Challenges and Potentiality of Tourism Industry in New Zealand

This report discusses the potentiality and major challenges being faced by the tourism board of New Zealand. It includes SWOT and PESTEL analysis of New Zealand, evaluation of the country, environmental challenges, acute shortage of employees, and recommendations for enhancing the potentiality of the industry.

Running head: MARKETING MANAGEMENT
Marketing management
Name of the student
Name of the university
Author note

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Executive Summary
The aim of this report is to discuss about the potentiality and major challenges being faced by the
tourism board of New Zealand. The report has thrown light on analysis of SWOT and PESTEL
analysis of New Zealand Country along with proper identification of the different kinds of
aspects such as analyzing the political, legal, economic, environmental along with social aspects
which has played a major role in managing the different operations of the organizations in
managing the different kinds of aspects which will be effective in nature. In addition, a few
major issues being faced by them are being identified and discussed. The recommended steps
discussed in this report will help in overcoming the identified issues and enhance the future
business potentiality significantly.

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Table of Contents
Introduction......................................................................................................................................4
Situational analysis of New Zealand...............................................................................................5
SWOT Analysis...........................................................................................................................5
PESTEL Analysis of New Zealand.............................................................................................6
Literature review..............................................................................................................................8
Evaluation of the country...............................................................................................................10
Environmental challenges..........................................................................................................10
Acute shortage of employees.....................................................................................................10
Pay issues...................................................................................................................................11
Increase in cost..........................................................................................................................11
Smaller access of destinations...................................................................................................12
Recommendations..........................................................................................................................12
Extensive marketing activities...................................................................................................12
Segmentation and targeting.......................................................................................................12
Diversified offerings strategy....................................................................................................14
Positioning strategy...................................................................................................................14
Branding strategy.......................................................................................................................15
Diversification strategy..............................................................................................................16
Market penetration strategy.......................................................................................................16

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Conclusion.....................................................................................................................................16
Reference.......................................................................................................................................18

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Introduction
In the current global tourism scenario, sustainability is acting as important determining
factors. This is due to the reason that tourism industry is having the direct impact on the natural
tourist destinations (Ruhanen, 2013). In addition, with the increase in the competition between
the countries in portraying and position their tourist destinations over others, supplementary
issues are further given concentration for resolution (Battisti, Deakins & Perry, 2013). In the
recent time, governments are focusing more on enhancing their tourist destinations in order to
have more access to foreign reserves. In some of the countries such as New Zealand, tourism
industry contributes a significant amount in the gross domestic income. Tourism is an important
sector of the economy of New Zealand and has been able to contribute more than 12 Billion NZ
Dollars to the GDP of the country in 2016 (Tourism.org.nz., 2018). Thus, for them, this industry
is having much more importance. In addition, sustainability of the tourist destinations will
further ensure that revenue generation will be seamless.
New Zealand is one of the most popular tourist destinations in the world with having
picturesque landscapes and natural factors. It is reported that they have attracted more than 3.5
million international tourists in 2016, which makes them one of the biggest tourism industries in
the world (Becken, 2013). However, in the recent time, they are facing a few issues in their
tourism sector, which are reducing their competitiveness in the global market. In addition, these
issues are further affecting the sustainability of the tourist destinations of the country (balli,
Curry &Balli, 2015).
This report will discuss about the external and internal business factors affecting the New
Zealand tourism industry. This will help to identify the current scenario of the industry. In

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addition, this report will also discuss about the major issues and challenges being faced by the
tourism industry of New Zealand. In accordance to these issues, a few recommended steps will
be discussed, which will further help in enhancing the potentiality of the industry.
Situational analysis of New Zealand
According to Leekha, Chhabra and Sharma (2014), the situational analysis is essential in
nature and is conducted in order to understand the external as well as internal environment of the
organization. This is inclusive of the collection of the methods which is being used by the
managers in order toanalyse the internal along with external environment of the country New
Zealand in an effective manner (Burns, Bush & Sinha, 2014).
The SWOT and PESTLE analysis is essential in nature as this will be helpful in
understanding both the strengths, weaknesses, opportunities along with threats of the country.
Furthermore, as per the external factors which are concerned, this will provide proper
investigation on the differentpolitical, economic, social, technological along with legal and
environmental factors which play a major role in managing the different aspects.
SWOT Analysis
Strengths
There is huge support for the growth of the
international organizations which plays a
vital role in being setting up the business in
New Zealand
Furthermore, New Zealand has niche
growth in the market which will be
Weaknesses
The New Zealand dollar fluctuation can be
one major reason or weakness for the
different kinds of organizations or
business as this will not provide
competitive advantage to the different
companies which are planning to set up in

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beneficial for the continuation of the
growth of the entire tourism industry and
this will help in managing the overall
effectiveness (Piercy, 2014)
New Zealand(Leekha, Chhabra &
Sharma, 2014)
Opportunities
The emerging markets is one of the major
opportunities wherein the introduction of the
information technology can be one major
reasons for the growth of the tourism
organizationsin the market of New
Zealand(Ogden, 2018)
Threats
There are different major competitors of
tourism industry in the New Zealand market
and this can be ineffective in nature for the
overall growth of the company in the market
of NZ
PESTEL Analysis of New Zealand
The PESTEL analysis is essential in nature which will be beneficial for the marketers in
the New Zealand for analysing and monitoring the macro-environmental factors which can create
impact on the different organizations performing in the New Zealand market.
Political Factors is one of the major aspects which is considered while analysing the political
stability and economic stability of the organization in an effective manner. In the economy of
New Zealand, there are stable government rules and regulations and the country has strong
chance of success due to the strong kinds of rules along with regulations (Ogden, 2018).
Moreover, the different companies are required to be aware of the new rules and regulations
which will be beneficial for the overall success of the firm in an efficient manner. The country

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has tried to provide trade freedom to the different organizations which are setting up their
business in New Zealand as well. However, this can be seen that there are various risks involved
in the setting up the business in New Zealand as the government changes in every three years
and this can be difficult for the companies in understanding the new rules which can affect the
overall efficiency and productivity of the different organizations.
Economic Factors are the other aspect wherein economic situation is excellent in comparison to
the other countries. The different product rates are economical and this is affordable by all the
individuals staying at New Zealand (Eshuis, Klijn& Braun, 2014). The rate of inflation of NZ is
less and this is quite effective for the growth of the economy in an effective manner (Lima et al.,
2018).
Social Factors are the aspect wherein the social system is wonderful and the rate of literacy of
the country is more than 100%. The expectancy of the life of the individuals is 81 and this is
helpful for the overall growth of the economy in an efficient manner. The ratio of the
unemployment is less and this can be a huge opportunity for the different kinds of
organizationsfor the overall growth and survival in NZ(Smith, 2015).
Technological Factors is the other aspect in which New Zealand has strong and own system of
education. Furthermore, NZ has tried in introducing the IT technology in urban and rural areas
which is exclusive in nature. There are different kinds of organizations which can implement the
IT technological advancements for the growth of their company in the NZ market effectively
(Smith, 2016).
Legal Factors is the other aspect in which the new government comes and takes the new position
after every three years. There is huge scope of the different international companies and

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businesses to start their business in such areas and this will be beneficial for the growth of the
companies as well (De Mooij, 2018). The freedom of doing business in New Zealand is 99.9%
and the freedom of trade is 84.6% and from the same, this can be analysed that the business
environment of New Zealand is apt for continuing and starting a new business effectively (Lima
et al., 2018).
Environmental Factors are the last aspect in which the country is situated around 900 km from
Australia and the ecological system is unique in nature as well. The educated population of NZ
tries to implement different strategies which will be beneficial for the overall success of the firm
in an efficient and appropriate manner (Lima et al., 2018).
Additionally, this can be seen that there is huge disadvantage of the different business
which is being performed at New Zealand as there is lack of the different resources of water and
the import cost is huge in nature which can affect the overall efficiency of the firm in a negative
manner. From the above SWOT along with PESTEL analysis, this can be identified that there are
different strategies which can be adopted in order toanalyse the overall efficiency of the firms
which are planning to start their business in the market of New Zealand. In New Zealand, the
political condition is stable and this has helped in managing the overall efficiency in an
appropriate manner.
Literature review
One of the major trending factors in the New Zealand tourism industry is the emergence
of popularity of the small tourism firms. This is due to the reason that small tourism firms are
having more intensity of community connections. According to Keen (2013), interaction
between the community and the small tourism businesses is more mainly in the rural part of the

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county. This is due to the reason that small tourism firms are working local communities in
serving to the tourists. This is uplifting the society as well as providing authentic experience to
the customers. This is also being stated by the authors that rural economy of New Zealand is
heavily depended on these small tourism organizations.
However, on the other hand, it is stated by Pearce (2015) that even though the small
tourism organizations are an integral part of the destination management of New Zealand, but
there are number of challenges also being identified. One of the major problems is the lower
access of the financial resources by them. This is causing lack of updated service delivery to the
international tourists and it is reducing their service competiveness in the global market. Thus,
according to the author, it is important for the small tourism organizations of New Zealand to
have better access to the financial resources, which will enhance their service quality and
delivery approach.
Tarrant et al., (2014) stated that trend of sustainable tourism is on the rise in New
Zealand. This is due to the reason that eco friendly tourism is on the rise in New Zealand. This
can be termed as one of the major positive signs in the recent time in the tourism scenario of the
country. In addition, the authors have also stated that education tourism of New Zealand is also
on the rise. This is due to the reason that colleges and universities of New Zealand are attracting
huge global talents from across the world. Thus, these international students can be included in
the education tourism and is further enhancing the trend of sustainable tourism.According to the
authors, education tourism should be given the major concentration in the recent time due to the
reason that this sector will have more generation of revenue as well as lower impact on the
natural resources.

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Evaluation of the country
Environmental challenges
One of the major issues being faced by the tourism sector of New Zealand is the
exploitation of the natural resources. This is due to the reason that inflow of the foreign tourists
is on the rise in New Zealand in the last few years. Thus, the more will be the traffic of the
international tourist, the more will be the crowd in the destinations of New Zealand. According
to the media reports, tourist destinations of New Zealand such as Mt Cook and Queenstown are
already being affected by the increased footfalls (Hopkins, 2015). It is also reported that
increased traffic is increasing the pollution rate in these places along with damaging the flora and
fauna species. According to Gillovic and McIntosh (2015), part from the environmental impacts
on the country, the tourism sector is also facing the challenge in terms of economic viability.
This is due to the reason that the more will be the adverse impact on the landscapes of New
Zealand, the less will be their viability as tourist attraction to the international travelers. Thus, as
per the authors, the inflow of the international travelers will get reduced in the long term.
Acute shortage of employees
Another major problem being faced by the tourism industry of New Zealand is the
shortage of employees in the county. This is due to the reason that New Zealand is mainly
depended on the foreign human resources and they are one of the least populated states. In
addition, the rate of immigration in the country is also rapidly increasing, which further
increasing the percentage of the non-residences in the country. However, it is reported
thattourism sector of New Zealand is facing the shortage of more than 47000 workers in the
current state. According to Ashton (2014), lack of employees is affecting the service quality and

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delivery for the international tourists. This is due to the fact that the service standards in the
global scenario of tourism is increasing and shortage of the employees is reducing the
effectiveness of the tourism industry of New Zealand in aligning with the global service
standard. It is also being identified that lack of indigenous people is also causing problems for
the tourism industry of New Zealand due to the reason that they are having the most idea about
the localtaste, language and culture.
Pay issues
Tourism industry of New Zealand is also facing the issue of pay differences with that of
other business sectors. This is due to the reason that it is reported that tourism sector of New
Zealand is having lower wage rate compared to the other business sectors. Thus, it is affecting
the potentiality of new recruitment in the industry (Sigala, 2017). In addition, low pay scale is
also demoralizing the employees working in this sector in providing effective service to the
tourists. Therefore, it is creating barriers in increasing the workers in the tourism sector along
with maximizing the performance and effectiveness of them.
Increase in cost
Another major problem for the tourism industry of New Zealand is the increase in the
average cost and price. It is reported that average price of food and accommodation is on the rise
in New Zealand. This is having adverse impact on the entire tourism industry due to the reason
that the increased price of the facilities in New Zealand will reduce the inflow of the tourists in
the country. This will reduce the rate of generation of revenue from this sector. According to
Sun, Ryan and Pan (2014), in major cases, international tourists mainly from China are getting

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attracted towards the tourist destinations by means of virtual mediums. However, in the later
stage, the expensive cost in New Zealand tourism isreducing the potentiality.
Smaller access of destinations
Another major problem for the tourism industry of New Zealand is maintaining the
loyalty level of the tourists. This is due to the reason that loyalty of the tourists will be
maintained only when they can be offered with differentiated service quality. This is due to the
reason that tourists will not come back to the same destinations every time. However, in the case
of the New Zealand tourism,the number of destinations is less due to the smaller national
boundaries of the country (Sun, Zhang & Ryan, 2015). Thus, it is challenging for the tourism
industry of New Zealand to offer new destinations to the tourists every time they visit. The
loyalty level of the visitors is affected by this phenomenon.
Recommendations
Extensive marketing activities
In the current competitive scenario, it is important for the New Zealand tourism sector to
accept the corporate approach of branding and promotion. Thus, it is recommended that New
Zealand tourism sector should participate in different tourism events around the world. This will
increase the visibility of the tourist destinations of New Zealand across the world. In addition, it
is also recommended that in increasing the visibility of the brand of New Zealand tourism,
embassies in the foreign market should be proactive. They should hold different events in the
respective countries and New Zealand tourism and increase the exposure in the target markets.
Segmentation and targeting

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Segmentation and targeting will also play an important role in enhancing the business
potentiality for the New Zealand tourism sector. This is due to the reason that without
segmenting the target customers, it will be difficult for them to determine the characteristics of
the target customers. Thus, it is recommended that segmentation should be done in terms of
demographic, geographic, behavioral and psychographic segmentation. This will help in
classifying the determining factors of customers and design the service process accordingly. In
addition, it is also being recommended that targeting strategies should be diverse in nature in
order to cater to different customer segments. In terms of the geographic segmentation, tourists
from Australia, China and the United States will be targeted. This is due to the reason that
Australia is the neighbor country of New Zealand and thus they can be targeted as more
alternative tourist destinations. China and the United States already comprise the major section
of international tourists in New Zealand. Thus, they will be segmented. In the following states,
developing countries such as South Asian countries and Latin countries will be targeted due to
the reason that inflow of tourists from these countries is rapidly increasing.
In terms of the demographic segmentation, customers between the age groups between
early teenage to senior citizen will be targeted. This is due to the reason that teenage and younger
ages will be accompanied by their families in tours. Adults will have the purchasing power for
the international tours and senior citizens can visit during their post retirement period. Thus,
wide and vast age groups will be segmented. In terms of the behavioral segmentation, tourist will
be segmented in terms of holidaying, family visits, business tours and education purposes. All
these sectors will be help New Zealand tourist board in having multiple streams of generating
revenue. In terms of the psychographic segmentation, both the first timers and loyal tourist will
be segmented. In terms of the Australian tourist, there are huge number of tourists comes to New

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Zealand to visit their family and friends. These customer segments are loyal in nature but
offering them more effective service and experience will help in generating positive word of
mouth and thus will attract new sets of customers from Australia. In addition, the more will be
the level of experience of the Australian customers in visiting New Zealand, the more will be the
probability for destinations in New Zealand to replace the domestic Australian destinations.
Diversified offerings strategy
It is recommended that New Zealand tourism sector should develop diverse offerings.
This is due to the reason that the more diverse will be the offerings for the global travelers, the
more will be their attraction and loyalty level. In addition, the diverse offerings will also ensure
that different customer segments can be targeted and every time the customers can be offered
newer services. It is also recommended that smaller and less known destinations should also be
projected to the international customers. This will enhance the diversity as well as increase
theexposure of the lesser known locations. The holistic social development can also be made
possible.
Positioning strategy
It is recommended that tourist destinations of New Zealand should be positioned based
on the customer segments. This is due to the reason that both the niche and mass market
customers should be targeted by means of different positioning strategies. It is recommended that
some of the destinations of New Zealand should be positioned as affordable offerings for the
major section of the global travelers. On the other hand, the most popular locations should be
positioned as the niche offerings and should be targeted towards the higher customer segments.
Three of the most renowned and famous world heritage sites are present in New Zealand. They

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are Te Wahipounamu, Tongariro National Park and Subantarctic Islands. These sites will help
New Zealand to position as a heritage destination to the segmented customers. These sites will
also help New Zealand in positioning themselves as the destination for the nature lovers and eco-
friendly tourism. These sites will be helpful in gaining the competitive advantages due to the
reason that they are particular for New Zealand only and Australian tourists will have to visit in
physical. On the other hand, Milford sound, Mitre Peak and waterfalls and Fiordland national
park can also be beneficial for the New Zealand tourism board in positioning themselves as
green and natural alternative for the international tourists. Majority of these destinations are more
favorable during the winter season but inflow of the tourists is maintained round the year. It will
also help the New Zealand tourism board in positioning these sites as the summer destinations
for the Australian tourists. Adventure is another genre of positioning for the New Zealand
tourism. It is reported that adventure sports such as bungy jumping from Kawarau bridge is
extensively being promoted by them for the adventure seeking new age tourists. In this case, the
New Zealand tourism board partnered with the last The Mission Impossible franchise in
marketing these activities. Thus, it is helping New Zealand in catering to both the leisure seeking
and adventure seeking tourists.
Branding strategy
Australian tourists are having multiple options for their international tourism. Thus, it is
important for the New Zealand tourism board to gain competitiveness in order to attract the
major sections of the potential Australian customers. One of the major strategic intent will be the
similarity of cultures between the two countries. The branding activities of New Zealand tourist
board will be focused on communicating the similarity of cultures between Australia and New
Zealand. This will attract as significant customer section over other destinations. Another

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branding strategy will be in terms of cost. This is due to the reason that New Zealand being the
neighboring country of Australia will have lower cost of transport compared to other
destinations. Thus, Australian tourists will have the option for international tour in lowest cost in
New Zealand.
Diversification strategy
It is also recommended that New Zealand tourism sector should initiate the
diversification strategyin order to have more presence across different customer segments. It is
recommended that education sector should be included in the tourism as part of education
tourism. This will enable them to cater to larger customer segments and having more revenue
streams.
Market penetration strategy
Apart from targeting the international travelers, it is also recommended that New Zealand
tourism sector should also target the national customers as well. This is due to the reason that
targeting the national customers will further increase the target customer segments. It is
recommended that market penetration strategy will help in catering to both the national as well
as international tourists.
Conclusion
This report concludes that New Zealand tourism board is facing a few challenges as well
having number of opportunities. In this report, the external and internal determining factors for
them are being identified and a few major important elements are identified. In addition, a few
relevant issues being faced by the New Zealand tourism board are also identified. This report

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recommended a few steps in accordance to the identified issues. Effective implementation of
these steps will help the New Zealand tourism board to enhance their competitiveness in the
global tourism market. In the recommendation part, different strategies and concepts are
discussed, which will have multiple benefits in the long term.

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