In the current global tourism scenario, sustainability is acting as important determining factors. This is due to the reason that tourism industry is having the direct impact on the natural tourist destinations (Ruhanen, 2013). In addition, with the increase in the competition between the countries in portraying and position their tourist destinations over others, supplementary issues are further given concentration for resolution (Battisti, Deakins & Perry, 2013). In the recent time, governments are focusing more on enhancing their tourist destinations in order to have more access to foreign reserves. In some of the countries such as New Zealand, tourism industry contributes a significant amount in the gross domestic income. Tourism is an important sector of the economy of New Zealand and has been able to contribute more than 12 Billion NZ Dollars to the GDP of the country in 2016 (Tourism.org.nz., 2018). Thus, for them, this industry is having much more importance. In addition, sustainability of the tourist destinations will further ensure that revenue generation will be seamless.
New Zealand is one of the most popular tourist destinations in the world with having picturesque landscapes and natural factors. It is reported that they have attracted more than 3.5 million international tourists in 2016, which makes them one of the biggest tourism industries in the world (Becken, 2013). However, in the recent time, they are facing a few issues in their tourism sector, which are reducing their competitiveness in the global market. In addition, these issues are further affecting the sustainability of the tourist destinations of the country (balli, Curry &Balli, 2015).
This report will discuss about the external and internal business factors affecting the New Zealand tourism industry. This will help to identify the current scenario of the industry. In addition, this report will also discuss about the major issues and challenges being faced by the tourism industry of New Zealand. In accordance to these issues, a few recommended steps will be discussed, which will further help in enhancing the potentiality of the industry.
According to Leekha, Chhabra and Sharma (2014), the situational analysis is essential in nature and is conducted in order to understand the external as well as internal environment of the organization. This is inclusive of the collection of the methods which is being used by the managers in order toanalyse the internal along with external environment of the country New Zealand in an effective manner (Burns, Bush & Sinha, 2014).
The SWOT and PESTLE analysis is essential in nature as this will be helpful in understanding both the strengths, weaknesses, opportunities along with threats of the country. Furthermore, as per the external factors which are concerned, this will provide proper investigation on the differentpolitical, economic, social, technological along with legal and environmental factors which play a major role in managing the different aspects.
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Strengths There is huge support for the growth of the international organizations which plays a vital role in being setting up the business in New Zealand Furthermore, New Zealand has niche growth in the market which will be beneficial for the continuation of the growth of the entire tourism industry and this will help in managing the overall effectiveness (Piercy, 2014) |
Weaknesses The New Zealand dollar fluctuation can be one major reason or weakness for the different kinds of organizations or business as this will not provide competitive advantage to the different companies which are planning to set up in New Zealand(Leekha, Chhabra & Sharma, 2014) |
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Opportunities The emerging markets is one of the major opportunities wherein the introduction of the information technology can be one major reasons for the growth of the tourism organizationsin the market of New Zealand(Ogden, 2018) |
Threats There are different major competitors of tourism industry in the New Zealand market and this can be ineffective in nature for the overall growth of the company in the market of NZ |
The PESTEL analysis is essential in nature which will be beneficial for the marketers in the New Zealand for analysing and monitoring the macro-environmental factors which can create impact on the different organizations performing in the New Zealand market.
Political Factors is one of the major aspects which is considered while analysing the political stability and economic stability of the organization in an effective manner. In the economy of New Zealand, there are stable government rules and regulations and the country has strong chance of success due to the strong kinds of rules along with regulations (Ogden, 2018).
Moreover, the different companies are required to be aware of the new rules and regulations which will be beneficial for the overall success of the firm in an efficient manner. The country has tried to provide trade freedom to the different organizations which are setting up their business in New Zealand as well. However, this can be seen that there are various risks involved in the setting up the business in New Zealand as the government changes in every three years and this can be difficult for the companies in understanding the new rules which can affect the overall efficiency and productivity of the different organizations.
Economic Factors are the other aspect wherein economic situation is excellent in comparison to the other countries. The different product rates are economical and this is affordable by all the individuals staying at New Zealand (Eshuis, Klijn& Braun, 2014). The rate of inflation of NZ is less and this is quite effective for the growth of the economy in an effective manner (Lima et al., 2018).
Social Factors are the aspect wherein the social system is wonderful and the rate of literacy of the country is more than 100%. The expectancy of the life of the individuals is 81 and this is helpful for the overall growth of the economy in an efficient manner. The ratio of the unemployment is less and this can be a huge opportunity for the different kinds of organizationsfor the overall growth and survival in NZ(Smith, 2015).
Technological Factors is the other aspect in which New Zealand has strong and own system of education. Furthermore, NZ has tried in introducing the IT technology in urban and rural areas which is exclusive in nature. There are different kinds of organizations which can implement the IT technological advancements for the growth of their company in the NZ market effectively (Smith, 2016).
Legal Factors is the other aspect in which the new government comes and takes the new position after every three years. There is huge scope of the different international companies and businesses to start their business in such areas and this will be beneficial for the growth of the companies as well (De Mooij, 2018). The freedom of doing business in New Zealand is 99.9% and the freedom of trade is 84.6% and from the same, this can be analysed that the business environment of New Zealand is apt for continuing and starting a new business effectively (Lima et al., 2018).
Environmental Factors are the last aspect in which the country is situated around 900 km from Australia and the ecological system is unique in nature as well. The educated population of NZ tries to implement different strategies which will be beneficial for the overall success of the firm in an efficient and appropriate manner (Lima et al., 2018).
Additionally, this can be seen that there is huge disadvantage of the different business which is being performed at New Zealand as there is lack of the different resources of water and the import cost is huge in nature which can affect the overall efficiency of the firm in a negative manner. From the above SWOT along with PESTEL analysis, this can be identified that there are different strategies which can be adopted in order toanalyse the overall efficiency of the firms which are planning to start their business in the market of New Zealand. In New Zealand, the political condition is stable and this has helped in managing the overall efficiency in an appropriate manner.
One of the major trending factors in the New Zealand tourism industry is the emergence of popularity of the small tourism firms. This is due to the reason that small tourism firms are having more intensity of community connections. According to Keen (2013), interaction between the community and the small tourism businesses is more mainly in the rural part of the county. This is due to the reason that small tourism firms are working local communities in serving to the tourists. This is uplifting the society as well as providing authentic experience to the customers. This is also being stated by the authors that rural economy of New Zealand is heavily depended on these small tourism organizations.
However, on the other hand, it is stated by Pearce (2015) that even though the small tourism organizations are an integral part of the destination management of New Zealand, but there are number of challenges also being identified. One of the major problems is the lower access of the financial resources by them. This is causing lack of updated service delivery to the international tourists and it is reducing their service competiveness in the global market. Thus, according to the author, it is important for the small tourism organizations of New Zealand to have better access to the financial resources, which will enhance their service quality and delivery approach.
Tarrant et al., (2014) stated that trend of sustainable tourism is on the rise in New Zealand. This is due to the reason that eco friendly tourism is on the rise in New Zealand. This can be termed as one of the major positive signs in the recent time in the tourism scenario of the country. In addition, the authors have also stated that education tourism of New Zealand is also on the rise. This is due to the reason that colleges and universities of New Zealand are attracting huge global talents from across the world. Thus, these international students can be included in the education tourism and is further enhancing the trend of sustainable tourism.According to the authors, education tourism should be given the major concentration in the recent time due to the reason that this sector will have more generation of revenue as well as lower impact on the natural resources.
One of the major issues being faced by the tourism sector of New Zealand is the exploitation of the natural resources. This is due to the reason that inflow of the foreign tourists is on the rise in New Zealand in the last few years. Thus, the more will be the traffic of the international tourist, the more will be the crowd in the destinations of New Zealand. According to the media reports, tourist destinations of New Zealand such as Mt Cook and Queenstown are already being affected by the increased footfalls (Hopkins, 2015). It is also reported that increased traffic is increasing the pollution rate in these places along with damaging the flora and fauna species. According to Gillovic and McIntosh (2015), part from the environmental impacts on the country, the tourism sector is also facing the challenge in terms of economic viability. This is due to the reason that the more will be the adverse impact on the landscapes of New Zealand, the less will be their viability as tourist attraction to the international travelers. Thus, as per the authors, the inflow of the international travelers will get reduced in the long term.
Another major problem being faced by the tourism industry of New Zealand is the shortage of employees in the county. This is due to the reason that New Zealand is mainly depended on the foreign human resources and they are one of the least populated states. In addition, the rate of immigration in the country is also rapidly increasing, which further increasing the percentage of the non-residences in the country. However, it is reported thattourism sector of New Zealand is facing the shortage of more than 47000 workers in the current state. According to Ashton (2014), lack of employees is affecting the service quality and delivery for the international tourists. This is due to the fact that the service standards in the global scenario of tourism is increasing and shortage of the employees is reducing the effectiveness of the tourism industry of New Zealand in aligning with the global service standard. It is also being identified that lack of indigenous people is also causing problems for the tourism industry of New Zealand due to the reason that they are having the most idea about the localtaste, language and culture.
Tourism industry of New Zealand is also facing the issue of pay differences with that of other business sectors. This is due to the reason that it is reported that tourism sector of New Zealand is having lower wage rate compared to the other business sectors. Thus, it is affecting the potentiality of new recruitment in the industry (Sigala, 2017). In addition, low pay scale is also demoralizing the employees working in this sector in providing effective service to the tourists. Therefore, it is creating barriers in increasing the workers in the tourism sector along with maximizing the performance and effectiveness of them.
Another major problem for the tourism industry of New Zealand is the increase in the average cost and price. It is reported that average price of food and accommodation is on the rise in New Zealand. This is having adverse impact on the entire tourism industry due to the reason that the increased price of the facilities in New Zealand will reduce the inflow of the tourists in the country. This will reduce the rate of generation of revenue from this sector. According to Sun, Ryan and Pan (2014), in major cases, international tourists mainly from China are getting attracted towards the tourist destinations by means of virtual mediums. However, in the later stage, the expensive cost in New Zealand tourism isreducing the potentiality.
Another major problem for the tourism industry of New Zealand is maintaining the loyalty level of the tourists. This is due to the reason that loyalty of the tourists will be maintained only when they can be offered with differentiated service quality. This is due to the reason that tourists will not come back to the same destinations every time. However, in the case of the New Zealand tourism,the number of destinations is less due to the smaller national boundaries of the country (Sun, Zhang & Ryan, 2015). Thus, it is challenging for the tourism industry of New Zealand to offer new destinations to the tourists every time they visit. The loyalty level of the visitors is affected by this phenomenon.
In the current competitive scenario, it is important for the New Zealand tourism sector to accept the corporate approach of branding and promotion. Thus, it is recommended that New Zealand tourism sector should participate in different tourism events around the world. This will increase the visibility of the tourist destinations of New Zealand across the world. In addition, it is also recommended that in increasing the visibility of the brand of New Zealand tourism, embassies in the foreign market should be proactive. They should hold different events in the respective countries and New Zealand tourism and increase the exposure in the target markets.
Segmentation and targeting will also play an important role in enhancing the business potentiality for the New Zealand tourism sector. This is due to the reason that without segmenting the target customers, it will be difficult for them to determine the characteristics of the target customers. Thus, it is recommended that segmentation should be done in terms of demographic, geographic, behavioral and psychographic segmentation. This will help in classifying the determining factors of customers and design the service process accordingly. In addition, it is also being recommended that targeting strategies should be diverse in nature in order to cater to different customer segments. In terms of the geographic segmentation, tourists from Australia, China and the United States will be targeted. This is due to the reason that Australia is the neighbor country of New Zealand and thus they can be targeted as more alternative tourist destinations. China and the United States already comprise the major section of international tourists in New Zealand. Thus, they will be segmented. In the following states, developing countries such as South Asian countries and Latin countries will be targeted due to the reason that inflow of tourists from these countries is rapidly increasing.
In terms of the demographic segmentation, customers between the age groups between early teenage to senior citizen will be targeted. This is due to the reason that teenage and younger ages will be accompanied by their families in tours. Adults will have the purchasing power for the international tours and senior citizens can visit during their post retirement period. Thus, wide and vast age groups will be segmented. In terms of the behavioral segmentation, tourist will be segmented in terms of holidaying, family visits, business tours and education purposes. All these sectors will be help New Zealand tourist board in having multiple streams of generating revenue. In terms of the psychographic segmentation, both the first timers and loyal tourist will be segmented. In terms of the Australian tourist, there are huge number of tourists comes to New Zealand to visit their family and friends. These customer segments are loyal in nature but offering them more effective service and experience will help in generating positive word of mouth and thus will attract new sets of customers from Australia. In addition, the more will be the level of experience of the Australian customers in visiting New Zealand, the more will be the probability for destinations in New Zealand to replace the domestic Australian destinations.
It is recommended that New Zealand tourism sector should develop diverse offerings. This is due to the reason that the more diverse will be the offerings for the global travelers, the more will be their attraction and loyalty level. In addition, the diverse offerings will also ensure that different customer segments can be targeted and every time the customers can be offered newer services. It is also recommended that smaller and less known destinations should also be projected to the international customers. This will enhance the diversity as well as increase theexposure of the lesser known locations. The holistic social development can also be made possible.
It is recommended that tourist destinations of New Zealand should be positioned based on the customer segments. This is due to the reason that both the niche and mass market customers should be targeted by means of different positioning strategies. It is recommended that some of the destinations of New Zealand should be positioned as affordable offerings for the major section of the global travelers. On the other hand, the most popular locations should be positioned as the niche offerings and should be targeted towards the higher customer segments. Three of the most renowned and famous world heritage sites are present in New Zealand. They are Te Wahipounamu, Tongariro National Park and Subantarctic Islands. These sites will help New Zealand to position as a heritage destination to the segmented customers. These sites will also help New Zealand in positioning themselves as the destination for the nature lovers and eco-friendly tourism. These sites will be helpful in gaining the competitive advantages due to the reason that they are particular for New Zealand only and Australian tourists will have to visit in physical. On the other hand, Milford sound, Mitre Peak and waterfalls and Fiordland national park can also be beneficial for the New Zealand tourism board in positioning themselves as green and natural alternative for the international tourists. Majority of these destinations are more favorable during the winter season but inflow of the tourists is maintained round the year. It will also help the New Zealand tourism board in positioning these sites as the summer destinations for the Australian tourists. Adventure is another genre of positioning for the New Zealand tourism. It is reported that adventure sports such as bungy jumping from Kawarau bridge is extensively being promoted by them for the adventure seeking new age tourists. In this case, the New Zealand tourism board partnered with the last The Mission Impossible franchise in marketing these activities. Thus, it is helping New Zealand in catering to both the leisure seeking and adventure seeking tourists.
Australian tourists are having multiple options for their international tourism. Thus, it is important for the New Zealand tourism board to gain competitiveness in order to attract the major sections of the potential Australian customers. One of the major strategic intent will be the similarity of cultures between the two countries. The branding activities of New Zealand tourist board will be focused on communicating the similarity of cultures between Australia and New Zealand. This will attract as significant customer section over other destinations. Another branding strategy will be in terms of cost. This is due to the reason that New Zealand being the neighboring country of Australia will have lower cost of transport compared to other destinations. Thus, Australian tourists will have the option for international tour in lowest cost in New Zealand.
It is also recommended that New Zealand tourism sector should initiate the diversification strategyin order to have more presence across different customer segments. It is recommended that education sector should be included in the tourism as part of education tourism. This will enable them to cater to larger customer segments and having more revenue streams.
Apart from targeting the international travelers, it is also recommended that New Zealand tourism sector should also target the national customers as well. This is due to the reason that targeting the national customers will further increase the target customer segments. It is recommended that market penetration strategy will help in catering to both the national as well as international tourists.
Conclusion
This report concludes that New Zealand tourism board is facing a few challenges as well having number of opportunities. In this report, the external and internal determining factors for them are being identified and a few major important elements are identified. In addition, a few relevant issues being faced by the New Zealand tourism board are also identified. This report recommended a few steps in accordance to the identified issues. Effective implementation of these steps will help the New Zealand tourism board to enhance their competitiveness in the global tourism market. In the recommendation part, different strategies and concepts are discussed, which will have multiple benefits in the long term.
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