Russia Hotel Market

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International Hotel Management

The Russian Hotel Market
Christian Cooper – 17035935 Hospitality Business Management

January 18th 2010 4,502 words

International Hotel Management

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INTRODUCTION (p 2-3) 1.1 1.2 BACKGROUND INTERNATIONALISATION & DUNNING’S ECLECTIC THEORY

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RUSSIA (p 3-4) 2.1 INTRODUCTION

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THE ENVIRONMENT (p 4-9) 3.1 3.2 3.3 3.4 3.5 THE COMPETITIVE MARKET THE MARKET OPPORTUNITIES CURRENT AVERAGE HOTEL RETURNS ON INVESTMENT THE OPERATING MODES OF THE CURRENT PLAYERS IN THE MARKET THE WIDER ENVIRONMENTAL FACTORS OF OPERATING IN RUSSIA (PEST ANALYSIS) ASSESS THE MERITS OF OPERATING IN THE KEY REGIONS

3.6 4

OPERATIONAL ISSUES (p 9-12) 4.1 4.2 4.3 PROPERTY RIGHTS EMPLOYMENT & HR ISSUES SERVICE PRODUCT DELIVERY

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COMPETITOR’S FUTURE DEVELOPMENTS (p 12-14) 5.1 5.2 INTERCONTINENTAL HOTEL GROUP – HOLIDAY INN STARWOOD HOTELS & RESORTS – WESTIN

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CONCLUSION (p 14) 6.1 CONCLUSION

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BIBLIOGRAPHY (p 15-17) 7.1 REFERENCES

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APPENDICES (p 17-18) 8.1 8.2 HOTEL BRANDS' MODE OF OPERATION IN RUSSIA CULTURAL CONTRASTS 1 Hospitality Business Management

Christian Cooper – 17035935

International Hotel Management

1

INTRODUCTION 1.1 BACKGROUND

As hotel organisations expand their international portfolio, they seek to develop in new markets as one method of international diversification. Emerging markets are essential to global growth. They are becoming the source markets for future business, and organisations with a global vision need to invest in them now.

1.2

INTERNATIONALISATION & DUNNING’S ECLECTIC THEORY

Dicken (1992, p120) highlighted that 'technological changes, particularly in the spaceshrinking technologies of transport and communication, help to make possible the internationalisation of economic activity and the development and geographical spread of transnational corporations'. These advances have greatly influenced the amount of Foreign Direct Investment in developed and emerging markets across the globe. FDI has been growing at a high rate, and trade barriers have fallen extensively at the same time (Griffith, Javalgi, and White, 2003). The development of complex financial products, such as derivatives has enabled global credit markets to augment rapidly. Thus, allowing organisations to explore markets outside their country of origin and gain competitive advantage on an international scale. Internationalisation is considered to be the process through which a firm moves from operating solely in its domestic marketplace to international markets (Andersen, 1993; Buckley and Casson, 1998; O'Farrell et al. 1998). Internationalisation and globalisation has rapidly changed the way organisations operate, as they need to understand the implications and processes involved when operating in a foreign market. Operating in a foreign market requires organisational assessments, global strategic planning and most importantly, the creation of a truly international vision for the organisation or brand. To overcome the advantages of indigenous firms in many countries simultaneously, private knowledge may be used to create differentiation or cost advantages for multinational enterprises and investors (Oviatt and McDougall 1994). Oviatt & McDougall (1994) consider private knowledge to be the fundamental source of both differentiation and cost leadership strategies, although no further discussion is offered. Private knowledge is gained through a firm operating in the country with a solid understanding of business practices, local culture and legislation. The disadvantages of operating in a foreign market for international firms include:   Governmentally instituted barriers to trade Incomplete understanding of local legislation 2 Hospitality Business Management

Christian Cooper – 17035935

International Hotel Management

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Language barriers General business practices in an unfamiliar geographical territory

(Adapted from Krueger 2002) Dunning and...
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