Red Carnation Hotel International Expansion

The report conducts a SWOT analysis to evaluate the strengths, weaknesses, opportunities, and threats of Red Carnation's hotel business. It also applies the 12 Cs model to assess the conditions in France, China, Thailand, and Nigeria as potential locations for international expansion. The analysis aims to provide insights into the feasibility of expanding Red Carnation's services globally.

INTERNATIONAL
MARKETING

Table of Contents
INTRODUCTION...........................................................................................................................1
Question 1: Macro and competitive factors have impact on global hotel industry.....................1
Question 2: Analysing the internal business environment of Red Carnation.............................3
Question 3: Potential target market in China, France, Nigeria and Thailand.............................4
Question 4: Appropriate mode of entering into foreign market..................................................6
Question 5: Developing market mix considering its socio cultural factors................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX....................................................................................................................................10

Illustration Index
Illustration 1: PESTLE Analysis......................................................................................................2
Illustration 2: 7 Ps of Marketing......................................................................................................8
Illustration 3: Contribution to GDP by various countries..............................................................11
Illustration 4: Hotel industry in China...........................................................................................12
Illustration 5: Hotel industry of Nigeria.........................................................................................13
Illustration 6: Thailand hotel occupancy in 2014..........................................................................13

INTRODUCTION
International expansion helps the organization to grow with the motive to increase profits
(Akaka, Vargo and Lusch, 2013). Red Carnation is a five-star hotel which is already set up in
UK, Ireland, South Africa and many other countries. It is planning to expand its business in other
geographical regions as well. The report focusses on PESTLE analysis of the entity in order to
find macro factors affecting the enterprise. Further, it discusses strengths, weaknesses,
opportunities and threats of Red carnation. France, Nigeria, China and Thailand are compared
based on 12 Cs to choose the best market in which the hotel can enter and earn maximum profits.
In the end, marketing mix is prepared considering socio economic factors and SWOT analysis of
Red Carnation.
Question 1: Macro and competitive factors have impact on global hotel industry
Red carnation is a five-star hotel involved in providing luxury rooms and hospitality
services to its client. It is already functioning in UK, Ireland, South Africa, Switzerland and
various other countries. The services provided to the customers by its staff helps in attracting
maximum number of clients. It is now planning to expand in potential markets. They are China,
France, Nigeria and Thailand. However, there are various macro factors that have a greater
impact on hotel industry. It can be assessed by performing PESTLE analysis in the following
manner:
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 Political: There is a great impact of political factors prevailing in the country on hotel
industry. A greater amount of tax is charged by the government from luxury hotels. Every
country has its own rules regarding safety exits, number of floors that can be build and
location constraints as well. It hinders the growth of hotels (Berthon and et.al., 2012).
 Economic: Major changes in the economy can be such as, inflation and interest rates,
currency exchange rates etc. It affects the revenue of the hotels as the demand goes down
due to increase in cost. Further, expansion of hotel and its branches in a country where
the exchange rate is quite high builds up extra cost for the entity and results in shooting
of prices for the end consumer.
 Social: Demand of the rooms may differ with the countries. The guest may prefer twin or
triple sharing rooms in one country or they may go for single rooms in the other. Cultural
patterns are another factor impacting the decision of the hotels while expanding (Yang,
Su and Fam, 2012).
 Technological: Upgraded technologies in the hotels attract large number of customers.
The organization should be updated enough about new and prevailing technologies in the
2
Illustration 1: PESTLE Analysis
Source:

market and upgrade as and when required. On the other hand, it adds up the cost of
hotels.
 Legal: Every country has different laws regarding health and safety which is required to
be followed when it is planning for expansion. For instance, some countries do not allow
consumption of alcohol in hotel premises which becomes mandatory for the hotel and its
management to be abide by these rules of law. War conditions also affect the prevailing
laws for hotel industry. For eg certain countries do not allow guests from their rival
countries.
 Environmental: Weather conditions have a direct impact on hotel industry as it affects
the demand. Other natural calamities such as the quake, landslide also affects the hotel
business. Establishing in natural calamity prone area will affect the functioning of red
Carnation and its profits as well.
There are various competitive factors that affect the functioning of hotel industry. It can
be evaluated by analysing Porter's 5 forces model in the following manner:
 Bargaining power of customers: Hotel contract with trip advising companies in order to
provide voluminous clients bargains to provide services at lower prices, which in turn
affects the sales revenue of the business. However, due to its price skimming policy, the
degree is low.
 Bargaining power of Suppliers: Red Carnation have to attain services from food and
beverages suppliers. Getting products at high prices increases the cost of services for the
hotel. However, due to availability of multiple supplier the degree of bargaining power of
supplier is low.
 Threat of new entrants: New hotels keep coming in this industry giving tough
competition to the existing hotels. They provide all the amenities at cheaper rates to the
customers which results in loss of client for Red Carnation.
 Threat of substitutes: There are already so many similar hotels who are providing
luxurious amenities to the clients. If the clients are not satisfied with the services of Red
Carnation, they switch to other hotel in order to satisfy their needs.
 Degree of rivalry: The degree of rivalry is high as various other hotels are already
functioning in the market. Red carnation has to increase its brand awareness and loyalty
of the customers to reduce its impact.
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Question 2: Analysing the internal business environment of Red Carnation
Red Carnation is a leading hotel in UK attracting premium customers to avail its services
at least for once. The internal functions of the organization can be analysed using:
a) Porter's Value chain framework
Supporting activities
Firm Infrastructure It offers luxurious services at premium prices. It has 17 luxury hotels and Spas at
prime locations of UK. Best designed rooms with all the amenities are provided to
its customers which leaves a long-lasting impact on them.
Human resource
management
Employees and staff members are trained enough to serve their guest in the best
possible manner. It also won hospitality award for Excellence in Recruitment and
retention at HR.
Technological
development
It provides all luxury amenities in the hotel rooms. Further, it constantly upgrades
its ongoing technology and provide the best to its clients.
Procurement It gets its brand advertised on social media platform. It also has its blog where
various travel destinations are discussed in order to attract clients and make them
potential customers for Red Carnation.
Primary activities
Inbound Logistics Operations Outbound
Logistics
Sales and
marketing
Servicing
 Selection of
menu
 Staff selection
 Planning of
facilities
 Interior of the
room
 Room service
list
 Check in and
check out of
guests
 Key handling
 Restaurant
operations
 Rental cars
for sight
seeing
 Pick and
drop from
the airport
 Promoting
on social
platform
 Advertiseme
nts in
leading
magazines
 Blogging
 Complaint
for lost
baggage
 Follow up
of
complaints
.
4

b) SWOT Analysis of Red Carnation
Strengths
 It carries good brand image in the
market.
 It consists of 17 luxurious Boutique
hotels and Spas at prime location of
UK.
 Globally expanded in Switzerland,
Ireland, South Africa and various
other countries.
 Well trained workforce.
Weaknesses
 It only targets to the premium class of
the society.
 Highly competitive market.
 It relies heavily on tourism industry.
Opportunities
 It has a scope for global expansion.
 Involve in more CSR activities to
attract maximum number of tourists.
 It can expand in low budget hotel
segment with affordable prices as
well.
Threats
 It has to compete with other established
5-star hotels such as, the Oyster box and
many others.
 Prevailing economic and political
changes in various counties affects the
market of Red Carnation.
 Natural disasters.
Question 3: Potential target market in China, France, Nigeria and Thailand
12 Cs China France Nigeria Thailand
Country It has easy laws for
foreign hotel
company going to
invest in China
France is one of
the most dynamic
places and
remains open for
investment in
hotel industry
It is difficult to
enter in Nigerian
hotel industry due
to stringent laws
by the
government.
The Foreign
business act
restricts the
foreign company
to operate its own
hotel business in
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Thailand. It has to
obtain Foreign
business license
first.
Culture It is difficult to
understand the
culture and set the
hotel premises
according to them
Acceptable
enough towards
the new
companies that
keep coming to
France
Less acceptability
in Nigeria
Developed
country with
larger
acceptability
among people.
Concentration
(Average age)
31-35 years. 40.1 years. 18 years in
Nigeria which is
low in
comparison to the
other countries.
35.5 years.
Communication Television, radio,
newspaper,
magazines and
internet
Television, radio,
newspaper,
magazines.
Internet access is
high in
comparison to
other countries
Television, radio,
newspaper,
magazines and
internet
Television, radio,
newspaper and
magazines.
Internet access is
low in
comparison to
other countries.
Channels of
Distribution
Varied Varied Less Varied
Capacity High High Low Medium
Currency Quite fluctuation Stable Not stable Stable
Control and
Coordination
Degree of control
over international
marketing
Degree of control
is low
Degree of control
is high
Degree of control
is medium
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activities is high
Commitment High commitment High commitment Low commitment High commitment
Choices Easy access Easy access Difficult access Easy access
Contractual
Obligations
More Less More Less
Caveats Political instability
and risky
environment,
Political stable
and not that risky
environment
Political unstable
and high-risk
environment
Political stable
but risky
environment
Based on 12 Cs, analysed above, t can be interpreted that France will be the best country
for Red Carnation hotels to expand its business (Data attached in appendix). The country have
favourable economic and social environment. It is expected that the company will be able to
grow and maximize its profits in France. It is also one among the countries which is contribution
maximum towards tourism.
It is a less risky and prudent choice for Red Carnation to expand as it has stable currency,
favourable work environment, acceptable public to adopt foreign entity. It will help the entity to
increase its revenue and attract maximum number of customers towards it. Further, the law of
foreign business entrant is convenient for the hotel and it will be easy to enter France market
(French hotel industry performance, 2016).
Question 4: Appropriate mode of entering into foreign market
There are various entry modes for red Carnation through which it can enter in France:
 Licensing: It permits another organization to conduct its activities by using its brand
name, technology and expertise. Since, the entity is already there in France it would be
easy to assess the taste and preferences, culture and various other factors (Bertoli, 2013).
 Strategic Alliances: Two or more parties come together with same objective. The
entities remain independent and carry out one specific goal together.
 Joint venture: It is an easy method where the entities join hand to attain a specific goal.
The enterprises are free to adopt each other's brand image, core competencies,
distribution and manufacturing channel etc.
7

The appropriate mode of entry for Red Carnation hotels in France is through Joint
venture. Joint venture helps in expansion of the business in early stage itself. It will help the
organization to establish a brand image and attract maximum number of customers. It will be
able to focus on its target market and can adopt the marketing strategies used by other hotels. It
can be done with the mutual understanding between the parties.
Question 5: Developing market mix considering its socio-cultural factors
Considering SWOT and socio-cultural factors of Red Carnation, Marketing mix can be
prepared in following manner:
 Product: The services offered by red Carnation is of the best quality. It helps in
attracting maximum number of customers towards availing its services.
 Price: Skimming policy is adopted by Red Carnation. It helps the entity to focus only
people who can afford its services. It helps in targeting the potential customers of hotel.
 Place: It should be situated in the area where it is easily accessible to the people. It can
adopt for intensive, selective or exclusive distribution of services to its clients.
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Illustration 2: 7 Ps of Marketing
Source: Majaro, 2013

 Promotion: Red Carnation can use various promotional activities such as magazine,
newspapers etc. It can also promote itself on social media platform as well.
 People: Recruiting appropriate staff which can perform the activities effectively as per
the set standards of the hotel. They should have effective interpersonal skills, attitude and
knowledge to perform the task.
 Process: An efficient check in and check out services to the clients are expected. Further,
all the necessary items should be available in the hotel in order to satisfy the needs of the
customers (Fletcher and Crawford, 2013).
 Physical Evidence: The environment of the hotel should be clean and friendly as it is the
first thing that attracts the customers. The room should be properly arranged as per the
standards of Red carnation.
CONCLUSION
From the above report, it can be concluded that, Red Carnation is planning to expand
internationally. SWOT analysis shows that it is involved in providing quality services to its
customers. Further, based on 12 Cs analysis, it will be easy for the entity to expand in France as
the conditions of this country are favourable where Red Carnation can earn maximum profit and
attract the largest number of customers in comparison to China, Thailand and Nigeria.
9

REFERENCES
Books and Journals
Akaka, M. A., Vargo, S. L. and Lusch, R. F., 2013. The complexity of context: A service
ecosystems approach for international marketing. Journal of Marketing Research. 21(4).
pp.1-20.
Berthon, P.R. and et.al., 2012. Marketing meets Web 2.0, social media, and creative consumers:
Implications for international marketing strategy. Business horizons. 55(3). pp.261-271.
Bertoli, G., 2013. International marketing and the country of origin effect: the global impact of'
made in Italy'. Edward Elgar Publishing.
Fletcher, R. and Crawford, H., 2013. International marketing: an Asia-Pacific perspective.
Pearson Higher Education AU.
Majaro, S., 2013. International Marketing (RLE International Business): A Strategic Approach
to World Markets. Routledge.
Paliwoda, S. and Thomas, M., 2013. International marketing. Routledge.
Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.
Wilson, A. and et.al., 2012. Services marketing: Integrating customer focus across the firm.
McGraw Hill.
Yang, Z., Su, C. and Fam, K. S., 2012. Dealing with institutional distances in international
marketing channels: Governance strategies that engender legitimacy and
efficiency. Journal of Marketing. 76(3). pp.41-55.
Online
French hotel industry performance. 2016. [online]. Available through
<https://www.hospitalitynet.org/performance/4078215.html>. [Accessed on 29th July
2017].
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APPENDIX
11
Illustration 3: Contribution to GDP by various countries
Source: Majaro, 2013

12
Illustration 4: Hotel industry in China
Source: Paliwoda and Thomas, 2013

13
Illustration 5: Hotel industry of Nigeria
Source: Terpstra, Foley and Sarathy, 2012.
Illustration 6: Thailand hotel occupancy in 2014
Source: Wilson and et.al., 2012