Overview of Sri Lanka Tourism Industry

The report is based on the tourism industry in Sri Lanka and it analyzes the porter national model for tourism industry. This report gives overview on the porter national model for the development of tourism industry in Sri Lanka therefore it explains the components of PND model in details. It focuses on how Porter national diamond model provide support to tourism business in Sri Lanka. The PND model provides a brilliant framework to the tourism industry and this report explains the effectiveness of PND model. Sri Lanka is classified as the most beautiful Island country in the world for tourism thus it also focuses on new technology and culture for the development of tourism industry (DeLoughrey & Handley, 2011). On the other side report focuses on the foreign direct investment and its effectiveness.  It explains the role of foreign direct investment in tourism industry. FDI plays vital role in every country and it provides financial support to Sri Lanka for the development of tourism industry (Rotberg, 2010).

This report also explains the key management issues which are faced by the company before starting operations in Sri Lanka tourism industry thus it should analyze the environment before starting new business in Sri Lanka. This report also explains the advantages, appropriateness and limitations of foreign direct investment. If the Sri Lanka wants to grow in tourism industry then it should focus on the environment conditions of Sri Lanka. It also should take care of social culture, new technologies for tourism, communication, transportations, knowledge and managerial skills for starting business of tourism in Sri Lanka. The report also analyzes the micro and macro environment of the country because they also affect tourism industry. The report also focuses on the recommendations which have been provided by the government for growth of tourism sector in Sri Lanka. The company should make regulatory framework for the tourism industry and it should make effective policies. Sri Lanka is famous for its attractive places so it should maintain coordination and communication with travelers. It should provide the best services to the visitors and it should also contribute for the development of tourism industry (Sornarajah, 2010).  

Porter national model: 

This model was developed by American professor Michael porter in 1990 for expansion of business and it provides help for identification of institutional environment and it analyzes the competitive position of competitors in the universal market. Porter assumes that competitive situation of the market is associated with the performance of other business (Markus, 2008).

Porter National Diamond Model in Sri Lanka Tourism Industry

The components of porter diamond model are discussed as below.

(Source: Mulder, 2016)

• Factor condition:It is the situation of a country which is related with the production factors like construction and infrastructure thus these factors are interconnected with competitiveness in particular business. These resources can be categorized as human resources, infrastructure and information resources and it also includes some other factors like oil, minerals and climate which create worldwide competitive position in the market.
• Supporting and related industries:The availability of suppliers and related industries are the key factors of market success therefore competitive suppliers should be increased and it should promote modernization and internationalization. So it is assumed that suppliers can be benefited by organizational success.
• Demand conditions:In the domestic market, demand conditions provide higher growth, quality improvement and innovation. Demand conditions give answer to the questions, “What is the reason of flourish market and the size and nature of the market”? And, “what is the impact of innovation and product development”? It maintains an interaction between economies, infrastructure cost and size of the market.
• Firm strategy, structure and rivalry:These factors are related in the manner in which association is prepared and managed by the management and it depends on the objectives of the firm and evaluation of rivalry within the union culture. It focuses on the circumstances of the country which determine that where a company and group can be established thus organization culture and competition plays vital role in the firm structure.
• Government:The government plays vital role in the development of industries and business in the home market as well as foreign market therefore it provides finance for the constructions of roads and airport. It also invests money in education and healthcare industries. In such way government encourages companies for use of energy, improve the performance and adoption of ecological schemes which affect the production of the company.
• Chance:It plays significant role in porter national model and provides opportunities for newly set up companies. The manufacturers conduct the business in the home country initially, and then they look to expand the business to the international level without being scared.

So, it can be said that porter national model plays important role in identifying the resources, opportunities, skill, innovation and objects of the company (Bakan & Do?an, 2012).

Tourism in Sri Lanka is increasing day by day and it is a popular place to attract foreign travelers thus Sri Lanka has developed resort areas for the development of tourism industry. The most popular resorts in Sir Lanka are Colombo resort region, South coast resort region, East coast resort region, West coast resort region and High country resort region. The attractive places of Sri Lanka are wildlife, beaches, natural scenic beauty, heritage, sports adventure, attractive rocks, elephants and culture of the country.  The Sri Lanka ecotourism foundation is the national organization which creates official ecotourism network with the help of Island. In the year 2010 foundation won the awards for outstanding contribution in Sri Lanka tourism (Henderson, 2007).

It is one of the most beautiful countries in the world and it continues focusing on the  tourism in the north and east areas. Tourism helps in to generate employment opportunities for people. The trained and educated people are deployed by the tourism industries. It also helps to maintain a good natural environment in the country. Due to the increased focus of Sri Lanka on the tourism, the condition of Islands and other tourism places has been improved. These are the blessings of god to Sri Lanka to have blue seas, beaches, wildlife, green hills, riots of plants and flowers, gardens and fruits. Tourism plays vital role in social, political, natural, economical development of the country (Pathirawasam & Wickremasinghe, 2012). The growth of the tourism maintains peaceful environment and it also analyzes the external environment of the country. The hotels and airports have been developed by the country for the progress of tourism industries (Ravinthirakumaran, 2015).

Porter model plays significant role in Sri Lanka tourism industry and it provides good platform to tourism industry. The Components of porter model for tourism industry in Sri Lanka are discussed as below:

1) Factor conditions: The factor conditions of porter model in Sri Lanka for tourism industry are divided in five categories. They are such as human resources, information resources, funds resources, physical resources and transportation. The factor conditions play significant role in Sri Lanka for tourism industry because porter model analyzes and evaluates the factor conditions like human resources, knowledge resources and infrastructure are available or not and it also evaluates the quality of factors for providing support to tourism in Sri Lanka by increasing competitive competencies of competitors. Physical resources measure the atmosphere and availability of tourism products which is related with natural and cultural attractions. On the other side human resources improve the quality of tourism employees and workers for doing work in tourism industries. It also evaluates the skills of tourism labors and services which are provided by the employees to travelers. Capital resources and transportation also provide financial assistance to tourism industry in Sri Lanka. Training is given by the management to workers and employees for providing services to foreign travelers (Postelnicu & Ban, 2010).

Components of Porter Diamond Model for Tourism Industry in Sri Lanka

2) Related and supporting industries: It maintains relationship between employees and tourists and it also provides coordination and cooperation to tourism industries. It evaluates whether tourism suppliers available or not and it also focuses on how tourism industries work simultaneously. Coordination and reciprocal relationship encourage tourism in Sri Lanka. Suppliers also play significant role in such industries because they promote innovation and they provide support for reducing risks. Now a day’s Sri Lanka is improving in tourism sectors by providing excellent services to travelers. Sometimes it provides support to other firm, industries and maintains good contacts with other tourism industries.

3) Demand conditions: It focuses on the demand of the travelers and demand conditions focus on the environment of home market which provides services to foreign travelers. It measure and analyze the reasons of growing tourism industry and size and nature of the home country market. A tourism industry can take competitive advantage in international segment if these segments are highly observable and sophisticated compared to the other nations. It emphasize on the travelers needs and satisfaction and continuous focus on the development of tourism industries thus it satisfy and fulfill the needs of travelers (Rouibah, 2008).

4) Firm strategy, structure and rivalry: It includes those factors which are related with tourism industries establishment, management and nature of the competition. It also indicates the production climate and course of actions. So it is assumed that if an industry wants to derive tourism business in Sri Lanka then it should focus on the environment, culture and competition of that country. Different nations have different techniques of management which includes strengths of personnel, leadership and organization styles, coordination and relationship between employees and travelers. Although porter model is an assessment tool for tourism industry in Sri Lanka and it plays vital role for the improvement of services in tourism industries. The government also plays significant role in development of such industries in Sri Lanka (Hong, 2008). 

There are some recommendations has been given to Sri Lanka for the tourism industries.

• It should develop a good marketing strategy and domestic tourism strategy for development of tourist industries.
• It should develop goods and services for increasing such industries in Sri Lanka and it should modify the organization culture for the development of tourism.
• It should increase coordination and cooperation between tourism and interconnected sectors and it should provide financial assistance to hotel owners and other professions in tourist industries so it will help in creating more employment opportunities.
• It should provide managerial training to employees for tourism industries related with languages and culture, in such way they can provide better services to tourist.  
• It should improve the infrastructure facilities, water supply, accommodations services, airports and banking sectors.
• It should develop awareness programs for the development of tourism industries in Sri Lanka.
• It should focus on the globalization, taxation policies and social issues for encouraging tourism industry in Sri Lanka.

In such way it can be said that all the above recommendations can help in increasing tourism industries in Sri Lanka (Hoyois, Scheuren, Below & Guha-Sapir, 2007). 

Foreign direct investment refers as investment done by association and person from one country to another country for establishment of new business and acquires assets. FDI plays significant role in Sri Lanka tourism industry and it provides excellent base for the development of such industry in Sri Lanka. In the past decades agriculture and manufacturing sectors was considered better source to generate employment and income for people but now a day’s tourism sector also consider a good source for generating jobs and employment opportunities. In such way it provides attractive services such as transportation, hotels, foods and drinks facilities, cultural and sports activities (Barenstein & Leemann, 2012).  Sri Lanka is the beautiful place for tourism and it provides opportunities to people for making good career in tourism industries. The Investment is carried out by the many companies in home country as well as in foreign countries, thus tourism requires distribution and communication channels, capital, transportations and universal market. However, foreign direct investment plays vital role in growth of the economy and it provides help to increasing gross domestic products (Bayne & Woolcock, 2011). 

Recommendations for Growth of Tourism Industry in Sri Lanka

The foreign investment advisory committee has been established in 1968 for the development of FDI in tourism industry of Sri Lanka and foreign investment law, has been made by the Sri Lanka government to attract FDI in such industry (De Mel, & Pathmalal, 2009). Sri Lanka continues increasing its overseas investment inflows thus as a result of this foreign investment inflows, the government of Sri Lanka is adopting good investment policies for new business (Mosedale, 2010). The main object of FDI in Sri Lanka tourism industry is to build long term relationship between foreign direct investment and growth of the nations.

Advantages of foreign direct investment for Sri Lanka tourism are discussed as below:

1) Financial assistance: It provides financial support for the development of hotels, rooms, airports, managerial skills and technologies in tourism industry. In such way it helps in maintaining Sri Lanka attractiveness.

2) Economic growth:  FDI provides financial assistance to Sri Lanka so it helps in expansion and development of economy thus it creates favorable environment for investors and provides benefit to home country and host country.

3) Employment increase: It provides greater employment opportunities to employees for doing work in tourism sector, in such way people can use their skills and knowledge. Employees maintain good coordination and cooperation with tourist and they provide excellent services to tourist. The services which are provided by the tourism industries they are such as accommodations, rooms and food and beverages (Samarathunga, & Pathirana, 2016).

4) Increase Efficiency: In FDI different kind of facilities are provided by the foreign investors so it helps in increasing productivity of employees in tourism industries.

5) Increment in country income: Increment in national income is the big advantage of foreign direct investment because it helps in to generate more employment and wages in Sri Lanka tourism industry.

6) Resource transfer: In foreign direct investment home country share the capital resources, knowledge managerial skills and new technologies in host country therefore host country can use and take advantages of different kind of resources and managerial skills.

7) Development of human resource capital: It is the big advantage of FDI for tourism in Sri Lanka. The human capital refers to the knowledge and competencies of workers.

8) Technology advancement: Foreign direct investment introduces new technology and technical knowhow for tourism in Sri Lanka so it is important for development and expansion of such industry in Sri Lanka.

9) Development of socio economic culture: FDI provides assistance to host country for development of social and economical culture and it also analyzes the social values and culture of the organization.  

Role of Foreign Direct Investment in Sri Lanka Tourism Industry

Foreign direct investment plays significant role in the development of tourism industry in Sri Lanka and it provides good employment opportunities for people doing work in such industry. It has becomes the salient feature of economic growth and expansion of export and import of goods and services for tourism industry (Dwyer, Forsyth & Dwyer, 2010). It provides financial assistance to Sri Lanka for development of such industry. It introduces various kinds of development programs for expansion of tourism industry and it provides managerial skills, infrastructure facilities and accommodations for making tourism industry more attractive and effective.

It plays major role in GDP of the country and foreign direct investment is improving in market conditions and economy of Sri Lanka for such industry. Resource and capital transfer is possible after FDI in Sri Lanka and it provides favorable environment for tourism industry. The government of Sri Lanka has made various policies for foreign investment.

There are many disadvantages of FDI and they all affect tourism in Sri Lanka. It creates obstacles and interferences in domestic investment and it faces many challenges related with managerial skills and knowledge. Foreign direct investment is very hazardous due to the risk involve in political situations because political, social, and economic conditions affect the foreign direct investment in tourism industry (Cole & Morgan, 2010). 

If the money is invested in Sri Lanka tourism industry then sometimes it becomes very costly and expensive. It affects country investment negatively and in some countries investment is banned by the government. Sometimes foreign direct investment becomes the reason of economic colonialism.

FDI also affects competition, balance of payments and employment adversely and it also influences the exchange rate of home country. It becomes the reason of nationalist sentiments and it also creates other consequences.  

The two key management issues which have been identified in part 1 and part 2 are discussed as below:

1) The porter national diamond model fails to analyze the tourism industry appropriately. Further, it does not include corporate responsibilities, business culture, social culture and legislation. These aspects are crucial for the development of tourism industry in Sri Lanka. In such way, the porter national diamond model is not much effective for analyzing the tourism industry. The innovation and governance also affect the porter national diamond model. Industry should take care of economic, demographic and social culture of the Sri Lanka before starting operations in Sri Lanka tourism industry. The company should observe and analyze the internal and external environment of overseas country and new technologies and excellent strategy should be used by the company for the growth of such industry in Sri Lanka (Page & Connell, 2006). 

The policy structure of Sri Lanka should be good so it provides support to investors and industries for doing business in that country and it should also improve in regulatory framework related with such industry. Sri Lanka should create a favorable environment for tourism industry. It should take corrective action if it finds any variation .In such way it can improve in tourism sector and expand its business in Colmbo.There should be a taxation policy for such industry in Sri Lanka and it should develop guidelines related with development of such industries (Middleton, Fyall, Morgan & Ranchhod, 2009). 

2) On the other hand foreign direct investment also affects the tourism industry adversely and it creates misunderstanding among nations. Many times FDI affects employment negatively because since the last few years the average amount of foreign direct investment is very low thus low FDI is not enough for economic growth and development of employment.  

It also affects competition adversely; sometimes host country is in worry that subsidiaries of overseas MNEs might have more economic power rather than home competitors. In this manner it affects development of tourism in Sri Lanka. It should focus on the target customer, segmentation of market and marketing communication for expansion of such industry in Sri Lanka (Salazar, 2010). 

The net profit from foreign direct investment do not find accurate and automatically thus its importance is different according to different conditions of host country. Sometimes it provides insufficient financial assistance in managerial skills, infrastructure, hotels, accommodations and airport for development and encouraging tourism in Sri Lanka (Pforr & Hosie, 2009). There are many challenges such as malfunction market, incomplete information, different business conditions for different countries and different requirements and the level of development which affect adversely home country as well as host country. Only one dimension and nature does not fit and suitable for such industry so before setting up of business in tourism industry Sri Lanka company should analyze all these factors and improve them effectively for growth of such industries in Sri Lanka. Government should use effective regulatory framework for starting operations of such industry in Sri Lanka. It should create and implements proper individual plans and strategies for operating business and it should follow the traditional norms for doing business in that country. The traditional norms and culture should be included in product development to make travelling more exciting. It should focus on the food and beverages facilities for such industry in Sri Lanka (Cohen, 2007). 

The company should analyze various factors which affect the tourism business in Sri Lanka. The various factors are such as: culture, environment of the company, transportations, and tourism transport policy agenda. So company should surveys and indentifies all these factors before starting business of such industry in Sri Lanka. It should conduct advertisement and promotions for making tourism industries more effective and the company should evaluate geographical and economical conditions of country before starting operation in tourism industry. It should improve in security, safety and travel conditions of travelers while travelling thus it should focus on the travelers’ needs, wants and satisfaction (Svetlicic, 2007). 

In such way it can be said that many things should be taken into account while starting operations in the Sri Lanka tourism industry.

Conclusion

The report is based on the Sri Lanka tourism industry and it also gives brief explanation about famous and attractive places of Sri Lanka. There are many places in Sri Lanka for tourism and they play significant role in growth and expansion of economy. In this report Porter national diamond model provides an effective and strong framework to tourism industry. The report explains the porter national diamond model and it also explains to how PND model applicable on such industry in Sri Lanka. On the other side report describes the role of foreign direct investment and it also tells that how FDI provides support to tourism industry in Sri Lanka. FDI provides financial assistance for the development of such industry therefore the report explains the advantages and disadvantages of FDI in Sri Lanka (Mulligan & Shaw, 2007).

This report also explains the key management issues which is faced by the company for starting tourism business in Sri Lanka. The tourism industries face many issues and challenges while operating tourism business in Sri Lanka so company should focus on these issues and challenges. It describes that tourism plays wider role in Sri Lanka so it should maintain the beautiful and attractive places for tourists. It should focus on the technology, FDI, PND model, rules and regulations of government, hotels, airports, accommodations, security and safety for the growth of tourism in future. In such way it can maintain a good identity in future as a tourism industry of Sri Lanka (Hanna, 2007). Tourism also provides jobs and employment opportunities to people for making good career in tourism industries.

Now it is concluded that Sri Lanka is the beautiful country for tourism so it should maintain this beauty for the long time. Some recommendations have given by the government to maintain this beauty for future.

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