Table of content
Introduction
1. Globalization and its definition
2. Globalization and Hospitality Industry
3. Challenges brought by Globalization
3.1 Globalizing marketing
3.2 Global promotion
3.3 Global advertising
3.4 Global e-marketing
3.5 Global pricing
3.6 Global ethics
4. Strategies and tends toward Globalization
Conclusion
References
World maps define national boundaries, but those lines belay the increasingly clear nature of the global economy. As recently as 30 years ago the international enterprise was a relatively rare phenomenon, and the term multinational was seldom heard (Gomes, 1991). Today, many companies have transcended the multinational phase and operate as trans-national or global companies. These labels reflect a major shift in the structure of the world market for goods and services - a shift to a competitive framework that has far-reaching impacts for almost all industries. Experts have predicted that by the year 2015, global corporations will control approximately half of the world’s assets. Сompanies are in the process of internationalizing the production of a vast array of manufactured goods, with mega-companies controlling factories all over the world.
Globalization has become an umbrella word for a number of political, sociological, environmental and economic trends which present challenges on a worldwide scale. The world as it was known long time ago, does not exist any longer, now we experience “shrunk" world (Dr. M.Cho, 2005). The globalization of business and lifestyles is characterized by communicating over vast distances in foreign languages, frequent travel to overseas countries, dealing in many currencies, and coping with a variety of political and social systems, regulatory environments, cultures and customs. While these aspects of globalization are easy to identify, understanding the underlying current and future trends can be problematic. Analysis, however, reveals that a number of issues are reshaping the global hospitality industry, although there are clearly some complex questions that are still to be resolved:
· International expansion with common product and brand position;
· Sales and marketing programs that fully capture global economies of scale;
· Organizational structures that allow global delivery of services with local operational control;
· Cross-border employee training to support operations (Cline R.S. n.d.).
Globalization is typified by the rapid movement of people, information and capital across national borders worldwide in ways that would have been difficult to envision not too many years ago. Yet 'globalization,' accepted though it is as a fashionable force, is a big concept requiring careful definition. As many experts you as many definitions you will get, therefore in this paper I will challenge to point out different definition of globalization and what is behind it. This paper will outline such issues as globalization vs. Internationalization and its difference. Globalization has huge influence on Hospitality Industry, and it brought lots of challenges, consequently Hospitality Industry should and does keep up with rigid business by defining strategies and tends toward Globalization.
In order to understand globalization, after defining it, we should have a look at how it got started. “During the 1970s the word “globalization” was never mentioned in the pages of the New York Times. In the 1980s the word cropped up less than once a week, in the first half of the 1990s less than twice a week - and in the latter half of the decade no more than three times a week. In 2000 there were 514 stories in the paper that made reference to “globalization”; there were 364 stories in 2001 and 393 references in 2002.
Based on stories in the New York Times, the idea of being “anti-globalization" was not one that existed before about 1999. Turning from the newspaper to the internet, “globalization” brings up 1.6m links through the use of the Google search engine, and typing in “anti-globalization" brings up 80,000 links.
Type in globalization and inequality and there are almost 500,000 references, 700,000 references to globalization and environment, almost 200,000 links to globalization and labour standards, 50,000 references to globalization and multinationals, and 70,000 references to globalization and cultural diversity and search of globalization and the IMF yields 180,000 suggestions.
The search for better and cheaper ways of doing business always seems to be an unstoppable force that drives multinationals to locales that offer the greatest “incentives" - subsidies, low taxes, low wages, and easy access to markets" (S. Fischer, 2003).
These locales almost never include the home country whose very success has made it unattractive due to high wages and societal protectors such as labour unions which struggle for working rights and employment law.
With such vast variety of product, companies need to keep customers’ loyalty, thus forced to go internationally. People nowadays aggressively travel, therefore expecting to find known product or service worldwide. Business world works in a jungle way - “either you have dinner or you are dinner”.
What is Globalization?
There are nearly as many definitions of globalization as authors who write on the subject. One review, by Scholte, provides a classification of at least five broad sets of definitions:
Globalization, as internationalization.The “global" in globalization is viewed “as simply another adjective to describe cross-border relations between countries.” It describes the growth in international exchange and interdependence.
Globalization, as liberalization.Removing government-imposed restrictions on movements between countries.
Globalization as universalization.Process of spreading ideas and experiences to people at all corners of the earth so that aspirations and experiences around the world become harmonized.
Globalization as westernization or modernization.The social structures of modernity (capitalism, industrialism, etc.) are spread the world over, destroying cultures and local self-determination in the process.
Globalization as deterritorialization. Process of the “reconfiguration of geography, so that social space is no longer wholly mapped in terms of territorial places, territorial distances and territorial borders.” (Najam, A., Runnalls, D., Halle, M., 2007)
Values can play a role in defining globalization. A definition of globalization as "Americanization" or, perhaps, the "McDonaldization," of the world presents globalization as a process driven by American consumer culture that rolls over other cultures. On the other hand, another definition of globalization highlights its cross-cultural impact, taking into account the nature of globalization as a way cultures interact and learn from each other. Globalization is the acceleration and intensification of interaction and integration among the people, companies, and governments of different nations (Rothenberg, L.E., 2002-2003).
The term “globalization” is widely used to describe the increasing internationalization of financial markets and of markets for goods and services. Globalization refers above all to a dynamic and multidimensional process whereby national resources become more and more internationally mobile while national economies become increasingly interdependent. (OECD’s Handbook on Economic Globalization Indicators, p.11cited by C.S. Carson (2006)).
Out of all these definitions the one which state that Globalization is the system of interaction among the countries of the world in order to develop the global economy and refers to the integration of economics and societies all over the world, involving technological, economic, political, and cultural exchanges, which made possible largely by advances in communication, transportation, and infrastructure, is the most common one. Having in mind different areas of business, we can define globalization in a dissimilar way, but no matter how it is described, globalization will drive us toward something innovate and unexplored, which we will have to face and deal with.
The hospitality industry is by nature an international one. As international trade and business expand, there is little question but that international linkage will become even more important for the industry in such competitive business environment. Defining the international hotel industry is not an easy mission. Broadly, the international hotel industry can be defined as an industry that exports hospitality services and generates export income. In a sense the hotel industry has always been international, because most hotels have received foreign guests at one time or another. As the industry has evolved over the years, its structure has become increasingly more complex with respect to range, ownership, management, and affiliation. There are many models one may observe, such as independently owned and operated properties; properties that are independently owned and operated with chain affiliation; chain-owned and-operated properties; independently owned, chain-operated properties; franchised properties; referral group properties and others (Gee, 1994).
Table 1. Characteristics of Globalization in Tourism (Feige 1998: 111)
| ECONOMY |
| Horizontal and vertical integration strategies of tourism enterprisesForeign investment in hotels and tourist attractions ("global tourism markets")Global players and strategic alliances (air companies, hotels, tour operators)Global tourism managementGlobal competition of holiday resorts |
| TECHNOLOGY |
| Global booking systemsStandardized technologies in transport systems |
| CULTURE |
| Global tourist: uniform traveller behaviourCreation of "global tourist village" |
| ECOLOGY |
| Tourism as "global syndrome of ecology problem"Climate changes and their effects on destinations |
| POLITICS |
| Increasing importance of international tourism organizationsNecessity for global coordination and regulation of passenger circulationSustainable development as quality and dominant idea. |
Most of sub industries of hospitality industry were influenced by globalization. Here are some examples:
Hotels: in the period between 1980 and 1998 the global accommodation capacity increased from 8 to 15.4 million beds. The largest increase took place in Europe, it accounts for 38.5 percent and is followed by the USA accounting for 33.5 percent. In the nineties most hotels, around 70,000, were opened in south Asia, a 45 percent growth was achieved in East Asia and in the Pacific Ocean. Six Continents Hotels has established strategic partnerships with 47 global air carriers. Radisson Hotels, which are part of Carlson Group travel companies, expanded with the help of international strategy based on SP with local hotels worldwide, such as Edwardian Hotels in Great Britain and Movenpick in Switzerland (Tipurić 2002: 212).
Tour operators: global distribution network of tour operators and travel agencies is one of the most consolidated businesses. The German TUI, former Preussag, features on the list of the largest corporations. Preussag entered the European travel market only in 1997 when it purchased TUI, the biggest German tour operator. One year later it bought Thomas Cook and Carlson UK and in May 2000 the major British tour operator Thomson. Due to anti-monopoly regulations Preussag was forced to sell Thomas Cook. C&N Touristik was founded in 1998 when the German company Karlstadt Quells decided to start cooperation between its TO NUR Touristic Gmbh and Lufthansa's charter air company Condor Flugdienst Gmbh. They purchased Thomas Cook, whom they were forced to sell, if it wanted to overtake Thomson. They decided to stop using the name C&N since Thomas Cook sounds better (Klančnik 2003: 55). In addition, in the year 2000 TUI formed a strategic partnership with the French tour operator Nouvelles Frontierres by purchasing 13 percent of its shares. It also entered into a SP with the leading Italian tour operator Alpitour by buying 10 percent of its shares (Tipurić 2002, 212).
The air travel industry: air companies are merging worldwide. The five major alliances are: Star Alliance, Oneworld, Wings, Qualifier and Global Sky Team. Everything started with the appearance of hubs offering services to millions of passengers from smaller emissive markets, such as Frankfurt and Vienna. Deregulation, the measure allowing flights out of the domestic country, made it possible for air companies to fly from everywhere and in all directions which is the most evident proof of globalization (V. Peric, 2005)
Globalization has positive and negative impacts on the Hospitality Industry.
Table 2. Positive and Negative Impacts on the Hospitality Industry (http://www.scribd.com/doc/8691190/Discuss-the-Impact-of-Globalization-on-the-Hospitality-Industry)
| Positive | Negative |
| Exposure to different cultures: Due to globalization the managers of the Hospitality industry are able to learn about different cultures-as they get to mingle with people from various walks of life - and thus, increase their knowledge. | Language Barriers: Due to globalization, the hospitality industry can employ people from different countries - as it is usually cheaper - they may sometimes have problems in communicating with customers. Many customers get quite irate as a result of this. |
| Larger Market: Due to globalization the customer base has increased greatly. People travel not only for holidays, but business, health and various other purposes too. Thus, this has increased the market for the hospitality industry, which gets its major income from international travellers. | Cultural Barriers: As there are people from various cultures, one needs to be careful not to offend them. What is acceptable by one culture may be frowned upon by another. |
| Boosts the economy: Visitors come in and spend money - multiplier effect - and foreign exchange increases. Thus it is of great value to the economy as globalization helps to pump in money into the country. | Events/Disasters in other countries: A disaster or even taking place in one country may affect other countries also. As an example, the financial crisis makes less people want to spend money or travel; due to increase in terrorism some visitors yet are not ready to travel to certain countries. |
| Technology Advancement: Since one wants to attract as many tourists as possible, hospitality organizations constantly need to upgrade and improve their product and services | Seasonal Employment: During peak periods, a lot of jobs are available but as soon as tourists go back the jobs disappear as well and after local population has no income. |
| Promote creativity: Organizations are constantly thinking of new and creative ideas to attract more tourists. | Increasing use of technology to communicate: Due to international barriers, there has been a steady increase in the use of technology for communication (through the internet, voice recording). This removes the human touch. |
| More Job Opportunities: Due to globalization, more visitors coming and thus more people are needed to serve and cater to their needs. So, with the advent of globalization, there are a lot of more jobs available for people within the hospitality industry. | Developing countries: Countries that are unable to keep up with the advancement in technology tend to lose out. (E.g. Africa does not have the infrastructure or technology as yet to welcome a large amount of foreign visitors, though it does have a lot of natural attractions. To increase the flow, it would have to improve conditions; otherwise tourists have a vast sea of areas to choose from). |
| Boosts the Travel Industry: Due to globalization more people move around, to facilitate this, the travel industry needs to grow as well. People come to their destinations by air, or ship, or land use the transport services offered as well. | Increase in crime rate: With the increase in tourists, crimes such as pick-pocketing, hustling, rape and smuggling increase too. |
| Variety of International Services/Cuisines: Since there are a lot of different visitors with various cultures, customs, cuisines, and languages, the hospitality industry includes recipes and various other services to cater to them. These services are available to the local too, which makes it even better. | Bad Habits: People from other countries sometimes influence the local youth in a bad way. Increase in drugs and promiscuous behaviour, etc. |
| Environmental Depletion: Globalization causes an imbalance in the eco system. People usually throw their garbage around everywhere which could cause sicknesses, to encourage more visitors, areas of greenery are cleared and wildlife killed - which is a major cause for global warming. | |
| Loss of cultural pride and values: To suit customer needs one needs to change or modify various services and product (e.g. certain dishes are changed (in taste, names become more westernized) to make them more attractive to visitors). This, in a way, leads to the loss of culture as one wants to become and behave like most of the tourists. |
Globalization has increased the interdependence between countries, economies and people. Tourism has become big business and is run by great trusts. Nevertheless, in addition to all gratuities, globalization brought lots of challenges.