................44
Illustration 22: BCG Matrix for Hilton Hotels and Resorts..........................................................50

CHAPTER 1- INTRODUCTION
Background of the study
Inkaterra can be determined as a sustainable tourism institution which was founded in the
year 1975. This organization provides different types of travel services and develops packages
which helps in attracting customers (Thqerle and Soto, 2015). In addition to this, cited firm has
rain-forest in Amazon of stewardship over 17,000 hectares located at south east Peru. Moreover,
in urban area of Maachu Picchu Historical sanctuary it has 10 hectares of cloud forest. In the
year 2011, cited firm received about 100,000 visitors at its hotels and restaurants. In addition to
this, there are about 500 employees and has served over 900,000 travellers (Collantes and
Martel, 2015). In addition to this, there are few of the things for which cited firm is devoted and
it includes protecting the culture and diversity of Peru. Conservation and preservation of
sustainable tourism in Peru. Focusing on providing visitors with memorable experience. In order
to grow, it is very important for any organization to provide its customers with high quality
service and in accordance with Inkaterra do focus on their services and help their travellers to
develop memories and experience (Abraham, 2012).
In this respect, there are three types of issues identify from the given case study of
Inkaterra which are ineffective marketing management, poor strategic management and problems
faced during the international expansion of business. In this context, marketing management and
strategic management both are important factor for the success of an organization (Candela and
Figini, 2012). With the application of both of these, it becomes easier to gain competitive
advantages in the marketplace. Along with this, the future planning relating to promoting the
services in the market place also based on both marketing and strategic management tactics. In
the case of Peru, the ineffective marketing strategies have deceased the demand of travel and
tourism at cited location. Along with this, the lack of cost leadership style and other issues, the
strategic management of Inkaterra has also failed to attract more and more travellers across the
world (Casprini and et. al., 2016). So, to increase the demand at cited destination, it is more
important for the organization to change marketing strategies and adopt different types of
solutions to attract more customers. On the other hand, with the application of various kinds of
strategic models, the reasons behind poor strategic management can be easily resolve. In this
context, various kinds of problems has to solve by Inkaterra at the time of expansion of business
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at international level. For this, company has required to adopt some strategies that can resolve
business expansion problems in more effective manner (Cooper, 2013).
RESEARCH PROBLEM (MARKETING MANAGEMENT OF
INKATERRA, LOW DEAMND OF TOURISM IN PERU,
INTRENATIONAL BUSINESS OF INKATERRA)
In accordance with the current study, the main issue is that the Peru which is the 3rd
biggest kingdom in South America. There are many beautiful place in Peru in which can be
effectively used in order to increase tourism but the main issue is that the travel and tourism
agency are not able to make use of effective marketing strategies with the help of which they will
be able to increase tourism (Glanz, Bader and Iyer, 2012). As the cited country has about 1.28
million square kilometres and half of the country is covered with water. With this respect, it is
very important for the organization to make sure that they provide proper information to their
potential customers. In this context, the research problem is regarding making use of different
types of marketing strategies which will be helpful in providing proper information to travellers
(Hallbäck and Gabrielsson, 2013). In this context, there are different types of marketing
strategies which can be adopted by Inkaterra and they will be able to increase tourism in Peru.
People prefer to visit those places which fulfil their needs and requirements and a place where
they will be able to enjoy their holiday. It been 41 years since Inkaterra has been established
however it has not been able to develop a great impact over the customers mind. This type of
issue is because of lack in use of marketing strategies. By using marketing strategies, firm will be
capable to increase their perception among customers mind (Green, Whitten and Inman, 2012).
Peru has high potential of increasing its customer’s base as there are many beautiful spots which
is very effective in attracting customers. In this context, Inkaterra have to develop awareness
among the various place and this can be done effectively with the help of making use of different
types of marketing strategies (Glanz, Bader and Iyer, 2012). Further, there are many
organizations which provide similar types of services like Inkaterra but it is very important for
the cite firm to make use of different strategies through which they will be able to attain
competitive advantages and this is very helpful in developing positive perception among
customers mind towards the services which are been provided by Inkaterra.
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RESEARCH QUESTIONS
Marketing management of Inkaterra1. What are the necessary changes in marketing strategies of Inkaterra which can increase
the demand of tourism in Peru?
Tourism and hospitality approach in global market place of Inkaterra2. What are the major reasons behind failure of tourism and hospitality approach in
international market place of Inkaterra?
International hospitality Management of Inkaterra3. What are the major problem of Inkaterra for expending its business at international level?
RESEARCH AIM AND OBJECTIVES:
Aim
To increase the demand of tourism in Peru by using effective marketing strategies: A case
study analysis of Inkaterra.
Objectives:
 To make necessary changes in marketing strategies of Inkaterra which can increase the
demand of tourism in Peru?
 To determine the major reasons behind failure of tourism and hospitality approach in
international marketplace of Inkaterra.
 To identify the major problem of Inkaterra for expending its business at international
level.
 To suggest appropriate strategies for growth and development of tourism industry of
Peru.
STRUCTURE OF CASE STUDY ANALYSIS:
For analyzing the give case study researcher will follow a systematic structure which will
comprise different chapters. These chapters will helps in understanding research problem and
getting appropriate solution to resolve this problem in effective manner (Hollensen, 2015).
Structure of this case study analysis will be based on research process and different chapters of
this analysis will be based on stages of research procedures. These stages are understanding
research subject and given case study, identifying research problem, collecting facts and figures,
analyzing collected data, interpretation and analysis of findings, making conclusion and
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suggesting appropriate strategies for resoling research problem (Wilson and Gilligan, 2012).
Therefore, in the basis of this research process author will follow the following structure of the
case study analysis:
Illustration 1: Structure of case study analysis
 Chapter 1- Introduction: It will provide a short explanation of the entire case lessons
analysis of Inkaterra and Peru. It will include a background study of growth and
development of tourism industry of Peru (Moutinho, 2011). Along with this, it will also
include historical information about the marketing strategies of Inkaterra. Further, it will
include aim, objectives and research question of the current case study analysis.
Afterwards, introduction chapter will also comprise stature of the entire case study
analysis which will be followed by researcher for resolving research problem. It is
considered as one of the most significant chapter which provides base to the entire
research. Apart from this, it provides idea to the readers regarding the topic being
selected for conducting research and is fruitful in every possible manner (Ferrell and
Hartline, 2010). The key areas covered in the introduction chapter involves aim and
objectives of the study which are most crucial and highlights the main reason behind
conducting research in appropriate manner. Apart from this, without setting appropriate
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aim it is not at all possible to conduct research in appropriate manner. On the basis of aim
of research other type of tools are decided which have to be considered for undertaking
research. Chapter 2- Case brief: After determining research problem author will include a brief
discussion about the given case study (Sheth and Sisodia, 2015). In which, it will include
tourism issue of Peru and scope of the growth and development. Along with this, it will
also include current situation of Inkaterra. Therefore, a brief introduction of whole case
study will be described in this chapter which will help in getting appropriate insights to
understand research problem by which study can apply appropriate methods to get
appropriate solution of it. In this chapter the major issues provided in the case have been
highlighted. Further, it is also regarded as one of the most significant chapter where
tourism issue faced in Peru has been undertaken which is directly acting as hurdle in
overall growth and development (Figueiredo and et. al., 2016). Apart from this, for
analysis purpose various tools have been applied in the study which have supported in
accomplishment of desired aims and objectives. Moreover, this case is also associated
with present situation of Inkaterra which needs to be considered for conducting the entire
study in appropriate manner. Chapter 3- Problem statement and analysis plan: After identifying research problem
study will frame a problem statement of the entire case study. This statement will also
describe different issues such as existing issues of tourism industry of Peru, methods
which are used by this nation for resolving these issues (Mudie and Pirrie, 2012). After
that it will also shed light on different methods by which this problem can be easily
resolved. Along with this, study will also develop appropriate data analysis plan for
resolving research issue in effective manner. It will include appropriate tools and
techniques for examine details and information. For the current case study instigator will
utilize both qualitative and quantitative methods of data analysis for examining collected
data and getting suitable solution (Gay, Mills and Airasian, 2011). Chapter 4- Analysis and findings: after data analysis this chapter will include
appropriate findings and results by which Peru can improve the growth and development
of tourism industry (Meffert, 2013). Along with this, it will also suggest appropriate
marketing strategies of Inkaterra by which this destination can raise the demand of
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tourism. For analyzing the findings, various methods will be use so that objectives of the
present investigation can be achieve in very more appropriate manner. Chapter 5- Conclusion and recommendations: On the basis of the findings of the
collected information, final conclusion and appropriate recommendations as per the
research objectives will be included in this chapter.
 Chapter 6- Future application of results: This chapter will include description and scope
of the future research. It will include brief discussion about the significance of the current
study for future investigation (Mullins, Walker and Boyd, 2012).
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CHAPTER 2 - CASE BRIEF
Description of the situation
As per the given case scenario Peru is 3rd biggest nation in South Africa and its
geographical area is 1.28 kilometres. Its population is 30 million which includes mix of
Amerindians, Europeans, Africans and Asians (Lee and Carter, 2011). One of the major
attraction of this country is the availability of the high natural resources. Along with this, it is
one of the biggest manufacturer of gold in Latin America and one of the main creators of Silver,
tin, copper, lead and zinc. But there are some other drawbacks also such as poor infrastructure
and limited foreign investment, etc. Along with this, its economic position is not as strong as
compare to the other developing countries. Peru is known as “export led” and it is the major
reason behind the growth of the nation. In terms of tourism and environment Peru has strong
potential to become a most visited country in the world because still there is a huge scope of
increasing attraction of customers towards the major attractive points of Peru (Philip, 2016).
As per the given case information UNESCO has declared that Peru has unparalleled
culture, environment and bio-diverse. So, all these factors decline the attraction of tourists.
Along with this, given information has also reflected that there are number of other aspects
which can influence the demand and supply of tourism services (Cant, 2011). In terms of
demand aspect of lack of marketing and advertisement of Peru and its tourist destination is the
major reason by which demand of the tourism services does not raise. In terms of lack of supply
of tourism services given information has reflected that lack of transportation, blockade to entry
for the new business and low involvement of the local people are the major reason behind them
most of the tourists organizations cannot provide appropriate tourism services to all tourism.
Therefore, study has described all the major problems associated with the Peru (Sharpley and
Telfer, 2014).
Along with this, case study has also included information about Inkaterra which is a
sustainable tourism institution and eco-pioneer. It is hotel developed and operators which
provides responsible travel services to all tourists (Wang, 2011). Major mission of this
organization is protecting natural resources and environment of the nation and enrich the rural
communities of the country. As per the given case study there are number of problems which are
facing by Inkaterra which affects the economic position of the organization and tourist industry
of Peru. Marketing strategies of Inkaterra were not as appropriate for increasing demand of
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tourist about the natural beauty of Peru. Along with this, these strategies are not appropriate for
increasing attraction of all tourists. Including this, as per the given information international
marketing strategies of Peru are also not appropriate for attracting mass population of
international market (Tribe, 2015). As per the given information Inkaterra was losing the market
share and attraction of number of customers. As per the given case study Peru and Inkaterra were
facing lots of problems and issues. These issues have direct impact on tourism industry and
services of the nation. Therefore, as per the given case study and analysis of the problems author
needs to focus on resolving these issues by determining appropriate solutions (Candela and
Figini, 2012). Financial performance of Inkaterra can be represented by the following charts:
Sales performance:
Illustration 2: Sales performance of Inkaterra Financials in 2011
Gross income:
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Illustration 3: Gross income of Inkaterra Financials in 2011
Scope of the study
Major scope of the current study is to make necessary changes in marketing strategies of
Inkaterra which can increase the attraction of tourism towards the Peru which is a low demand
destination for tourists (Cooper, 2013). Further, it is well known fact that effective marketing
strategies in case of tourism supports in attracting customers towards the range of services. Apart
from this when marketing activities of any place is ineffective then it leads to unfavourable
results and decline in sales volume of services etc. Any specific place is appraised in the market
when the kind of benefits it provides to tourists are highlighted and on the basis of same
decisions regarding selection of tourist destination is taken. Effective promotion with the help of
effective media sources such as social media supports in attracting customers and in turn
enhances demand for tourism in the market (Hall and Page, 2014). Therefore, case study analysis
will help in increasing the demand of Peru for the purpose of tourism. Along with this, study will
determine the major reasons behind poor strategic management problems in Inkaterra in terms of
tourist and development. Therefore, it raises the scope of tourism research in investigation.
Further, it will easily resolve the issue of Inkaterra for expanding its business at international
level. Therefore, current case study analysis will help in identifying the major factors of the
international environment which can harm the overall performance of Inkaterra (Osterwalder and
Pigneur, 2013). Including this, study will also help in raising the information about how to use
marketing strategies to increase the demand of tourism in those locations where demand of
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tourism is low. Along with this, the present study will also help in determine those issues which
creates barrier for hospitality organizations at the time of expansion of business at international
level. Beside this, the following research will give opportunities to understand the importance of
strategies in the direction of growth and development of tourism industry in different nations of
the world (Herrmann and Herrmann-Nehdi, 2015).
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CHAPTER 3: PROBLEM STATEMENT AND PLAN OF ANALYSIS
As per the given case study there are different issues and problems which are affecting
the overall performance of Peru and Inkaterra. Case study analysis focuses on determination of
these problems in effective manner (Scheer, 2012). Regarding this, study has decided to apply
appropriate models which will help in critically evaluating the overall performance of
organization as well as tourist destination. These models will also assist in determining suitable
answer to solve the research issue in efficient way. Major problems and related models can be
presented as follows:
Illustration 4: Research Problem and relevant models
Marketing management problem of Inkaterra and models
Problem 1: Inappropriate marketing strategies
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Inkaterra is not using appropriate marketing strategies for attracting local and
international tourists towards Peru (Forsgren and Johanson, 2014). Marketing strategies of the
organization can be easily analyse by SWOT analysis of the organization because it is a model
for analysing internal environment of the organization. Ineffective marketing strategy is leading
to decline in tourism demand and in turn is leading to favourable results. Apart from this, tourist
demand in Peru is not increasing as all the additional benefits present in the place are not
highlighted through appropriate media source. Moreover, SWOT analysis as one of the model
has been undertaken through which it is possible to know the strengths along with weaknesses of
the company along with opportunities and threats present in the external environment can be
known easily (Kapferer, 2012). This tool can support business in knowing the specific areas
where its performance lacks and overall improvement is needed for further development.
SWOT analysis:
SWOT analysis of Inkaterra helps in determining strength and weakness of the
organization which can affect the marketing performance of the company.
According to Chernev, 2012 SWOT analysis helps Inkaterra in terms of gathering more
important information of different areas which can be used in strategic planning in the near
2
Illustration 5: SWOT analysis
(Source: Intrieri, 2013)

future. Similarly, Das, 2011 has asserted that the following model assist the firm to find core
competencies that can be used at the time of international expansion and increase demand of
tourism in Peru. But Kunnanatt, 2011 has stated that, at the time of using SWOT analysis, there
are some factors which has not controlled by management of Inkaterra. It has bring the changes
in opportunities and threats for the firm according to current situations. In addition to this,
Mathur, 2011 has explored in his research that SWOT analysis is a subjective process which
makes the business decisions of Inkaterra unreliable of invalid (Kriz, Gummesson and Quazi,
2013).
Problem 2: Lack of effective development of international marketing strategies
Inkaterra is not capable enough to develop appropriate marketing strategies for attracting
international customers (Casprini and et. Al, 2016). So, there are number of online marketing
strategies which can help in resolving this issue:
Online marketing strategies:
Social media marketing, Website, Email marketing etc are the part of online marketing
strategies which can be used for strengthening poor international marketing strategies.
3

Ferrell and Hartline, 2010 has stated that online marketing strategies have delivered very
fast information to the travellers across the world. It has beneficial for Inkaterra because this
strategy helps the services users to get the relevant and right information about Peru destination.
In this context, Flander, 2014 has asserted that online marketing strategies have not required too
much investment. So the save money can be invested by Inkaterra in expansion of travelling and
tourism services in cited place. In the contrast of the above statement, Hyde, 2014 has suggested
that lack of trust of travellers on online marketing strategies has a negative point for the
organization. The constant virtual promotions may be frauds for the customers. Along with this,
4
Illustration 6: Online marketing strategies
(Source: Chakraborty, 2013)

Kiptoo and Mwirigi, 2014 has stated that online marketing strategies have increases
dependability of Inkaterra of technologies. In the case, if failure of server or breakdown in
machines can increase difficulty for the company to establish contact with the customer and
promote hospitality services.
Problem 3: Market share and attraction of customers
Lack of attraction of customer towards Peru is one of the major issue for Inkaterra
because it can affect market share of the organization (Wang, 2011). So, promotional mix is one
of the appropriate model which can provide appropriate strategies for attracting customers of
Inkaterra towards Peru.
Core Competence model
Illustration 7: Core Competence model
(Source: Njeru, Stephen and Wambui, 2014)
There are number of strategies which can be used by Inkaterra for attracting tourism
towards Peru. In this context, for resolving the market share and attraction of customers, core
competence model is more appropriate.
As per the view point of Njeru, Stephen and Wambui, 2014, core competence model
assist Inkaterra for create awareness in the people about Peru destination so that large number of
traveller can be attracted. It is an effective mode of reaching to target market and help in build
customer trust. In this context, Parnell, 2010 has stated that core competence model is a good
method of increase the interaction between Inkaterra and travellers. With the help of this, a
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detailed information about Peru destination travelling packages can be easily explain to the
services users and influence them to buy the services. But Rumelt, 2010 has not satisfied with the
above stated statements and asserted that the too much or long term use of core competence
strategy by Inkaterra may damage brand image in the market. The reason is, from the same
promotional technique, the service users may get used to it and they have lost their interest.
Further, Abraham, 2012 has suggested that because of core competence strategy, the risk of
losing control has increase for Inkaterra because company will not stop the people to write or say
about hospitality services in Peru.
Tourism and hospitality strategy in global market place of Inkaterra and models
Problem 1: Ineffective cost leadership style
As per the given information of the case study inappropriate cost leadership style of
Inkaterra in the hospitality sector of Peru is one of the major problem. Due to this reason, it
affects strategic management of company negatively. This problem can be easily analysed by the
Porter’s Generic Strategies model which cover three areas: differentiation, cost leadership and
focus.
Porter’s Generic Strategies model
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Illustration 8: Porter’s Generic Strategies model
(Source: Porter’s Generic Strategies, 2016)

According to Allison and Kaye, 2011, with the application of Porter's Generic Strategies
model, Inkaterra can take competitive advantages. By this, firm can enjoy higher profit gain even
the prices of tourism and travel services is average. Along with this, Carlson, Harris and
McLeskey, 2013 has asserted that Inkaterra can gain benefits in price war by differentiated
services from its competitors. It has created a barriers for the new entry companies. It has
minimized the investment of the organization in terms of various resources. But Conduit and
Mavondo, 2015 has stated in the opposed of the above statements that Porter’s Generic
Strategies model can be easily use by competitors of Inkaterra. When the prices of rivals goes
low than customers will go to buy cheap travel services. In the support of following argument,
Dameron and Durand, 2013 has explored that it may be possible that competitors of Inkaterra
can be copy the services and eliminate the differentiation. So, price sensitive customers may
chose services on the basis of prices rather than uniqueness.
Problem 2: Not understand external factors
There are number of external factors which also affect strategic management of Inkaterra.
This problem can be analyse with the help of PEST analysis. These factors are described as
political, economic, social and technology.
PEST analysis
From the research of Ferrell and Hartline, 2012, it has found that PEST framework helps
Inkaterra to minimize the effects and impacts of potential threats on the business operations. It
7
Illustration 9: PEST Analysis
(Source: PEST Analysis, 2016)

assist the company to exploit new opportunities by which the demand of hospitality in Peru can
be raise with the time. By supporting the following argument, Hamilton and Webster, 2015 has
stated that with the application of PEST analysis, Inkaterra can easily assess implications at the
time of entering new markets at international level. By doing this, the impact of external factors
at global expansion can be previously resolve. But Kapferer, 2012 has argued that external
factors have not controlled by Inkaterra and due to this, it has affected the decision making
process of the firm. Sometime, several assumptions take by organization for understand and
analyse external factor may negatively affect decision making process. In addition to this,
Mueller and Naffziger, 2015 has asserted that PEST analysis has over simplify the information
that is used by Inkaterra at the time of external analysis. Because of this, the probability of
missing of important information can be increase.
Problem 3: Failure to make coordination between business activities
From the past few years, Inkaterra has faced one more problem which is failure to make
coordination between business activities. Due to this, organization has not able to make price for
the clients. In this situation, it has affected the entire business operation and it has leads poor
strategic management (Needle, 2010). To resolve this, Inkaterra needs to examine entire business
activities and analyse whether they are connected with each other. In this context, Value Chain
Analysis model can be used for resolving the issue.
Value Chain Analysis model
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Illustration 10: Value chain analysis model
(Source: Dudovskiy, 2013)

From the research of Piercy and Morgan, 2015, it has found that value chain analysis
provide flexibility to Inkaterra to integrate all business activities. It has leads to enable the firm
to take competitive advantages and delivers value added products to the customers. Similarly,
Stevens and et.al., 2013 has stated that it assist Inkaterra to compare own business model with
the rivals business models. It gives better understanding about strengths and weaknesses of the
business. On the other hand, Chernev, 2012 has argued that value chain analysis takes time to
understand key differences and strategy divers between Inkaterra and its competitors. When the
whole work finish regarding the analysis that time, some important points have missed out.
Along with this, Das, 2011 has asserted that value chain analysis makes separation of Inkaterra
business operations into primary and support activities. Due to this, it becomes hard to make
coordination between all the activities at same time.
International hospitality Management of Inkaterra and models
Problem 1: High competition
For developing new business at a new destination it is very important to consider
competition level of all other business present in the market (Herrmann and Herrmann-Nehdi,
2015). High competition in adjacent business is not allowing Inkaterra to establish its new
business in Peru. Due to presence of high competition level in the market subtitues of products
along with services are easily present in the market and in turn it has become one of the main
reasons behind decline in expansion of companies in the market. Inkaterra is facing large number
of issues linked with business expansion in the market of Peru where large number of
opportunities exists. Apart from this, there is a need to develop more effective strategies so as to
deal with the issue of increase in competition level in the market (Landroguez and Ruiz, 2016).
Moreover, it can surely bring favorable results such as feasible business expansion along with
enhanced satisfaction level of customers.
Porter’s five force model:
Analysis of Inkaterra with utilizes of Porter's five force model will help in determining
comparative power of business in Peru. It is mainly based on five forces which are Supplier
power, Buyer's power, Rivalries, Substitution threat and Threat to new entrant in the market.
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Kunnanatt, 2011 has stated that with the application of Porter's five Force Model,
Inkaterra to determine the level of threats from substitutes in the hospitality market. According to
that, the prices can be change and modifications in the existing services. To support the argument
of above statement, Mathur, 2011 has asserted that Porter's Five Force model helps Inkaterra to
identify bargaining power of both suppliers and customers towards hotel. On the basis of this,
company can take actions to attract both travellers and vendors to stay long with the firm. But
Ferrell and Hartline, 2010 has not satisfied with the above statements and explored that the
following model has only put emphasis on external factors of cited firm and neglect firm specific
factors. In this context, Flander, 2014 has suggested that porter's five forces have not provided
some meaningful information to about how prevention actions can be implement to deal with
five forces.
Problem 2 : External environment
Those factors which are not present in an organisation but still affects the functioning of
Inkaterra are known as external environment. CAGE framework will help in identifying cultural,
10
Illustration 11: Porter’s five force model
(Source: Porter’s five force, 2016)

administrative, geographical and economical differences which should not be overlooked when
planning to develop international strategies for business (Wang, 2011).
CAGE framework:
At cultural level there are many differences which are not letting Inkaterra enter into
international business of tourism. It is difference in language and connective ethnicity. Lack of
colonial connectivity is also one of the administrative differences that is faced by Inkaterra in
Peru (Candela and Figini, 2012). Even if Peru has large colonial borders due to lack of
population and large border areas there is geographic distance which needs to be overcome. Last
is economic distance that is faced by individuals who have invested in Inkaterra.
Problem 3: Challenge to enlarge the venture in worldwide markets
Inkaterra is planning to enlarge its venture in global markets. But in this case, it has
faced several issues or challengers which affect its services of the business. For resolving this
problem, foreign market entry modes can be used by the organization
Foreign Market Entry Modes
For taking the decisions regarding enter into the foreign market, the following model or
strategy is more appropriate. In this context, Osterwalder and Pigneur, 2013 has stated that
11
Illustration 12: CAGE framework
(Source: Ferrell and Hartline, 2010)

“foreign market entry modes minimize risk of failure of investment of Inkaterra” ( Osterwalder
and Pigneur, 2013). With the application of this, organization can reduce the risk of investment
in the oversea nations. In addition to this, Candela and Figini, 2012 has asserted that “it has
delivered the good knowledge to Inkaterra about the international market” (Candela and Figini,
2012). It assists the company to meet the expectations of customers by delivery hospitality
service to them.
But on the other hand, Stevens and et.al., 2013 has argued that “foreign market entry
modes increases the transportation cost of Inkaterra” (Stevens and et.al., 2013). The reason of
difference of trade barriers, tariffs and costs in various countries have raised the transportation as
well as final costs of the products. By supporting to the above statement, Chernev, 2012 has
stated that “the following strategy had created a situation of lack of control over use of assets of
Inkaterra” (Chernev, 2012). For expanding the business at international level, company has
needed to open outlets in different nations. It has leads to lose of control over the use of
resources.
Illustration 13: Foreign Market Entry Modes
12

Research Methodology
Methodology of the research means systematic and theoretical analysis of the methods
which help in conducting investigation in effective manner. The current research subject includes
number of methods for analysing research problem and attaining aim and objective sin effective
manner. This methodology will comprise different methods such as philosophy, design, approach
and technique (Fiegen, 2010). For resolving research problem author will collect facts and
figures form appropriate sources. Afterwards researcher will also analyse the collected
information and get appropriate solution of each research question. Different methods for case
study analysis are explained as under: Research philosophy: It can be define as a belief which assists in providing an
appropriate way to collect, analyse and use the data about a specific phenomenon. There
are two types of philosophies; positivism and interpritivism. However, research
philosophy comprises of varied aspects that investigator has to undertake for the
evaluation of each and every prospect of the selected topic in suitable and reliable
manner. For the current study instigator will analyse positivism research philosophy
(Creswell, 2013). It will be used by researcher because it is based on objectivity of the
investigation rather than subjectivity of the subject by which it will attain aim and
objectives of the current study. Research design: It is most essential important methods for construction of an suitable
research plan for analysing the given case study. In other words, it can be defined as the
overall strategy that can be chosen by the investigator for investigating the different
components of research in sequential manner (Daniel and Sam, 2011). The main purpose
of research design is that it assists in making sure that issue of investigation is resolved in
effective way. There are diverse types of research design available such as descriptive,
exploratory and explanatory. For the present research author will use descriptive research
design because it will be appropriate for understanding research problem (Garner and
Scott, 2013). Along with this it will be suitable for collecting facts and figures from both
primary and secondary data collection method. It is very significant for analysing facts
and figures of the current research. Further, the main purpose of using descriptive
research design is that it will assist in addressing the answers to the questions that consist
13

of who, where, what, how and when that have specific link to particular issue within the
present research. Research approach: This element of methodology assists in defining the way or method
used by researcher in carrying out a study. However, it is significant for the researcher to
make sure that he/she selects the best suitable approach for carrying out the research so as
to minimize the risks and uncertainties associated with it. There are two types of
approach available inductive and deductive (McMillan and Schumacher, 2014). In
general, deductive approach possesses higher association with the quantitative nature of
study in which investigator has to focus on preparing the hypothesis and proving it by
using different statistical test. While on the other hand, inductive approaches focuses on
observation and accordingly resolve the issue of entire study. Herein, researcher focuses
on developing new theory by laying emphasis on qualitative research and according to
resolve the problem of the investigation. For attaining aim and objectives of the current
study author will use inductive research approach for analysing the given case study. It
will play important role in conducting investigation form specific to general manner.
Therefore, it will help in developing general theory for different other business
organisation (Gay, Mills and Airasian, 2011). Research method: Qualitative analysis will be used by the current study because it helps
in analysing subjective and theoretical aspect of the current study. It will also help in
analysing and understanding the research problem and plays important role in getting
appropriate solution to resolve it in effective manner (Kriz, Gummesson and Quazi,
2013). Data collection methods: There are different data collection methods such as primary
and secondary. But the given report if based on case study analysis. So, author will use
only secondary data collection methods for collecting facts and figures about the research
subject (Fiegen, 2010). In terms of secondary data collection methods study will use
literature review which will assist in getting suitable insight to understand different
research problem of tourism destination and Inkaterra. Overall selecting data collection
methods will play very important role in resolving research problem in appropriate way
(Kumar, 2014).
14

 Data analysis: Once the data is collected it is important for the researcher to make sure
that appropriate strategies and tactics are employed to analyse it so that suitable and
reliable findings can be generated. There are two types of method available qualitative
and quantitative (Creswell, 2013). As per the characteristics of current investigation,
researcher undertakes Qualitative methods such as thematic analysis so as to make in-
depth analysis on the selected topic and enhance the overall understand and knowledge
regarding the selected topic. Further, researcher selects this method because author has
selected literature and subjective methods for conducting investigation and collected
facts. By which thematic analysis is one of the appropriate methods for analysing
theoretical information using different themes, graphs and charts and diagrams. Findings
of the data analysis process will be effective for making final and meaningful conclusion
for the whole case study analysis (McMillan and Schumacher, 2014). Reliability: It is essential for getting most reliable result for the whole case study
analysis. Reliability of the data and results can be maintained by collecting facts from
authentic and reliable sources of information. Study will not use the data of open sources
such as Wikipedia, investopedia and other related sites. Author will use most popular and
authentic data bases for collecting information (Creswell, 2013). Validity: Only those data will be collected by the current study which must be relevant to
the current subject. For increasing reliability researcher will collect information from
those data sources which are valid and contemporary for the current business scenario.
Proper referencing and citation will also raise the validity of the research content (Flick,
2011). Ethical issues: Secondary data collection such as literature review will be used by
researcher for obtaining reliable facts and figures. So, changes in the data, copy and paste
are the major ethical issues which may affect the research findings of the current
investigation (Daniel and Sam, 2011). So, appropriate ethical considerations will play
very important role in resolving all these issues. For example, appropriate citations and
referencing of all those articles by which author has collected information for the current
study analysis will help in resolving issue of manipulation and plagiarism. Along with
this, collection of only relevant information will also help in maintaining research ethics
at the time of investigation.
15

 Research limitations: To carry out a research is considered as one of the difficult tasks
because it possess varied issues and obstacles that leads to increase the limitations of a
study (Kumar, 2014). Following are the limitations faced by researcher while carrying
case study analysis such as: lengthy process and insufficient secondary information.
However, there are several section that a study consist of thus, to carry out each section in
reliable and suitable manner researcher requires time. But due to shortage of time,
validity of entire study is affected as researcher is restricted to make use of available
sources and on the basis of which carry out the analysis section. On the other hand,
restricted access possess great hindrance for the investigator in gathering wide range of
information regarding the selected topic so that in-depth analysis can be executed (Njeru,
Stephen and Wambui, 2014). Further, restricted access limits the researcher to gather
information from reliable and suitable sources that affects the entire course of study to
great effect.
16

CHAPTER 4: ANALYSIS AND FINDINGS
Data analysis is one of the main elements in the research. It helps in appropriate analysis
of data and draws a valid findings and conclusion related to the investigation (Daniel and Sam,
2011). With the help of various data analysis such as statistical analysis, parametric and non-
parametric test, thematic analysis, standard models and etc, the collected data can be easily
evaluated. For the present study, the gather data has analyzed with the help of international
marketing and international business models. Both will increase the understanding of the reader
as well as researcher to know about global scenario of hospitality sector (Fiegen, 2010).
From the given case study, it has found that some issues have determined from the study.
First was ineffective marketing management of Inkaterra that decrease demand of hospitality
services in Peru (Hyde, 2014). Along with this, another one problem was major issues behind
poor strategic management in cited organization. Rather than this, problems faced by Inkaterra at
the time of expanding the business at international level. So, the analysis of Inkaterra with the
help of different models is as follows:
1. SWOT Analysis
Illustration 14: SWOT analysis of Inkaterra
17

Findings:
Strengths of hospitality industry:
 From the evaluation, it has found Inkaterra focuses on sustainable development of the
organization.
 Along with this, its strong financial position in the market helps in creates a good brand
image in both local and national market.
 Along with this, it has also focuses on eco-tourism to save natural resources (Kiptoo and
Mwirigi, 2014). In this context, Inkaterra has also appropriately use of existing financial and other
resources and reduce the wastage of the resources.
Weakness of hospitality industry:
 From the assessment process, it has determined that inappropriate marketing strategies of
Inkaterra not suitable for attracting customers.
 It marketing style has not unique and creative which create interest and curiosity in the
service users about organization services (Njeru, Stephen and Wambui, 2014).
 Along with this, lack of skilled and experienced employees has affected the business
operations of Inkaterra which has directly made impact on business performance.
 On the other hand, firm has incapable to compete with existing competitors because of
less resources and ineffective marketing strategies to promote tourism of Peru across the
world (Carlson, Harris and McLeskey, 2013).
Opportunities:
 Inkaterra has the opportunity to expand the business at the international level because
with the time, the hospitality industry at global level has increased with exponential rate
(Conduit and Mavondo, 2015).
 In additional to this, organization has another opportunity to understand the needs and
expectations of national, local and international customers, by doing this, the new
hospitality services can be develop and modifications in then existing services can be
made.
18

 Along with this, Inkaterra has an opportunity to increase tourism demand in Peru by
adopting appropriate marketing strategies.
Prevailing threats:
 There are some threats which may negatively affect the business operations and services
of Inkaterra (Dameron and Durand, 2013).
 In this context, one threat is environmental conditions of Peru. The environment
condition is not all the time same for travelling to the travellers.
 Due to the heavy summer and winter, the visitors are not taking interest to come that
place.
 Rather than this, transportation issues are one of another problem because in cited
destination, the connectivity of one area to the others is very poor.
 The transportation facilities with the other nations have also not that good (Ferrell
and Hartline, 2012).
 Due to poor demand of tourism in Peru, number of barriers to entry in this sector is high.
 Along with this, lack of involvement of local community of Peru with the other states of
nations has also a threat for Inkaterra.
2. Online marketing strategies
Illustration
15: Marketing issues faced by Inkaterra
Findings:
 From the gather information, it has found that Inkaterra has faced lack of effective
development of international marketing strategies.
 It has led to decreased demand of tourism in Peru.
19

 With the the application of online marketing strategies, the services of hotel and travel
can be effectively communicated to the customers.
 By using this, an effective promotional activities can be carry out (Flander, 2014).
 Inkaterra can use different kinds of online marketing tools such as social media, digital
marketing, internet, email etc.
3. Core Competence model:
 The evidence of secondary source of information defines that Inkaterra has faced the
problem related to poor market share and unable to attract the customers.
 This thing has not increased demand of tourism in Peru.
 But with the application of core competence model, the analysis shows that organization
has able to created awareness in the people by offering various services to the end users
(Forsgren and Johanson, 2014).
 Along with this, Inkaterra has able to determine its core competencies and use it in the
business to market services between the target groups.
 Therefore, it can be easy to promote hotel and travel services among the consumer and
increase demand of tourism in Peru.
4. Porter's Generic Strategies Model of Competitive Advantage
Porter's Generic Strategies Model present three ways by which a venture can take
competitive advantages in the marketplace (Kiptoo and Mwirigi, 2014). As per this model,
competitive advantage can be taking either by cost leadership or focus strategy or differentiation.
From the study of hospitality sector, it has found that all hotel organizations either adopt cost
leadership or differentiation strategy or both with the aim of maintain core competencies and
achieve business objectives within the industry. Also, there are some companies which are
following focused cost and focused differentiation strategies because they are having a good
position in their niche market (Njeru, Stephen and Wambui, 2014).
20

Cost Leadership (Lower Cost/Broad
target) Use for decreases prices of the goods
and services Help in achieve lower profit margin Increase number of customers
Differentiation leadership
(Differentiation/Broad target)
 Deliver good quality products
 Strong customer recognition
 Consistent promotional support
Cost focus (Lower Cost/Narrow target)
 High level of productivity
 High capacity utilisation
 Use of bargaining power to bargain
the least possible prices for
production inputs
 Effectual use of skill.
Differentiation focus (Differentiation/
Narrow target)
 More opportunities to provide products
which is different from the competitors.
 Helps in understand needs and wants of
end users.
Illustration 16: Porter's Generic Strategies Model of Competitive Advantage for Inkaterra
Findings:
The Porter's Generic strategies which are being presently following by Inkaterra
organization, the detail of this in terms of findings are as follows.
Differentiation:
 In the present time, Inkaterra is famous hotel in Peru which offers various hospitality
services to the customers.
 These are unique and different from its competitors (Parnell, 2010).
 Along with this, company is starting to bring differentiation in travel services such as
food, guide services, cab facilities, room services, banqueting etc in Peru with the aim of
increase demand of tourism in cited destination. Further, Inkaterra organization of hotel chain has invested funds to deliver fast and
quality services to the visitors (Rumelt, 2010).
Cost Leadership:
21

 It is adopting for decreasing the prices of the products and services or achieve low profit
margin after selling the commodities.
 Inkaterra is also following cost leadership style in terms of reducing the prices of
hospitality services (Abraham, 2012).
 The aim behind doing this is to attract more and more customers to Peru and increase
demand of tourism at cited place. By lowering down the prices of services, it becomes easy to increase current market share
and survive in the marketplace.
Cost Focus:
 In hospitality sector, there are hardly any organization which follow cost focus strategy.
 Inkaterra has not adopt this strategy because company has already adapt differentiation
and cost leadership strategy (Allison and Kaye, 2011). The aim behind not following this tactic is do not lose market share and affect all the
strategic plans that help in achieve business objectives.
Differentiation Focus:
 Inkaterra has also followed differentiation focus strategy because it offers hospitality
services in Peru which are unique in nature.
 Another reason of adopting this is to become a market leader of hospitality at the time of
expansion of business at international level (Carlson, Harris and McLeskey, 2013).
 For offering special services to the particular segment, company has also used this tactic
so that it can be easy to meet the demand of the customers and increase demand of travel
and tourism in Peru.
5. PEST analysis
PEST is a strategic planning tool that helps in evaluating the impact of different factors
such as political, economic, social, technology etc on an organization.
22

Illustration 17: PEST analysis of Inkaterra
Findings:
 From the assessment with the help of this model, it has found that Inkaterra has faced
impact of political factor (Stevens and et.al., 2013).
 The government of Peru has also itself not taking interest in develop demand of tourism
in cites destination.
 Along with this, the tax, employment, trade restrictions and tariffs and other
environmental regulations has negatively affected the business operations of
organization.
23

 On the other hand, in the terms of economy factor, although, the state of economic
condition of Peru has moderate.
 But the interest rates of bank loans have created an extra burden for Inkaterra because for
the expansion of the business at national and international level, it has to take loan for it
(Ferrell and Hartline, 2010).
 Beside this, the changes in social trends have both positively and negatively affect
business operations.
 People are now taking interest for travelling and tourism and due to this, firm has
developed more and more services for inbound tourism.
 But, the division of wealth in society has unequal.
 It has leads to most of the customers ready to pay high prices for Inkaterra services and
some of them not afford it.
 Along with this, the customers are more aware towards their health and safety at the time
using the services of cited firm (Kiptoo and Mwirigi, 2014).
 The result of this is, company has developed more health policies and ensured that every
services user gets proper safety and security at the time of visiting in Peru.
 On the other side, technology is one of the other factors which has made impact of
Inkaterra business operation.
 The innovation in technologies help the organization to deliver complete and right
information to the end users related to hospitality packages for Peru in quick and easy
manner.
 In addition to this, the recent technology development also helps Inkaterra to promote
brand, its services and about Peru so that more and more people can know about the
destination (Njeru, Stephen and Wambui, 2014).
6. Value Chain Analysis
Value chain analysis method is one of the core model that assist the organizations to
accomplish business objectives as well as take competitive advantages in the market place. It
also improves supply chain and logistic activities of the firm so the business operations can be
run in effective manner (Hamilton and Webster, 2015). The following model is having five
elements i.e. operations, inbound logistics, marketing, outbound logistics, sales and services.
Findings:
24

 From the analysis of Inkaterra with the help of value chain analysis, it has found that
organization has now significantly integrated its existing manpower, material and
financial resources within business activities.
 Along with this, various other supportive resources have helped the firm in adding values
in hospitality services and deliver quality services to the customers (Mueller and
Naffziger, 2015).
 Value analysis model has also reduced the operating cost of Inkaterra in more effective
manner.
 At the time of delivering the services to the services users, company has fulfilled all the
requirements of the clients who are coming Peru for the travelling.
 For selling different types of hospitality services, the cited firm has used several mediums
such as online retailers, offline retailers, own franchise store and etc.
 Beside this, Inkaterra has also added value by provided after sales services to the
customers in terms of taking feedback, sharing experience, solving their queries etc
(Piercy and Morgan, 2015).
7. Porter’s Five Forces Model
From the given case study, it has found that Inkaterra has faced various kinds of issues
which affect entire business operations of the company (Conduit and Mavondo, 2015). In this
respect, one more model Porter's Five Forces Model has used to assess several problems of cited
organization. The following framework is used to analyse the competitive environment of
hospitality sector with respect to five elements which are bargaining of power of supplier,
bargaining power of buyer, threat of substitute goods, threat of new entrants and rivalry among
the existing firms (Dameron and Durand, 2013).
25

Findings:
26
Illustration 18: Porter’s Five Forces Model of Inkaterra

After implementing Porter's Five Forces Model on Inkaterra, some important information
has discovered related to the competitive environment of the firm which are as follows:
Bargaining power of buyer:
 In hospitality sector, the bargaining power of the customers have enlarged with the time
because there are huge number of companies present in the market that are offering same
services for a particular destination on different reasonable prices (Ferrell and Hartline,
2012).
 Now service user’s demand related to hospitality services starts to increase and they want
more services within the minimum prices.
 In this respect, Inkaterra is also brining modifications in the existing travel services as
well as innovate new services to attract more number of customers.
 In addition to this, company has also followed low pricing strategy so the switching cost
of the services users can be decrease and retain more number of customers for long time
(Hamilton and Webster, 2015). Another reason of increase buying power of buyer with the respect of Inkaterra is the
consumers are becoming more educated and have proper knowledge about packages and
their prices related to hospitality with the help of internet.
Bargaining Power of supplier:
 For Inkaterra, the bargaining power of supplier is medium because they have more
options to switch to the other hospitality organizations for the contracts (Kapferer, 2012).
 In the recent time, the number of travel companies in this sector increases with the time
with exponential rate.
 There are various supportive firms which are accepting the bookings of Inkaterra.
 The pressure of suppliers on the organization has low because the vendors know that
cited firm has offered unique and differentiated hospitality services to the customers
(Mueller and Naffziger, 2015).
 Along with this, the consumers are taking interest to buy services of Inkaterra.
 This thing has established the good relationship between the company and its suppliers. If in case bargaining power of the vendors high than it will increase operating cost of
cited firm.
Threat of new entrants:
27

 The competitive environment of an industry is also gets extremely prejudiced when a
new firm come into the market (Needle, 2010).
 In terms of economics, the threat of new entrants raises when a market grows with high
rate or generate huge amount of profit.
 Along with this, another reason of increase threat of new entrants is when the process of
establishing a company in a particular market is very easy and requires less investment.
 In the case of travel and tourism in Peru, to enter into this industry, it needs average
amount of financial investment and less staffing.
 It means, the threats of new entrants in this market is moderate (Piercy and Morgan,
2015). It can be said that for Inkaterra, the threats of new entrants is moderate in cited
destination.
Threat of substitute goods:
 Hospitality sector is also facing high competition in terms of substitute because in the
present time, there are huge number of companies which are working in this sector and
offer different types of hospitality services to the customers (Stevens and et.al., 2013).
 These are available at affordable costs to the customers where they can choose the
holiday packages according to their requirements and budget.
 For Inkaterra, the threat of substitute is moderate because in the present time, the demand
of travel and tourism in Peru is very low. In this situation, the numbers of competitors at local and national areas are minimum
(Ferrell and Hartline, 2010).
Rivalry among the existing firms:
 Inkaterra face high competition at international and national level in terms of offering
travel services to the customers, taking intellectual property rights, innovation in services,
war pricing, advertisement, loyalty of the customers etc.
 Further, competition between the cited firm and its competitors is also increase the
concept of sustainable tourism, eco-tourism, etc (Flander, 2014).
8. CAGE Framework
28

Culture Distance
 Face difference in language, ethnicity
and social norms
 Poor work system of Inkaterra
 Not adopting the traditions of Peru
Administrative
 Tolerance of Inkaterra towards
unethical activities increase
 No transparency in decision making
 Sometimes legal system not followed
by Inkaterra
Geographic Distance
 Size, sea access, quality of
communication, infrastructure
 Natural and political barriers despite
closeness
Eco/wealth Distance
 Per capita income
 Cost of labour
 Availability of human resources
 Organization capability
 Economic size
Illustration 19: CAGE Framework of Inkaterra
Findings:
 Inkaterra has deal with various external environment factors in which most of the
common elements are culture, geographic, economic/wealth distance and administrative
as well as political distance.
 These all have affected marketing activities of organization in negative manner and it
leads to decrease the demand of tourism in Peru.
 When the analysis of Inkaterra has done with the use of CAGE framework, it has found
that this framework has helped in dealing with four major factors in effective manner
(Collantes and Martel, 2015).
 By overcoming the barriers, marketing can be strengthen and easily enter into
international market. With the application of CAGE model, tourism demand in Peru can
be promoted.
9. Foreign Market Entry Modes
29

Illustration 20:
Foreign Market entry issues faced by Inkaterra
Findings:
 From the secondary research information, it has explored that Inkaterra has faced several
kinds of challengers to expand the business at international level.
 Organization has not selected right method to enter into foreign market and it has hinder
expansion of business.
 When this problem analyse with the help of foreign market entry modes, it has found that
different foreign market entry modes like joint venture, licensing, acquisition, direct or
indirect exports etc (Dameron and Durand, 2013).
 All these approaches have assisted the organization to enter into a foreign market and
successfully run the business.
30

CHAPTER 5: PROPOSED SOLUTIONS TO PROBLEMS/
RECOMMENDATIONS AND LIMITATIONS OF THE ANALYSIS
In the chapter 4, various models were applied on different problems face on Inkaterra on
order to understand the competitive environment, strengths, weaknesses, core competence,
internal and external environment etc. From the assessment process, several useful information
and solutions related to Inkaterra problems was evaluated and presented. In the analysis, it was
explored that the cited organization marketing strategies are very poor and it is not increasing
demand of travel and tourism in Peru (Conduit and Mavondo, 2015). The existing tactics have
not effectively promoted the hospitality service at the destination place and not able to gain
attraction of customers. So, it can be consider as one of the main reason to decrease demand of
travel and tourism in Peru. Along with this, at the time of expansion of business at international
level, company has also faced various kinds of barriers. Increase competition level in global
market of travel and tourism industry has created numerous entry level barriers. There are many
of the firms which are presently offering various hospitality related services around the world at
economic prices (Allison and Kaye, 2011). Beside this, the external environment factors have
also imped the growth of Inkaterra at international level. These activities have made impact on
services and operations of organization. In this addition to this, the analysis process has shown
that there are many reason of failure of tourism and hospitality strategy in international market
place of Inkaterra. Further, these have affected the business operations of the cited organization
in Peru. Therefore, in overall terms, it can be said that there are various issues in Inkaterra which
has not promoted travel and tourism at destination place and it has led to decrease the demand of
tourism at cited place (Carlson, Harris and McLeskey, 2013). To minimize the impact of
different problems on business operations of organization, some solutions have been derived
from models. Their detail explanations are in the next section.
Solutions
Marketing Management
Solution 1
SWOT analysis tool also deliver relevant information about Inkaterra organization.
From the assessment process, it has found that the cited firm is getting significant growth in the
market. This can be maintaining for long time by brining continuous innovation in the existing
services (Lee and Carter, 2011). Along with this, SWOT analysis shows that there are some
31

weaknesses of cited organization in which the most important one is inappropriate marketing
strategies it has not suitable for attracting customers. Further, lack of skilled employees and less
availability of resources also affect the promotion of hospitality services of Inkaterra. In order to
reduce the impacts of various issues and weaknesses on business operations, the organization
should adopt numerous online marketing strategies (Meffert, 2013). It will leads to bring the
improvement in marketing strategies of the company and help in increase the demand of travel
and tourism in Peru.
Recommendations
From the above solution, it has recommended to Inkaterra to adopt SWOT analysis to
overcome threats and weaknesses by improving strengths and weaknesses. It will help in taking
the advantages of competitive market and increase the tourism in the Peru with the time.
Solution 2
Beside this, another solution that is suitable for solving the issue of Inkaterra is Online
Marketing Strategies. From the assessment of this model, it has determined the company has
less focused on effective development of international marketing strategies. Due to this, the
demand of tourism has decreased in Peru.
Recommendations
To solve this, it has suggested to the cited firm to use different types of online marketing
strategies. With the help of this, it can be easy to convenience the target customers and tracking
the outcomes. It removes the geographical barriers and easily reach to all areas. It also offers a
big advantage to Inkaterra to target and measure the responses from different demographics
regions.
Solution 3
On the other hand, from the analysis of Core Competence model, it has determined that
with the application of following model, hospitality organizations focus on their competencies
and enhance their strengths to lead the market. Companies are discovering new markets and
increase opportunities for growth by utilizing core competences (Moutinho, 2011). In the case of
Inkaterra, organization has faced market share and attraction of customer’s related issue. The
major reason behind this is improper marketing strategies. From the assessment of the model, the
solution of the problem has found that the cited firm should use its core competence to develop
unexpected and surprising travel and tourism services which developing costs are very low
32

(Mullins, Walker and Boyd Jr, 2012). Along with this, the development of the services faster as
compare to the other competitors.
Recommendations
From the above solution, it has recommended to the Inkaterra to adopt Core Competence
model. It will able to respond quickly and flexible to adopt the changes within the environment.
Therefore, it can be said that with the combination of particular knowledge, attitudes, skills,
collaboration etc. It will be easy for cited organization to deal with less attractive customers and
poor market share in both national and international level. Along with this, the proposed solution
will also help in increase the demand of travel and tourism in Peru and develop tourism on that
place (Njeru, Stephen and Wambui, 2014).
Tourism and hospitality strategy
Solution 1
From the assessment process of Porter's Generic Strategies Model, it has explored that
all the organizations of hospitality sector are following differentiation scheme with the aim of
achieve competitive strategies in the market place. Many of the companies are brining innovation
in travel and tourism services to attract more and more customers (Chernev, 2012). The prices of
the services are at economic level that can be affordable by the end users. Further, from the
analysis, it has described that many of the hospitality organizations have followed cost leadership
style including differentiation in order to capture large market share. Another aim of adopting
combination of both the strategies is to increase profit level and to become a market leader in
terms of cost. The following situation has created a war on prices where all hospitality
companies decrease prices of the services and try to gain huge market share (Cant, 2011). Due to
this, some time, this action has affected the quality of offer services. Such type organizations are
delivering competitive hospitality services that increase competition in the market place.
Moreover, from the cited model, it has also found that there are hardly any firm that use cost
focus strategy to explore the market and gain competitive advantages. The evidence shows that
in hospitality sector, there are some organizations in the world which are using the following
strategy to establish good position in niche lower income group target market (Das, 2011).
Recommendations
In the case of Inkaterra, for taking the competitive advantages, organization should use
Porter's Generic Strategies Model. In this context, the cited firm has to follow three strategies to
33

run the business in the market and sale of the services of hospitality (Ferrell and Hartline, 2012).
These tactics are differentiation, cost leadership and differentiation focuses. With the help of
differentiation action plan, the cited organization can offer unique and different services to the
customers which will deliver value of the money to the buyers. It also help Inkaterra to
established unique position in the market place and create a good image in the end users mind.
This will be most applicable in that situation when the firm expand its services at international
level. But in the case of increase demand of tourism in Peru, Inkaterra has to adopt cost
leadership strategy (Glanz Bader and Iyer, 2012). It will assist in develop the services at low cost
and by doing this, it become easy to keep control over and command on the prices of hospitality
services. Therefore, it can be said that with the application of different strategies of Porter's
Generic Strategies Model, Inkaterra to deal with ineffective cost leadership style in hospitality
sector and it will leads to increase the demand of travel services in Peru.
Solution 2
To solve the problem of understanding of external factors, PEST analysis is a most
appropriate tool. With the application of this, it can be easy to minimize the negative impacts of
potential external elements on business operations of Inkaterra.
Recommendations
PEST analysis can be used by Inkaterra to understand the effects of different external
factors on business. With the help of the following suggested model, it can be easy to analyse
various elements at the time of business expansion at national and international level.
Solution 3
Another solution that can be draw for Inkaterra is Value Chain Analysis. From the
evaluation, it has found that organization has failed to make coordination between business
activities. It has not able to create or add any kind of value in the services (Wang, 2011). It has
affected the business operation of organization and became a reason of failure of strategies to
increase demand of tourism in Peru. On the basis of this problem, the solution has found where
the company needs to understand various drivers that can affect the coordination between
business activities.
Recommendations
It has recommended to Inkaterra to use value chain analysis model because it can
enhance value of services by giving focus on proper procurement of supportive services and
34

supply chain activities (Thqerle an//d Soto, 2015). Further, from the cited model, Inkaterra has to
use different media for selling of hospitality services within the market relate to tourism in Peru.
These are opening of franchise store, opening of outlets, via internet etc. These all will align with
the core competence of the organization to achieve competitive advantages in the market by
present extensive choice of travel and tourism services to the customers as per their needs and
requirements.
International hospitality management
Solution 1
The findings from the Porter's Five force model, it has derived that the insight and
behavior of buyers are changing because their negotiating power increased with respect of
hospitality organization around the world. In the present time, the customers have good and
enough knowledge as well as information about the prices and range of the services of travel
companies (Hallbäck and Gabrielsson, 2013). On the basis of this, they can compare the features
of the services and according to it, negotiate in prices of the services. By considering such kind
of behaviour of buyers, many of the companies of hospitality including Inkaterra should use cost
leadership, differentiation and differentiation focus strategies to achieve competitive advantages
at international level during the expansion of business. It will help the cited organization to retain
the customer and market share (Hollensen, 2015). Further, the given model has defined that
bargaining power of the suppliers have also increased because there are huge number of travel
and tourism organizations that are offering various service to the target market. So that vendors
can go with those firms who are giving right value of their services. In the case of Inkaterra,
company has made contract with the different supportive firms like airlines, hotels, restaurants,
cabs etc (Kiptoo and Mwirigi, 2014). By meeting all terms and conditions of the contract and
deliver right value to the services of supportive organizations, cited enterprise can retain the
suppliers for the long time. If Inkaterra capable to lower down bargaining power of vendors, it
will help in offering travel and tourism services in Peru at low cost. It will lead to reduce the
overall costing of the services in the effective manner.
On the other hand, from the study, it has also determined that Inkaterra is facing
important risk of new applicants because hospitality industry at international level is growing
very fast. This threat can be minimized by adopting the strategy of nonstop modernism and
offering good quality of travel services to the customers. It will reduce the end user switching
35

cost and increase market share (Kunnanatt, 2011). The same strategy can be applied at local area
of Peru by Inkaterra in order to increase the demand of tourism.
Recommendations
From the above solution, it has suggested to Inkaterra should adopt Porter's Five Force
Model. It will help the organization to determine the level of various threats in the hospitality
sector. It will also assist in understand the buying behaviour of the customers and explore the
new methods to attract them.
Solution 2
There are four external factors: culture, geographic, administrative and economic affects
the business operations of Inkaterra. Because of issues in understanding languages and
connective ethnicity as well as administrative differences, it has hard to increased tourism in
Peru. These all problems can be easily resolve with the help of CAGE frameworks.
Recommendations
From the above stated solution, it has recommended to the Inkaterra to follow CAGE
frameworks To minimize the culture, geographic, economic/wealth distance and administrative
as well as political distance. It assists Inkaterra to consider these factors at the time of
formulation of marketing strategies and implementation with the aim of increase tourism in Peru.
Solution 3
Form the evaluation of Foreign market entry model with the respect to hospitality
industry, it has found that decision to enter into a foreign market has made significant impacts on
the outcomes (Osterwalder and Pigneur, 2013). The firms can enter into the international market
and effectively improve their business operation with the help of various foreign market entry
modes like exporting, licensing, direct investment, joint venture, importing etc. Further, the
evidence of analysis shows that many of hospitality organizations have prepared to enter into
foreign market via different ways. In the case of Inkaterra, company is planning to expand the
business at international level and during this plan; it has experienced various issues (Philip,
2016). These are relating to legal issues, utilization of resources operating costs etc. These are
the challenges faces by cited organization at the time of expanding the business at global level.
To deal with this situation and minimize its impacts on business operations, Inkaterra should
adopt various foreign market entry modes.
Recommendations
36

In this context, company should licensing strategy as a market entry. Under this, firm can
permits its license to the other foreign company to use the property of the licensor. It will assist
cited organization to easily enter into the foreign market and expand its business (Wilson and
Gilligan, 2012). On the other hand, Joint Venture and FDI should be adopted by Inkaterra to deal
with challenges at the time of international business expansion. The overall result of these
actions of company is it will be increase the demand of tourism and travelling in Peru.
Recommendations
From the analysis and proposed solutions, there are some recommendations giving to
Inkaterra to deal with different marketing issues and increase demand of travel and tourism in
Peru. In this context, some suggestions on the basis of assessment are as follows: Inkaterra should adopt differentiation strategy, cost leadership and focus differentiation.
These all will lead to develop new services and bring the modifications in the existing
hospitality services. The suggested strategies will help the organization to gain
competitive advantages in hotel industry (Sloan, Legrand and Simons-Kaufmann, 2013). For resolving marketing management problems, Inkaterra should follow various online
marketing strategies. In this context, organization has to use different tools like display
ad, search engine marketing, email marketing, referral marketing, social media marketing
etc. These all will assist the company to effectively promote hospitality services in the
target market and increase tourism demand in Peru (Sheth and Sisodia, 2015). Inkaterra should continuous innovation strategy to make hospitality services more
improve and unique as compare to the competitors. By doing this, it will be easy to
deliver right services to the customers on low prices and increase grip on the market
share (Sharpley and Telfer, 2014). Inkaterra should find new ways or methods to sell out hospitality services in the market.
For this, the firm should either open the stores at different locations around the world or
doing the business via internet. Along with this, by giving licensing to the other
companies, the sale of service can be increase. Cited organization should use vertical and horizontal integration where low profit margin
and low pricing strategy. It will assist Inkaterra to reduce the overall cost of development
of travel services and that will leads to decrease prices. Due to this, company will earn
37

low profit margin. The advantage of this is it will increase the customer base and improve
market share in hospitality sector (Rumelt, 2010). Inkaterra should adopt customer centric approach where the changes in the services can
be made according to the needs and requirements of them. The development process of
hotel services should be flexible so that modifications in existing services can be easily
made (Piercy and Morgan, 2015). On the other hand, do understand the end users’ needs
and desires, organization should conduct a proper market research and try to know about
the interest of them. By doing this, it will be easy to retain the customers for he long time
by offering hospitality services according to their needs and requirements. Inkaterra should adopt different modes to enter into the international market such as joint
venture, exporting, licensing etc. These all will assist in business expansion across the
world. Along with this, it will overcome the barriers or challenges face by the
organization during operating business in foreign nations (Scheer, 2012).
Action plan
As the above suggested recommendations, one of these related to continuous innovation
in the travel and tourism services of Inkaterra. To transform this idea into action, the
organization needs to consider the following action plan:
Allocating of adequate financial resources: Inkaterra should use limited financial resources to
offer wide range of services to the customers with new innovation. Along with this, by using
different kind of funds allocation techniques like activity based costing, a continuous innovation
in hospitality services can be made.
Ensuring of proper technological resources: At the time of delivering improve quality services
to the customers, Inkaterra should ensure the use of right technology resources. For this, the
organization needs to assure that use technologies and machines are new and they can be update
whenever required (Sloan, Legrand and Simons-Kaufmann, 2013).
Recruiting/appointing skilled, technical as well as professional staff in the organization:
Inkaterra should hire skilled employees within the organization. The knowledge level, skills,
experience and core competence will able the firm to develop new hotel services in Peru and
effectively marketing of that services (Tribe, 2015).
Investing of funds in research and development activities: Inkaterra should increase the
funding in research and development activities. It will assist in brining innovation in the existing
38

services of hospitality in Peru that help in increase tourism in that location (Stevens and et.al.,
2013).
Undertaking of required marketing mix and product mix activities: Marketing mix and
product mix strategies should be used by Inkaterra in order to bring continuous improvement in
travel services. By doing this, the tourism in the Peru will be raise and it will increase sales of
services within the marketplace (Parnell, 2010).
Limitations
The limitation that can be seen in the present case study is that it is a subjective research
in nature and there have been not any kind of quantitative data use in the analysis. The entire
investigation has been done with the help of various international marketing tools and
international business models. All these techniques have been effectively defined the issues
faced by Inkaterra during the marketing in order to increase tourism in Peru. Beside this, another
limitation is to complete present study; it has required too much time. In other words, it can be
said that investigation is more time consuming. Moreover, the research is qualitative in nature
and due to this; it has been criticized by experts of travel and tourism industry as different point
of view (Garner and Scott, 2013).
Implication
The current research will provide the guidance to the new researchers. With the help of
this, the learners will get more information about the model and they understand how to use
international marketing tools and business model to analyse the effectiveness of particular
industry. On the other hand, the individual or a group or any kind of institution can get huge
support as well as significance advantages from the study on travel and tourism. The outcome of
the investigation draws with the application of various model and the results are validate in
nature (Flick, 2011).
39

CHAPTER 6: FUTURE APPLICATION OF RESULTS
About Hilton Hotels and Resorts Group
Background information of Hilton Hotel and Resorts Group
Hilton Hotels and Resorts is an international chain of full service hotels and resorts and it
is a flagship brand of Hilton Worldwide. It was founded by Conrad Hilton in 31st may 1919. He
bought his first hotel property, the Mobleyb Hotel in Cisco, Texas. The name of this hotel was
Dallas Hotel that was opened in Dallas, Texas in 1925. In 1945, Hilton Hotel bought the Statler
Hotel chain and this strategy makes the organization world largest hospitality company. Along
with this, hotel was also deal with Shamrock Hotel property and business activities and other
operations became a part of Hilton Chain and after one year, the hotel was rename with
Shamrock Hilton (Hilton Hotel and Resorts Group, 2016). In 1974, The Roosevelt Hilton in
New York City becomes the first hotel in the world where Television installed in the guest
rooms. In 1968 Democratic Convention riots was occur in Chicago and in the history, it was the
first time that hotel doors were locked. In 14 April, 1975, the Beirut Hilton finished construction
was supposed to be open in next day, but the occurrence of the Lebanese Civil War one day
before the grand opening of hotel. Because of this, the hotel was never opened and severely
damaged during the war. On the other hand, on 13 February, 1978, the Sydney Hilton Hotel was
the one of the hotel where few terrorist incidents on Australian soil. The bomb blast was killed 3
people. Between 1978 to 2010, many kinds of notable incidents happened at different Hilton
hotel chains and it was affecting hotel brand image. After 2010, Hilton Worldwide announces a
name change of the Hilton Hotels Brand to Hilton Hotel and Resorts as well as brings the new
changes in logo. The aim behind doing this is to create rebranding efforts for the flagship brand
(About Hilton Hotel and Resorts Group, 2016).
In the present time, Hilton Hotels and Groups has been a leader in the hospitality sector.
It has known for innovation, quality and success. Vision of the company is to develop as a good
hospitality organization on the earth so that people can take good experience of hotel and its
supportive services. Mission of the organization defines that to be become preeminent
international company i.e. first choice of guest, employees and employer. On the other hand,
value of Hilton Hotels and Groups are
Effectively deliver exceptional guest experience.
 Support culture and diversity of organization and prevent resources across the world.
40

 To achieve significant research via self-supported sustainable tourism with respect to
social, culture, authentic and environmental values.
 To provide support in conservation of the resources (Mathur, 2011).
 To develop a skilled workforce to deliver good tourism and other facilities to the
customers.
 Enhancing assets of hotel and transform those into world class services and products.
 To create good memories for the travellers via excellent travel experience so that they can
learn good things from them.
The brands of Hilton Hotels and Resorts can be divided into different segments such as
luxury, full service, focused services, lifestyle based services, timeshare, defunct and franchising.
Under these all categories, the services and products have modified according to the customers’
requirements, preferences and and expectations. The services offer by Hilton Hotels and Resorts
are same in characteristics and nature with only some little variations (Hilton Hotel and Resorts
Group, 2016).
After doing the business more than 97 years, Hilton Hotels and Resorts is now become a
leader of hospitality sector across the world. From the research, it has found that organization is
at number 1 in delivering good quality services to the customers. It continuous leads the
hospitality industry in terms of net unit growth excluding portfolio acquisitions. At present,
Hilton Hotels and Resorts bring the innovation in hospitality by introducing digital solution
designed to give customers greater control and choice where they want to stay. Organization has
introduced digital check-in room selections technique in more than 4100 hotels across of the
world. With the application of this, guests can check and chose their exact room from digital
floor plan and room lists either from their smartphone or personal computer. So, it can be said
that Hilton Hotels and Resorts is a first hospitality organization which bring this pioneering
technology (About Hilton Hotel and Resorts Group, 2016). The features or characteristics of
Digital Check in with room selection are remote check in, pre select a particular room, floor and
location and not required any kind of ID proof, credit cards or signing a registration card. With
the help of the application, the front desk can get all relevant information about the guests. At the
time of check out from hotel, a system generated receipts deliver to the customer mail id without
standing in a queue. As a part of digital strategy, Hilton Hotels and Resorts has included a one
41

more feature in Digital Check in with room selection in which guests can use their smartphones
as a key of their rooms.
From the evidence, it has found that Hilton Hotels and Resorts are planning to open
boutique hotels at international level. For this, it has planned to target mature markets where
business related activities such as training and development, meetings, corporate events etc has
increased with the time. Along with this, the new generation is technology savvy and it is good
opportunity for the organization to expand the business in the area. Boutique hotel with quirky
traits are now becoming most famous between the travellers and Hilton Hotels and Resorts seen
it as an alternative to chain hotels. From the last few years, company has focused on organic
growth with new 12 marketing leading brands (About Hilton Hotel and Resorts Group, 2016).
There is a huge growth opportunities for the organization to increase market share of
international middle class and travellers arrivals
Application of models on the identified problems on Hilton Hotels and Resorts
From the chapters of analysis and proposed solutions, it has found that there are various
kind of models available that help in solving the issues of the organization. In the present study,
different models are applying on the explored problems of the cited firm so that it can be easy to
deal in the near future (Forsgren and Johanson, 2014). Application of some frameworks on the
determined difficulties of Hilton Hotels and Resorts is as follows:
Problem 1: Poor marketing strategies to promote boutique hotel services at international
level
Hilton Hotels and Resorts have planned to open boutique hotel at global level. But its
current marketing strategies have not that effective as compare to hotels and resorts. So, to deal
with this, a suggested model is PESTLE because it has helped the organization to determine
various factors that affect strategies of launching of new services at international level.
PESTLE Model
It is one of the strategic management models that are mostly used by the ventures in to
study external environment of the firm. When a company plans to expand its business operation
to new geographical place or want to introduce a new service or a product in the market with the
aim of meeting the demand of the customers (Glanz Bader and Iyer, 2012). Moreover, the
following concept is using by the firm's to track the environment in which they are operating
business. The outcome of the following tool helps the management to take the decisions in easier
42

manner. With the application of PESTEL analysis, it becomes easy to assess macro-
environmental factor that can affect strategies of business. In other words, the aim of this method
is to evaluate how exactly the external elements influence business performance (Figueiredo and
et. al., 2016). The following framework includes 6 factors: political, economic, social,
technology, ethical and legal. These all are interdependent on each other. PESTLE tool helps in
assessment of strategic management techniques via different factors so that it can be easy to
analyse how these are impact on business operations of an organization.
According to Hallbäck and Gabrielsson, 2013, PESTLE analysis assist the organization
to reduce the impact and effects of potential threats. It has easily minimized the issues faced by
the Hilton Hotel at the time of conducting the business in the market. Similarly, Garner and
Scott, 2013 has stated that it provides a mechanism that enables the company to determine the
new opportunities for the growth. By doing this, it becomes easy to take any kind of strategic
decisions. But Flick, 2011 has explored in his study that the entire process has consume more
time and cost. It has increased the expenses of the firm which directly affect the business of
Hilton Hotel. Further Scheer, 2012 has explained that PESTEL analysis has not delivered the
enough information to the firm by which it can take corrective actions to minimize the impacts of
the external factors.
Findings:
In the respect of following model, evaluation of Hilton Hotels and Resorts is done with
respect to six factors are as follows:
Political: It includes regulations, norms, rules and provision of government regarding entry of
foreign companies into the nation, FDI, employment laws, taxation regulations etc. By seen the
current situation of Hilton Hotels and Resorts at international level, it can be stated that the
business operations and other supportive activities are highly been affected by government
regulations such as taxation, FDI and contractual relationship (Hallbäck and Gabrielsson, 2013).
In the present time, organization plans to expand its hotel chain business across the world. But at
global level, the marketing strategies for boutique hotel are not that effective and because of this,
the demand of the tourism in the cited location has decreased with the time. Along with this, high
penalty charges by the Income Tax Department, the profit of the organization become decline.
So, it can be said that if this situation remain same that Hilton Hotels and Resorts has to roll out
from opening of boutique hotels very soon. Further, the hotel is also seeing complexity regarding
43

the contractual relationship with the other nations during the business expansion (Herrmann and
Herrmann-Nehdi, 2015). The lack of coordination between them is also affecting the business
operations of cited company. Therefore, it can be said that the various kind of political situations
and elements have affected the business of Hilton Hotels and Resorts in both positive and
negative manner.
Economic: The economic performance directly impacts on company operations. The factors that
includes in economic element are interest rate, inflation rate, economic growth, foreign exchange
rate, economic growth rate etc (Kiptoo and Mwirigi, 2014). For example, raise in inflation rate of
a company economy affects the ways in which an organization set the prices of products and
services. Along with this, it also affecting the purchasing power of the customers and bring the
changes in demand and supply. In the case of Hilton Hotels and Resorts, the evidence shows that
hotel has taken a loan on large scale from the banks for doing marketing of boutique hotel
services in order to increase market share at international level. But now, increase a rate of
inflation, organization is paying higher rate of interest (Hamilton and Webster, 2015). Therefore,
it can be said from the above discussion, that economic factor has affected the business
operations of Hilton Hotels and Resorts in global level.
Illustration 21: PEST analysis of Hilton Hotels and Resort
(Source : Tribe, 2015)
Social: It scrutinize the social environment of the market and it determinates are culture trends,
population analytics, demographics etc. It is also relating to the needs, expectations and desires
of the customers (Ferrell and Hartline, 2012). In the present time, all hospitality and travel and
44

tourism organizations are facing non-acceptance or opposition from traditional marketing
businesses because companies are now moving in the direction of online marketing tactics for
attracting more and more customers. From the secondary research, it has found that people are
using internet and other technology to connect with the world (Cooper, 2013). This is the major
reason of adopting internet and other online marketing tactics by Hilton Hotels and Resorts for
effective marketing of services of boutique hotel and increase demand of hospitality services at
international level.
Technological: Advancement in technology helps the organization to optimize internal
efficiency and minimize the possibility to obsolete a product or service in technological aspects.
Technology is playing an important role in business and the dependency of the firms on this is
increasing year by year (Hall and Page, 2014). In the case of Hilton Hotels and Resorts, it has
been used different types of technology advancement products to make the marketing strategies
to promote boutique hotel to attract target market. Dynamic changes in the technology has been
influenced the organization to develop own website and update it time to time so that end users
can get the right information about hotel services in Peru (Kapferer, 2012). Further, there is a
less barrier to enter into e-commerce market and by this, hotel can try to grab more attention of
the customers and increase sales of services.
Legal: This factor has both internal and external sides. There are different laws that can affect
the business environment when a firm is operating its business in a country. It includes
competition laws, consumer laws, labour laws, land acquisition and contractual relationship,
safety standards etc (Kriz, Gummesson and Quazi, 2013). Hilton Hotels and Resorts is also
facing legal issues running the business in different nations because of breaching certain laws
and regulations. It has directly affected the business activities of boutique hotel which has not
well for brand image.
Environmental: The following factor covers climatic changes, unfit of geographical location to
run the business. Hilton hotel has seen these types of challenges at some places in the world. It
has affected the business of the hotel in both Peru as well as in other nations (Landroguez and
Ruiz, 2016).
Solution
From the above findings, it has been concluded that there are various external factors that
has directly or indirectly affected the business operations. So, to deal with external elements,
45

PESTEL analysis has suitable for Hilton hotel. With the application of this framework, it
becomes easy to deal with external issues.
Recommendations
It has recommended to Hilton hotel should be used PESTEL analysis. It will help in
analyse the impacts of different external factors. Along with this, it will also encourage the
development of strategic thinking within the firm in the right direction.
Action Plan
Hilton hotel should increased the investment on market analysis and focus on those
factors which affects the business of the organization. It will help in develop some new solutions
and methods to deal with the external factors more effectively.
Problem 2: Unable to develop sustainable business at international market.
At the time of expansion of business at international level, Hilton Hotels and Resorts try
to give efforts in the direction to achieve sustainable hospitality business. But the strategies of
organization have not that effective and due to this, it has difficult for hotel to achieve
sustainability during conducting the business in global market.
Ansoff matrix
Meffert, 2013 has stated that Ansoff matrix is another strategic planning model that is
used by the organization for making strategies with the aim of achieve growth and sustainability
in upcoming time. The following model helps the management to take the decision regarding
four alternative strategies to expand the business operations. Mullins, Walker and Boyd Jr, 2012
have explained that these options are: developing of new invention in existing market,
developing of new product in new market, developing existing market with existing product and
developing new market with existing products. With the help of these ways, the organizations
can effectively developed four strategies for various situations. On the other hand, Hollensen,
2015 has asserted that the following model fails to show that market development and
diversification strategies have required changes to run the business. Similarly Kiptoo and
Mwirigi, 2014 has explored that with the help of Ansoff matrix, organization has unable to
accurately predict the events and their impacts on the business operations.
From the secondary research, it has determined that existing products can be explored in
a new market or geographical locations. This can be achieve from acquisition, market entry
studies, and market evaluation process and market expansion studies. On the other hand, new
46

products launch into the new market can only be achieve by diversification. Further,
organizations can improve its current market with existing products by taking the help of
competitive intelligence studies, segmentation and corporate positioning studies (Mudie and
Pirrie, 2012).
Findings
The application of Ansoff matrix, the problems related to unable to achieve sustainability
hospitality business in boutique segmentation. Evidence shows that Hilton Hotels and Resorts
has been faced tough competition in the international market for capturing large market share
(Njeru, Stephen and Wambui, 2014). Various hotel organizations are adopting low pricing and
lower profit margin strategies to gain more service users base and to become a leader of the
industry. It has also observed that there are not any kinds of barriers in hospitality sector for new
entry firms. This is the only reason why many of the enterprises are entering into this area to earn
various monetary benefits. This trend affects the business activities of Hilton Hotels and Resorts
at large level. Further, government of different nations have given several benefits to hospitality
sector because it is major source of both revenue and employment generation (Osterwalder and
Pigneur, 2013). This thing motivates Hilton Hotels and Resorts to decrease the pricing of the
boutique hotel services which is not possible for other international companies. But the hotel is
not investigating more funds on promoting the services into the market and it leads to decrease
market share of customers. Along with this, another reason of less attraction of the end users is
the services of cited organization are not that much new and improved that can meet the
satisfaction level of the customers (Philip, 2016). So, to overcome such type of situation, Hilton
Hotels and Resorts need to adopt either product development or diversification strategy or both
to increase market share and sales of services.
Solution
Hotel can move in the direction of bring the improvement in accommodation, food and
other supportive services to get more and more attention of the service users (Piercy and Morgan,
2015). Along with this, by adopting the new ways to deliver hospitality services to the
customers, Hilton Hotels and Resorts can increase sales of services.
Recommendations
47

It is suggested to the Hilton Hotel to focus on there aspects at the time of conducting the
business is market penetration, product development and diversification. These all three will help
the organization to develop sustainable business at international level.
Action plan
It has recommended to Hilton Hotel to adopt various kind of marketing mix and product
mix activities to deal with the issues. It will help in develop sustainable services for the
customers at the time of business expansion at international level
Problem 3: Ineffective portfolio management of services of Hilton Hotels and Resorts.
BCG Matrix
BCG Matrix is also called Growth Share Matrix which was created by Bruce D.
Henderson in 1970. The aim behind the development of this model was to help the organizations
to analyse their business units as well as product lines. Mathur, 2011 has asserted that it also
assist in allocation of the resources and it has worked as an analytical tools for evaluate brand
marketing, portfolio analysis, product management and strategic management. Further Sheth and
Sisodia, 2015 has stated that to ensure about the long term value creation, a firm should have to
create a portfolio which include both high growth products that required cash inputs and low
growth products that generate a huge amount of cash. But Glanz Bader and Iyer, 2012 has
explored that BCG matrix has not delivered the appropriate data on market share and market
growth. Similarly, Ferrell and Hartline, 2012 has enlisted in his research that the following
framework has neglects small competitors that have fast growing market share.
BCG matrix has worked on two dimensions: market share and market growth. The
following framework contains four elements: star, dog, cash cows and question mark
(Kunnanatt, 2011).
Star: Under this, a business unit has a huge market share and operate in fast growing industry.
To remain in the competition, the organization needed huge amount of funding to maintain
growth rate. If the company is currently in star position and preserve its large market share then
it will become a cash cow when the market growth rate starts to declines. In this context, the
portfolio of the organization should be diversified because it help in stay remain in star position
that will become the next cash cows and ensure future cash generation (Hollensen, 2015).
48

Cash cows: It is stage where a company has high market share with slow growth rate of
industry. Under this, the business units generate cash in large amount which has required running
the business. The characteristics of such kind of market are mature. The owner of the
organization tries to get good and huge amount of return from the little investment as much as
possible (Abraham, 2012). The cash generated in this phase help the firm to transform question
mark situation into market leaders or to provided funds in the research and development section
or to pay dividends to the shareholders.
Dogs: Here, the business units are operating their business at lower market shares where
characteristics of the market are mature or consider as a slow growing industry. The
organizations which are dealing at this phase, they have barely enough cash to maintain the
market share of business (Candela and Figini, 2012). To run the business in mature market, it is
better for the company to tie up other firm’s for capital so that business can be effectively run
and operated in the market.
Question mark: At this phase, the organizations are growing with rapid speed and needed large
amount of cash to maintain business. The reason of this is the low market shares do not generate
too much amount of cash. To come in star position, business units require more resources to
grow market share. If the firm does not get success to become a market leader then after some
time, organization will switch from question mark to dog when the market growth declines
(Collantes and Martel, 2015).
Findings
49

Illustration 22: BCG Matrix for Hilton Hotels and Resorts
(Source: Rumelt, 2010)
()
In the case of Hilton Hotels and Resorts, currently hotel has in the phase of question mark
where market growth rate is high but relative market share at international level is low. To
become a leader in travel and hospitality sector, organization needed to switch from question
mark to star stage (Conduit and Mavondo, 2015).
Solution
With the help of application of BCG matrix, Hilton Hotels and Resorts have to start to
invest more amount of money in research and development to understand target customer’s
needs. By doing this, it becomes easy to modify the services according to the requirements of the
service users. On the other hand, with the help of the following model, it becomes easy to expand
the business at international level and assessment of service portfolio (Ferrell and Hartline,
2010).
Recommendations
It has recommended to Hilton Hotel that organization should not neglects small
competitors that have rapid growing market share. High market share has not be considered as
only a success factor. Along with this, hotel needs to be considered low market share to earn
profit too.
50

Action Plan
To implementation the recommendation into the action plan, Hilton Hotel has to required
to allocate adequate financial resources. By doing this, it becomes easy for the firm to increase
market share, profit level and stay remain in the competition for the long time.
51

TRANSFER OF LEARNING
The following section is related to transfer of learning where some good points of
Inkaterra will explained that should be adopt by Hilton Hotel. Along with this, some bad points
of organization will also enlisted that should be avoided by Hilton Hotel. These points are as
follows:
Good points of Inkaterra that should be adopt by Hilton Hotel
 Inkaterra is having strong brand position in local or domestic market i.e. Peru. The reason
is organization has supported to developed sustainable tourism in that area.
 Along with this, it has also promoted the concept of eco-tourism where accommodations
have build as per the structure of the local buildings (Sharpley and Telfer, 2014).
 The effective and unique marketing strategies have made Inkaterra different from its local
and international competitors. It has used various types of marketing tactics where
company has used them to promote the tourism in Peru itself.
 Firm has highly contributed in development of tourism in Peru because of preserve the
forest and other historical places. It has created a good brand image in the local
community (Sloan, Legrand and Simons-Kaufmann, 2013).
 Inkaterra has developed strong position regarding the customers as with attaining the
loyalty of those users. The accommodation services of the hotel has more effective and
available to the end users at the economical prices.
 Cited firm has developed a strong position in the market to deliver the diversified
productions and expand the business in all over the world. It will surely increase demand
of tourism in Peru. Along with this, it will leads to able to attract many travellers among
the world (Abraham, 2012).
 Inkaterra is now preparing a good business plan so that it can be easy to develop as an
organization which can lead the hospitality industry at international level. Along with
this, it is also trying to build a string financial position in the world on the basis of large
number of debt (Candela and Figini, 2012).
 Cited organization has delivered range of hospitality and other supportive services to the
customers that satisfied their needs. Further, the services and products of the hotel have
customized in nature.
52

 Inkaterra has effectively represented the culture of western South America and it has also
know by luxury hotel group in that geographical locations.
 It has used different types of motivational techniques to motivate its employees. Due to
this, they consider this place as a good work to do (Casprini and et. al., 2016).
 Cited firm has various leadership styles by assessing the situations. At the time of
decision making, it has included its employees in this process by inviting their
suggestions.
 Inkaterra has given empowerment to its various level of staff so that they can take some
decisions by themselves. It has reduced all time dependency on the top management for
all kind of decisions (Chernev, 2012). Cited hotel has used different types of technologies for various aim such as inventory
management, payroll preparation , records of all type of transactions etc. With the help of
this, they have able to take financial, managerial and other business related decisions.
Bad points of Inkaterra that should not to be adopt by Hilton Hotel
 At the time of expansion of business at international level, Inkaterra is becoming weak in
their management system which has directly affect the performance of the organization
(Wilson and Gilligan, 2012).
 Hotel has already borrow huge amount of loan from the market because of business
expansion and other operational activities. Due to this, it has faced high debt situation and
its current financial situation in Peru is not that good (Thqerle and Soto, 2015).
 Firm has experienced backwardness in the infrastructure in the field of information and
technology management. Due to this, the services in entire world has different from each
other.
 In the present time, the position of Inkaterra is a t declining level because of decrease in
market share. The reason of this is instability of top management that can handle the
issues of the organization in right manner (Stevens and et.al., 2013).
 The lack of support of top management at the time of business expansion at international
level, it has created a risk for Inkaterra at the time of running business in foreign nations.
 The high rate of fluctuation is also found in the pricing of hotel services in different
seasons. This thing has affected the buying behaviour of the customers.
53

 The lack of centralized control has bring the variation in the services of Inkaterra which
has directly affected the business operations and market share (Sheth and Sisodia, 2015).
 Cited organization has not effectively used social media for promotion and campaigning
of hotel services and destinations of Peru in the world.
 There are no loyalty programs for customers have run by Inkaterra and it is one of the
bad point for the organization.
 Most of time, firm has preferred to hire freshers for the vacant posts. The reason of this is
management of hotel thinks that new generation have creative and brilliant that can grow
their business. Due to this, Inkaterra avoid to hire a experienced persons. It leads to affect
the business decisions of the organization.
 It has imposed poor customers retention techniques and it has decreased the service users
numbers with the time (Collantes and Martel, 2015).
 Most of the time, employees have avoid the quality standards and this thing has affected
the quality of food and services.
 Inkaterra has not implemented some legislations such as health and safety, discrimination
act, quality standards etc. Along with this, organization has also not organized a health
check up camp for the staff to ensure their health. It has affected the health and created a
risk of injuries etc (Conduit and Mavondo, 2015).
 Cited firm has not carried out any kin dof risk assessment to analysed the potentials
hazards and their impact on different aspects of workplace. Further, they have not
adopted any type of mitigation process for minimize the impact of hazards.
 Inkaterra has failed to analysed the strategies of competitors because of its current
methods and tools (Dameron and Durand, 2013).
 Some of the time, company has not able to meet all the expectations of the customers.
Due to this, it has increase dissatisfaction level in the guests and avoid to use the services
once again.
54

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