Economic Decision Making In Hospitality Industry

Government influence

Discuss about the Economic Decision Making in Hospitality Industry.

For many years of the time period, due to the economic forces, several changes takes place within the National Corporation and concentration of large global into the market (Yap et al., 2014). That is why the medium and small sized sectors remain feasible and workable along with several entrepreneurs who survive and also succeeding in spite of the current economic situation of their own country (Yang et al., 2014). By the help of this article, anybody is able to get a clear idea about the economic techniques and concepts by the help of which they are able to understand the economic trends and the reason behind the economic fluctuations and their impact on the various organizations.

A developing country is also known as an underdeveloped country or less developed country.  The country which has low Human Development Index (HDI) and less developed industrial base than other countries is called as developing the country (Amran et al., 2014). Malaysia is also a successful developing country.

There are several factors which show that Malaysia is a successful developing country. Those factors are

• Recently, it has been seen that within Malaysia corruption, abuse of power and malpractices are reduced effectively
• They overcome the bureaucratic red tape and also increase the efficiency of public delivery system
• They enhance the business ethics and corporate governance
• They also enhance the quality of life and develop the people’s well-being facilities

The economic performance of Malaysia is one of the best performances throughout Asia. The real GDP is increasing every year by an average of 6.4% from the year of 1957 to 2005. During the period of the early 1980s and mid-1990s, the economic performance of Malaysia reached the highest peak. At that time they experienced a sustainable rapid growth in their economy by an average of nearly 8% per annum (Tang et al., 2014). High levels of domestic private investment and foreign investment plays the most important role in modernizing and diversifying the economy. In the recent days, Malaysia totally depends on the multi-sector economy which is based on manufacturing and services. For this reason, nowadays Malaysia becomes an upper middle-income country (Tajeddini et al., 2017). Due to the weak condition of the global economy, the government of Malaysia is unable to cut down their spending for providing support to the economic condition of the country. For this reason, the government sells their currency to the offset market demand.

By the end of the quarter of this year, it is expected that the Malaysia GDP Growth Rate will be nearly 1.10%. According to the econometric models of Malaysia, it is forecasted that the GDP Growth Rate will be nearly 1.50% in the year of 2020 (Sher et al., 2015). By the end of the quarter of this year, it is expected that the Malaysia Unemployment Rate will be nearly 3.60% (Ramely et al., 2014). According to the Trading Economics Global Macro Models, it is forecasted that the Malaysia Unemployment Rate will be nearly 4.10% in the year of 2020.

Tourism development

According to the financial report of Malaysia, it has been seen that there is a Government Budget deficit which is equal to 5.32% of the GDP of the country in the year of 2011. To overcome this budget deficit, the government of Malaysia incorporates a contractionary financial policy where the rate of tax increases and the governmental spending is decreasing (Mok et al., 2013). However, due to the weak condition of the global economy, the government of Malaysia is unable to cut down their spending for providing support to the economic condition of the country. There also have another way by the help of which the government of Malaysia is able to influence the GDP rate of the country (Mardani et al., 2016). The Central Bank of Malaysia uses some instruments for influencing the economy of their country through the interest rates and money supply.

By the help of the monetary policy, the Bank Negara Malaysia has influenced the GDP of Malaysia by decreasing the rate of interest. Due to the decrease in the rate of interest, the aggregate expenditure on the interest-sensitive consumption goods and investments are increasing. For this reason, the growth rate of Real GDP is also increasing (Malaysia, 2013). The government of Malaysia can also able to decrease the rate of interests by buying bonds, by decreasing the ratio of reserve requirement and by lowering the rate of discounts. When the government of Malaysia buys bonds, then the size of the bank deposit is increased which mean the money supply is also increasing. As the level of the money supply is getting high, so eventually the rate of interests is getting decreases. That is why; the purchasing power of the people is increasing (Garg, 2015). The reserve requirement ratio always influences the amount of money which can be created through the banking system along with the reserve of each dollar. By decreasing this reserve requirement ratio, the government of Malaysia is able to decrease the rate of interests and increase the money supply of bank. The discount rates generally determine the rate of interests on loan which are makes by the Central Bank to the banks. When the discount rate is decreased then the rate of interests on the loan also decreases. That is why more numbers of people can apply for loans from the banks and the purchasing power of the people is increased.

The government of Malaysia also influences the value of their currency by purchasing the weak currency and selling their strong currency. It is very important that there should be sufficient currency within which the current markets are moving (Chong, 2015). The government sells their currency to the offset market demand. By the help of direct intervention within the foreign exchange markets, the government is trying to equalize and balance the market forces on the rate of spot exchange.

The government of Malaysia is more responsible the individuals for ensuring the personal well-beings of their citizens. According to various researches, it is found that the confidence of the people on their government tremendously affect the governmental decisions and the economic conditions of the country.

In the recent few years, Malaysia becomes one of the most famous tourist destination. Nowadays, the tourism sector becomes one of the most important contributors to the economy of Malaysia. The income from the tourist sector becomes the main source of foreign exchange earnings. This tourism sector is acting as a catalyst in the growth and development of the economic condition of Malaysia. The tourism sector of Malaysia contributes minimum 8 to 10% of the GDP. In the year of 2011, just about two million numbers of jobs have been created by the help of the tourism sectors and those industries which are related to tourism (Ashrafi et al., 2013). In the year of 2009, Malaysia holds the 9^th position in the terms of arrival of tourists with 23.5 million through all over the world and in the year of 2012, Malaysia holds the 10^th position in the terms of arrival of tourists with more than 25 million numbers of tourists. According to the Ministry of Tourism, the neighbor Asian countries such as Singapore, Indonesia, China, and Thailand are the main tourist markets for Malaysia.

In the recent days, it has been seen that some impossibilities are arises within the tourism sector for which they are unable to expand the economic opportunities within the developing countries. To overcome these impossibilities, the tourism companies play a role of leadership within the business community and tourism industry as a whole. The tourism industry already has a significant and large impact on developing the economies of their own country. High levels of domestic private investment and foreign investment plays the most important role in modernizing and diversifying the economy. In the recent days, Malaysia totally depends on the multi-sector economy which is based on manufacturing and services (Ali et al., 2016). The government of Malaysia also influences the value of their currency by purchasing the weak currency and selling their strong currency. It is very important that there should be sufficient currency within which the current markets are moving. That is why the medium and small sized sectors remain feasible and workable along with several entrepreneurs who survive and also succeeding in spite of the current economic situation of their own country. To overcome this budget deficit, the government of Malaysia incorporates a contractionary financial policy where the rate of tax increases and the governmental spending is decreasing. However, due to the weak condition of the global economy, the government of Malaysia is unable to cut down their spending for providing support to the economic condition of the country.

Nowadays, it becomes most important for Malaysia to make the tourism industry more sustainable within the global market. It cannot be done only by managing and controlling the negative impacts of the tourism industry. By the help of tourism sectors, the local communities are able to get lots of benefits, socially and economically and also able to increase awareness among the people and also provide a great support for the conservation of their environment.

Cameron Highlands is the most wide-ranging hill station in Malaysia. In this area hotel business and tourism business is become more appropriate. They also implement some innovative ideas into their marketing strategies such as plan and make arrangements for celebrating an event like weddings in the beachside at the time of sunset. Such brilliant ideas can improve and develop the whole business process and give lots of opportunities to the local people for running some local business like supply of flowers in the events, catering business, etc. by the help of this tourism and hotel business the economic condition of the local people also become better than before.

The business owners can easily able to appoint many staffs from the local communities. Due to the establishments of lots of hotels in Cameron Highlands, a huge amount of jobs are created within the local areas (Ahmad 2016). For this reason, the unemployment rate is also getting decreased in future. As a result, it also influences the GDP of their country and also improves the economic condition of Malaysia. However, before starting the business of tourism, the business owners should have a clear idea about the tourism law. The legal and regulatory framework for a sustainable business always reflects the roles which are played by the stakeholders and their responsibilities towards ensuring the rights of the international and local tourists. By the help of this legal framework, the business owners are also able to determine the rights and limitations within the business of tourism.

Conclusion

In conclusion, it can be said that the tourism and hospitality industry is the main contributor to the economy of Malaysia. By the help of this industry, Malaysia is able to improve their nation’s economic condition. Malaysia totally depends on the multi-sector economy which is based on manufacturing and services. This tourism sector is acting as a catalyst in the growth and development of the economic condition of Malaysia. Nowadays the economic performance of Malaysia is one of the best performances throughout Asia.

References

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Ashrafi, A., Seow, H. V., Lee, L. S., & Lee, C. G. (2013). The efficiency of the hotel industry in Singapore. Tourism Management, 37, 31-34.

Chong, K. W. (2015). The Influence of Price Structures on Experience Quality and Behavior Intention in Hospitality Industry. International Journal of Marketing Studies, 7(6), 137.

Garg, A. (2015). Travel Risks vs Tourist Decision Making: A Tourist Perspective. International Journal of Hospitality & Tourism Systems, 8(1), 1-9.

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Mardani, A., Zavadskas, E. K., Streimikiene, D., Jusoh, A., Nor, K. M., & Khoshnoudi, M. (2016). Using fuzzy multiple criteria decision making approaches for evaluating energy saving technologies and solutions in five star hotels: A new hierarchical framework. Energy, 117, 131-148.

Mok, C., Sparks, B., & Kadampully, J. (2013). Service quality management in hospitality, tourism, and leisure. Routledge.

Ramely, A., Lim, K. C., & Kayat, K. (2014). Predicting hotelier’s intention in practicing event greening: an examination of personal belief, subjective norms, and perceived behavioral control from managerial perspectives.

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