Business free essay: Business Diversification Proposal
Business Diversification Proposal
From the participation experience in the private transport business in New York City and major other parts in the country, it is clear that sufficient benefits of presence in the service industry can sustain diversification projects. In this respect, the familiarity with the service market with respect to the private and luxury transport segments provides the company with necessary assessment for the diversification in the country and abroad (Lovelock and Wirtz, 2009). In view of the magnitude of diversification component when compared with the main business, a strategic approach must ensue in balancing sustainability of the existing business wing and oversee development of the new wing. Participation in the hospitality industry is proposed as the appropriate diversification destination for the company as contained in this discussion. This report highlights the details of conducting diversification plan for the business into a relatively related business line, owing to the growth status of the mainstream business.
As illustrated, shifting from the transport portfolio into the hospitality component as proposed for purposes of business congruence in terms of succession of operations demonstrates the logic behind the proposal. Considering the operations standing and status in the American market coupled with the presence expansion ambitions across the borders, the hospitality industry appears to support growth as anticipated. The role of business complementarity for the two portfolios is for purposes of soaking up risk exposure and provides nurturing to the developing business in a direct version (Lawton and Weaver, 2009). Due to the demands of a new business line of operations with respect to overseas presence as a long-term diversification concept, providing the nexus in synergies of related business in the complementarity concept augurs well with growth prospects.
Similarities of the travel industry and hospitality business in terms of services needed for both private and business packages provide synergies in business operations. Exploiting the nature of opportunities availed by the hospitality industry to the travel component offered by the travel agency line of current operations present upward trajectories in growth projections (Borein, Rowe and Smith 2002). As an illustration, visitors into the City of New York require accommodation, meals, entertainment and leisure products that have traditionally originated from other hospitality businesses with which the company partners. Hospitality component entails venturing into property ownership across the world’s target cities in America, Europe, Middle East and Africa as well as Asia Pacific to support the business model. Rolling out property ownership pushes the diversification component into a long-term consideration, apart from a few New York City pilot project considerations. Diversification of the hospitality and travel agency components will require a couple of years and extensive property market research across the world.
The first foreign market for entry with the new model as deliberated is India, due to the vibrant economic and tourism growth coupled with relatively affordable property transactions. India as an emerging economy in the world today provides excellent attention to investors that provided a lucrative opportunity for business travel for the vast business territory. The centrality of India for Asian markets extending to the Pacific region will facilitate future diversification of transport component into the sea and luxury travel component involving yacht and cruise ship famous as central regional business lines. Growth supported in the vibrant economy will facilitate entry into Middle East and Africa as other potentially beneficial opportunities (Lovelock and Wirtz, 2009). As expected in certain markets to provide an opportunity for a single functionality, entry with one component will also form part of the expansion and diversification strategy. As an illustration, countries with an efficient transport system or stiff competition for private transport may have constricted opportunities for the transport wing currently undertaken. However, entry as a hospitality provider may eventually turn around the opportunities after establishing contact with customers.
Entry into the foreign market space is expected to face several challenges ranging from internal to external variables of the company and the markets. Internal challenges may include finding funds to kick-start the hospitality component that requires ownership of properties to host the accommodation, restaurants, entertainment and other incidental requirements of the industry. Equally, the transport component faces challenges of finding sufficient capital to purchase recommended vehicle models for various travel jurisdictions across the target markets. External challenges such as culture shock in dealing with overseas markets accustomed to a diverse orientation in sociopolitical and economic settings (Dewald and Self, 2008). Rising domestic competition poses a threat to the development of the business as a national service provider for its business portfolio for luxury and middle-end private transport. Foreign competition also offers a significant threat to entrants in the service industry due to the risks involved in such business moves. However, remedies of outsourcing funds and efficient transition into globalization framework facilitate absorption of cultural shock.
Due to the magnitude of challenges in establishing overseas presence in particular markets based on risk analysis, it would be unwise to continue with diversification (Lawton and Weaver, 2009). As illustrated above, entry into certain markets may call for a single component presence as opposed to a diversified entry. For instance, it would be retrospective to launch hospitality component into Italy’s city of Venice that has an efficient and competitive transport business with an opportunity of hospitality investment. The risks currently involved in the Italian economy due to the Eurozone crisis may discourage huge capital investment with chances of luxury traveling likely to experience the economic meltdown.
In terms of ethical participation by the company in its diversification and overseas expansion components, efficient human resource management and world-class corporate social responsibility such as sensitivity to environmental conservation must prevail. In view of customer care component at the company, an ethical approach geared not only to increased satisfaction but also the establishment of customer loyalty benefits will be considered. Upholding integrity in the treatment of customers by all staff members, for instance in protection of luggage and personal effects while under contractual engagement with the company must formulate the applicable ethical culture. Dealing with technology and other customer-based innovations geared towards a competitive advantage experience provides the necessary confidence of diversification. For instance, launching a successful international human resource management component for the entry into overseas business alongside corporate social responsibility positions the company for a strategic entry into the market (Canter et al., 2008).
Borein, F., Rowe, A., & Smith, J. (2002). Travel and tourism: standard level, Cambridge, UK: Cambridge University Press
Canter, D., Chiang, C., Jang, S., & Prince, B. (2008). “An Expectancy Theory Model for Hotel Employee Motivation: Examining the Moderating Role of Communication Satisfaction,” International Journal of Hospitality and Tourism Management, 9(4):327-351
Dewald, B., & Self, J. T. (2008). “Cross-Cultural Training for Expatriate Hotel Managers: An Exploratory Study,” International Journal of Hospitality and Tourism Management, 9(4):352-364
Lawton, L. J., & Weaver, D. B. (2009). “Travel Agency Threats and Opportunities: The Perspective of Successful Owners,” International Journal of Hospitality & Tourism Administration, 10(1):68-92 Doi.org/10.1080/15256480802557283
Lovelock, C. H., & Wirtz, J. (2009). Services marketing: People, technology, strategy (7th edn) Upper Saddle River, NJ: Pearson Prentice Hall
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