With Examples from the International Hospitality Industry Critically Comment on the Main Methods of Integration and Growth

3708 Words Dec 24th, 2012 15 Pages

Planning for growth within firms involve a number of strategic decisions that need to be made. These include the direction in which to expand, expansion method and how far or fast they should aim to grow. Firms may choose to expand by increased involvement with their existing products or services, or diversify into new activities. They may also set up new capacities within the firm or expand externally through mergers, acquisitions, strategic alliances, joint ventures with one or more firms (Morgan, 1980; Hornby et al, 2001; Johnson et al, 2008). The service sector has grown rapidly in both developed and developing countries during the past three decades. The hotel industry is characterised by high capital intensity,
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Horizontal growth is achieved when firms expand their products or services into other geographic locations and/or by increasing the range of products and services offered to current markets. Horizontal growth results in horizontal integration, which is the degree to which a firm operates in multiple geographical locations at the same point on an industry’s value chain. This can be achieved through acquisitions or strategic alliances with other firms in the same industry (Dess et al., 2005; Grant, 2005; Wheelen and Hunger 2006; Johnson et al 2008).

Whitbread Plc is a good example of a well-integrated and well-grown hospitality industry. It is one of the leading players in the U.K. leisure industry, now concentrating on restaurants and coffee shops, hotels, and health and fitness clubs. Although its roots were in brewing, from this it grew to become one of the most prestigious of London 's older breweries, with its history closely paralleling that of the Whitbread family, which retained continuous control of the company from 1742 to 1992. Whitbread began to diversify in the early 1960s. Its long involvement in the pub industry led to a deeper delving into the restaurant sector, with a key development being the 1974 launch of the Beefeater casual dining chain. In 1982 a 50-50 joint venture with PepsiCo Inc. Began. It
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