GLOBALIZATION

AGENDA IN
TOURISM
THC 1 – Macro Perspective of
Tourism and Hospitality – Part One
OBJECTIVES
•Discuss on Economic
Motivation of Tourism
Globalization
•Understand Tourism
Development
•Describe Impacts of
Tourism
INTRODUCTION
GLOBALIZATION is the functioning process
of the global economy, which, in the global
society, it is able to create global decision
structures for solving global problems.
Globalization imposed competitive
pressure by facilitating market entry for
several stakeholders and as a result
companies have to fight in a much more
complex environment.
INTRODUCTION
FOUR STAGES OF GLOBALIZATION
1. Tourism “missionaries” to
access new markets, to attract
customers to business,
destinations or countries where
the tourism product will be sold
or consumed. Communication
plays important role.
INTRODUCTION
FOUR STAGES OF GLOBALIZATION
2. Integration and incorporation of tourism
business across borders. International
investments and external expansions is a
powerful globalizing force majeure.
2 Methods of Global Integration
• Integration through Investments, Mergers and
Acquisition
• Integration through franchises and licenses
INTRODUCTION
FOUR STAGES OF GLOBALIZATION
3. Fragmentation and relocation of
processes. Resources are exclusively
local or national increasing the
profitability.
4. Transcending new value chains. The
identity of the industry and new types
of markets and business concepts.
INTRODUCTION
FOUR STAGES OF GLOBALIZATION
The model is the gradual implementation
of globalization, individual companies,
destinations and countries involved will be
able to control costs, to increase market
share and access skills and other
important resources.
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
PROFIT MAXIMIZATION - General reasons
why companies are expanding beyond
national is to maximize profits; includes
cost reductions or increase in sales from
the production or supply of services
abroad.
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
PRODUCTION – is a process of combining
various material and immaterial inputs in
order to make something for consumption.
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
The development of international trade
has made the market to be much more
competitive and companies more aware of
the need to be leaders in terms of prices
or add value to their products to increase
market share and profitability.
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
REASONS FOR PROPER MULTINATIONAL EXPANSION
• REDUCED LABOR COSTS – companies are trying
constantly to reduce costs below those of
competitors, labor cost is can be reduced by
globalization
• ADDITIONAL REDUCES COSTS – companies access
the international capital markets and thus local rate
of interest is rarely taken into account, the costs of
land and planning regulations, and the exchange rate
between the parent and host economy will also be
significant
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
REASONS FOR PROPER MULTINATIONAL EXPANSION
• EXPLOITATION OF “NATIONAL DIAMONDS” –
competitiveness and high consumer demand on the
domestic market, make firms to improve technology,
quality and marketing, the product is reworked and
polished into a national diamond and allows
companies to be competitive in foreign markets
• MARKETING ADVANTAGES – internationally
renowned corporate image can be exploited by
expanding operations abroad
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
REASONS FOR PROPER MULTINATIONAL EXPANSION
• MARKET ECONOMY, INTEGRATION AND
COMPETITION – expansion may be a way to increase
profits through vertical integration such as travel
companies, tour operator investments in foreign
resorts; buying foreign competitors reduces
competition making horizontal integration; market
economies developed through transnational
partnerships
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
REASONS FOR PROPER MULTINATIONAL EXPANSION
• EXTENDING THE PRODUCT LIFE CYCLE – that
products that have reached maturity in the internal
market and suffer a decline can be revitalized by
promoting them abroad especially in developing
economies
PRODUCT LIFE CYCLE – refers to different stages in the
communication to promote a product
• AVOIDANCE OF CHARGING – to produce within the
charging zone
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
REASONS FOR PROPER MULTINATIONAL EXPANSION
• INCENTIVES IN HOST ECONOMIES – investment and
operating costs can be reduced by international
markets, taking advantage of governments’ stimulus
packages
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
GLOBALIZATION THROUGH COMMUNICATION IN TOURISM
• Computerized information and reservation systems
-more flexible and cost efficient
-leading to cheaper costs
-easier access to destination
• Increasing use of Internet
-global accessibility
-reduced the need for intermediaries
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
GLOBALIZATION THROUGH COMMUNICATION IN TOURISM
Globalization in Air Transport
• Allowed private companies to enter the market
• Formation of international alliances which cooperated in promoting
communication and standardization
Accommodation
• Cooperation and creation of hotel chains, franchises, joint ventures,
management contracts etc.
Tour package trade
• Developed partnership with hotel chains, airlines and cruise
companies
Globalization effects are observed in shaping the tourist profile and
preferences towards products and services.
ECONOMIC MOTIVATION OF TOURISM
GLOBALIZATION
GLOBALIZATION THROUGH COMMUNICATION IN TOURISM
Globalization effects are observed in shaping the tourist profile and
preferences towards products and services.
Tourist is dependent on communication, information technology
• More individualistic
• Wants more products and services developed
• Customized in a wide range, variety and quality
• Easy access to information
• Cheaper transport
• Greater flexibility