InterContinental Hotels Group: Brazil Market Entry Strategy Analysis

This report examines the InterContinental Hotels Group (IHG) and its potential market entry strategy in Brazil. It begins with an overview of the hospitality industry and a SWOT analysis of IHG, highlighting strengths like its geographical presence and brand portfolio, and weaknesses like IT security and lack of R&D. Opportunities include emerging markets and technological advancements, while threats encompass intense competition and global crises. The report then delves into the background of emerging markets and provides a PESTEL analysis of Brazil, considering political, economic, social, technological, environmental, and legal factors. It outlines the political stability, economic growth, social inequalities, and technological advancements in Brazil. Finally, the report proposes and justifies specific hotel tactics for IHG to adopt and implement within the Brazilian market, offering a practical application of strategic strategies for both short-term and long-term success. The report emphasizes the importance of customer satisfaction and strategic planning within the context of the hospitality industry.

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Table of Contents
INTRODUCTION.....................................................................................................................................2
Overview of hospitality industry.............................................................................................................2
SWOT analysis in regard to IHG.............................................................................................................2
Background of emerging markets............................................................................................................5
PESTEL of Brazil....................................................................................................................................6
Hotel tactic to be adopt and implement by company within Brazil as entering market............................8
Justification of chosen strategy..............................................................................................................10
Practical application of strategic strategy..............................................................................................11
CONCLUSION........................................................................................................................................11
APPENDIX..............................................................................................................................................13

INTRODUCTION
Hospitality industry is one of the most leading and profitable industries in the world
because it encompasses varied category of fields such as Food & Beverage, lodging, Travel &
Tourism; tourism agencies, motels, Hotels and restaurants. The current assignment will be based
on InterContinental Hotels Group, which falls under category of top 10 successful hotel
organizations in the UK. The aim of chose company is to offer satisfactory and top quality
accommodation and other kind of services to each guest. The study will explain background
information about hospitality industry, IHG and will define SWOT analysis in the context of
chosen firm. Furthermore, it will justify background of emerging markets and PESTLE of
selected one. The report will clarify hotel strategy to be adopt and implemented within entering
market. It will provide proper justification of tactic and their practical application up to 5 &10
years ahead.
MAIN BODY
Overview of hospitality industry
It considered as a wide group of ventures or companies that specialist in offering and
providing quality accommodation, food & beverage and other types of services to guest whether
it is national or international. Customer satisfaction is the main objective of hospitality industry,
which its management may attempt to achieve by conducting varied practices like strategy
development, plan implementation, etc. Another objective of hospitality & tourism industry is to
provide coaching and mentoring to prepare individuals for effective job performance and
productivity, which allow them to offer service to guest in unique and effective manner
(Department of Tourism & Hospitality Management, 2021).
SWOT analysis in regard to IHG
SWOT is the best strategic model that has been utilized in regard to many organizations
whether it is small or large, in order to determine their key strengths in term of power or
capability, weaknesses, opportunities related to business growth and threats that may affect
strategic plan and strategy of a firm (Đalić and et.al., 2020). Here, this concept is use in the
context of InterContinental Hotels Group. It encompasses four different elements that are
following;

Strengths-
Wide geographical presence with concentrate on priority markets- it is one of its
biggest strengths that make firm extremely popular in the world. It has built organizational
presence approx. in 100 nations successfully with 766,837 comfortable rooms. IHG may have 89
percent of pipeline and 87% of open rooms in priority markets of Middle East, Canada,
Germany, United Kingdom, India, Russia, etc. which in return provide a lot of benefits to its
venture.
Wise brand portfolio- another strength of IHG that provide benefits to its business and
retain potential guest is that company is able to follow a unique method of popularizing and
segmenting varied brand of hotels on the basis of each guest events that help management in a
differentiated organizational experience for customers that excellently meets target market
expectations and fulfil their needs.
Effective hiring tactics- IHG is capable to recruit skilled, experience and knowledgeable
candidate, which is one of its another strengths including above two (Qiu and et.al., 2020).
Human resource department in InterContinental Hotels Group may successful develop and use
recruitment tactics, which enable them to acquire talented people who may contribute to grow
venture even better than its rivals.
Strong financial background- with this strength, IHG is able to take action to enter into
new and emerging markets or nations, where it may obtain competitive benefits in varied
manners. It has strong financial background, which enable brand to invest in profitable projects
or plans.
Weaknesses-
Lack of IT security- it is the biggest weaknesses of Intercontinental Hotels Group,
which may put negative impact on brand image and customers as well as worker’s safety. Its
hotels may have infected with credit card stealing malware and customer’s details such as card
number, cardholder name, etc. may stole. It may decrease guest visit in hotels.
Lack of research and development practices- due to this weakness, firm may also face
challenge and varied problems, which may decrease its sales and management may losses

competitive edge. Lack of activities and practices related to research and development functions
may give experience to IHG in term of losing strategic planning and implementation as well as
success chances.
Ineffective organizational structure- this weak point may restrict company to grab
competitive edge and provide negative outcomes in term of failure of several mergers that aim at
vertical integration. Its current organizational culture and structure may decrease the
performance of each candidate whether it perform in front office department or marketing.
Opportunities-
Emerging markets- IHG may grab this opportunity by developing strategic market entry
plan, for which they may choose the most developing and profitable market or nations where
firm may enter and gain advantages. In recent time, each hospitality industry brand may attempt
to start their businesses in emerging market that help increasing profitability and productivity.
Technology advancement- along with above, InterContinental hotels Group may also
obtain this opportunity, in term of implementing advance technologies related to marketing,
research & development and other functional units, which help to maximize its productivity and
performance level within current and further market in effective manner. With social media
marketing channels, marketer may generate unforgettable brand image of IHG that help to gain
attention of profitable guest such as successful entrepreneurs.
Accessibility of skilled workforce- in today’s competitive business environment each
company focus on strengthen their workforce, for which they may take initiative to hire new
people that are capable to growth ventures in effective manner. IHG also may grab this chance in
term of recruiting local people where it has or in the future open a branch, which enable them to
serve services in appropriate way to national as well as international guest.
Threats-
Intense competition- increase extent of competition between existing brands within
hospitality industry may possess biggest threat for InterContinental Hotels Groups, as it drives
the attention of management and leaders towards increasing brand productivity and improving

their performance, which is quite tough to increase and improve in limited time duration. It may
loss key benefits.
Global crisis- in recent time, it possesses as the biggest threat for organizations in every
nation. For example, pandemic as the main global crisis recently affecting success of many
brands in term shutting ventures for short term duration in term of lockdown which may decrease
number of guest visiting and sales as well.
Emerging demand of customers related to food items- due to some health issues and
concerns, individual person demand for vegan and organic food products and expect the same to
obtain when they visit a restaurant or stay in hotel like IHG (Yardi and Aksoz, 2021). It may
threaten management in term of fulfilling customers demand, which is not possible in some cases
when they demand for unseasonal items.
Background of emerging markets
Emerging markets are known as the process of the economic that experiences
considerable economic growth but does not have all the characteristics of development. BRICS
is termed as Brazil, Russia, India, China and South America They are the topmost country which
has high emerging markets that are based upon few things that are
• High GDP growth
As, the government of the emerging market have implemented different types of
procedures and policies data in the favor of industrialization and rapid economic growth. But this
policy result in lower unemployment. Higher investment, higher disposable income and better
infrastructure.
• Population
The other most characteristic of emerging market is that the population in this country is
are very high if than you company will come up to this country then they will also get high
profits because of higher number of people.
• Income per capita
Mainly in emerging markets they usually achieve a low middle income per capita it is
compared to the other countries Because of their dependency on the agriculture activity. As

nowadays economy are pursuing towards industrialization and manufacturing activities that is
because of increase in per capita income with GDP. In this country’s lower average incomes are
also functions has the term as incentives for higher economic growth.
• Market volatility
In these emerging markets the new company has to face different types of political
instability, supply and demand shocks due to natural calamities and external price movements.
On the other hand it also results in I suppose it investors to the risk of attrition data related to
exchange rate as well as market performance.
• Growth and investment potential
Emerging markets are known as the best market that result in attracting large number of
foreign investors because of their high return on investments. Hush they are based upon the
agriculture economy or developed economy and the required high a large influx of capital from
the foreign source because of their shortage of domestic capital. This is known as the best
competitive advantage for the companies who are focusing on exporting their local goods to rich
nations, stock prices and return for investors.
PESTEL of Brazil
POLITICAL FACTOR: The government of the Brazil is very proactive and stable and
there is no political instability in the country at this time Ben hotel have to expand their business
in Brazil (Wijaya, 2019). The hotel had to face different types of affect because modern history
of Brazil cannot be predicted as in that the things change overnight especially at the time when
there is election in the company and the entire political situation are based upon the heat up a
great deal. Great deal the other impact the company has to face it’s related to corruption which is
the big issue in the Brazil. It is even for a small business has to give payments to the government
officials and representatives. As for this entry Brazil is known as the 72 rank countries among
180 in the list of corruption which is even higher than economics like Turkey and Cuba.
ECONOMIC FACTOR: The Brazil have large population and FDR intro which is very
good for growth for the new companies which is extremely high. In the Brazil the company will
face different types of substantial trend data related to growing middle class and the gap between
the poor and reach our tech lining on the faster basis. Along with this the central government has

also reduced the currency devaluation and has control inflation. The positive impact for the
company is that both domestic and foreign enterprises are treated equally and labor costs are low.
As compared to the other countries like Greece the tax rate of Brazil are high. There are different
types of challenges that are faced by the Brazil Company because of their economic crisis, non-
tariff barriers, decrease consumer demand and forward infrastructure. On the other hand the
company also offers different types of opportunity for their domestic and international
companies in different types of sectors that are known as education, aviation, infrastructure,
health and tourism (Bohone, and et.al., 2020).
SOCIAL FACTOR: The Company has to face different types of inequality with the
population around 20% which leave under the poverty line. As compared to the class distribution
there are also high number of people who are wealthy citizens and a huge segment of people
with minimal incomes (Ribeiro and Nobre, 2018). The good so for the companies the middle
class is also growing nowadays. Brazil is known as the one of the best country in the world who
is up to date better new fashion world is there aware of big brand and buy expensive and
luxurious products. In the year 2014 the company has also organized FIFA World Cup in which
many of the individuals of Brazil were interested in football. There are thousands of children
who are living and working on the streets another exports towards drugs and crime. The country
has largest number of discrimination that is on the basis of race and gender.
TECHNOLOGICAL FACTOR: As compared to the other countries like US and
Russia, but as you have weaker technology infrastructure along with the investment but the
individual of the country are putting their efforts to push the development of technology centers
across the country. In other terms we can also set that I teach the sector of the Brazil country
which is keep improving and ranked 53rd in the world. Brazil is known as the enthusiastic users
of social media and around 50% people are engaged in online activities. On the other hand Brazil
is known as the one of the 5th largest number of Internet users and mobile phone in the world.
The Brazil has one of the largest ICT market in America. All the employees were working in the
Brazil prefer to communicate with their family and friends by using mobile phones and Internet.
ENVIROMENTAL FACTOR: Brazil is known as the one of the most beautiful
countries in the world because of its Amazon River and rainforest along with hundreds of
conversation areas that attracts large number of tourists every year. As the hotel want to operate

their business in Brazil they have large opportunity because tourism sector are keep on growing
and are contributing there progress in economy of several regions of the country. Along with this
the country also faces different types of environmental challenges that are related to
deforestation, pollution, Air pollution, illegal wildlife trade and illegal poaching. The country has
also taken different types of initiative that is to make them environmentally friendly by dealing
with environmental challenges (Câmara and da Silva, 2020).
LEGAL FACTOR: The hotel has to face different types of legal factors data related to
them have to do contact with their employees on the written basis. On the other hand they also
encourage foreign direct investment in the general but on the other hand foot restriction in
certain sectors. Investment in nuclear energy, postal services and private security and transport
are restricted in the country orders subjected towards authorization of government. There are
different rules and regulation for the new companies who are operating in the Brazil as they have
to operate as further Brazilians loaned have to follow all the procedures that are set by the
government of Brazil (da Silva and et.al., 2019).
Hotel tactic to be adopt and implement by company within Brazil as entering market
InterContinental Hotels groups may maintain its market progress and obtain long term
benefits by choosing and using appropriate strategy. In order to do so, here, three forms of
strategic frameworks use and discuss below;
Porter’s generic tactics-
Cost leadership-
According to this strategic growth tactic, firm may take initiative to offer low cost
services to its guest, which made them able to gain attention of rivals guests that increase sales
even better than now (Islami, Mustafa and Latkovikj, 2020). They may offer the most demanding
dishes and services to individual person, which contribute to enhance their satisfaction level and
allow to conduct repetitive practices that is amazing and beneficial for excellent growth of
Intercontinental Hotels Group.
Cost focus-

This tactic drives the attention of organization to offer a service or item in a niche market
and make assure that it may be lowest in price, because it makes customers able to purchase it as
some of them are unable to book accommodation services that may high in cost. Just like other,
cost focus also provide benefits to a company but in different manner, it may help to retain
middle and upper class guests.
Figure 1: Porter's Generic Model
(Source: Porter's Generic Strategies, 2021)
Differentiation-
According to this strategic growth strategy, firm may take action to offer accommodation,
food and other services and products that are in high demand, but it may have a unique feature
that help to satisfy guests and attract other as well. This strategy may increase sales of business
and profits margin, more than key rivals in Brazil as new emerging market where IHG plan to
enter. It is one the most emerging markets in the world.
Differentiation focus-
This strategy just like above enable organization to do some different or unique thing. For
example, with differentiation focus tactic, management may take decision to offer their services
to a niche target segment and each service or item may have unique characteristics. It helps to get
success in new market and allow to sustain venture for longer, which is not possible to obtain for
many companies as they are unable to do so.
Ansoff’s matrix-

Market penetration-
When firm adopt this strategy, it may focus on improving quality of its current products,
through which it may retain existing customers in current market and gain the attention of new as
well towards room bookings, luxury stay, and other services that a well-known hotel may offer
to their guests. It provides strategic direction to firm, which management may consider to take
benefit in term of increasing sale and gaining competitive edge.
Market development-
In order to grow venture in the future and reach at global level, Intercontinental Hotels
Group, may adopt and implement this strategy. It enables firm to gain the attention of
international guests and especially those who seek to stay in luxury service providing hotels like
chosen one (Chintalapati, 2020). It drives attention of organization to enter into the most
emerging market and that is Brazil. It allows firm to stay for long in new market and give tough
competition to existing hotels group.
Product development-
It considered the way that a company may adopt to grow through new items, which
satisfy people customers and other stakeholders in term of fulfilling their expectations and needs
as well that is essential to fulfil by the management. It drives focus and efforts of organization to
bring a new and innovative item that people prefer to buy and always take action to purchase by
a company not more than else.
Diversification-
This strategy is combination of two approaches, because it permits firm to enter into new
or profitable market with totally unique services or goods, which not only attract guests, but also
retain them forever that is quite tough task to achieve for any enterprise.
Nykiel’s fourteen hotel strategic growth options-
By referring to fourteen hotel strategic progress options, IHG may chose value-related
products & services (What are the Strategic Options: Hospitality Focused, 2018). According to
this strategy firm may take initiative to offer new food items or service to its guest according to

current market trends that help to retain existing and new consumers for longer time period.
Among list of fourteen strategic growth options, IHG may chose current one.
Justification of chosen strategy
By applying three different models, it can be analyzed that IHG may chose and utilize
market development and value related goods and services as strategic approaches or strategies.
These two are beneficial and helpful for brand, because it drives its attention and strengthen
management to enter into Brazil, where economic growth is much better than non-emerging
nations in the world. With these two, Intercontinental Hotels group may obtain competitive edge
in systematic and effective way. It may grow successfully and productively, without taking too
much stress as these may strengthen organization to gain attention of new customers.
Practical application of strategic strategy
After considering three models, it can be said that Intercontinental Hotels group may
implement above two strategies in term of taking decision to offer vegan food products to
customers and to enter into Brazil, which is the most emerging market. These two tactics help
organization to grow more than its key competitors in existing and new market. Its manager and
leader may conduct a meeting through which they may take initiative to encourage staff to
provide their suggestions and though. Management may develop plan to divide roles and
accountabilities related to both strategies implementation and allocate task to each candidate on
the basis of their skills and competencies like food department is able to purchase a food and
vegetables and prepare according to customer demand. Organization may implement strategy to
enter into Brazil by conducting market research in new nations and get information about key
trends, culture and values of local people that help to develop further plans accordingly.
CONCLUSION
From above analysis, it has been concluded that organization has successfully enter into
new emerging market, where it has gained a lot of advantages in term of profitability and
productivity. It has maximized its customer base by offering valuable and satisfactory services to
guests that has enhanced their satisfaction level and allow them to promoted venture by
conducting word of mouth promotion. Furthermore, by summing up above discussion, it has
been determined that management has taken effective actions after taking each factor into their
considerations, which is quite important for them. It has chosen market development approaches

that has provided unexpected outcomes to brand. It helped to build strong organizational image
in new and existing market, where customers tend to purchase satisfactory and top quality
services, when they take decision to spent some time with friends or family member away from
hectic schedule that make mind fresh and free from stress.

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APPENDIX
Background to Intercontinental hotel group
 Leading as biggest or wide hotel organizations, IHG has increased a lot of profits.
 It has more than 350,000 workers who perform more than 100 nations to deliver true
accommodation services to guest.
SWOT analysis-
Strengths-
 Wide geographical presence
 Wise brand portfolio
 The best recruitment tactics
 Strong financial background
Weaknesses-
Opportunities-
Threats-
Overview of emerging markets-
Background of the emerging markets are based upon five countries that are India, Brazil,
china, Russia, South America
PESTEL analysis-
POLITICAL FACTORS: Corruption
ECONOMIC FACTOR: large population
SOCIAL FACTOR: Up to date fashion trends
TECHNOLOGICAL FACTOR: weak technology
ENVIROMENTAL FACTOR: environmental challenges
LEGAL FACTOR: rules and regulations