International Strategy Report: Hal Luna Luxury Hotel Analysis

This report provides a comparative management analysis for Hal Luna Luxury Hotel, focusing on its international strategy. The analysis examines the environmental contexts of Spain and South Korea, considering cultural, political, and economic factors. The report evaluates potential entry strategies, including offshoring and franchising, to determine the most suitable approach for the hotel's expansion. It assesses the advantages and disadvantages of each strategy in both countries, providing recommendations for the client's investment decisions. The report considers Hofstede's cultural dimensions, political incentives, and economic conditions to inform its conclusions. It highlights the importance of understanding local market dynamics and adapting management practices to succeed in the global tourism and hospitality sectors. The report also discusses the impact of environmental factors and potential risks associated with each entry strategy.

1. Introduction
1.1 Company Background
The International Management Consultant has come up with a new client that is the
organisation of Hal Luna Luxury Hotel. It is a hospitality business, and it operates in
the tourism and hospitality sectors.
1.2 Purpose
The primary purpose of the entire report is to assess and evaluating the practices
and strategies of management that the company can apply and implement in its
business. In the comparative management analysis, entry strategies, management
decision-making approaches and controlled processes have been outlined and
elaborated that the client will require for making an international strategy.
1.3 Scope
This report analyses and reflects upon two different countries: South Korea and
Spain, and the most similar environmental factors that influence or impact them. A
brief overview considering the overall analysis and findings has been provided. At
last, significant actions have been recommended that the client should undertake by
choosing a country for investing in soon.
2. Environmental Context of Selected Countries (external factors)
2-1 Country 1 (Spain)
Culture
According to Hofstede's cultural dimension, Spain is close to a collective society and
is considered in individualism. This means that work and business have a personal
and collaborative relationship in business but can be seen more in individualism. And
in terms of power distance, Spain has high scores, making them a hierarchical
society. It is an inherent inequality and authoritative management style, mainly
reflecting the decisions of senior management. In addition, Spain hashigh
uncertainty avoidance(Business Culture, 2021). This means that Spain prefers rules
and concerns about changing, ambiguous and undefined situations.

Political
Spain's Political organization is Parliamentary Monarchy. The government of Spain is
promoting sustainable tourism. And Spain has incentives for foreigners investing in
the tourism industry. In Spain, Free establishment and non-discrimination principles
apply to foreign investors. But the tourism industry of Spain causes various
environmental problems in the economy such as biodiversity loss, water availability
changes, and rise in natural hazards, inundation and coastal erosion and changes in
agricultural production (World Travel Guide, 2021). Even infrastructural damages
also take place along with the considerable rise in vector-borne diseases further
creating an impact on the varying degrees of tourism.
Economical
Spain has a mixed capitalist economy, which means it has some flexibility while still
being a centralized economy. Also, Spain is a member of the European Union and is
regarded as one of the emerging markets (Climate change, 2021). The tourism and
travel business has made a 177-billion-dollar contribution to Spain's emerging
economy. As a result, starting a tourist business in Spain would provide some
management and autonomy.
Country 2 (South Korea)
Culture
South Korea, which has a low score of individuals, is considered a collectivistic
society. In a collectivist culture, loyalty takes precedence over most other societal
laws and laws. The society promotes deep bonds among its members, with each
individual taking responsibility for the other group members. And South Korea has a
high score of power distance. It tends to managers rely on formal rules to manage as
a hierarchical society. Uncertainty avoidance is strong in South Korea (Asia link
business, 2021). This high Uncertainty Avoidance follows rigorous religious and
behavioral management and is intolerant of unconventional behaviour and ideas.
Political

South Korea is a presidential representative democratic republic. South Korea's
tourism vision is to connect the country to the rest of the globe while also aiding and
integrating with developing nations and has foreign investment incentives such as
tax assistance, cash subsidy and backing for industrial sites. Along with the country’s
legislative power, budget bills are decided by the National Assembly that the
Executive submits.
Economical
South Korea, which had remained one of the world's poorest countries, has seen
significant economic growth over a long period since 1960. South Korea's economy
is Asia's fourth-largest. Following the Great Recession, South Korea is still one of the
world's fastest-growing industrialized countries (Globaledge, 2021). The economic
system of South Korea is mixed which mainly comprises an array of private freedom
together with government regulation and economic planning that is centralized.

1. Comparative Management Analysis (internal mechanisms)
3. Comparative Management Analysis (internal mechanisms)
3.1 Entry Strategies
Briefly describe your client’s operations, size and requirements for their international
strategy.
3.1.1 Entry strategy 1
Off-shoring
Hal Luna Luxury Hotel can adopt an offshoring strategy by relocating the overall
business operations to the target country. Offshoring services is significant as a
competitive strategy in particular tourist industries by gradually rising in importance
(Fuster, Lillo-Bañuls, &Martínez-Mora, 2018). It will assist in decreasing the cost of
operations and using the available resources (Farrell, 2004). The management will
focus on the core functions, use a skilled workforce, and better control the operations
(M, 2019). However, Spain and South Korea drawback from offshoring in limitations
have been associated with the strategy, such as language barrier because of the
gap between the following local language and the native language, communication
barrier the change in the country (Larsen, Manning, & Pedersen, 2013). Even though
they have language barriers, both South Korea and Spain countries benefit from
better understanding the market, utilization of the resources, providing services to a

foreign market, and low risk of failure (Farrell, 2004). And South Korea benefits from
offshoring in 24*7 operation. According to (Hofstede,2021), South Korean tend to
have an underlying hard work because time equals money by high uncertainty
avoidance.
Advantages of off shoring in South Korea – Here, advantage is that political
environment of country remain stable. Thus, it will help company to use this strategy.
Itincludes lower risks in business, lower costs, exercising more control in the
business, business expansion flexibility in the business.
Advantages of off shoring in Spain –Spain government provide incentives to
foreign investors. Hence, it will be beneficial for business to enter through off
shoring. It helps the company to enhance the culture and lower the costs.
Destinations like India and America support the off shoring business of Spain.
Disadvantages of off shoring in South Korea – There is high risk in this as South
Korea focus on hard work and is having high uncertainty avoidance in culture. this
includes synchronization and calibration, there can be lack of engagement and
customer focus.
Disadvantages of off shoring in Spain – In Spain, there arises quality control
problems. Along with this, there is high rise of labor cost in the country for the
process of outsourcing. And security issues in the business are the major
disadvantage.
3.1.2 Entry strategy 2
Franchising
Hal Luna Luxury Hotel can adopt a franchising strategy to capture the market share.
It will assist in determining and retaining appropriate customers. There would be a
contract between the two parties, which consists of terms and conditions. It will help
the hotel increase its brand presence, capture the distribution and marketing system,
and understand the valuable customers in the market (Pranoto, 2010). The
organization will be able to utilize the resources of the franchisee and penetrate the

market quickly. According to Pranoto (2010), the benefits of the strategy are
gathering information on the local market, sharing financial risk, and leveraging
business suitable for expansion. In addition, franchising can make fair profits to
franchisees without taking huge capital risks or dealing with management problems
(El-sayed, Tang, & Jones, 2011). However, the major disadvantage of this strategy
for a franchisor is that it will be held accountable for its franchisee's debts in the
event of bankruptcy (Pranoto, 2010). Besides that, there are drawbacks such as
motivation and maintenance of franchisee, publicized conflicts and disputes,
inconsistent control, and customer relationship quality (El-sayed, Tang, & Jones,
2011).
Advantages of franchising in South Korea – The company will be able to adopt
culture of South easily. They can attract customers from that.
Advantages of franchising in Spain – The hotel will be able to do business
easily as economy of Spain in tourism is growing rapidly.
Disadvantages of franchising in South Korea –culture of country is different
from Australia. So, in franchising hotel may face various issues related to
language, communication, etc.
Disadvantages of franchising in Spain – In Spain as well culture of country is
different from Australia. So, in franchising hotel may face various issues related
to language, communication, etc.