Marriot Hotels: Expanding into Netherlands through Foreign Direct Investment

This report discusses the expansion of Marriot Hotels into Netherlands through Foreign Direct Investment (FDI). It includes details about Marriot Hotels, the business environment in Netherlands, and an evaluation of the business scenario. The report also analyzes the macro environmental factors that impact the expansion of Marriot Hotels in Netherlands.

Business
Organisations in a
Global Economy

Contents
INTRODUCTION...........................................................................................................................1
Details and summary about Marriot Hotels.....................................................................................1
Overall details and data of the Business Environment at Netherlands............................................2
Evaluation of the Business Scenario................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment refers to the collection of internal and external factors of enterprise
that impact its overall functioning. In modern times, it is imperative for organisations while
moving into a new country to consider these factors so as to facilitate easy growth and expansion
of business. In globalised economy, there are various macro environmental factors like political,
legal, social, environmental, technological etc. that affect business during expansion (Henry,
Foss and Ahl, 2016). The present report is based upon Marriot Hotels which is a company
headquartered in Washington, United States. The company is looking for opportunities of
Foreign Direct Investment (FDI) and planning to move into Netherlands. This report will take
into account the background information in relation to various macro environment factors in
Netherlands which will be considered while facilitating expansion. Also, it will include the
analysis of business scenario in global context. Furthermore, it will assess main issues that were
encountered by company along with some recommendations in relation to scenario.
Details and summary about Marriot Hotels
Marriot Hotels is one of the most renowned hotel and deals in accommodation and
hospitality sector across the globe. Marriot Hotels operates in 28,218 locations of the world. As
per data of 2016, company workers 2,38,000 people in all its outlets across the globe. Globally,
the hotels and units of company offer a range of beverages and measl such as hot and cold
drinks, French, Itanliam, continenat called VIA Besides this, enterprise also offers certain items
including beverages, pastries and snacks that are either seasonal or exclusively available in
selective locations (Shahriar, Schwarz and Newman, 2016). Also, many hotels and units also
offer dining, café and other srvices. Exclusive locations of company also provide alcoholic
beverages inclusive of beer, appetizers as well as wine. Company's bottled drinks, ice cream
along with are also available at grocery hotels and units globally. Marriot Hotels is the prime
representative for 5 Star hotels which helps the entity in differentiating itself from other big
names in hospitality industries in terms of quality, experience gained by customer, taste in order
to make the services and qualities more famous in marketplace.
Marriot Hotels follows a corporate structure which helps the company in facilitating the
operations of business across globe. Enterprise makes use of its organisational structure so as to
ensure growth and development of company along with overall industry. Company's corporate
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has an effective impact upon various areas of function like incorporating change, execution of
growth and expansion along with daily management of activities. Company ensures that its
structure is specific to needs of entity. These adjustments give a strategic edge to company and
assists in easier expansion of entity across different parts of world (Tukker and Tischner, 2017).
Being a well renowned brand across different parts of world, company keeps in
consideration satisfaction derived from consumers. The brand focuses upon creating such an
experience for consumers that they place trust in company and remain loyal towards brand. They
believe in recognising the importance of human resources within (staff) and outside the
organisation (consumers). As a result of this, the corporate image and position of Marriot Hotels,
over years, has been quite high in market and can be seen to the extent that company earned
revenue of US$22.387 billion in 2017.
Overall details and data of the Business Environment at Netherlands
Marriot Hotels is a famous brand with various outlets across the globe. Company is
considering to explore the option of Foreign Direct Investment (FDI) in Netherlands so as to
expand its operations there. The company offers a wide variety of high quality snacks, appetizers
and beverages. Marriot’s major aim is to sell and associated products of finest quality so as to
derive a positive customer experience and ensure widespread acceptability from public
worldwide. Top management of company recognises the need for reaching the consumers spread
across different parts of world so that it can become the leading brand in and relative products
industry (Storey, 2016).
Company's core competency values are based upon effective management of human
resources along with building healthy and strong relationship with suppliers such that company
can easily enter a new market and enjoy the benefit of its large scale networking. Also, the
destination chosen by company for expansion is Netherlands wherein company by way of
foreign direct investment will carry out expansion of its operations. For this, manager of Marriot
Hotels has conducted PESTEL analysis. This is a strategical tool which helps an entity in
assessing the external environment of business so that entity can move in to a new place feasibly.
The PESTEL analysis of Marriot Hotels in relation to expanding into Netherlands is as follows:-
Political Factors: These factors determine the extent of government intervention in
operations of company. Political factors include aspects like government policies and legislation
including tax and workerment laws (Westhead and Solesvik, 2016). Netherlands is situated in
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Western Europe. The political conditions of country is stable and the regional as well as
community governments there enjoy the power to take decisions and make policies in relation to
water, education, transportation, public health, environment, industrial policies, cultural values
etc. The Netherlands government has an aim to facilitate promotion of trade and foreign direct
investment covered under Electronic World Trade Platform (eWTP) initiative. Also, government
encourages new foreign investment as a source for creation of workerment opportunities. Thus,
political conditions as well as initiatives by government will help Marriot Hotels in easily
carrying out the expansion of business operations there. Also, favourable support from
Netherlands government will assist enterprise in feasibly conducting its activities and enhancing
its sales and profitability in the country.
Economic Factors: Such factors include the aspects related to economy of a country and
includes factors like inflation rate, interest rate, disposable income of people etc (Van Der Aalst,
La Rosa and Santoro, 2016). This helped Netherlands in creating an excellent channel of
distribution and a well managed transportation and infrastructure system consisting of railways,
ports, canals and highways to facilitate integration of economy with neighbouring places. This
will help Marriot Hotels in entering into foreign direct investment so as to carry out expansion of
operations in the country.
Social Factors: These are the factors related to customer preferences and trends that are
persisting in marketplace. These include aspects like attitude and behavioural pattern of people,
population growth rate, demographical situations, age groups, choice and preferences, trends and
technologies, culture, norms and values of people etc (Sekaran and Bougie, 2016). Netherlands is
constitutes various ethnic groups with diverse set of languages and religions. It consists of three
regions, namely: The Brussels Capital Region, Flanders and Wallonia. Also, as the people are
becoming increasingly aware of health consciousness factor, they prefer over other beverages.
Also, millennials have a trend that consumes more than tea nowadays. Thus, the social
conditions of Netherlands as well as the latest trends and preferences of people will facilitate
easier expansion of Marriot Hotels in the country and assist the company in gaining widespread
acceptability from public there.
Technological Factors: With rapid evolution of time, there have been significant and
massive changes in technology that need to be considered by every business entity to stay ahead
of its competitors. Netherlands was the first country to undergo industrial revolution and highly
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encourages the use of technological advancements in business organisations. Thus, this creates
opportunity for Marriot Hotels to utilise extensive technology in its operations so as to increase
the pace of its operations and gain widespread acceptance from public (Crane, Matten and
Spence, 2013). Company may face threat from home use specialty machines as this will
increase the chances of substitution of Marriot Hotels products with other food articles or
beverages. Company can also consider bringing improvements in its mobile application so as to
become popular in Netherlands. This will help Marriot Hotels in reducing the barriers to enter a
new market and enhance the sales and profitability of company in Netherlands by aid of foreign
direct investment.
Environmental Factors: These factors define the extent to which business entities
operate in response to increasing environmental concerns and extinction of natural resources,
Business organisations are required to indulge in sustainable development and other environment
friendly practices so that there is no legal intervention in functioning of enterprise (Goleman,
2017). Over years, Marriot Hotels have also indulged in eco-friendly practices, revaluation of
dipper well system to avoid excess use of water along with recycling of waste and Marriot’s
C.A.F.E. Practices so as to work in public interest towards environmental and natural resources
conservation. Marriot Hotels should continue using sustainable practices in Netherlands so that it
can easily expand in new market without any hindrance from law, statutory bodies or local
communities.
Legal Factors: These are the factors that ascertain the various types of laws and
legislations made by government or statutory bodies within which business has to conduct its
activities. It includes laws related to health and safety, workerment, tax, customs, trade barriers,
tariff etc. For easily carrying out expansion in Netherlands by way of foreign direct investment,
it is essential that Marriot Hotels takes into account all the laws and regulations prescribed for
business entities operating in Netherlands. Also, it is imperative that company follows all these
legislations so as to facilitate easy functioning without any legal intervention. Besides this,
company is also required to stay alert in response to policies introduced by government and
heath authorities that are associated with production and consumption levels of caffeine. By
complying with all such regulations, company can easily expand in Netherlands markets.
Environmental Factors: These factors define the extent to which business entities
operate in response to increasing environmental concerns and extinction of natural resources,
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Business organisations are required to indulge in sustainable development and other environment
friendly practices so that there is no legal intervention in functioning of enterprise (Brustbauer,
2016). Over years, Marriot Hotels have also indulged in eco-friendly practices, revaluation of
dipper well system to avoid excess use of water along with recycling of waste and Marriot’s
C.A.F.E. Practices so as to work in public interest towards environmental and natural resources
conservation. Marriot Hotels should continue using sustainable practices in Netherlands so that it
can easily expand in new market without any hindrance from law, statutory bodies or local
communities.
Evaluation of the Business Scenario
Marriot Hotels is considering to expand by entering into Netherlands through Foreign
Direct Investment. Companies are easily attracted towards investing in Netherlands is due to its
strategic location in Western Europe and its competitive position in terms of high quality
infrastructure, communication, transportation, multilingual and skilled workforce, logistics
channels and high purchasing power of people.
There are various positive aspects that need to be considered by company while investing
in Netherlands. This country offers a wide range of perks to investors as this was the first country
to undergo industrial revolution. Also, the population of Netherlands comprises of immensely
skilled, productive and multilingual workforce with a wide base of knowledge. Also, the country
has high quality infrastructure and other necessary facilities for business entities to freely operate
in the country. Also, the country is highly open to international trade and commerce (COUNTRY
RISK OF NETHERLANDS : INVESTMENT, 2018). Besides this, government take initiatives so
as to promote foreign direct investment into country as this reflects high level of workerment
opportunities. Furthermore, people in Netherlands possess high purchasing power and the
standard of living of country is also quite good.
Even though there are various opportunities for investors while investing in Netherlands,
yet there are certain drawbacks that need to be taken into account by company for easy
expansion of operations in country. Corporate tax levied upon businesses in the country is high
(Wales, 2016). Also, stressing upon these factors will help the company in ascertaining the areas
which can help Marriot Hotels in easy expansion of business operations.
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The manager of Marriot Hotels conduct an industry analysis of market in Netherlands so
as to gain information about various rival firms and strategies adopted by them to stay ahead in
marketplace. For this, he has used Porter Five Force Model which is described as follows :-
Threat of New Entrants (Moderate)
The threat of new entrants for Marriot Hotels in Netherlands is moderate as there are not
many barriers to entry in market for new businesses so as to be able to discourage them for
entering the market. Also, the initial investment required for new companies to enter into this
industry is not very high as there are options of taking hotels and units and equipments on lease
(Anderson and et. al., 2016). At local levels, small firms that enter into market can also compete
with Marriot Hotels as the switching cost is not significant. Many firms can take entry into
Netherlands but being able to deliver quality and taste like Marriot Hotels is a tough task for
them.
Threat of Substitutes (High)
As there are a number of substitute products available in market that can take place of
for consumers. These can be hot or cold beverages like fruit juice, soda, energy drinks,
appetizers, tea etc. Bars that offer alcoholic or non-alcoholic beverages may also pose a threat to
Marriot Hotels. Also, there are chances of consumers using home use makers to make at a low
cost. Also, substitution cost is quite low for consumers to switch to alternate brands of and other
hotels (Wales, 2016).
Bargaining Power of Buyers (Moderate to Low)
There are various buyers in beverage industry and single buyers can not demand price
according to their choices. The bargaining power of consumers here is moderate as they pay a
premium price for the beverage they consume of Marriot Hotels in Netherlands but at the same
time demand quality in accordance with the same as they enjoy the power to switch to alternate
products.
Bargaining Power of Suppliers (Low to Moderate)
The main raw material required for making of Marriot Hotels is beans and premium
Arabica grown which is exclusively found and grown in selected locations which tends to lower
the cost of switching the suppliers (Anderson and et. al., 2016). Also, Marriot Hotels takes
advantage of its strong networking with suppliers so as to acquire the necessary raw materials in
time and reach consumers in Netherlands with high quality to enhance its sales and profitability.
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Competitive rivalry (High)
Company faces high rivalry in industry as there are a number of brands in Netherlands
that deals in same product line. Rivalry basically concentrates on the impact of competitors on
each other as well as environment of industry in Netherlands. In case of Marriot Hotels, there are
various external factors that contribute to strong force of competition like existence of various
numbers of firms, moderate variety of firms and substitution costs which are low. Marriot Hotels
in Netherlands uses two different strategies to deal with their competitive rivals namely
extensive marketing strategy and intensive growth strategies by way of utilising advantage of its
strong networking.
CONCLUSION
As per the above report, it can be concluded that for any business to feasibly expand into
new markets, it needs to take into account the external environmental factors that affects the
operations of company in new country. Also, company needs to take into account the industry
analysis so as to be able to gain information about the overall environment of industry in market
and the condition of rival companies with respect to their image and position in marketplace.
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REFERENCES
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