Introduction
Global trends tend to affect the performance of companies. Various business executives concur that various global trends are quite significant in a company’s corporate strategy and noted that there some positive results that may be gained by addressing the global trends. A major global trend has been the increasing number of consumers in emerging economies. However, companies have not been able to maximize the benefits from these global trends. The reasons being cited include companies lacking the right strategies to address the global trends. Some companies have addressed the opportunities by applying strategies such as developing new operations or expanding the existing ones to address the consumer trend. Other companies have developed new products that fetch low prices to serve the increasing number of consumers’, majority who are middle-income earners. Examples of these economies include India and China. China has been able to rise and become a major global economy. According to McIver (2012), the growth in its economy can be attributed to increasing level of modernization and adoption of technology.
Summary and Analysis
The significance of trends is quite high. From the survey conducted by McKinley, over 70% executives concur that global trends are critical in developing corporate strategy. In Latin America, in the manufacturing sector, executives rate trends to be very significant in developing a corporate strategy. Furthermore, global trends such as developments linked to economic growth, knowledge, and technology are ranked as the most important. In addition to the growing number of consumers, other top six global trends include the global nature of labor, talent markets, increasing availability of knowledge, faster pace of technological innovation and increasing constraints on the supply or usage of natural resources. The increasing constraints on the supply or usage of natural resources has become a major global trend since it is attributed to issues of climate change and climate change is a major key issue when it comes to development in the world.
Certain trends may have a negative impact on the level of corporate profitability. Increasing constraints on the supply of natural resources is likely to influence negatively the profitability of corporate businesses in the next five years. Additionally, geopolitical instability is another trend that introduces risk and may affect the profitability of businesses. Technology and knowledge trends are likely to increase the company’s profits in the coming few years. Further, organizations have resulted to the adoption of scientific management techniques.
Despite the fact that some of these trends may influence the performance of an organization or business, the levels of action in addressing these trends are low. From the McKinley survey, approximately 75% of the executives interviewed indicated that trends such as technological innovation and increasing availability of knowledge might have an influence on the profitability of businesses. However, slightly over 50% indicated that they had actually taken action on these two trends.
The mismatch between acknowledging the importance of a trend and acting on it may be explained by several reasons. Executives indicate that strategic priorities are more important than the global trends. Additionally, the absence of insufficient skills and resources contribute to the inaction on the global trends. Further indecisiveness among the executives on whether the trend may cause a positive or negative impact also contributes to the inaction. Several factors may influence or determine whether a business may act on a certain trend. For instance competitive pressure, increasing opportunities to do new businesses and the likelihood of gaining a competitive advantage are some of the factors that may influence the decision of whether to act on a global trend. Further, certain businesses may act on a trend to better the reputation of the company. This is quite significant as the issue of corporate social responsibility has been a major area that many companies have taken a keen interest to promote their business among the consumers. Furthermore, the personal convictions of the senior executives play a key role in the level of action in a certain trend.
The adoption of trends is mainly because of the likelihood of the profit it may bring to the business. However, the adoption of these trends also bears risk to the business. There is a low priority on managing risks especially for companies that have acted on the increasing availability of knowledge. A major issue on the increasing availability of knowledge is the issue of intellectual properties. Organizations need to develop strategies that will be used for managing and protecting intellectual properties. Further, in case of adoption of technology, companies need to ascertain the level of usage of a certain technology if they want to increase their competiveness in the market. Adoption of a technology that is being used by many companies may result in being an increased cost expense. Some companies that have acted on the talent market trend have not been able to retain the global talent. However, some companies have been able to address this issue of retaining global talent by outsourcing their work to low-cost countries. Others have addressed the issue of increasing constraints on supply by redesigning their services and products to be more environmentally sustainable. Based on the survey, less than 30 percent of companies have taken steps to develop sustainable products. If companies are able to develop sustainable products, chances of increasing profits are high as costs associated with issues such as cleanup of toxic waste from product use may be reduced. Additionally, adoption of issues such as recycling may greatly favor the performance of a company.
Problems concerning the scarcity of resources can be attributed to the increasing need of companies wanting to produce in large quantities cheaper products with disregard to natural resources (Manić, Veljković, & Petrović, 2012). The global trend in increasing constraints to natural resources has prompted more companies to develop business strategies that address sustainable development. As majority of companies may view this trend as a negative impact on the profits, companies need to develop strategies that will have a balance between the economic, social, and environmental issues. The recent global economic crisis provides justification to companies to embrace new strategies as the economy may shift and failure to adapt may lead to financial losses. Incorporation of the global trends may assist in developing concrete business strategies. Stearns (2013) identifies some super trends that are likely to drive change, both positive and negative in the next 10 years. These include technology accelerators and globalization. Globalization involves the processes that companies use to increase the global connections in terms of business. Technology accelerators contribute to changing the way executives think and make decisions (Stearns, 2013). The following of trends allows companies to identify opportunities early enough to develop competitive advantage unlike companies that spot the opportunities late. Companies that do not follow global trends may end up in risky situations once they decide to adopt the trends late. In the incorporation of social and environmental trends, companies need to address or approach opportunities presented by the trends with caution. Proverbio, Smit and Viguerie (2008) suggest that companies need first to study the impact of the trends on sub-industries, segments and categories. This enables the company to invest with confidence. Studying the trends on the different sub-industries and categories allows executives to gain detailed insights thus allowing them to make more informed strategic decisions about growth and allocation of resources (Proverbio, Smit and Viguerie, 2008).
Why hospitality Industry needs to respond to Global trends
The hospitality industry may greatly be affected by climate change that has an influence on trends such as constraint on supply. Furthermore, the presence of natural resources in different countries may offer the best location to set up new business or expand existing ones. Tourists’ tastes and preferences are also influenced by the presence of environmentally friendly destinations and service providers that are environmentally responsible (Mihelj, 2010). Cases of geopolitical instability can greatly affect the success of a hotel. For instance, tourists may neglect to travel to areas or countries where there is political unrest. Furthermore, the hospitality industry may rely on countries where the population growth is high and there is need for jobs. By creating employment opportunities, they can be able to find cheap labor.
Further, the hospitality industry deals a lot with food and beverage whose consumption is based on the increasing number of tourists or guests in hotels. In the planning, hotels need to select foods and beverages that are unique and can attract tourists (Cerovci and Horvat, 2010). Furthermore, international companies have sought to adopt technological advancements to aid in communication. According to Radulovic (2013), this has been necessitated by the need of international companies to offer their brands worldwide and continue to provide customer satisfaction to their customers wherever they go worldwide. Further, the hospitality industry is all about satisfying the needs of the client and making sure that they have the best experiences.
Conclusion
Technology can play a significant role in improving the experience of a tourist in a hotel. For instance, tourists may be willing to pay more in hotels that provide the use of tablets and mobile applications. The use of modern technology allows tourist to be able to make last minute bookings, which fetch higher prices than normal booking and provide a viable platform for companies to advertise their products. Consequently, hospitality businesses are able to increase their competiveness based on the current market trends. Increase in consumer demand in places such as Czech provides a suitable location for companies in the hospitality industry to set up new operations (Ryashko, 2013). On the other hand, companies in the hospitality industry need to keep up with global trends especially dealing with credit card payment and e-commerce. Computer hackers can use their skills to obtain card data of the tourists from hotels. New hotels engaging in the adoption of new technology such as Wi-Fi, may have unsecured networks that provide easy access for hackers. The hotels need to setup security measures to handle such issues and protect the privacy of their clients.
References
Cerović, Z., & Horvat, Đ. (2010). The Global Trends on Alcoholic Beverage Consumption. Tourism & Hospitality Management, 831-842.
Manić, M., Veljković, D., & Petrović, D. (2012). The Enterprises from Serbia Facing the Phenomenon of Sustainable Development in the Global Environment. Megatrend Review, 9(4), 29-45.
McIver, R. P. (2012). Global Financial Crisis And The Changing Geography And Industrial Composition Of Large, Listed Companies: Evidence On China's Ascent. Journal of Business Management, (6), 5-18.
Mihelj, V. (2010). New Tourist Products for New Tourists' Expectations. Tourism & Hospitality Management, 1075-1085.
Proverbio, S., Smit, S., & Viguerie, S. (2008). Dissecting global trends: An example from Italy. McKinney Quarterly, (2), 14-16.
Radulović, L. (2013). The Role and Potential of Global Distribution System Amadeus for Tourism Development at the Global Level. Singidunum Journal of Applied Sciences, 10(1), 28-38.
Ryashko, L. (2013). Analysis of the Dynamics, Trends and Prospects of Hotel Business In Prague. Czech Hospitality & Tourism Papers, 1819-32.
Stearns, D. (2013). Small Bets and Super Trends: Business Strategies for 2013. Financial Executive, 29(2), 64.
