Strategic Management Analysis of Banyan Tree Holdings Limited
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This article provides a strategic management analysis of Banyan Tree Holdings Limited, a global hospitality organization. It includes a PESTEL analysis, PORTER's Five Forces analysis, and strategic recommendations for the organization's growth and profitability.
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Running head: STRATEGIC MANAGEMENT ANALYSIS STRATEGIC MANAGEMENT ANALYSIS Name of the Student Name of the University Author Note
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1STRATEGIC MANAGEMENT ANALYSIS Table of Contents Introduction....................................................................................................................2 PESTEL analysis............................................................................................................2 Impacts of PESTEL analysis on the organization..........................................................4 PORTER’s Five Forces analysis....................................................................................5 Impacts of PORTER’s Five Forces analysis..................................................................6 Strategic recommendations............................................................................................7 Conclusion......................................................................................................................8 References......................................................................................................................9
2STRATEGIC MANAGEMENT ANALYSIS Introduction Banyan Tree Holdings Limited is a hospitalitybased organizationthat has its operations on a global basis in different parts of the world. The brand manages the operations of different spas, hotels and resorts in America, Africa, Asia and the Middle East. The brand had been established in the year 1994 with the roots in Singapore. Banyan Tree operates more than 30 resorts and hotels in the year 2014. The organization further plans to increase its operations in China and Morocco. At present, there are 77 retail based galleries, 70 spas and 3 golf championship courses in 28 countries of the world (Banyantree.com., 2019). The first resort of the organization was opened in Phuket. The organization has been able to expand its business model in order to offer three different types of resort based experiences to the customers, like, Angsana Hotels & Resorts, Cassis and soon to be opened Dhawa. Banyan Tree is mainly known in the industry for providing offering places based on locally infused sanctuaries that are able to rejuvenate the mind. The needs of individual customers or a group of customers are analysed and fulfilled by the organization with the help of different services that are offered by the brand of Banyan Tree (Banyantree.com., 2019). PESTEL analysis a) Political factors –The political factors of PESTLE framework are based on different issues including, employment based laws, stability of the government, education levels and the taxation policy. The favourable climate that has been developed in the South East Asian based region is a major factor related to development of a proper tourist destination. The terrorist bombing based activities have also affected the tourism based activities of the region in an adverse manner (Lee, 2016).
3STRATEGIC MANAGEMENT ANALYSIS b) Economic factors –The economic factors include different issues like, inflation, businesscycle,disposableincomebasedlevels,GDPofthecountries,levelsof unemployment and the interest rates. The fluctuations that are experienced in the currency based rates have been able to affect the international corporations in a huge manner. South East Asian region is considered to be an emerging region based on the lower rates of GDP that have been developed in comparison to the first-world based countries (Madera et al., 2017). c) Social factors –The social influences that are able to affect the operations of an organization are based on consumerism, changes in the lifestyle, demographics of the population and globalization. The social attitude that has been depicted towards the leisure and work is able to affect the hotel industry or the luxury based industry in general. Other major social aspects that have been considered for hospitality industry are related to changes in the family based patterns (Mandal & Vong, 2016). d) Technological factors –The proper evolution of technology related to the past few decades had a major impact on luxury industry or the hotel industry. Levels of efficient research, comparisons are able to ensure high levels of transparency in the market. The hotels are able to manage the resources and different platforms in a competent way with the help of proper control and management (Melissen et al., 2016). e) Environmental factors –The changes that have taken place in the norms related to the environment have been able to affect the proper development of products or services. The services in the hospitality industry are developed in such a manner that is able to take the changesinenvironmentalstandardsintoconsideration.Theawarenesslevelsofthe consumers have also increased in the last few years which is based on changes in operations (Mohammed, Guillet & Law, 2015).
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4STRATEGIC MANAGEMENT ANALYSIS f) Legal factors –The legal factors that are based on proper protection of the intellectual property, copyrights and patents have a major impact on the organizations operating in hospitality industry. The employment based laws that are followed in Singapore have a major impact on the organizations and the levels of profitability as well. The hospitality industry also faced issues based on the business laws. Impacts of PESTEL analysis on the organization a) Political factors –The hotels that operate under the brand of Banyan Tree are mostly located in China, although the operations had started in Thailand. The government of China and its socialist or quasi-democratic nature is able to affect the operations of Banyan Tree. The levels of the cronyism and bureaucracy that is present in the country is considered to be a major factor that has an impact on Banyan Tree (Cheah, Ho & Li, 2018). b) Economic factors –The economic condition of Singapore and China has led to the development of a fair salary based system by the organizations which operate under the brand of Banyan Tree. Banyan Tree will be influenced in a huge manner by fluctuations that have been detected in the currency based rates. The liquid assets that have been gained by the organization cannot be converted into a favourable currency (Gardetti & Torres, 2017). c) Social factors –Banyan Tree needs to take into account the increase in number of couples who have started travelling on an individual or group levels. The economic climate that is prevailing currently in the countries have been able to signify that the middle class based couples are not always interested in indulging in luxury holidays. However, the romantic packages have been targeted by the organizations in the hospitality industry (Hargreaves, 2015). d) Technological factors –The technological shifts that have been taken in the industry have a major impact on the hotel and hospitality based organizations that are
6STRATEGIC MANAGEMENT ANALYSIS advancements in technologies have increased transparency levels of the service based organizations in the industry. The rankings provided by different websites like Trip Advisor and Booking.com are based on direct as well as the indirect competitors (Sheehan, Grant & Garavan, 2018). 5. Threats based on substitutes –The increase in number of organizations in the hospitality industry have influenced the ways by which customers are able to choose from different options. The threats which are provided by the substitutes are considered to be higher as compared to previous times. Impacts of PORTER’s Five Forces analysis 1. Competition levels in the industry –Banyan Tree has been affected by the levels of competition that has increased recently in the hospitality industry. The loyalty of customers is considered to be a major factor that has an impact on the competitiveness of the organizations that are a part of the industry. The online accommodation based platforms like, FlipKey, AirBnB have provided major competition to Banyan Tree (Song & Kang, 2018). 2. Potential of the new entrants in the industry –The barriers that are related to the entry of new organizations in hospitality industry have played a key role in reducing the popularity. The hospitality industry is considered to be capital intensive in nature. The cost based advantages that have been gained by organizations in the hospitality industry are undermined by the accommodation sharing based platforms and the services offered by them. Banyan Tree is not affected by entry of potential new organizations in the industry. 3. Power of the suppliers –The suppliers in hospitality industry are not able to affect the prices of services offered by the organizations under the brand of Banyan Tree. The unions of employees in the organizations that are a part of hospitality industry are considered
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7STRATEGIC MANAGEMENT ANALYSIS to be major factors which are based on management of the employees (Tsai, Dev & Chintagunta, 2015). 4. Power of the buyers –The increasing levels of competition in the hospitality industry have affected the high-end hotel based buyers. The consumers of Banyan Tree also belong to the group of luxury hotel based customers. The levels of price sensitivity of the buyers in this group of consumers are lower as compared to other industries (Zaitseva et al., 2016). 5. Threats based on substitutes –The experience that is offered by the organizations operating under the brand of Banyan Tree is considered to be a major factor which is based on the threats related to the substitutes that are available to the customers. The immersive experiences are offered to the customers of the organizations in the industry by the other organizations as well (Zervas, Proserpio & Byers, 2017). Strategic recommendations The strategic recommendations that can be offered to Banyan Tree are as follows, a)Banyan Tree already has its operations in different countries of the world. The organizationneedstoaimatincreasingitspresenceinotheremerging countries like, India. The increase of operations can also be related to the expansion in the home country as well. b)The joint ventures and strategic alliances that can be made by Banyan Tree with major brands like, Starwood Hotels can help the organization to increase its operations in the industry. c)The changes that can be implemented in the organizational structure of Banyan Tree can affect the operations and profitability of the organization. The marketing based initiatives and changes in business model are considered
8STRATEGIC MANAGEMENT ANALYSIS to be an important part of the expansion of the operations of the brands of Banyan Tree. d)The organizations that operate under the brand of Banyan Tree can expand its their operations in hospitality industry with the help of introduction of new services that can play a key role in increasing the levels of revenue. The services of the hotel can be based on the local feel that can be provided by the organization that are a part of Banyan Tree based brands. Conclusion The analysis can be concluded by stating that the Banyan Tree has been operating in a profitable manner in different countries of the world. However, the increase in levels of competitionhasbeenabletoaffecttheprofitabilitylevelsoftheorganizations.The organizations and their operations are affected in a huge manner by the PORTER’s analysis and PESTEL analysis as well. The organization can aim at overcoming the threats with the help of proper expansion in different countries. Banyan Tree is currently aiming providing residential services in different parts of China. The high-end and luxury residential buildings will be able to attract the tourists who prefer luxury based services. The organization thereby needs to focus on the first rated residential properties in China for the purpose of increasing the revenues that are earned in the market.
9STRATEGIC MANAGEMENT ANALYSIS References Banyantree.com. (2019). Retrieved from https://www.banyantree.com/en Cheah,S.,Ho,Y.P.,&Li,S.(2018).BusinessModelInnovationforSustainable Performance in Retail and Hospitality Industries.Sustainability,10(11), 3952. Gardetti, M. A., & Torres, A. L. (Eds.). (2017).Sustainability in Hospitality: how innovative hotels are transforming the industry. Routledge. Hargreaves, C. A. (2015). A comparative analysis of hotel ratings and reviews: an application in Singapore.American Journal of Marketing Research,1(3), 118-129. Lee, L. Y. S. (2016). Hospitality industry web-based self-service technology adoption model: A cross-cultural perspective.Journal of Hospitality & Tourism Research,40(2), 162- 197. Madera, J. M., Dawson, M., Guchait, P., & Belarmino, A. M. (2017). Strategic human resources management research in hospitality and tourism: A review of current literature and suggestions for the future.International Journal of Contemporary Hospitality Management,29(1), 48-67. Mandal, P., & Vong, J. (2016).Development of tourism and the hospitality industry in Southeast Asia. Springer,. Melissen, F., Cavagnaro, E., Damen, M., & DĂĽweke, A. (2016). Is the hotel industry prepared tofacethechallengeofsustainabledevelopment?.JournalofVacation Marketing,22(3), 227-238.
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11STRATEGIC MANAGEMENT ANALYSIS Zervas, G., Proserpio, D., & Byers, J. W. (2017). The rise of the sharing economy: EstimatingtheimpactofAirbnbonthehotelindustry.JournalofMarketing Research,54(5), 687-705.