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How Globalization Influence the Hospital Industry Essay Sample

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In the 21st century, with the increasing levels of globalization in hospitality industry, hotel companies will need to learn different management approaches to survive and develop in environmental circumstances with high levels of uncertainty as well as understand the implication of future impacts, both positive and negative, of the changing environment in which they operate. As international trade and business expand, there is no question that international linkage will become more important for the hotel industry. This essay focuses on globalization in the hotel industry and explains how the increasing levels of globalization, in this particular industry may affect the internal operating environment (e.g. organizational culture, structure, management styles etc.) of hotel companies Effects of Globalization Globalization has various aspects which affect the world in several different ways such as: * Industrial – emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. * Financial – emergence of worldwide financial markets and better access to external financing for borrowers. As these worldwide structures grew more quickly than any transnational regulatory regime, the instability of the global financial infrastructure dramatically increased, as evidenced by the financial crises of late 2008.

* Economic – realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets however meant that an economic collapse in any one given country could not be contained. * Political – some use “globalization” to mean the creation of a world government which regulates the relationships among governments and guarantees the rights arising from social and economic globalization. [4] Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of The United States’ own economy, the People’s Republic of China has experienced some tremendous growth within the past decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United States for the position of leading world power. * Informational – increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fiber optic

communications, satellites, and increased availability of telephone and Internet. * Language – the most popular language is English. o About 35% of the world’s mail, telexes, and cables are in English. o Approximately 40% of the world’s radio programs are in English. o About 50% of all Internet traffic uses English. * Competition – Survival in the new global business market calls for improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skillfully in order to face increased competition. * Ecological – the advent of global environmental challenges that might be solved with international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Since many factories are built in developing countries with less environmental regulation, globalism and free trade may increase pollution. On the other hand, economic development historically required a “dirty” industrial stage, and it is argued that developing countries should not, via regulation, be prohibited from increasing their standard of living.

* Cultural – growth of cross-cultural contacts; advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one’s standard of living and enjoy foreign products and ideas, adopt new technology and practices, and participate in a “world culture”. Some bemoan the resulting consumerism and loss of languages. Also see Transformation of culture. o Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood and Bollywood movies). Some consider such “imported” culture a danger, since it may supplant the local culture, causing reduction in diversity or even assimilation. Others consider multiculturalism to promote peace and understanding between peoples.

 Greater international travel and tourism. WHO estimates that up to 500,000 people are on planes at any one time? o Greater immigration, including illegal immigration o Spread of local consumer products (e.g., food) to other countries (often adapted to their culture). o Worldwide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to those who have Internet or Television, leaving out a substantial segment of the Earth’s population? o Worldwide sporting events such as FIFA World Cup and the Olympic Games. o Incorporation of multinational corporations in to new media.

Adidas had created a parallel website with a downloadable interactive rugby game for its fans to play and compete.[10] * Social – development of the system of non-governmental organizations as main agents of global public policy, including humanitarian aid and developmental efforts. [11] * Technical o Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones o Increase in the number of standards applied globally; e.g., copyright laws, patents and world trade agreements. * Legal/Ethical o The creation of the international criminal court and international justice movements. o Crime importation and raising awareness of global crimefighting efforts and cooperation. o The emergence of Global administrative law. Cultural effects Culture is defined as patterns of human activity and the symbols that give these activities significance.

Culture is what people eat, how they dress, beliefs they hold, and activities they practice. Globalization has joined different cultures and made it into something different. As Erla Zwingli, from the National Geographic article titled ―Globalization‖ states, ―When cultures receive outside influences, they ignore some and adopt others, and then almost immediately start to transform them.‖ One classic culture aspect is food. Someone in America can be eating Japanese noodles for lunch while someone in Sydney, Australia is eating classic Italian meatballs. India is known for their curry and exotic spices. France is known for its cheeses. America is known for its burgers and fries. McDonalds is an American company which is now a global enterprise with 31,000 locations worldwide. Those locations include Kuwait, Egypt, and Malta. This company is just one example of food going big on the global scale. Meditation has been a sacred practice for centuries in Indian culture. It calms the body and helps one connect to their inner being while shying away from their conditioned self. Before globalization, Americans did not meditate or practice yoga.

After globalization, this is more common. Some people are even traveling to India to get the full experience themselves. Another common practice brought about by globalization is Chinese symbol tattoos. These tattoos are popular with today’s younger generation despite the fact that, in China, tattoos are not thought of as cool[13]. Also, the Westerners who get these tattoos often don’t know what they mean, [14] making this an example of cultural appropriation. The internet breaks down cultural boundaries across the world by enabling easy, near-instantaneous communication between people anywhere in a variety of digital forms and media. The Internet is associated with the process of cultural globalization because it allows interaction and communication between people with very different lifestyles and from very different cultures. Photo sharing websites allow interaction even where language would otherwise be a barrier.

Impact of Globalization on the Hospitality Industry Globalization has both positive and negative impacts on the hospitality industry. Impacts of Globalization are as follows: 1. Exposure to different cultures: Due to Globalization the managers of the hospitality industry are able to learn about different cultures – as they get to mingle with people from various walks of life – and thus, increase their knowledge. 2 .Larger Market: Due to Globalization the customer base has increased greatly. People travel not only for holidays, but business, health and various other purposes too. Thus, this has increased the market for the hospitality industry, which gets its major income is from international visitors. 3. Boosts the economy: Visitors come in and spend money – Multiplier effect – and foreign exchange increases. Thus it is of great value to the economy as Globalization helps to pump in money into the country. 4. Technology Advancement: Since one wants to attract as many Tourists as possible, hospitality organizations constantly need to upgrade and improve their products and services Example: Singapore Flyer, using faster and newer technology in hotels to so that the customer is satisfied.

5. Promotes Creativity: Organizations are constantly thinking of new and creative ideas to attract more tourists 6. More Job Opportunities: Due to Globalization, more visitors come into our country and thus more people are needed to serve and cater to their needs. So, with the advent of globalization, there are a lot of more jobs available for people within the hospitality industry 7. Boosts the Travel Industry: Due to globalization more people move around, to facilitate this, the travel industry needs to grow as well. People who come into our country – by air, or ship, or land – use the transport services offered as well. 8. Variety of International Services/Cuisines: Since there are a lot of Different visitors with various cultures, customs, cuisines, and languages, the hospitality industry includes recipes and various other services to cater to them.

These services are available to the locals too, which makes it even better. Impacts on Internal Operation Environment 1. INTRODUCTION Globalization has become part of everyday vocabulary. Every day people hear the term globalization on the news, read it in the papers, and overhear people talking about it. What is globalization? Globalization refers to the shift toward a more integrated and interdependent world economy (Charles, 2003). This essay focuses on globalization in the hotel industry and explains how the increasing levels of globalization, in this particular industry may affect the internal operating environment of hotel companies.

2. INCREASING LEVELS OF GLOBALISATION IN HOSPITALITY INDUSTRY As international trade and business expand, there is no question that international linkage will become more important for the hotel industry. In the early stages, most hotels have received foreign guests at one time or another. Then, as the industry evolved, and with the development of technology and transportation systems, the industry’s structure has become increasingly more complex with respect to scope, ownership, management and affiliation. There are many models including: independently owned and operated properties; Chain-owned and –operated properties; independently owned chain-operated properties; franchised properties; referral group properties and others. However, in terms of the number of rooms, chain hotels are the dominant Sector.

There were two main reasons why hotel chains began looking for opportunities to enter into the global marketplace. They are comparative advantages, especially in developing countries, and the over capacity or saturation in their home markets. Unfortunately, hotel investment outside one’s home country incurs high risks with a wide range of environmental influences affecting organizational strategies and performance. Those environmental factors include: political factors, such as foreign trade regulations, taxation policy; economic factors, such as business cycles and inflation; socio-cultural factors like social mobility and lifestyle changes; technological factors like new discoveries; environmental factors, such as environmental protection laws and legal factors, such as employment law, monopolies legislation and cultural factors. How those factors are likely to impact on the internal operating environment of hotel companies will be discussed in the following paragraphs. 3. IMPACTS ON ORGANIZATIONALCULTURES

developers and employees come from different cultures with different business practices.―Guanxi‖, for example, is the cultural imperative of doing business in China. Indeed, ―guanxi‖ is rooted in a culture characterized by interdependence and reciprocity. People exchange favors’ to develop extensive networks of interpersonal relationships to share scarce resources and cope with uncertainties. Therefore, ―guanxi‖ can be viewed as the Chinese way of doing business, based on friendship and trust (Su,Sirgy & Littlefield,2003) Intercontinental Hotels Group, the number one hotel group in Asia, operates more than30 hotels around China. Since the majority group employees in the organization is Chinese, the managers managing those hotels in China also have to broaden their ―guanxi‖ network not only with employees, but Also with other commercial partners, as well as with the officials in the People’s Republic of China’ government.

Good communication between the regional office and the individual hotel’s sales department helps produce more business for the individual property. Additionally, the policy of Equality of Opportunity is also inessential part of its organization’s culture. This policy ensures that there shall be no unfair discrimination, in respect of gender, marital status, sexual orientation, colour, religion, race, nationality, ethnic origins, disability or age, and that equal opportunity shall be given to all employees. 4. IMPACTS ON MANAGEMENT STYLE

There is an oft-told story of a person, new to a company, asking an experienced worker what an employee should do when a customer calls. The old-timer responds:―There are three ways to do any job—the right way, the Wrong way, and the company way. Around here, we always do things the company way.‖ In most Organizations, the ―company way‖ is derived from the Corporation’s culture. Corporate culture is the collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another (Wheelen & Hunger, 1998). A strong culture can create the basis for a superior competitive position. When a hotel company makes a decision to invest outside its home country, it has to adjust more or less of its company’s culture to adapt to the cultural diversity in the new work Environment.

This new work environment thus becomes enriched by the multiple cultures. Hotels are, therefore, Better able to meet the needs of a diverse group of customers and employees. However such cultural diversity can also bring some negative effects, which can generally be attributed to individuals, and how they relate to difficulties arising from departmental concentration of minority ethnic groups, especially from language and cultural differences. But this kind of adjustment is not an easy task to fulfill. Even for a Domestic hotel, when businesspeople are all from the same culture and speak the same language, the actual Construction of the facility can be difficult. The many interdependent players sometimes have conflicting objectives and a number of timetables to coordinate. An international hotel is even more complex because the An organization’s culture is translated into practice largely as a result of actions taken by managers. Thus, the quality and style of managerial leadership is crucial in shaping perceptions that will support cultural values and hence, the organization’s strategy. Managers have been classified by their decision-making style: authoritarian, democratic (the leader actively involves subordinates in the decision-making process, sharing problems, soliciting input and sharing authority) and laissez-faire.

Sometimes, a hotel company operating around the whole world may focus on democratic management style rather than an authoritarian style since it has to relate to different employees from different cultures or social backgrounds. For example, Six-Continents PLC, the second largest hotel group by the number of rooms, has a ―Disclosure Procedure‖ to ensure such a democratic management environment. If in doubt, in this organization, employees are encouraged to discuss the matter with the person to whom they report or to the company’s secretary. They also all have a responsibility to draw attention to issues that come to their attentions or that comes to their knowledge. They are also responsible for helping to maintain a safe and healthy workplace for their employees. Thus employees can enjoy the work in pleasant and comfortable environment .Moreover, despite the increasing levels of globalization; the management style in the hotel industry tends to be localization, which can meet the specific needs of local employees. While labor supply is not a problem in most developing countries, skilled personnel are sometimes difficult to find, due to a shortage of training facilities and trainers.

Those of imported laborers or immigrants. Facing such an issue, a multinational hotel company has to set up some new management approaches or adjust its management style. For example, the reward system will be different in China and in Australia. Recently, Australian employees have been required to reduce their working hours each week, although most of them have been promised overtime payments. The situation is quite different in China. Two of the greatest ways to show appreciation to Chinese employees is through giving higher salaries and promotions instead of through giving them vocations or leave to spend with their families. At the same time, training and education has become more important for transnational’s hotel companies. Such training is provided from within their own organizations (Rutherford, 2002). They understand that, as they truly play host to the world in a earning falseness, multilingual staff will become increasingly necessary. Communications and cultural sensitivity may become an escalating problem, especially where there is a large pool of immigrant labor or a large numbers of foreign guests.

Solutions to the labor problems are as varied as the causes, for the various and different locations around the world. Ultimately, it will be up to the hotels to make themselves more attractive employers and to improve in the recruitment, retention, training and rewarding of staff. However the sense of localization also brings some negative impacts on management style of a multinational hotel company. ―Guanxi‖, mentioned above, is an ancient system based on personal relationships, which sometimes is lacking in management efficiency. In contrast, the traditional western management paradigm is centered on discrete transactions and formal agreements. Now, the major disadvantage of the ―guanxi‖ system is that juniors are only allowed to do some business on the peripheries of a close-net workgroup; the seniors must have time to observe the juniors and decide whether they can be trusted; later those new members who prove to be trust worthy or otherwise acceptable to the senior members, are allowed to engage in larger and more significant aspects of the group’s business (Lovett, Simmons & Kali, 1999). This constraint is actually a very realistic depiction of the way the―guanxi‖ systems work. 5. IMPACTS STRUCTURE ON ORGANISATIONAL

This kind of organizational structure characterizes a Transnational rather than an old-line multinational, international or global company. A multidivisional Structure is built up of separate divisions on the basis of products, services or geographical areas. For example, Six Continents PLC is the leading hotel group in the world with over 3,300 hotels across nearly 100 Countries and territories. Its organizational structure is described as follows. In the board, Chairman is backed by a finance executive and a CEO. The business of Six Continents PLC is divided into three main regions: America, Asia and pacific, and Europe, Middle East &Africa. In each area, there is a head office, which is supported by two management teams: a management committee and senior managers who manage different Brands of the group in specific areas. This kind of organizational structure has its disadvantages.

The two Main disadvantages are that it is costly and the divisions grow too large. The Six Continents PLC established itself in a similar structure with head offices, management committees and senior managers in every Three-business region, which increased management costs. If there are too many divisions, the complexity of Cooperation increases. There is a fact that a global hotel company may prefer geographically defined divisions As the operating units for local marketing (because of their specialist local knowledge of customers). However at the same time, they may still want global product divisions responsible for the worldwide co-ordination of product development, manufacturing and distribution to these geographical divisions (because of their specialist knowledge in these issues). To conclude, complexity and environmental uncertainty are directly related, with the more complex the environment, the greater the decentralization (Robbins & Barnwell, 1998). Different organizations face different degrees of environmental uncertainty and their structural design is a major tool that managers can use to eliminate or minimize the impact of environmental uncertainty. 6. CONCLUSION

Every organization depends on its environment to some degree. The evidence demonstrates that a dynamic Environment has more influence on a structure than does a static environment. However what is Organizational structure? Generally, organizational structure means three things: (1) The formal division of the organization into subunits; (2) The location of the decision-making responsibilities within that structure; and (3) The establishment of integrating mechanism. In the volatile world of transnational corporations, there is no such thing as a “universal” global manager. Rather, there are three groups of specialists: business managers, Country managers and functional managers.

In the 21st century, with the increasing levels of globalization in hospitality industry, hospitality companies will need to learn different management approaches to survive and develop in environmental circumstances with high levels of uncertainty as well as understand the implication of future impacts, both positive and negative, of the changing environment in which they operate. The only certainty about today’s hotel industry is that only those who plan for uncertainty and change, and who are able and willing to respond to global events with speed and decisiveness, will reap the full rewards of success. Successful hoteliers will be those who are able to anticipate, determine and solve problems of a varied nature in the context of their organization’s goals and in the environment of an increasingly globalized and complex society.

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