CHAMPA CENTRAL HOTEL, MALDIVES

INTERNATIONALIZATION

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Table of Contents

1. Introduction – Champa Central Hotel, Maldives................................................................................1

Purpose of the Study - Scope...................................................................................................................2

Drivers Favoring Internationalization Strategy – Success in Domestic Market.......................................2

Factors driving to Internationalization.....................................................................................................3

2. Readiness for Internationalization.......................................................................................................4

3. Macro Environment Analysis – India(Host Country).........................................................................4

Macro environment Analysis - PESTEL Analysis...................................................................................5

Porter’s Diamond Model for Assessing National Competitiveness..........................................................5

Hofstede’s Cultural Dimension Analysis:................................................................................................7

4. Strategy Formulation............................................................................................................................7

International Strategy – Investments (Joint Venture)...............................................................................7

Internationalization:.................................................................................................................................9

5. Conclusion..............................................................................................................................................9

References..................................................................................................................................................9

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1. Introduction – Champa Central Hotel, Maldives
Central Hotel is a well established hotel in the Male city of Maldives. The hotel is
renovated in 2016 and named as Champa Central Hotel with more facilities accommodated than
the previous Hotel structure. The expansion of hotel includes new building with more rooms and
modern facilities to the visitors. The hotel offers premium services to its various customers
according to their needs such as facilities for business meetings, special occasions like weddings,
birthdays and other corporate events.
Champa Central Hotel is a 4-star rated hotel that has leading position in the capital city of
Maldives which provides premium quality service at convenient location for local and
international guests who visiting the hotel. The exceptional, unique service and personalised
attention for each guests makes them feel at home and inspires them to return to the hotel year
after year. Champa Central Hotel is located in centre of the capital city. The premium quality
service at an affordable price makes the hotel as choice of both business and leisure travellers.
The hotel is located near to the famous tourist spot of the city like Museum, Mosque and
parliament. The hotel as a special attraction, that makes it unique among other hotels in the city
which is Roof Top Restaurant located at the highest place of the city restaurant. The restaurant
offers variety of international dishes with specialized dishes from Indian Cuisine. The Champa
Central Hotels offers other services like sightseeing, water sports and other entertainment
program that represents culture and history of Maldives, and other board games. The Hotel has
coffee shop and a rooftop restaurant in the hotel that fulfils the social and business needs of the
guests.
Purpose of the Study - Scope
The major purpose of the current study is to assess and measure the Champa Central
Hotel opportunity prevails in the international market to start its business. It also measures the
factors of macro environment that can contribute positive signals for starting business in that
particular country.
The scope is that the study delivers the results for sustainable capacity of the Champa
Central Hotel for Internationalization through the analysis like PESTEL analysis, Porters
Diamond Model and Hofstede Cultural Dimension and the appropriate global entry mode for
success in the new market

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Drivers Favoring Internationalization Strategy – Success in Domestic Market
Champa Central Hotel is the considered as the best hotel that wins awards in the city of
Male for Hotels along with convenience and luxury to travel from the Male city of Maldives. The
Hotel Gained a 4 star status that comforts by providing modern venue, affordable cost and
premium quality of service that makes it as a preferred choice of hotel for leisure, events and
business. The hotel has includes a roof top restaurant an unique feature, café shop and to
contemporary meeting rooms that makes it the choice of all kind of tourist visiting the country.
The hotel was recently renovated to the new look that creates additional attraction to the Hotel.
Thus, the Champa Central Hotel identifies several strategies in attracting customers to their
hotels which states their marketing and promotional skills in upgrading and sustaining
competitive skills for beat the competition in the market.

Maldives is an island country comprises of 1190 islands of which 188 islands are
inhabited. The country population is highly populated in the Male, the capital city accounts for
nearly 39% of the total population. Tourism accounts for a third of the Maldives’ gross domestic
product, measured at $3.5 billion in 2017. The Maldivian economy focuses mainly on fishing,
agriculture and tourism that accounts for 28% of the Gross Domestic Product (Tourism Ministry,
Maldives, 2018; Michael Taylor, 2018). The country has recorded a new height in 2017 as it the
number of tourists visited records 1.3 million. This growth in the industry attracts many players
to start new hotels in the country which increases the competition also. But, the hotels which
provides better service attracts loyal and repetitive customers for them which creates hurdles for
the new hotels.

Factors driving to Internationalization

 To develop economies of scale, as the selected market is bigger than the domestic
market and to become economical through high attractiveness in the host country.

 Internationalizing the company can be economically profitable by availing low

cost and also access to cheaper labor force.

 Labor force will provide a chance for the company to lower its operating cost in
long term through a vast contribution margin and lower operating expenses.

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  The employment of new labor force in the company after internationalization
offers new ideas, thoughts and capabilities from them to the company which
provides additional advantage to the company in both domestic and international
market.

 The internationalization readiness stabilizes the risks and provides opportunity to

gain strategic power. The failure of one market can be balanced by the gains from
other market.

 Gains competitive advantage in foreign markets will provide even stronger

position to compete in the domestic Market (Grunig & Morschett, 2012).

2. Readiness for Internationalization

Many internationalization models deal with selecting the right country or selecting the
right entry mode as part of a two-sided process (Meier & Meschi, 2010). The international
business assessment model is a tool developed for identifying the capabilities and progressive
areas while internationalizing the business ( Carroll, 2012). The readiness of internationalization
should be examined through the fields customer understanding, market deduction, Business
knowledge and entry mode.
Champa Central Hotel plans to start a new hotel in India. India is a country with rich
culture, traditional values and multiple religions with great population and growing economy.
India attracts more tourists visiting the country as like Maldives which provides the scope of
growth for hotel business in the country. The service sector of India contributes to the major
portion of the nation total GDP. It is estimated that the GDP of India will grow more than 100%
in next ten years from US $234 billion in 2017 to a peak of US $493 Billion in 2028(Indian
Tourism and Hospitality Industry Report, March 2019). The company also has stable market for
the development of foreign organizations starting their company in India as they do in their home
country. The labor force and market for tourism is attractive as the country has a mix of several
culture that creates uniqueness about India from other countries of the world. India is the second
largest population of the world and it moved six places up to climb 34 th place in the world
tourism index. These milestones provide better opportunity for the growth of the hotel industry
in India.

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3. Macro Environment Analysis – India(Host Country)
A Qualitative business environment evaluation of macro environment is mainly required
to formulate a business entry strategy that can start its new operation in the new markets that can
reduce the possibility of unfavorable impact of environmental changes (Kozlinskis, Guseva
2006). Multi-dimensional style of evaluating the macro factors of an economy can be done
through PESTEL analysis which gives proper understanding about the strategic orientation of the
organization (Aguilar, 1967). Thus PESTEL analysis assist the organizations to make informed
decisions about its activities (Kremer & Symmons, 2015).Six major factors has been analyzed in
PESTEL Analysis they are namely political, economic, social, technical,environmental, and
legal. PESTEL analysis is considered as the vital tool to organize environmental factors in a
structured way that can provide an overview to the company for making better decisions about
the environmental factors (Sandberg et.al, 2016).

Macro environment Analysis - PESTEL Analysis

Political Factor Analysis
 Government follows a three tier structure
 One of the Largest democratic country in the world
 Political environment is largely stable
 Political parties have limited powers than the government policies
Economic Factor Analysis
 GDP of the country is expected to achieve 7.4% in 2020
 By nominal GDP India is the 7th largest economy
 Ranks 34 in world tourism index.
Social Factor Analysis
 Youngest populated Country in the world with a median age of 27.9years.
 The population is second largest next to china in the world with 1.3 billion.
Technological Factor Analysis
 Third largest mobile phone users in the world
 More technologically upgraded economy with rich infrastructure facility
 4g Internet services enabled and expecting 5G in next year.

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Environmental Factor Analysis
 Natural resources are high
 Climatic conditions differ simultaneously with different landscapes found in the country.
 Plastics banned in hill stations
 Air pollution is high in Delhi, capital city of India
Legal Factor Analysis
 Labor laws and consumer protection law aids the benefit of consumers
 Business activities are governed by Companies Act, 2013

Porter’s Diamond Model for Assessing National Competitiveness

Firm Strategy,
Structure and
Rivalry:
 Labor cost is
cheap and more labor force available due to the young population
 Multi brands provides opportunity for new organizations
 Service sector is the backbone of the Indian Economy
Related Supporting Industries:
 Tourism industry grows rapidly which climbed 6 places up in the world tourism index.
 Foreign direct investments are allowed by new policies to start up new firms from foreign
country.
 Population and diverse culture allows more travel within the country itself.
Demand Conditions:
 Ranked 7th in the sectoral contribution to country GDP by travel and tourism sector,
which shows there is remarkable growth potential in hotel industry.

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  Travel industry growth ensures the demand for hospitality and hotel industry as well in
the country.
Factor Conditions:
 Luxurious and economical rooms are limited
 Hotel management education offers more skilled labor to the industry.
Chance:
 Government frames several policies and spends more money to develop the Infrastructure
facilities in the country.
 Indian hotels finds alliances with global hotel chains to operate in India
 Policies and taxes are smoothens for new start-ups.
Hofstede’s Cultural Dimension Analysis:

Cultural Element Home Country Culture Host Country Culture Scale

Scale (Maldives) (India)
Individualism vs. People are more collectivistic The intermediate score of 48,
Collectivism as they interdependence is indicates, the country is both
low. collective and individualistic.
Power Distance High power distance Power Distance in India is 77
(High Score) People obey
orders and accept hierarchy in
society and organizations.
Uncertainty Avoidance People took time to accept India score of uncertainty is
new products, ideas and 40 medium low. Society
policies in the society accepts imperfection as it’s a
nation of patience.
Masculinity Vs. Femininity Masculine culture – people India score 56, considered as
looks for achieving higher a masculine, seeks attention
success for success and power.

4. Strategy Formulation
International Strategy – Investments (Joint Venture)
A firm expanding internationally has to decide upon a strategy that can ensure gaining
competitive advantage in the host country. The decision has to involve separate ownership

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strategy and control on business operations strategy that can provide access and control to its
business operation in foreign country (Dev, Erramilli, and Agarwal 2002).

Champa Central Hotel has selected the international strategy for entering the foreign
market India. The strategy of international states the firm entitling its ownership in the business
activity of foreign market. The strategy provides multiple choices to choose for entering the
global market that facilitates success for the firm moving internationally (Anderson and
Gatignon, 1986). Companies plan for expansion through international strategy is considered as
an vital step in the history of that particular company. In emerging market economies many
companies that are growing and leading in their domestic market starts its operation
internationally which is trending behaviour in international business (Mathes, 2006). To be
competitive and adoptable to various market situations it has become vital for the organizations
to enter into global market. The international strategy has three major modes of entry Export
(Home Country Based & Host Country Based), Investments and Contracts.

Champa Central Hotel chosen to entry in foreign market throuh investment choice with
joint venture with local player in India. Joint venture is not new for the company as it already
works on the same principle with Crown Company in Maldives to operate resorts and
restaurants. In India there are more players leading the industry associates with foreign hotel
chains, so choosing the idle partner for association is crucial task for Champa Central Hotel. Taj
hotels, Sheraton Hotels, Hilton Hotels are some players who gained a position in the Indian
Hotel Industry. The Strategy of holding control on ownership and business activity shoulod be

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carefully handled by Champa Central Hotels with its partner will provide the desirable market
share for the hotel in Indian market and Global Market.

Internationalization:
Internationalization is a process of analyzing several incremental decisions that can suits
the entry strategy which involves several products, services or resources for operating the
business activities across various market boundaries (Anderson, 1997). The Strategic approach of
internationalization offers multiple choice of entry in the foreign markets (Hill, Hwang & Kim,
1990). The strategy on market entry modes works on the control issues, resource commitment
and diffusion risk entry. Thus, different entry modes imply a different level of control over the
foreign operation (Anderson & Gatingon 1986).
The international strategy will offer benefits to the companies by providing competitive
advantage in domestic and global market. As companies moves internationally the resources,
operations and final output product has to be in standard quality which is added advantage to
gain eminent market share in the global market.

5. Conclusion
Hospitality industry has become one of the most vital industry in any economy that comprises
of several service oriented companies. In the recent era, the development in technology has lime
lighted the importance of service sector of an economy. The hotels serve major income to the
society through accommodating tourist visiting the place by offering a food and shelter to the
visitor. The growth of the companies is determined by its global presence after most of the
economies in the world moves globally. Thus, the current study looks at the possibility of
Champa Central Hotels, Maldives to start its business operation in India a foreign country. The
company chosen to be international company by adopting a entry mode of investments through
joint association with players in India Hotel Industry. The proper selection of alliance partner and
time of entry has to be analyzed critically in order to succeed in the process of
internationalization.

References

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