Country Analysis and Market Entry strategy

Understand the Countries and

their International Business Name-Aditya Prakash

Environment COURSE-PGDM
Team-2
Guided By-Prof. Shivani Aggarwal
Country Analyzed-SWITZERLAND
MBA (Finance and Marketing)
Part- A

Introduction

The Swiss Confederation, founded in 1291, was a defensive alliance among cantons. It
gained independence in 1499 and was replaced by a centralized federal government in 1848.
Switzerland's sovereignty and neutrality have been respected by European powers, and its
political and economic integration has strengthened ties with neighbouring countries.

Location

Central Europe, east of France, north of Italy.

Border countries (5): Austria 158 km; France 525 km; Italy 698 km; Liechtenstein 41
km; Germany 348 km

Environment
Population distribution

Population distribution corresponds to elevation with the northern and western areas far more
heavily populated; the higher Alps of the south limit settlement
Swiss 69.2%, German 4.2%, Italian 3.2%, Portuguese 2.5%, French 2.1%, Kosovan 1.1%,
Turkish 1%, other 16.7% (2020 est.)
German (or Swiss German) (official) 62.1%, French (official) 22.8%, Italian (official) 8%,
English 5.7%, Portuguese 3.5%, Albanian 3.3%, Serbo-Croatian 2.3%, Spanish 2.3%,
Romansh (official) 0.5%, other 7.9%; note - German, French, Italian, and Romansh are all
national and official languages; shares sum to more than 100% because respondents could
indicate more than one main language (2019 est.) Roman Catholic 34.4%, Protestant 22.5%,
other Christian 5.7%, Muslim 5.4%, other 1.5%, none 29.4%, unspecified 1.1% (2020 est.)

Environment - current issues

Air pollution from vehicle emissions; water pollution from agricultural fertilizers; chemical
contaminants and erosion damage the soil and limit productivity; loss of biodiversity
Party to: Air pollution is a significant issue, with various protocols and agreements signed but not
ratified. These include heavy metals, nitrogen oxides, persistent organic pollutants, sulfur 85, sulphur
94, volatile organic compounds, Antarctic environmental protection, biodiversity, climate change, and
more. Other issues include desertification, endangered species, environmental modification,
hazardous wastes, marine dumping, marine life conservation, nuclear test bans, ozone layer
protection, ship pollution, tropical timber 2006, wetlands, and whaling. The climate varies with
altitude and is mostly mountainous.

Natural resources: hydropower potential, timber, salt

Urbanization

Urban population: 74.2% of total population (2023)

Rate of urbanisation: 0.79% annual rate of change (2020-25 est.)

total population growth rate v. urban population growth rate, 2000-2030.
Major urban areas - population

1.432 million Zurich, 441,000 BERN (capital) (2023)

Government
Switzerland operates in a federal system consisting of a confederation, cantons and municipalities.
This direct democracy empowers citizens to influence decisions at all levels, ensuring broad
opportunities for democratic participation. Since becoming a federal state in 1848, Switzerland has
expanded its opportunities for democratic participation and included minorities as much as possible.
Municipalities are closest to the people and have as much power as possible. The Federal Council, a
seven-member collegial body, makes decisions unanimously. The United Federal Assembly elects the
representatives of the federal government, the National Council represents the people, and the State
Council represents the cantons. In the current parliament, representatives of eleven different political
parties present their views.
Bicameral Federal Assembly or Bundesversammlung (in German),
Assemblée Fédérale (in French), Assemble Federal (in Italian) consists of:

Council of States or Ständerat (in German), Conseil des États (in French), Consiglio degli
Stati (in Italian) (46 seats; members in two-seat constituencies representing cantons and
single-seat constituencies representing half cantons directly elected by simple majority vote
except Jura and Neuchatel cantons, which use list proportional representation vote; member
term governed by cantonal law)
National Council or Nationalrat (German), Conseil National (French), Consiglio Nazionale
(Italian) (200 seats; 194 members in the cantons are elected directly on the basis of
proportional representation and 6 members in half of the cantons directly by simple majority;
the term of office of the members is 4 years
civil law system; judicial review of legislative acts, except for federal decrees of a general
obligatory character
International law organization participation
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Judicial branch

Highest court(s): Federal Supreme Court (consists of 38 justices and 19 deputy justices
organised into 7 divisions)

Judge selection and term of office- Judges, affiliated with political parties, are elected by
the Federal Assembly for 6-year terms based on linguistic and regional criteria, proportional to the
level of party representation in the Assembly.

Subordinate courts: Federal Criminal Court (established in 2004); Federal

Administrative Court (established in 2007); note - each of Switzerland's 26 cantons has its
own courts

Political parties and elections the four parties represented in the Federal Council are generally
called the government parties: The Liberals (FDP/PLR), the Social Democratic Party
(SP/PS), The Centre (DM/LC) and the Swiss People's Party (SVP/UDC).

International organisation participation

The list includes various organizations such as ADB, AfDB, Australia Group, BIS, CD, CE, CERN,
EAPC, EBRD, EFTA, EITI, ESA, FAO, FATF, G-10, IADB, IAEA, IBRD, ICAO, ICC, ICCt,
ICRM, IDA, IEA, IFAD, IFC, IFRCS, IGAD, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO,
ITSO, ITU, ITUC, LAIA, MIGA, MINUSMA, MONUSCO, NEA, NSG, OAS, OECD, OIF, OPCW,
OSCE, Pacific Alliance, Paris Club, PCA, PFP, Schengen Convention, UN, UNCTAD, UNESCO,
UNHCR, UNIDO, UNITAR, UNMISS, UNMOGIP, UNRWA, UNTSO, UNWTO, UPU, Wassenaar
Arrangement, WCO, WHO, WIPO, WMO, WTO, ZC.

Economy

Economic overview

The EU-based, high-income European economy, a renowned banking and financial hub, has low
unemployment, a skilled but aging workforce, and is a key pharmaceutical and precision
manufacturing exporter.
Real GDP (purchasing power parity)

$760 billion (2022 est.)

Real GDP growth rate

2.13% (2022 est.)

Real GDP per capita
$89,341 (2022.est.)
$90,000 (2021 est.)

GDP (official exchange rate)

$731.502 billion (2022 est.)

Inflation rate (consumer prices)

2.84% (2022 est.)

GDP - composition, by sector of origin

Agriculture: 0.61% (2022 est.)

Industry: 24.6% (2022 est.)

Services: 74% (2022 est.)

GDP - composition, by end use

Household consumption: 53.7% (2022 est.)

Government consumption: 12% (2022 est.)

Investment in fixed capital: 24.5% (2022 est.)

Investment in inventories: -1.4% (2022 est.)

Exports of goods and services: 65.1% (2022 est.)

Imports of goods and services: -54% (2022 est.)

Exchange rates

Swiss francs (CHF) per US dollar: 1.13 USD

Technology
National air transport system

Number of registered air carriers: 6 (2022)

Inventory of registered aircraft operated by air carriers: 179

Annual passenger traffic on registered air carriers: 28,857,994 (2022)

Annual freight traffic on registered air carriers: 1,841,310,000 (2022) mt-km

Railways
Total: 5,296 km (2020) 5,296 km electrified; Switzerland remains the only country with a
fully electrified network.
Roadways

Total: 71,557 km (2022)

Paved: 71,557 km (2022) (includes 1,458 of expressways)

Waterways

1,292 km (2010) (there are 1,227 km of waterways on lakes and rivers for public transport
and 65 km on the Rhine River between Basel-Rheinfelden and Schaffhausen-Bodensee for
commercial goods transport).

Communications

Telephones - fixed lines

Total subscriptions: 2,956,500 (2022 est.)

Subscriptions per 100 inhabitants: 34 (2022 est.)

Telephones - mobile cellular

Total subscriptions: 11,060,700 (2022 est.)

Subscriptions per 100 inhabitants: 127 (2022 est.)

Part B
Hospitality Industry In Switzerland Market Analysis
 Switzerland's hospitality industry generated a revenue of USD 19 billion in the current year
and is expected to grow at a CAGR of over 2.4% for the forecast period. The industry, known
for luxury tourism, world-class hotels, and stunning natural landscapes, has been significantly
impacted by the COVID-19 pandemic, leading to a sharp decline in demand and revenue.
Travel restrictions, border closures, and lockdown measures significantly impacted the
tourism sector, with international travel stopped and domestic travel significantly reduced.
But as time pass the COVID-19 impacts start falling and tourism sector emerging again.
  Switzerland's hospitality industry is growing despite stagnant visitor numbers. The US is
experiencing growth, while Gulf countries, Hong Kong, Taiwan, and Japan are experiencing
growth. However, Arabian countries experienced a sudden drop of over 8%. Switzerland also
experienced a decline in visitors from Italy, Spain, the UK, and France. Domestic travel has
helped recover from these drop rates. The hospitality industry is thriving, particularly with
international brands, with around 64 international brands offering services in Switzerland.
The chain penetration rate of these brands is increasing.

Hospitality Industry In Switzerland Industry Segmentation

The hospitality industry means providing services such as stay, lodging, food, drinks,
entertainment, and more related services of facilities that a traveller or tourist may need or
which can be of help and comfort.

By Type
Chain Hotels

Independent Hotels

Service Apartments
By Segment
Budget and Economy Hotels

Mid and Upper mid scale Hotels

Luxury Hotels

Hospitality Industry In Switzerland Market Trends

Rising Online Bookings Boosting the Market

The Swiss hospitality industry has moved towards digitalization, with online bookings
increasing due to events such as the COVID-19 pandemic and changing traveler
expectations. Mobile apps have become key tools for hoteliers to streamline operations and
improve guest experience. These applications enable efficient management of guest cycles
and provide convenience and personalized services. Hoteliers are adopting technology-
based solutions to stay competitive, attract guests and deliver the best guest experience. As
the digital transformation continues, it is expected to transform the Swiss hospitality
industry. The hotel market is forecast to reach $3.16 billion in revenue in 2023. Revenue is
expected to grow at a compound annual growth rate (CAGR 2023-2027) of 1.70%, resulting
in a projected market size of $3.38 billion by 2027. market, the number of users is expected
to reach 6.30 million by 2027. User density is projected to be 67.4% in 2023 and 70.0% in
2027. The average revenue per user (ARPU) should be $0.53,000. 92% of total hotel
market revenue will come from online sales by 2027. In a global comparison, most of the
revenue is generated by the United States ($106,100.00 million in 2023).

Hospitality Industry In Switzerland Market Leaders

 Accor SA
 InterContinental Hotels Group
 Marriott International, Inc
 Sorell Hotels
 Radisson Hotel Group

Mode of entry-

Switzerland is a highly developed and competitive market for the hospitality industry, so
it's important to choose an entry mode. Based on the nature of the hospitality business, the
level of control desired, and the resources available, franchising could be a suitable
market entry mode in Switzerland. Franchising is a low-risk option that allows businesses
to leverage local knowledge and expertise while maintaining control over their brand.
Entering international markets through a joint venture is a strategic approach where two or
more businesses from different countries collaborate and form a new entity, sharing
ownership, control, risks, and profits. Joint ventures can take various forms, each with its
own benefits and considerations.
1. Joint Venture:
 ● Rationale: Partnering with a local Swiss entity can provide valuable insights
into the market, help navigate regulatory complexities, and share the financial
burden.
It also demonstrates a commitment to local engagement.
● Advantages: Local expertise, risk sharing, access to local networks, and
resources.
● Challenges/Risks: Sharing control and profits, potential cultural clashes, and
differences in business practices.

Recent Case Studies:

● Succeeded Entry Strategy:
In 2021, Marriott International successfully entered the Swiss
market with a combination of wholly-owned subsidiaries and franchising. They
leveraged
their global reputation while partnering with local investors for specific properties.
Marriott's flexible approach allowed them to adapt to local preferences while
maintaining
their brand's core standards. Key challenges included navigating Switzerland's
strict labour laws and adapting to the high cost of living.
 Failed Entry Strategy:
In contrast, the American fast-food chain, Taco Bell, failed to gain traction in
Switzerland in 2022. They entered with a wholly-owned subsidiary strategy but struggled
to compete with established local competitors and failed to adapt their menu to Swiss
tastes. The high cost of real estate and labour also posed significant financial challenges.

Summary:
Most interesting or fun facts about the country:
Switzerland is known for its stunning natural beauty, including its majestic mountains and
pristine lakes. It is also home to several world-renowned cultural institutions such as the
International Red Cross and CERN (the European Organization for Nuclear Research).
Additionally, Switzerland is famous for its chocolate, cheese, watches, banking sector, and
skiing resorts. Switzerland has four official languages: German, French, Italian, and
Romansh. And the most wonderful thing is The Swiss Army knife was invented in
Switzerland in the late 1800s.
Key Challenges, Risks, and Threats of Doing Business in Switzerland:
 High Operating Costs: Switzerland has one of the highest costs of living and labour
costs in the world, which can significantly impact the profitability of businesses.
 Cultural Differences: Understanding and adapting to Swiss consumer preferences and
cultural norms is essential for success.
 Competition: The Swiss hospitality market is competitive, with strong local players
and
 international chains vying for market share.
 Regulatory Environment: Switzerland has strict regulations on business operations,
including labour laws, zoning regulations, and food safety standards, which can pose
challenges for newcomers.

Bibliography/References:

Website-
1. Wall Street Journal
2. Business culture guides - http://www.executiveplanet.com/index.php?
title=Main_Page
3. Company analysis - http://www.glassdoor.com/index.htm
4. https://www.trade.gov/country-commercial-guides/switzerland-market-overview
5. https://testbook.com/ias-preparation/switzerland-constitution
6. https://www.cia.gov/the-world-factbook/countries/switzerland/

Books

 Entry Mode Decisions in International Business

 Marketing Management, 16e