Business Project: IHG's International Market Expansion Strategies

This business project analyzes InterContinental Hotels Group (IHG), focusing on its international business operations. The report examines factors IHG must consider when trading across borders, including legal frameworks, cultural diversity, and resource requirements in different countries like the UK and India. It also evaluates the EPG model (ethnocentric, polycentric, geocentric) for international business, assessing its implications for IHG's strategic planning and market expansion. Furthermore, the project explores the social impact considerations for IHG, analyzing theories like Carroll's Pyramid and critically evaluating their application in various markets. The project highlights key differences in business etiquette and practices between the UK and India, providing insights into how IHG can adapt its strategies to succeed in diverse global markets.

BUSINESS PROJECT

TABLE OF CONTENTS
BUSINESS PROJECT.....................................................................................................................1
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................3
3) IHG need to consider while trading across the border................................................................3
Laws for operating business in different countries:.....................................................................4
Cultural diversity and business etiquette in accordance to operate business in different
countries.......................................................................................................................................5
Requirement of resources that need to be take care by company while trading across the
borders.........................................................................................................................................6
EPG MODEL for international business.....................................................................................6
4) SOCIAL IMPACT.......................................................................................................................8
Consideration taken by company while creating social impact:..................................................8
Theory of Carroll's Pyramid........................................................................................................8
5. Critical evaluation of the theory:...............................................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................16

INTRODUCTION
International business refers to those business activities which take place between two ore
more region, countries and nations beyond their political boundaries. A multi national company
is the business entity which operates its business in various countries. The entire report is based
on InterContinental Hotel group PLC, which is an English multinational hotels company
headquartered in Denham, UK. IHG has more than 710,000 rooms and 4,800 hotels across 100
countries. Its major brands are Candlewood Suites, Crowne Plaza, Even, Holiday inn, Hotel
indigo, Hualuxe, InterContinental and Staybridge Suites. 3934 hotels of the company are
managed under franchise agreement, 658 are managed by the company but they are separately
owned and 10 directly owned. Apart from this, they have annual revenue of $1,803 million and
more than 7311 employee are working over there.
The report highlights the major factors which a company have to consider while trading
there business across the globe, this part include the major factors such as rules, regulations,
political issues, cultural issues and market conditions of the different countries which have to
taken care by the company while operating in international market. This are very important
aspects while trading in international market. Other than this, the report also evaluate the critical
and analyse the academic theories which are related to two areas that is implementation of
theories in Indian market and the implementation of these academic theories in market of UK.
This two areas will help the company to find effectiveness of their business in those areas
through which they will be able to concentrate on the weak business area This theories will help
the company to get advantages and disadvantages of adopting these theories for the business
purpose. In addition to this, the major factors are identifies which have to consider by IHG for
expanding their business across the globe. This will include development strategies which can
help the company to make their business more profitable. The major factors which a company
need to take care is the market environment, level of competition in that market and the attitude
and choice of people.
3) IHG NEED TO CONSIDER WHILE TRADING ACROSS THE BORDER
When trading in the global market, IHG have to consider some factors which make them
able to understand the global market easily. Considering this issues will make the company

protected from the unavoidable circumstances. There are different rules and regulations while
operating business in different countries.
Laws for operating business in different countries:
In UK different law is there such as Companies act, 2006 and UK Companies Act 2014
which is an act of parliament of UK (Hovhannisyan and Keller, 2015). This Act deals with the
some major common law principles such as duties of the directors of the company. It will protect
the interest of employee at the workplace. The Act says that there should be at least one board of
director of the company to perform as a natural person. The act also states that the age restriction
for he directors is 70 and the minimum age of 16 has been announced for all the directors of the
company (Zander, McDougall-Covin and Rose, 2015). In UK it will become possible for a single
person to from a public company through facilitate incorporation over the internet. In UK, the
article of association will be treated as main constitutional document while memorandum will be
treated as a part of it articles. Apart from this companies will be able to redenominate their share
capital in one currency to another currency without taking the court's order. Before proposing
annual general meeting it requires 14 days prior notice to the shareholders. Main listed
companies are required to hold their annual general meetings and file account within 6 months of
the and of financial year. They also need to publish their accounts on their website (Carraher and
Paridon, 2015).
While in India, there is different rules and laws under which the company have to operate
their business. According to Companies Act 2013 and Companies Act 1956, there are different
rules from operating business in India. In India, there is a rule in which one single person can run
his own company and he will considered as the only shareholder of the company (Lee, Gibbon
and Oebels, 2015). Every listed company with paid up capital of Rs. 100 Crores or more shall
have at least one Woman director. Apart from this, there is also a rule that every listed company
with net worth of 500 Crores or more shall constitute a corporate social responsibility committee
of the board consisting three or more directors. Other than this, there is also a separate provision
of fast track merger under section 233 of the companies act, 2013 (Machado-Assefh and et.al.,
2015).

Cultural diversity and business etiquette in accordance to operate business in different countries.
There is different types of cultures are for operating business in different countries. This
should be taken care by IHG while operating business in the both the countries. Culture of a
country reflect the attitude and behavior of the people. So it is very important for IHG to make
sure about this cultural things as they can only earn profit by understanding the culture of theat
country.
In UK, Corporate social responsibility is very important for operating business in UK, as
there is a very strong consumer activism. Apart from this waste management in also an important
environmental factor that reduces the wastage of the natural resources. Other than British people
are very punctual about the time. For example, if a Person is running late for more than a few
minutes, he will be called for making apologies (Rangasamy and et.al., 2015). Giving gift during
a business meeting is not considered as a usual part, this will be take care by IHG while
operating business in UK. Denim wear I not allowed for any professional business meetings as
this will make poor impression. Other than this, British people are very honest with having
relatively low level of corruption (Malik and et.al., 2015). IHG have to considered this things
while operating business in UK that any mistake in any of this will make poor image of the
company.
On contrary to this, in India there is different culture for operating business in effective
ways. During the business meetings it is essential for the junior to greet the senior people of the
organization and also they expect to start some small talks with them (Mora and et.al., 20160.
Other than this, it can take a long time for people to complete negotiation. Hard sales techniques
will not work in the Indian market. Apart from this, indirect approach is preferred for doing
business whereas in UK people usually make direct conversation while making any deal. Other
than this, seven major types of religions and six ethnic groups are there, so there are countless
holidays which depending upon the year, which is not same with UK. Arranging meetings in
these festivals will not be acceptable. Other than this, Indian people mostly starts their business
meetings a cup of tea which should not be refused as it make negative impact (Siddaiah and
Saini, 2016). Indian people do not prefer to offer coffee during the business meetings. For doing
business in India, it requires handshakes while greeting someone. These are some ground on

which culture of UK and India are differentiated which help IHG to operate business easily in
both of the market.
Requirement of resources that need to be take care by company while trading across the borders
There is much difference in requirement of resources while operating business in
different countries. For example in China it requires more skilled and experienced workforce
because there is very tough competition between the companies. While there is less competition
in US with compare to market of China (Taie and Afshari, 2015). They have much time to train
there employee but spending major time in training activities in China will leads to high amount
of loss. As, Chinese market has high competition, it will also requires a huge amount of money
but in US there is less competition in compare to china which requires less amount of money to
business.
EPG MODEL for international business
EPG model refers to an international model which has three dimensions i.e. ethnocentric,
polycentric and geocentric. These dimensions helps the people to develop their strategic planning
more accurately which helps them to achieve their business goals. Through this model an IHG
will be able to find the aspects which are not beneficial for the company and make them in loss. Ethnocentric: In this the company have to follow the trends and traditions of domestic
market which make them able to do their business more effectively. It will focuses on the
similarities between home and foreign country through which they can better find their
goals more efficiently (Sharma, 2015). Through adopting this company will be able to
make greater communication and control over the domestic market which make the
business able to get expected profit. The main critical concept regarding ethnocentric
approach is there is lack of flexibility in the business decisions. In this approach
everything is centered on the domestic market of the country. Apart from this, priority
should be given on searching identical segments in foreign market. In this, home
standards are applied on every market in order to accomplish their organizational goals.
Other than this, in these approach high positions are taken by the managers from the
owner's country. In these approach it is profit for the business that no extra efforts and
cost are needed in order to complete the task.

 Polycentric: Polycentric can also plays an important role in business development. It
deals with one of the attitudes and orientation towards internationalization which is
associated with successive stages in the evolution of international operations. In this
original marketing strategies are typically limited, focusing largely on local growth and
needs of that community (Heidorn, 2015). It is a type of marketing in which companies
attempt to spread out the appeal of their products or services among the multiple
countries. This approach occurs when a business thinks to broaden its operations across
the home country in spite of earning more profit from the international market. It has its
own key factors such as it can takes place in multiple countries rather than just operating
in one or two countries. It will be helpful for making global adaptability. It also tends to
follow ethnocentric marketing through which company can better implement heir
strategies for the business. In this, management is unable to have total control over the
company in the host country because it is found that local market have a better
understanding and understanding of national market conditions (Forrer and Katsos,
2015). The polycentric approach can only be used when there is some amount of comfort
in allowing the host countries to make all major decisions.
 Geocentric: This is the third and last approach under EPG model. This approach does not
shows any bias to either home country or host country. It spotlights the significance of
the doing business whichever is makes more profit for the company (Wang and et.al.,
2015). The approach focuses on building an organization under which the subsidiary is
not only a good citizen of the host nation but it is considered as leading exporter from this
nation in the international community. It help the company to provide better quality of
goods and services. Apart from this, it can provide use of best resources throughout the
world. It will also help in improving local community management. Through adopting
this, IHG can lead to get higher global profits.
By analyzing all the approaches of EPG model, Polycentric approach will be considered as
suitable approach for the company. It will help them to generate more profits while doing
business in the international market.

4) SOCIAL IMPACT
Consideration taken by company while creating social impact:
Social impact basically refers to as the effect of an action carried out by the organization
for the well being of community. In other words, social impact can be defined as an activity
based on the social fabric of the community as well as the well being of the individuals and the
families. In order to become successful in the market, an organization must create a good social
impact on the community. As it is known that InterContinental Hotel Group is carrying out its
services in various parts of the world. The business has been successful in every part of the world
because the company is fulfilling social responsibilities in an effective manner.
Further, to create a strong social impact, organization is required to take several
consideration for that. Moreover, by creating social impact, this firm has created good corporate
image in the minds of customers across the world. In order to create better impact, the
organization can firstly identify the needs and demands of the consumers in different countries.
This can be done by conducting deep market researcher (Vagts and et.al., 2015). This way
organization can identify the behaviour of customers and their needs and wants. Thus, by
providing products and services as per their needs will help the organization to create good
impact. Along with that, by fulfilling the needs of all the stakeholders associated with the
organization the company can fulfil its social responsibilities. However, there are many other
consideration which are required by the IHG to take while creating social impact on the minds of
customers. Based on the theory of Carroll's Pyramid the firm can put the impact socially on the
minds of their customers and society as well. The model has been described as follows:
Theory of Carroll's Pyramid
The Carroll's Pyramid of corporate social responsibility have been propounded by Archie
Carroll. This pyramid has four sections which denotes the four major social responsibilities
which the company is required to perform in order to create social impact on the minds of
consumer. The four responsibilities has been described below which must be considered by the
IHG firm to create strong social impact on the community and customer's mind. Economic responsibility: This is the foremost responsibility which is the foundation of
the business organization. It is mainly concerns the responsibility of a company
accounting the production of services that are needed by the society and selling them for

making a profit for the company. Under this there are seven responsibilities which are to
be taken care by the company in order to fulfil the economic responsibility. The firm
possess shareholders who demands reasonable return on the investment (Yeung and Olds,
2016). There are employees who desire safe and healthy working environment and fair
remuneration for the services rendered and lastly there are customers who demand good
quality goods and services at fair price. Thus, it is the first responsibility to function as a
economic unit. Therefore, IHG must consider their shareholder's value. The firm should
provide appropriate ROI to them and raise their value in order to encourage higher
investment by them. Furthermore, the firm must provide highly safe and healthy working
environment to them so that they can work in an effective manner. Moreover, the
company must also give them fair remuneration against the services rendered.
Furthermore, the company must also provide effective and quality services to their
customers in order to meet their demands and expectations (Hamilton and Webster,
2015). This way company can earn maximum revenue and can fulfil its economic
responsibility in an effective manner. As this is the base of the pyramid so organization
has to first fulfil this responsibility in an effective manner. Furthermore, this will help the
organization to create the social impact on the minds of shareholders, employees and
customers of IHG. Legal Responsibility: This responsibility have to be fulfilled by the organization as this
demands that businesses are abide by the law and play by the rules of the game. It is the
main responsibility of an organization that they should follow the laws and regulations
given by the government in order to reduce the interference of government in business
context. Furthermore, there are many laws such as health and safety law in businesses,
consumer protection law, environment safety law, taxation policy and many other similar
laws and policies (Hair Jr and et.al., 2015). These should be taken care by the firm in
order to avoid the legal action against them and this way company can build the good
corporate image as they are following the laws which are made for the welfare of the
employees, customers and society. Similarly, the organization has to also remain adhere
to the laws and policies while establishing their business in international market. In a
similar manner, IHG should also fulfil this responsibility by remaining adhere to the laws

and regulations made by the government of UK and other countries. Further, this way
company can reduce the intervention by the government and also can avoid legal actions
which will help in carry out the work in a smooth manner (Schniederjans, Schniederjans
and Schniederjans, 2015). Further, when the company carry out its services in
international market then the international law must be followed by them so that the
organization does not face any issue running their business. For example, while
establishing the hotel in India, firm must take care that all the health and safety law at
workplace, environment safety laws and consumer protection laws are followed by the
company so that with the hotel working none of them get any harm. For this aspect, the
organization has to carry out the deep research in every country about the legal laws
which are related to the business so that all these law must be employed in the policy of
the company and this way organization can remain adhere to the policy of the company. Ethical Responsibility: As per the Carroll, ethical responsibility is consist of the
expectation of the society over the economic and legal expectations. This aspect cover
wide range of responsibilities. Ethics must be employed by the organization as it is not
imposed by the government in fact it is implied in the company's policy. In other words,
these are the obligations of the firm to do what is right and fair in order to avoid or reduce
the harm which can be caused to the stakeholders that are employees, consumers,
environment and many other (Schwalbe, 2015). There are many ethical practices which
should be taken care by the company in order to avoid the rejection by the society and
community. Further, the firm is also required to fulfil the ethical responsibilities towards
the society and environment. This way company can accomplish the legal responsibilities
as well. It is required by the business organization that provide fair remuneration to the
employees and workers and do not exploit them, they must provide safe and healthy
working condition to them. Along with that, it is the moral duty of firm towards society
as they do not destroy the environment and do not pollute the natural resources. As this
may lead to the depletion of natural resources which ultimately leads to the difficulty for
the company to carry out their work in a proper manner. In regards with this, IHG should
not adopt such practices which leads to the unethical practices for the company.
Furthermore, the company should fulfil the ethical responsibility in order to create social

impact on the minds of customers and also on the society (Redesigning Carroll's CSR
Pyramid Model - Journal of Advanced Management ScienceVol. 2, No. 3. 2014.). In
order to fulfil this purpose, a firm has to take care that unethical practices such as
hoardings and fraudulent activities carried out against the customers. Giving misleading
advertisement, misguiding the customers, misrepresentation of the services provided.
Along with that, misusing the resources of the country, exploitation of the employees and
many more such practices. Therefore, company should avoid such practices and conduct
ethical practices that are providing hotel services at fair prices, respecting the culture of
the countries where the firm is conducting their services, growing more and more trees to
save the environment and also contributing for the charity purpose. Along with that,
carrying out employee welfare practices. This will help in generating social impact on the
minds of consumers. Philanthropic responsibility: This is the top most responsibility which is to be performed
by the company in order to create social impact on the minds of consumer of different
countries. This suggest that a firm must behave as good corporate citizen of a nation. If
this responsibility is duly performed by the company then organization can achieve their
goals and objectives in an easier manner. This also helps in establishing their business
and getting success in other countries in an easier manner (Hovhannisyan and Keller,
2015). This responsibility mainly focus towards providing luxurious things such as
improving quality of life of employees, local communities and eventually society in
general. The given organization that is IHG has to fulfil this responsibilities in order to
create good social impact on the minds of customers for getting success in international
market. Therefore, the company can organize the employee welfare society so that
employees can take benefits out of it and their living standard get raise. Along with that,
the organization must provide benefit to the local communities by donating for improving
their quality of life. In regards with this, the company can also open up the schools and
business schools to provide education to the slum people at lower rate. This way
company fulfil this responsibilities in order to earn the maximum profit by benefiting
society.

5. CRITICAL EVALUATION OF THE THEORY:
Critical analysis of EPG model: As, EPG model helps the company to make their business
process more effective but in some context it will proved as ineffective. Some authors also
critically evaluated this model in context to get its disadvantages for the business. Ethnocentrism: As, ethnocentrism is very effective approach in context of establishing
an international business. But on contrary to this Brown (2016) states that it gives poor
feedback from the users which make it less effective on the business. Apart from this,
there is less possibility of innovation in the business which make it less attractive for
using as customers always wants new innovations and adventures things from the
company. Other than it will reduce the manufacturing of new and innovative products. Polycentric: Polycentric approach is used for different gentleman strategies and planing
procedures in spite of achieving international operations. On contrary to this statement
Skou (2016) says the approach is making waste of resources due to duplication of the
strategies. Using home country's approach is not enough for making strategies in foreign
countries as different types of rules and regulations are there for both the domestic and
international market. It is not enough for the organization to implement the same
strategies and planning for both international and domestic market. It is difficult to use
the limited resources for the international business which are covering the domestic
market. As there is more competition in international market, so it will be less useful for
the company to use the same techniques for gaining competitive advantages across the
market.
 Geocentric: According to this approach it will not show any type of bias which can be a
loss for the company. This approach involves high communication and travel cost with it.
Apart from this, It has too much wide distribution which makes it more costly and
ineffective. In against of this Hornstein (2015) says it also have an another issue i.e. it
takes major time while making relevant decision for the business. In addition to this, this
approach also have some personnel problems related to reentry of international
executives which leads to failure of organizational goals.
Critical analysis of Carroll's Pyramid