TOURISM AND GLOBALIZATION
Vesna Peric, MSc
University of Primorska, Turistica - College of Tourism, Portorož, Slovenia
Tourism businesses operate globally and many have opted for a competitive advantage
of internationalization. Technology, information and reduction of boundaries have
created new forms of service companies, not only the large multinational corporations,
but also small niche specialists. The growing importance of strategic alliances in
creating networks of business relationships has become a trend also in tourism. Tourist
destinations must establish identities that differentiate them from other destinations.
Keywords: Globalization, internationalization, travel industry, strategic alliances.
There has been much talk of globalization. It can refer to a variety of phenomena:
politics, technology, consumer behaviour, firm strategy, markets, trade flows and capital
flows (Nooteboom 1999, 56). This paper intends to look into the phenomenon of
globalization in tourism and determine its pros and cons. Internationalization is the
process by which firms become involved in serving markets outside their home country
(Teare, Boer 1993, 194). Globalization can be defined as the highest development level
of internationalization. Its two principal instruments are international trade and media
communication, which makes information a trade good. The most exposed agents of
globalization are mega corporations, multinationals as a rule, and however, consumers
themselves. In a purely economic sense, the term »globalization« stands for the
increasing interdependence of markets and production in different countries through
trade in goods and services, cross-border flows of capital, international strategic
alliances, cooperation, mergers and exchanges of technology. Globalization also means
an increase in the international division of labour, achieved through the international
fragmentation of production, as well as the political trend towards a more liberal
economic order (Smeral 1998, 372).
Many companies have also found that their domestic markets are now saturated and that
the only way to maintain sales growth is to seek out new selling opportunities in
international markets. Furthermore, many managers are turning to outsourcing- the
practice of acquiring raw materials, products, and services from other companies- as a
way to lower their companies' costs. They have found that their companies can gain
competitive advantage by focusing on marketing and distributing while turning to
foreign producers for the manufacture of their products (Bourgeois et al.1999, 7).
Globalization of tourism has not started in Slovenia yet.
Managing the Process of Globalisation in New and Upcoming EU Members
Proceedings of the 6th International Conference of the Faculty of Management Koper
Congress Centre Bernardin, Slovenia, 24–26 November 2005
2 Why Organizations Enter the Global Environment
The benefits of international expansion are known and include additional growth and
expansion; the opportunity to increase revenues, profits and return on investment.
Global companies have special requirements that are significant organizational
challenges. The structures that the managers of global companies adopt must assist them
in their efforts to exploit opportunities to achieve economies of scale by centralizing
their marketing and production activities whenever possible. At the same time, the
structures of international companies must also accommodate differences in national
cultures and variations in business practices. And, as in any organization, the structures
of international companies must serve to coordinate business activities and to move
information quickly and accurately across borders and around the world (Bourgeois et
Developments introduced by foreign firms can seriously affect local communities and
local businesses. The international arena entails some significant challenges and risks.
Language, cultural and business practices, and political and legal environments can
differ greatly across national borders. Practices that are perfectly acceptable in one
country can be taboo in another country. McDonald's decision to enter India meant that
its menu had to change drastically in order to accommodate the culture of a country in
which cattle are revered (Bourgeois et al.1999, 7). Clark and Arbel (1993, 86) cite
several challenges, such as communication difficulties, little control over regulatory,
legal and political decisions, political instabilities, different labour patterns, costs,
product supplies, religions, customs, work ethics, languages, lack of codes and
Globalization is primarily about negative effects on the environment, culture, social
values, with the imitation of the western culture in the first place, and standardization,
which leads to a uniform product in tourism and disappearance of local standards
(Klančnik 2003, 53).
3 International Tourism and Globalization
Globalization has increased the interdependence between countries, economies and
people. It does not involve only giant corporations, but also small and medium sized
businesses together with family-run firms (Klančnik 2003, 51). This process has led to
the creation and operation of global tourism market where destinations, which are
expected to compete on equal basis regardless of the country of origin, function
interactively. Globalization has opened a whole new world of development
opportunities. 715 million people travelled abroad in the year 2002, by the year 2020
this number is expected to increase to 1.6 billion. The tourism turnover is 3500 billion
US$ and accounts for 10 percent of global trade (ibid., 53). Tourism has become big
business and is run by great trusts.
Creation of a global society means that tourism businesses have the ability to operate
globally and many have opted for a competitive strategy of internationalization. Global
enterprises view the world as their operating environment and establish both global
strategies and global market presence (Knowles et al. 2001, 177). In tourism,
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