Culture is one of the most important considerations in today’s global world (based on Lee and Carter 2012). Critically appraise how marketers can manage both the local and global (global) cultures when planning their marketing operations. Consider the macro environment as well as the impact of culture on buyer behavior. A country’s culture is a part of it, which has been there through generations. Today, we are able to communicate and share our cultures through travel and trade. The world is now a huge global economy where one change in one part of the world can affect the economic conditions worldwide.
Through Globalization, we can see the ongoing change in front of us and how the world is now becoming increasingly interconnected. As per which, the world is now massively interconnected and is ever growing from the increase in trade and cultural exchange all around the world. Earlier there were big companies, which played a monopoly role in certain areas of the world, these firms are no longer restricted locally and have expanded internationally and become multinational corporations with its branches spread across the globe.
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As the world is becoming more and more interconnected big impasses are no longer national firms but are now turning into multinational corporations with subsidiaries in many countries. While considering this transformation, two of the most successful theories in context to the Hospitality and Food and Beverage industry have been that of “Globalization”. When we look at a global market and its functioning, and combine it with the local trends and form a blend between the two, it is called Globalization. It is a concept, which involves the global and local dimensions of any strategy, I. . , cultural values, religious values, political conditions, etc. In order to make an impact and have a successful venture in any country, the multinational companies must first learn how to think locally. Taking India into consideration, one of the key factors to keep in mind is the Cultural Factor. India being a diverse country of many different religions and cultures, it is very important to understand them and plan strategies keeping them in mind. Culture is an idea, customs, and the social behavior followed by a particular group of people or society.
The Indian culture is a delicate issue, and for any international brand to be successful in India, it is essential for them to understand it. Globalization is today, the main drive behind the hospitality industry. As the world has gotten more interconnected, there has been a huge increase in the number of people that are moving all around the world for different purposes. When people go to new foreign locations, there is a need for the presence of a place for them to stay, eat etc. In other words, there is a need for the presence of the hospitality industry.
The South Asian market for global growth by international hotel brands has come into light in recent years, as it is one of the fastest growing regions as noticed gently. India has also come into the radar, as it still has quite a way to go in terms of brand presence. InterContinental Hotels Group (GIG) has entered the Indian market with great success, and they are still expanding. GIG has a pipeline of 47 hotels, which is the second largest on-going project in the Asia-Pacific region behind China. At present the group has 13 hotels spread across 9 cities.
India is seen as a country with incredible growth opportunities, as there is not only rise in the domestic market but also the earlier underdeveloped cities, are now coming up and many ore will be developed over the next decade. From Gig’s perspective, they believe in the next 10 years the unknown mid-scale cities mostly in India and China will be responsible for the generating of almost 40% global economic growth. However, opening hotels is not an easy task, one must first understand its surrounding market. India does not face any challenges in terms of demands, as the market is still growing and need for more hotels is there.
GIG has been a part of the Indian market for nearly 50 years and have gained a great understanding of the environment. They eve also formed two strategic partnerships, a 20-year deal with Duet India Hotels Group which is assigned for the development of 19 Holiday Inn Express hotels, and another deal with Marital Group, for the development of 2 Holiday Inn and 4 Holiday Inn Express. A majority of the brands in India focused on upscale segments until recently, as there has been uproar in the demand for mid-scale hotels.
One of the key factors for this shift in focus is that, the middle class in India is growing and along with that is the growing disposable income, which has lead to an increase in ravening and touring of locals within India itself. Another important point to keep in mind is the increase in the size of the corporate world in India. More people are traveling from city to city for work, meetings, etc. All of this has lead to an increase in the need for international standard, reasonably priced and comfort based hotels. Any multinational entering the Indian market must understand and make a PEST analysis of the surrounding market.
A PEST analysis is the investigation of the Political, Economic, Social and Technological influences surrounding an establishment. Political Environment – This is in reference to the involvement of the government in the form of policies that affect the economy. Any small changes in certain laws, relating to tax etc, could have a serious affect on the hospitality industry. In India, high taxes are charged on luxury hotels, which in turn have huge impact on the political situation, and changes that may occur. Economic – This factor revolves around the interest rates, inflation, current exchange rates and tax policies.
In recent years, the economy of India has achieved the lowest drop in the world, as a result of TTS controlled and sound financial system. Indian’s common man now has the choice of going to luxurious hotels to have a meal due to the rise in the countries GAP. The stabilizing of the local market has offered a huge relief to the Indian Hotel Industry. Social – Social trends have a great impact on the demand for any given product. Indian markets see fewer Foreign Individual Traveler guests in comparison with the Bill to Company Guests, and business travelers.
As a result hotels can be seen having a higher number of single or twin bedroom guests as compared to double bedroom guests. Technological – Technology is used in a way to reduce manpower and time utilized in performing certain tasks manually. India is growing rapidly in the field of IT, and the international brands can see this and are using this to their full advantage. It is not only the Hotel Industry that is entering the Indian market, but the Quick Service Restaurant industry has also entered the market with great success. Globalization” is a key factor for fast food chains entering into the Indian market, as one of the most important factors for any brand entering the Indian market is the cultural factor. India is a land of culture and religion. In India, taking the majority into consideration, people are very price conscious and have a huge value for money. And the Indian taste palate is very distinctive and not acquired to the regular tastes of the international Sir’s that have entered the Indian market. Keeping this in mind, all the successful brands have had their menus inspired/directed by the Indian consumers.
Many foreign brands have come to India; their cost structures are higher than the local brands however they cannot price their products high, as they know that it could risk scaring away the customers. The International Brands like McDonald’s, Subway, Hagen Adz etc, have to compete with the local shops in the area, which are selling products that the consumers are used to and are available at a very cheap price. Cutting costs is, not enough to make the chains run, and the brands have all understood and gone towards the same path – Go Ethnic.
McDonald’s changed its menu according to the Indian market. As per religious values and customs, majority of Indians do not consume beef. Even though in its international chains, McDonald’s provide beef burgers, they have completed erased it from the menu in the Indian Market. McDonald’s also introduced its McCall Tick, which is a perfect example of improvising and innovating. It takes the popular allow tick, found with local food vendors in India, and has converted it into a signature McDonald’s burger. McDonald’s has also announced that it has plans of opening all vegetarian restaurants in India.
This decision is made, keeping in mind, that India has a very large population of pure vegetarians, which comes under the religion factor again. One case that can be taken into consideration is that of Hagen Adz, the ice cream rand, which entered into the Indian market with its international menu, and was adamant in changing it in its initial launch, targeting the international travelers, however today its menu is full of Indian flavors. This is the impact that culture and religion and the market environment can have on an international brand entering the market.
From the above cases, we can understand how companies have gone from national to multinational level, and have made their way into India by blending in with the environment and making appropriate changes to their strategies based on various factors. Entering India has its own challenges. India being such a diverse country, every part of India has its own culture and the companies must understand it. India is still growing rapidly, and interests from major brands on establishing a hold on this market is on the rise.
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