Analysis of the German Market for Hilton Brand Expansion (QAB020C407S)

This report provides a comprehensive analysis of Hilton Hotels' expansion strategy into the German market. It begins with an introduction outlining the business scenario, focusing on Hilton's Foreign Direct Investment (FDI) opportunity in Germany. The report then provides background information on Hilton, including its size, financial performance, and current international operations. A detailed PESTLE analysis assesses the political, economic, social, technological, legal, and environmental factors influencing the business environment in Germany. The report also employs Porter's Five Forces to analyze the competitive landscape. The analysis considers the threat of new competitors, the bargaining power of suppliers and buyers, the threat of substitute products, and the intensity of rivalry. The report concludes with a summary of the key findings and recommendations for Hilton's successful entry into the German market.

Analysis of the
German Marker with
the purpose of the
Expansion of the
Hilton brand

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................4
Background Information of Hilton Hotel....................................................................................4
Background Information on the Business Environment in Germany..........................................5
Analysis of Business Scenario.....................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business can be defined as the financial activity where major objective is to earn the profit from
current market and on the other side environment is that respective place where business is
operated. When discussing about globalisation, it can be simply expressed as the activity where
business entity tries to enter into the new market for enhancing the profit percentage. The main
reason for any of the organisation to enter into the global market is simple as it allows the
business to earn foreign currency. In context of the file, the main topic which will be focused in
it is related with Hilton Hotel, where they are planning to expand their business to next level by
starting the business activity in Germany. Hilton is one of the multinational organisation dealing
in the sector of hospitality within the different part of the world (Hausman, A. and Johnston,
W.J., 2014). For the purpose of entering into the market, company will conduct the PESTLE
analysis through which company will get the idea that how they are required to enter into the
market. Secondly, in order to check the competition within the market proper Porter’s Five
Forces will be conducted.
Foreign Direct Investment is one of the way through which an organisation directly
investment into another nation for the purpose of expanding the business. Here, entity is still
controlled from the headquarter where decision making process of the company is totally based
upon management of the company. In context of Hilton, they are directly pushing them to
Germany for expanding the business. It is one of those way through which company can easily
allow themselves to earn the profit. In present scenario, there are number of company who is
investing their fund within the Germany as percentage of investment is increasing day by day.
The below, mentioned graph clearly shown that there was certain period of time in which FDI
were not willing to invest within the Germany. But, in current scenario, the percentage of
investors are increasing day by day (Foreign Direct Investment in Germany, 2019).

Figure 1: FDI in Germany
If in case company like Hilton enters into the market of Germany, then in that respective
situation company will allow themselves to earn huge amount of profit. The tourism industry is
increasing day by day which reduces the chances for company like Hilton to suffer from losses in
any of the situation.
MAIN BODY
Background Information of Hilton Hotel
Hilton is itself a brand name where they have been delivering the services in different
part since 1919. It was officially founded by Conrad Hilton in Tysons Corner, Virginia, United
States. While talking about the size of a company, it is necessary to understand that company has
been performing its business activity in different part of the world where they have employees
from worldwide. As per the financial report presented by the Hilton Hotel, it can be clearly state
that the Net income of the company is $176 million for the fourth quarter of the year whereas
annual income is around $886 million for the year (Hilton Reports Fourth Quarter and Full Year
Results, 2019). The business is expanding at a regular basis as they have approved around 33700
new room for the development process for future time period. In current scenario, there are
number of types of organizational division any out of the hotel Hilton has adopted Ownership
division comprises which is allowing them to attain their goals within the specific time period.
The current operation towards which they have be focusing is related with expansion of business

to new locations as well. In short, Germany can be one of the best destination which can allow
them to earn profit at a significant speed.
Background Information on the Business Environment in Germany
In present scenario, there are number of strategies and framework which can easily allow
the company to accomplish their goals within the specific time period through which proper
planning and plotting can be done. With the help of analysis upon micro and macro environment,
organization can easily form the policies and laws which can help them to attain the goals within
the short time period (Roberts, 2015). In context of Hilton Hotel, they are planning to enter into
the market of UK, but before that they must collect some of the relevant information which allow
them to trade in best possible manner. If company will be able to overview all of the area, then
performing the business at international level can become one of the easiest task for any of the
firm. For the purpose of analysis, company can easily take the help of PESTLE analysis.
PESTLE Analysis: It is defined as one of the most effective framework which can easily
allow to collect all of the relevant information which are required for the business organization
for attaining the goals. If in any of the situation, entity is able to take the help of market position,
then in that respective situation they give the idea to company that how they are required to take
any of the decision for future period of time. In context of Hilton Hotel, they are planning to
expand their business at a greater platform by the process of business expansion so it will be
necessary for the company to understand that how crucial role can PESTLE analysis play for
them in achieving the target (Liverman, 2016). Here, PESTLE includes different factors such as
Political, legal, social, environmental, economical & technology factor. All of this factor must be
considered at beginning for attain the goals in future period of time. Below, there is the detail
description about the various factor and its impact on business organization at time of giving
input for attaining the goals.
Political Factor: It is among one of the most important factor which can have the great
impact upon business organization. It is because it simply related with the plans and policies
which are being formed by government on a regular basis. There are most of the nation where
political decision relation to business organization are taken in the similar form because it will
create less problem for the company to enter into any of the new market. In context of Hilton,
Germany is one of those country where political stability can be seen. It is one of the reason that

nation is developing at a greater speed. The laws which are formed by the federal government do
not changes as compared to other nation which can be one of the positive side for the company at
the time of attaining the goals within the nation like Germany. Also, as government shows
positive attitude towards the FDI in their nation, there is huge opportunity for the company like
Hilton to grow their business at a rapid speed (Ayati and et. al., 2018).
Economical factor- Talking in the context of economic aspects, Germany is among one of
those nation which has been growing at a great speed and it has become the 5th largest economy
nation in context of Europe. This is one of those factor where company looks for The GDP,
inflation and foreign exchanges charges. In context of Hilton Hotel, if they can be able to invest
within the premises of Germany, they will be able to get fair amount of output. It is because of
the investor as they are willing to invest within Germany which is allowing to improve the GDP
of the nation which will reflect into a great outcome. Not only this, the employee skills can be
seen very effective in Germany which will allow to attract huge number of customers towards
the company.
Social factor- It is among the factor where it relates with the life style of the people and the
public on any of the specific area. Some of the crucial aspects which are included in it are related
with belief, culture and values of the people and many more. In context of Germany, it is among
one of the nation where financial position of people is strong due to which they believe within
high standard and values which is to be followed in a nation. While talking about Hilton Hotel, it
can be said that the social values of people within the German is favorable for attaining the goals.
It is because people living within the country likes to experience something new on a regular
basis and even their climatic condition also allows them to do so (Morkovina and et. al., 2016).
Also, people who lives within the German are well educated where they have a positive mind-set
for FDI which will give them the positive result.
Technological- When it comes to technological factor, it is essential to understand about
the importance of technological factor. It is among those factor where people of Germany do not
compromise at all. It is because they have been already famous for the introduction of new
concept and ideas for performing any of the business activity. In context of Hilton, if they are
willing to invest within the market of Germany, they must ensure that they are able to use proper
technologies which can attract the people. Although, it can be one of the expensive process for

the company because changes will be required to be done on the regular basis but it will also
enable to earn huge amount of profit for the company. But, FDI with in Germany will allow
Hilton Hotel to introduce latest technologies to its several braches (Bullock and et. al., 2017). In
short, investment will be required in huge amount of capital.
Legal factor- It is among the factor where it is essential for the company to focus on the
laws and policies which has been formed by the legislative body. Here, government of Germany
has a stable law policy which attract the foreign investment. Even in any of the situation legal
factor do not allow to develop the concept of unfair trade competition. Looking at the scenario of
legal factor that Germany has, Hotel Hilton can be beneficial because their goals can be
accomplished easily. This is among the factor which will help them to take every single decision
for long time period because stability can be seen within the plans and policies. But, the main
thing which they must focus while conducting the business is that management must take
appropriate decision because legal remedies are very high which can create issues as well.
Environmental- The people and the government of Germany is very activity towards this
particular aspect. Here, Company like Hilton must try to work in effective manner by utilizing
the resources properly. Several laws are also their which is to be followed. Although, people like
to and appreciate the Foreign Direct Investment but in any of the circumstances, they do not give
the power to misuse the resources or harm them environment. These are the things which must
be considered by the company while investing within Germany.
Analysis of Business Scenario
Analysis about the market is essential because it gives the idea that how any of the
company can perform better within the market for attaining the goals. Here, Hilton Hotel can
take the help of Porter Five Forces which can be helpful in analysing about the market position.
It is one of those framework which can allow to build the market strategy through which working
condition becomes easy and favourable. The detail information about the framework is
mentioned below:
Threat of new competitors- New business entity are being incorporated on a regular basis
it is necessary to identify what are those sector where investors wants to invest their capital
(Ryder, 2015). In context of Hilton Hotel, there are number of company who has been dealing in
the same market since long time period due to which there is a limited scope of new competitors

for them. Even the cost for entering into the market is very high in tourism and service industry
which is not possible for small investors.
Bargaining Power of supplier- It is that respective situation where buyer is more and
suppliers are in limited numbers. In context of Hilton, there are number of suppliers who can
easily supply them the similar form of product at a reasonable amount of price. It is one of the
reason that the power of supplier for Hilton Hotel is low (Gann, Davies and Dodgson, 2017). It is
one of those power which will allow the company to perform better in the market and even
opportunity will be created to earn huge amount of profit.
Bargaining Power of buyers- It is also among one of the most crucial factor where it is
necessary to determine for the business entity that how much power does they hold within the
market. If in any of the situation, buyer holds the higher power then chances of earning profit
reduces significantly. In context of Hilton Hotel, there is low bargaining power for buyer because
there are number of customers in current situation who can avail the services at the specific rate.
Here, company will get the chance to earn the profit from existing market or even from the
market where they are willing to invest for earning the profit.
Threat of substitutes- It is related with the similar form of services which is being offered
by other organisation. As company like Hilton is dealing within the hotel industry where similar
form of services can be easily offered by other organisations as well. It can be easily determined
that the threat of substitutes for Hilton is very high (Rogers, 2017). It will be necessary for the
management to find the way to provide effective services to the customers so that problem will
not occur related to substitutes.
Rivalry between existing Competitors: For any of the business organisation, profit earning
always depends upon the percentage of competition available within the market. When it comes
to Hilton Hotel, it can be easily said that the competition within the market is very high where
slight mistake can create huge issues for the company in attaining the goals.
These are the forces where company must focus for attaining the goals. Here, Hilton
Hotel must prepare their strategies accordingly so that they will not face any of the issues at any
period of time.

CONCLUSION
From the file, it can be concluded that whenever any of the business try to expand their
business in a new market, they must be able to form proper plans and policies. Here, PESTLE
and PORTER Five force can be effective for the company. It will be crucial for the Hilton Hotel
that they must introduce some of the technologies within the hotel for sustaining within the
market of Germany. The second thing must be focused more by the management of Hilton Hotel
is that following the laws and regulations as it is one of those area where government of
Germany is quite strict then other nation.

REFERENCES
Books & Journals
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the Global Economy and a Driving Force of its Development. Contemporary
economics, 10(4), pp.311-322.
Bullock, C and et. al., 2017. The economic contribution of public bike-share to the sustainability
and efficient functioning of cities. Sustainable cities and society, 28, pp.76-87.
Ryder, A., 2015. Governmental Devolution as a Motor of Local Development. In Governance in
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Gann, D.M., Davies, A. and Dodgson, M., 2017. Innovation and flexibility in megaprojects.
In The Oxford Handbook of Megaproject Management.
Rogers, D., 2017. Making subways pay: How China is testing Hong Kong’s approach to
profitable metro development. Construction Research and Innovation, 8(2), pp.55-59.
Online
Foreign Direct Investment in Germany. 2019. [Online]. Available Through:
<https://tradingeconomics.com/germany/foreign-direct-investment-net-inflows-percent-
of-gdp-wb-data.html>
Hilton Reports Fourth Quarter and Full Year Results. 2019. [Online]. Available Through: <
https://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-V3/quarterly-results/2019/
q4-2019-earnings-release.pdf>