Company Description and Its Operations, Relative Size, and Reasons for Going International - Free Essay

Introduction

Having launched its operations in 2016, Excel Tours has managed to penetrate the market effectively, acquiring, a market share of 3%. Based on the current competition, it is correct to say that the company has entered the market successfully. Among the reasons why the organization has succeeded in the market is because it offers reliable services, and a variety of services to meet the needs and expectations of the diversified customers. Currently, the company has operations in the United States but intends to expand its operations to the Chinese market.

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Services the company offers include coordinating local and international travel. In the last four years, the company has been focusing on domestic tourism, and for this reason, it understands the customers better. The second service the organization offers is visa processing for domestic and international visitors. It works directly with relevant authorities to process visas for all clients. Direct processing reduces the cost of services and gives the company a competitive advantage due to its cost-effective strategies. Additionally, the company offers hotel booking services to its clients. It has direct links with the various categories of hotels for easy booking. For example, customers have choices about levels of hotels they book, including five-star, three-star, and four-star hotels.

Reasons for going international include the need to expand sales and organizational profitability. Competition in the domestic market increases annually, hence the need to exploit opportunities in new markets. The best way to sustain a competitive advantage is to diversify the market and offer new services to new clients. The company cannot improve its profitability without enlarging the customer base. Therefore, the organization will enjoy new customers in the target market, thus increasing its profitability.

Appropriate Country to Operate

The selected country to expand the business operations to is China. It is because the country is one of the economic giants in the region. In the 2017 fiscal year, the tourism industry generated CNY 4.57 trillion, indicating an increase of 15.9% from the previous year (Songling, Ishtiaq & Thanh, 2019, p. 4, para. 2). Further, the sector contributes about 28.25% to the economy through direct employment, and about 80 million people directly benefiting (Songling et al., 2019, p. 4, para. 4). In this regard, the country is the best choice to operate the company because of the rate at which the industry is growing creating demand for the services of Excel Tours.

Planned Entry Strategy

The planned entry strategy is the use of the Internet. Particularly, the company will use Facebook, Twitter, Instagram, and the company website to promote its services before entering the market to create awareness for the target audience about the new company. The strategies are effective because they are cost-effective since the company requires few employees to promote its services and keep track of what local customers want (Watson, Weaven, Perkins, Sardana & Palmatier, 2018, p. 43, para. 5). Also, the methods help to create a constant conversation with the customers online to understand their unmet needs, although there are existing firms in the market. Although the Chinese economy uses superior technology in its operations, Excel Tours will export the American culture and way of doing business to create demand for its products and services. Exporting new services to new markets is crucial since it helps to offer differentiated services, such as customer focus to create a lasting relationship with the clients.

Environment Description and Factors to Consider

Excel Tours will operate in a competitive environment in Beijing, China. Among the leading tour operators include Beijing Tours, Beijing China Travel Service, and China International Travel Service Limited. However, the city offers great opportunities due to the ever-growing Chinese population and the diversity of the dwellers. Factors to consider that may affect the business include political risks. Political forces, such as government regulations are likely to hinder the operations of the company (Hitt, Ireland, & Hoskisson, 2015, p. 249, para. 2). However, China is a stable political economy; hence there will be no disruptions during government transition. Further, the potential effects of corruption may also affect business operations. Being an American company, Excel Tours does not entertain any form of corruption as this would affect the company’s financial structure. The economic risk is that Chinese firms may buy shares in the company and take ownership (Hitt et al., 2015, p. 250, para. 2). Consequently, it is possible to lose the company to foreigners; hence the need to limit the number of shares individuals and firms can buy.

Cultural Profile of the Local Area to Operate, Workers, and Anticipated Reception

Beijing is the capital city of the People’s Republic of China; hence the central government administers its operations. The city hosts among the world’s largest heritage; hence it attracts visitors from across the world. 99 of its cultural sites enjoy state protection, as well as five natural parks. Other resources the national government protects include 15 national parks, and 151 museums (UNWTO, 2018, p. 7, para. 2). It demonstrates that the company must adhere to the national government policies while doing business, including employment policies. The city is one of the leading destinations for global and domestic tourists. In 2015, the city received 173 million visitors. Its total income in the same year was USD $ 73.95 billion (UNWTO, 2018, p. 8, para. 1). Domestic and international visitors increased by 48.3% from 2010 to 2015. It demonstrates that the city has among the greatest opportunities despite control from the national government.

Based on the local business environment, the company will hire 40% of the employees from the locals because they understand the local culture. For example, they can speak Chinese and better understand the needs and expectations of domestic tourists. However, the employee must have experience of at least four years and show their competency in the tour operations. Since the national government governs Beijing, Excel Tours will adhere to employment regulations and business permits. Importantly, the company will develop partnership working relationships with stakeholders, such as suppliers, hotels, and airlines to help offer quality services to meet the needs of the customers.

Organizational Structure

Excel Tours will use a hierarchical organizational structure in its international operations. The structure is preferred because it helps to streamline communication lines. It is because the head office formulates decisions and strategic plans. However, since the company will establish new operations in China, it will have a regional manager to coordinate its operations (NIBusiness, n.d, p. 1, para. 6). Additionally, the structure gives clear results since it is easier to organize the firm according to job categories and allocate tasks to employees for easy administration. However, the problem with the structure is the decentralization of power that may affect business operations in Beijing China. The regional manager will work directly with departmental heads to develop programs and strategic plans for the company’s operations in the respective region.

Staffing Policy for Top-Level Managers

The staffing policy the company will use is ethnocentric. The approach designates employees from the home country as top managers in global activities. It means that the company exports top employees from the head office to the regional operations. The purpose of using this policy is that it ensure the continuity of company culture in the target market (Whitehead, 2017, p. 1, para. 2). For example, top employees will uphold the policies and values of the company and ensure everyone understands its long-term plans. However, they must adjust their regulations to fit the Beijing environment and regulations but they should not deviate from the long-term goals and objectives.

Leadership and Motivational Systems to Apply

Excel Tours will use a democratic leadership style in the target market. The strategy is effective since it helps to engage employees from diversified labor markets and exploit their potential to grow the company. The objective is to create a cross-border strategic alliance that involves combining international and domestic resources and competencies to create a competitive advantage (Hitt et al., 2015, p. 279, para. 5). For example, local employees will work hand-in-hand with senior managers to develop policies and systems that would meet the needs and expectations of the local customers. Furthermore, the company will offer paid holiday packages to employees annually as a way of motivating them to offer superior experiences to the customers.

Potential Communication Problems and How to Deal With Them

The potential communication problem in the new market is language disparities. Most employees exported from the host country may not understand Chinese; hence they may face serious communication channels. Similarly, communication signs and symbols differ between the host country and the new market segment. However, the company will hire interpreters to help in communication and ensure coon understanding. However, the employees will undergo training to learn the Chinese language to help in serving customers diligently. In this way, the company will reduce the cost of hiring interpreters.

Special Controls and How to Deal With Them

Although it is a good idea for the company to hire a regional manager from the locals, the company may not have control of the region as intended. This is because the manager may not understand the company culture despite understanding trends in Chinese culture. In this way, the company will export a regional manager from the host country and hire an assistant locally. In this way, the company will encourage the managers to understand one another and work collaboratively to deliver positive results for the company. Importantly, the recruitment team will consider hiring a regional manager with Chinese experience, including the Chinese language.

Concerns of the Host Country and the Local Community and Plans to Ensure Long-Term Cooperation

The first concern of the host country is competition. The extent of competition in the tourism industry in Beijing becomes intense annually from domestic and international companies. Therefore, the company will develop partnerships with local companies to share their experience and mobilize their resources towards building a strong basis for competition (UNWTO, 2018, p. 14, para. 2). As the competition increases, clients demand more; hence the need to engage in research and development to develop superior products and services to meet the needs of the customers.

Beijing, like other cities, is facing common problems, such as traffic congestion, high cost of living, and high population density. Consequently, many visitors would not want to experience these problems (UNWTO, 2018, p. 15, para. 1). Therefore, Excel Tours will partner with stakeholders, such as hotels and tourist attraction sites in the suburbs of the city to build a comfortable customer experience. In this way, customers will enjoy an excellent experience and environment outside the city.