Hospitality Business Strategy

This report discusses the impact of macro environment on hospitality business strategy, analyzing the internal environment and capabilities of a given hospitality organization using appropriate frameworks such as the VRIO Framework or McKinsey’s 7s Framework. It also evaluates the competitive forces of a given market sector for a hospitality organization using Porter’s Five Forces model and recommends the most appropriate growth platform and strategies through the application of Ansoff’s Product/Market Growth Matrix.

Hospitality Business
Strategy

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
Analyse the impact and influence of the macro environment on a given hospitality
organisation and its strategies by applying appropriate frameworks PESTLE and
SWOT analysis...........................................................................................................................4
Critically analyse the hospitality macro environment to determine and inform strategic
management decisions (Merit Criterion).................................................................................7
Analyse the internal environment and capabilities of a given hospitality organisation
using appropriate frameworks such as the VRIO Framework or McKinsey’s 7s
Framework.................................................................................................................................8
Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set...................................................9
Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation.......................................................................................10
PART B.........................................................................................................................................11
Evaluate the strategic directions available to the organisation...........................................11
Justify and recommend the most appropriate growth platform and strategies through
the application of Ansoff’s Product/Market Growth Matrix..............................................12
Applying a range of theories, concepts and models, interpret and devise strategic
planning for a given hospitality organisation. This will involve an explanation of the
strategic planning process in your chosen organisation, and an explanation of the
corporate, business and tactical strategic priorities and objectives....................................14
Produce a strategic management plan that has tangible and tactical strategic priorities
and objectives...........................................................................................................................14
CONCLUSION..............................................................................................................................15
REFRENCES.................................................................................................................................16

INTRODUCTION
Business strategy is being determined as one of the most crucial approaches for the
business organisation as it assist them in growing as well as expanding their business in a very
systemic and strategic manner. Continuous change has been seen in the hospitality industry
because of the change in the travelling habits of the consumer (Edwards, 2021). So, it is very
important for the business organisation who came under the hospitality sector, build the proper
strategic management plan in order to attain all the set objectives. For the completion of this
report InterContinental Hotels & Resorts has been taken into consideration which is a well-
known British luxury hotel brand. The respective firm was established in 1946 by Juan Trippe
and the headquarter of the company is situated in the Denham, Buckinghamshire, United
Kingdom. The hotel provides their services all across the globe with over 210 hotels worldwide
featuring over 71,045 rooms. The following report is going to cover the macro as well as micro
environment of the respective company in the beginning after this, the internal capabilities of the
firm with appropriate framework. This report also focusses on the competitive forces present in
the market along with the strategic directions by using proper framework. In the end growth
strategy will also be cover in this report with proper justification and recommendations through
appropriate application.

TASK 1
Analyse the impact and influence of the macro environment on a given hospitality
organisation and its strategies by applying appropriate frameworks PESTLE and
SWOT analysis.
PESTLE analysis: -
 Political Factor: -This factor comprises of the rules and regulation which are made or
implement by the government of the nation (Alanzi, 2018). In context to the
InterContinental Hotel, the act of Brexit in the United Kingdom is a huge barrier for
them. The firm have to face the shortage of EU workers because of Brexit due to which
they are not be able to hire the skilled employees within the firm.
 Economical factor: -this factor contains the growth rate of the nation, economic
condition and many more. In relation to the InterContinental hotel, the emergence of the
COVID 19 pandemic paid a huge impact on the economical setback for each and every
industry all across the globe. But the implementation of the rules and regulation on
travelling by the UK government result in affecting their profitability as well as sales.
 Social factor: -the social factor also paid a negative impact on the hospitality industry.
This factor includes the change in the behaviour, preferences of the consumer and many
more. In relation to the InterContinental Hotel, the change in the behaviour of the young
travellers to travel from one place to another because of the risk spreading the disease
affect the company profitability (Shtal and et. al., 2018).
 Technological factor: - this factor includes the development of the development of the
technology over the few years. This factor has a positive impact on the hospitality
industry. Virtual Reality (VR) technology is used by the management of the
InterContinental hotel which helps them in effectively connect with their customer stay in
touch with them during the COVID 19 situation.

 Legal Factor: -this factor is related to the laws which are made by the nation council for
the welfare of the society people and the company employees. In relation to the
InterContinental, within the legal policies continuous changes has been take place due to
which the functioning of the company has been affected. The implementation of the new
legal guidelines during pandemic situation affects the different decisions of the respective
hotel.
 Environmental factor: - This element includes the laws for protecting the environment.
In relation to the InterContinental, this aspect has a positive impact on the respective
brand. As the proper implementation of the CSR policies along with the environmentally
friendly activities are performed by the firm which assist them in gaining the goodwill
and attracting the large customer base (Thompson, 2019).

SWOT analysis: -

STRENGTH
 The biggest strength of the
InterContinental hotel is that they
invest huge number of resources in the
training and development of the
employees, which make them more
competitive (Teoli, Sanvictores and An,
2019).
 Automation of the all the activities of
the business organisation result in
bringing consistency in the quality
serve. This makes able the organisation
to scale up and scale down as per the
market demand conditions.
WEAKNESSES
 Days inventory in comparison to their
competitor is very high, due to which
IHG have to make more capital
investment in this channel which can
directly impact their long-term growth.
 Financial planning is not done by the
company management in proper
manner. The current and liquid asset
ratio of the firm suggest that the
respective firm can use the cash in
proper manner as what they are doing
in present.
OPPORTINITIES
 The Intercontinental Hotel have the
opportunity attract the consumer
through the new online channels. They
have to invest in the digital technology
which may assist them in attracting
large base of customer and increase the
sales.
 The firm can also introduce the more
food and beverages item which also
help in attracting the new customer.
The availability of new food item and
beverages helps in increasing the
revenue for the firm.
THREAT
 In the first quarter of the 2020, the
arisen of the COVID 19 result in the
global financial crises. Due to losses
the respective firm may have to cut job
which affect the company image in
negative manner (Puyt and et. al.,
2020).
 The most important threat is the
availability of the immense
competition. The biggest rivals of the
firm are Marriott, Wyndham and
AccorHotels group, Hilton, Hyatt and
many more which affect the market
base and the sales.

Critically analyse the hospitality macro environment to determine and inform strategic
management decisions (Merit Criterion)
It has been evaluated that to develop an excellent strategic management plan, it is very
crucial for the company management to analyse the external environment in a very effective
manner. This helps them in identifying the different variable which affect and support the
success of the strategic management plan. The respective company management must have to
develop the strategies which best to the interest of the stakeholders. The management of the
respective business organisation must have to address the impact of Brexit because this develops
the situation of less availability of the skilled employees. Along with this, by using the VR
technology the firm can effectively make change in the behaviour of the young travels. In
addition to this, they have to paid focus on continuous change in the legal polices for the smooth
functioning of the different business functions if Intercontinental management don't do this then
may have to face the consequences. The proper development of the strategic management plan
assists the respective firm in surviving while economic downturn in United Kingdom.
Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks such as the VRIO Framework or McKinsey’s 7s
Framework.
VRIO Analysis: -
This analysis may be defined as the analytical or brilliant techniques which assist the company
management in in evaluating the internal capabilities of the firm in order to enjoy the
competitive advantage over their rivals (Ariyani and Daryanto, 2018). With the help of this,
effective evaluation of the resources can be effective.

This stands for Valuable, Rare, Inimitable and Organised. In relation to the
Intercontinental Hotel VRIO analysis has been discussed below: -
RESOURCES VALUABLE RARE INIMITABLE ORGANISED
customer base Customer base * * *
innovative
packages
Innovative
packages
Innovative
packages
* *
infrastructure Infrastructure Infrastructure *
human resource Human resource Human resource Human resource Human resource
 Valuable: - these are basically those resources which assist the business organisation in
exploiting the opportunities and eliminate the threat and give value towards the firm.
◦ Customer base: -the Intercontinental hotel has the loyal customer base which
regularly provide the revenues to the firm by using their services.
◦ Innovative Packages: -this allows the brand to maintained its popularity in the
market and retain the customers for a long period of time.
◦ Infrastructure: - the management of the Intercontinental Hotel focus on provide the
valuable experience to their customers from their hotel’s infrastructure
◦ Human resource: - the workforce of the hospitality organisation is being considered
as the lifeline of the firm. The employees of the Intercontinental Hotel are very
skilled and talented that is why they are valuable for them.
 Rare: - these are basically those resources which are rare in nature and not possessed by
the other competitors.
◦ Innovative packages: - the management of the Intercontinental Hotel ensures that
their innovative packages offer the personalized experience to their customers.
◦ Infrastructure: -the infrastructure of the respective company is very unique this
helps them in making their presence stronger and enjoy the competitive advantage.
 Human resource: - the employees of the Intercontinental Hotel are very highly rare as
the skills which are possess by them are very unique which provide great value to the
organisation (LEE, KIM and PARK, 2020).
◦ Inimitable: - these are basically those resources which are difficult to imitate by the
others or competitors.

◦ Infrastructure: -the uniqueness of the Intercontinental Hotel infrastructure is
extremely difficult to imitate by the rivals.
◦ Human resource: - the training session and development programme which are
developed by the hotel for their employees can't be imitate by the others.
 Organised-
◦ Human Resource: -the workforce of the company is well-organised and very
systematic in nature and they work as per the plan made.
Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set.
It has been evaluated that the utilization of the technology within the different function by
the management of the Intercontinental is the biggest strength of the company. This not only
helps them in making strong bond with their customers but also helps them in maintaining the
consistency in the services. As company invest more in the day inventory which can be act a
hurdle for them in future. In addition to this, the customer base of the Intercontinental hotel are
valuable in nature along with this, the infrastructure and the innovative packages of the company
are rare and inimitable in nature.
Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation.
Porter’s Five Forces Model:
This frame work is used by the management of the business organisation in identifying
the competitive environment in which they are working. This assists them in in making the
proper strategy to survive in the market. In relation to the Intercontinental Hotel, Porter's five
forces model has been discussed below: -

 Existing rivals: - this may be defined as the availability of the competition in the
industry. As the hospitality industry is the fastest growing industry where huge amount of
competition is present (Bruijl, 2018). The Intercontinental face High amount of threat
from this force which result in reducing the market base and the profits.
 Threat of Substitutes: - this may be referred to the development of the new or similar
services in the industry. The respective firm face less threat from this force because of its
well-known image in the international market.
 Threat of New entrants: -this threat is Low for the Intercontinental hotel as they as they
are present in different parts of the world. The experience of the firm in the industry and
huge amount of capital investment result in affecting the company less from this force.
 Bargaining power of Suppliers: - the management of the Intercontinental not depend
totally on the suppliers. So, they, face moderate threat from this force. Instead of
depending on one supplier they have the multiple supplier which assist the in keeping the
power moderate on the decision making.
 Bargaining power of Customers: - the respective firm face high amount of threat from
this force. As the availability of the competition in the hospitality industry allow the user
to drive the prices low. It is very important for the intercontinental hotel to paid focus
serving the high-quality services at a very reasonable price. This assist in retaining the
customers (Hamilton, 2020).
PART B
Evaluate the strategic directions available to the organisation
Bowman's clock -
This framework is that will make the business capable to explore accurate options for
their strategic positioning that is how an individual company’s goods must be positioned in the
marketplace in regards to give the most rivalry position amongst another in the business. Here
are its eight positions which is elaborated in below report: -

 low cost and low value added - it is the few competitor areas on the strategy clock
where value and cost of the services is cheap possible creating it less rivalry.
 Low cost - the strategy as the name advices is regarding becoming the lower value
applied for the consumers and guest.
 Hybrid - it is a mixture of low cost and specific value that us given variedly goods
and service to buyers with low values (Echchakoui, 2018).
 Differentiation - it states to the company to be concentrated on given specific
goods to their buyers which give them a rivalry benefits of the coming indifferent
from their rivals giving them high values.
 Focused differentiation - it is varied strategy advices the entity to concentrated on
one individuals segment by giving them huge cost of goods and services along with
that high cost which would capable them to achieve high cost .
 Uncertain high margins - This policy states that the brand must enter the market
valuation strategy without any other perceived added cost in the goods and services.
 Monopoly valuation - This states and guides that the trade must come up with the
policies that the brand and institutions where only an individuals is accessible in the
market having in the complete management over this (Pikor, 2018).
 Loss of market share - it Is the worst position in the total strategic framework
there the business stays in their present marketplace and also loses its loyal user
base.

Through the above valuation and micro surrounding analysis along with that the
determination of the competitive environmental analysis of intercontinental hotel in the
service sector. It is suggested that the company must utilise the diversification policy where
it concentrate on creating its services and goods aggrievedness specific value to users
according to the expectations and needs.
Justify and recommend the most appropriate growth platform and strategies through the
application of Ansoff’s Product/Market Growth Matrix
It is a framework that utilised in business to determine and approparite raising and
expansion policy for their company in relation to the present actions as well as the internal
and exterior surrounding in which they are dealing and working their company. The
analysis of the model in consideration of intercontinental hotel are elaborated in below: -
 Market penetration - it is policy which analysis that company must stay inn their
current business surrounding and give innovation in marketing tools in regards to
retain the present buyers and to recover their attention (Gurcaylilar-Yenidogan and
Aksoy, 2018). The uncertainty included in this practices is very less for
intercontinental hotels.
 Product development - it is an expansion policy which states that the business must
creative and invent new serving for their present guests. Intercontinental hotels can
use its this policy in regards to manage the industry and serving causes because of
the pandemic situation.

 Market development - it refers to the situation that the company must explain into a
new marketplace with their present services and catches s new buyers along with
entertaining them . It can be appropriate policy for intercontinental hotels as the brand
has its existence in certain market it can easily go in to another one for capturing a new
user base.
Diversification -it is an expansion practice with high uncertainty as it advices that industry
must move in a new market place with creative and new goods and services.
Intercontinental hotel being a service provider this is an accurate policy for the company
but uncertainty included is also very huge (Tsatsoula, 2018).
as per the above study in intercontinental hotel is working and treated a top brand in
worldwide that presents in the reach of every nation it is very crucial step for the service
industry to expand into new market place along with the new services for guest. Whereas
diversification is a powerful and valuable policy which will be taking huge amounts to
intercontinental hotels as well as contributing its aim of being a most prominent brand in eyes
of the users and particularly guest and visitors of all the sections reaching for a valuable location
for them to expand their holidays and add a new memory.
Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation. This will involve an explanation of the strategic
planning process in your chosen organisation, and an explanation of the corporate,
business and tactical strategic priorities and objectives.
Through the above valuation and micro surrounding analysis along with that the
determination of the competitive environmental analysis of intercontinental hotel in the service
sector. It is suggested that the company must utilise the diversification policy where it
concentrate on creating its services and goods aggrievedness specific value to users according to
the expectations and needs . As per the analysis of various and above frameworks it is
suggested that company must come up with the new creativity and analysis so that they can have
a competitive edge as well as other benefits that makes the company more effective and
creates a long term sustainability (Walton ,2021). this satisfies the guest and traveller by the
quality serves along with that they have growth in business or its profits.

Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives
Company Overview:
The InterContinental Hotels and Resort is a well-known British multinational hotel brand, which
marketed as IHG hotels and resorts. The Hotel was established in 1946 by Juan Trippe and their
headquarters are in Denham, Buckinghamshire, United Kingdom. The respective group have
around 213 hotels all across the globe with over 71000 rooms. The IHG group listed in London
Stock Exchange.
Mission statement: - the mission of the company is to offer the best and true hospitality
experience to their customers and develops great hotels for guest lovers.
Vision statement: to become the largest and leading brand in the Hospitality sector.
Business Objectives:
 To enhance the profitability by 20 %.
 To improves sustainability by using social media platform.
 Become the best and largest Hotel chain.
Tactics:
 Develop gym services and provide consumers with a home environment
 Expansion to Asian nations
 Reduce the cost of various services
CONCLUSION
From the above report it has been concluded that it is very important for the management of the
business organisation to analyse the external as well as internal environment in a very effective
manner by utilizing the proper frameworks. This not only helps in improving the company
sustainability but also helps in developing the strategic plan in effective manner. This report
concluded macro and micro environmental analyses of the InterContinental hotel along with the
competitive environment, growth strategy and internal capabilities. In the end with the help of all
these analyses strategic plan of the firm is developed.

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