Hospitality Business Strategy

This document analyzes the influence of macro and internal environment on Crowne Plaza, a leading hotel in the hospitality industry. It discusses the impact of political, economic, social, technological, legal, and environmental factors on the organization. It also evaluates the internal capabilities of Crowne Plaza using the SWOT and VRIO models. Additionally, the document discusses Porter's Model for evaluating the competitive force in the hospitality sector.

Hospitality Business Strategy
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Contents
INTRODUCTION...........................................................................................................................4
TASK...............................................................................................................................................4
P1 Analyse influence of macro environment on organization.....................................................4
P2 Analyse capability of internal environment on oorganization...............................................6
P3 Discuss about the Porter’s Model and evaluating the competitive force of given sector for
IHR..............................................................................................................................................8
P4 Range of different theories, concept and model that integrate, devise strategic planning for
InterContinental Hotels group (IHR).........................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Business strategy is based on the set of competitive move and actions that mainly used by
organization to influence existing customers. In order to increase the overall business
productivity as well as profitability in global marketplace. The documentation is mainly focused
on the macro environment which will influence on the overall business capabilities. The report
will be selecting the Crowne Plaza” for analyzing the business by using Pestle analysis
framework. It provide the better idea about the organization whereas how macro environment
will impact on the organization capabilities. For business for competitive analysis, it will be
considerations of Porter’s five force model for determine the existing competition within
hospitality industry. At last, it will explain the different theories, concept and model that help for
providing the better strategic direction of “Crowne Plaza” in business expansion.
TASK
P1 Analyse influence of macro environment on “Crowne Plaza”
Every business is highly affected by its external factors. This is because they exist outside
business and are not controlled and managed by it. Also, business has to work within a specific
boundary (Ginindza, and Tichaawa, 2019). So, it is necessary to identify those external factors
which impact highly on organization. With that it becomes easy to develop strategies and
minimise impact. In order to do so there are several concept and model available. Similarly, as
IHG operate at global level there are various factors which can influence on it. Thus, pestle
analysis is done for it. It is a framework which is used to find out external factors that influence
on organization. This includes political, legal, social etc factors which are described as below
 Political- It is a factor which is related to political stability of a country. This highly
influence on business operations as any change in political condition results in change of
laws and regulations, trade policy, government etc. Thus, due to it business operations are
affected. As IHG operate in various countries they have to follow rule and regulation.
However, in many countries political condition is unstable. So, it is directly affecting on
growth of “Crowne Plaza”.
 Economic- the factors are related to economic growth of a nation. Any change in
economic growth highly affect on “Crowne Plaza” business operations. In this factor
included are GDP, income level, inflation rate etc thus, if there is any change in it then it
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directly affect on growth of Crowne Plaza”. IHG operate in many countries so they have
to depend on economic growth of that country. Besides that, in recent times, income level
of people has increased so it will be beneficial for hotel to expand in those nation whose
economic growth is rising. It will benefit in their expansion and operations will not be
affected as well (Lauer, 2019).
 Social- they are those factors that is related to change in taste and preference, needs,
lifestyle of people. If the needs changes then it directly influence on business operations.
However, as Crowne Plaza” operations are related to hotel they provide various types of
services. But now people needs has changed. This is because of rise in income level.
People require luxury services and have become health conscious. Thus, it will highly
affected on business operations. The hotel needs to maintain hygiene and cleanliness.
Furthermore, they need to provide various services to fulfill needs of people. (Tian, . and
Cao, 2019).
 Technological- As name depicts this factor is related to advancement in technology. In
every sector technology is highly been used. It has affected on “Crowne Plaza”
operations in positive way. Moreover, in hotel industry various advance technological
device are used such as robotics, AI, IOT etc So, with more use of technology it will
ease in doing of operations in IHG. Through that, hotel will be able to expand and
provide services to more people. Alongside, the quality of services will be maintained
and this will be useful in gaining their trust and satisfaction.
 Legal- they are those factors which is related to laws and legislation which is to be
followed by business. The rules differ in various countries and are formed by
government. They include health and safety, employment law, wages law etc. So any
change in these highly impact on business operations. Moreover, as IHG operate in
various countries so they have to follow laws of that country. However, many
government is focusing on changing law to provide more health and safety to staff in
hotel. Therefore, it will highly affect on “Crowne Plaza”. They will have to form new
policy and procedures and install different health and safety equipment. Hence, training
will be provided and staff has to work in different way, so it will affect on operations
(Tian, . and Cao, 2019).
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 Environmental- this is most crucial factor for business as they have to protect ecosystem.
Here, the factors are related to change in environmental law, CSR policy, etc which
directly influence “Crowne Plaza”. In recent times, government is focused on
maintaining of environment so they have changed law and CSR practices of it. However,
as IHG operate in hotel industry they will have to follow new policies and laws. The
organization will have to change its CSR practices and contribute more towards society
and protecting ecosystem. Therefore, it will directly affect on their operations and
growth.
Therefore, it is stated that there are many external factors which will affect on “Crowne Plaza”
operations. They need to develop strategies for it. By that it will be easy to achieve goals and
expand in new market.
P2 Analyse capability of internal environment on organization
In a business there exists internal environment as well which is within its boundary. So, it
also highly influence on it growth and development. This is because these factors are within
organization. Thus, any change in it affect on business. Therefore, to identify those factors there
are several models and concept which is used. It is helpful in analyzing internal capabilities as
well. Likewise, for IHG SWOT and VRIO model will be used to identify internal factor which
are explained as below
SWOT- this is a model which is used to identify strength, weakness, opportunity and threat.
Strength
The employee working in it are highly trained and experienced. “Crowne Plaza” is having is
huge resources as trained work force which is motivated as well.
The automation of service has enabled in maintaining consistency with quality in services. So, it
has enabled them to increase and decrease service as per market demand (Turner. and Hesford, ,
2019).
IHG is having a high innovation in developing of new products. It has enabled them to enter in
new market and successfully operate. Thus, they are having a high revenue stream in hotel
industry.
“Crowne Plaza” is having a high level of customer satisfaction due to its strong and positive
brand image.
Weakness
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Its profitability ratio is low as per industry average.
The marketing of products and services is not effective enough. Its USP is not defined properly
as compared to other competitors in the market.
The financial planning is not done properly as hotel liquidity and current ratio are does not show
effective cash flow (Chun-Lai, Espino-Rodríguez and Baum, 2019)
Opportunities
By using new technology hotel can attract more customers by effectively doing marketing of
products and retaining of loyal customer.
“Crowne Plaza”can attract new customers from online channel. It will benefit in creating a large
customer base and investing in more online sales channel. They can generate more revenue as
well from it.
They can decrease cost of transportation due to low shipping prices. This will help in generating
more profit and revenue from it.
With change in customer trends, “Crowne Plaza” can offer new services to them. It will be useful
in allowing them to expand in new market.
Threats
Rise in competition from rivals can be a threat to IHG as it will led to breaking of large customer
base.
The change from physical to online business model can impact on driven supply chain.
The change in environmental laws can be a threat to “Crowne Plaza”. It may affect on their
growth and expansion.
VRIO- it is a model which is used to find out internal capabilities of “Crowne Plaza”so that
whether competitive advantage can be gained or not. Likewise for IHG the analysis is as follows
Valuable- it refers to valuable resources which helps in generating value and gaining competitive
advantage. In IHG the resources that are valuable is employee and products. The organization is
having skilled and experienced staff. Also, service offered by them are highly innovative.
(Rahman, Islam and Ahmad, 2019)
Rare- they are those resources which can be acquired by few companies are considered as rare.
Thus, “Crowne Plaza” employee are rare resources as other organizations can train staff to
become highly experienced. It will enable in achieving of goals in effective way and gaining of
competitive advantage
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Imitate- they are those resources which are costly to imitate. This means for other resources it
requires huge cost to acquire that resource. Therefore, IHG innovative products are costly to
imitate. It needs huge investment for other hotels to copy it and gain competitive advantage in
the market by using it.
“Crowne Plaza”- The resources itself do not confer any advantage for a company if it’s not
organized to capture the value from them. A firm must organize its management systems,
processes, policies, organizational structure and culture to be able to fully realize the potential of
its valuable, rare and costly to imitate resources and capabilities
Thus, it is evaluated that hotel internal capabilities are not enough which can be used to gain
competitive advantage. There are many rivals already operating in “Crowne Plaza” Hotel. So,
there is stiff competition in it. However, with change in trends there is need to develop new
services. It will be useful in increasing capabilities. Besides, technology needs to be used as well
to enhance efficiency within operation. (Amar, Syariati and Rahim, 2019)
P3 Discuss about the Porter’s Model and evaluating the competitive force of given sector for
IHR
Porter’s five force of competitive position analysis that were developed in 1979 by Michael E
porter of Harvard business school as simplest framework for evaluating as well as assessing the
competitive strength, position of enterprise (Ginindza and Tichaawa, 2019). This theory is to be
consider as concept that can identify the competitive intensity, attractiveness of market. The
theory will help for identifying where power lies in current enterprise condition or situation.
Furthermore, it is helpful for understanding the entire strength of business.
The porter’s five force is a holistic strategy framework that took a strategic decision
which help for analysing the current present competition level in global marketplace.
Threat of New Entrants
New entrants in lodging brings innovation which providing the better way to improve
overall business capabilities. In some situation, it is putting pressure on the InterContinental
hotels group through lower pricing strategy (Amar, Syariati and Rahim, 2019). In order to reduce
the price/ cost which providing the better new value proposition to client. “Crowne Plaza” has
managed all these various challenges that can build an effective barriers in order to maintain
safeguard its competitive edges.
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The economies of scale is becoming difficult to achieve in the business of
InterContinental Hotel Group PLC operates. It make easier for producing the better capacity to
have a become cost advantage. The product differentiation is strong within “Crowne Plaza”. By
innovating new product as well as service (Ginindza and Tichaawa, 2019). It brings new client to
fold but also give older client a reason for buying InterContinental Hotel group. However, it is
also building the economics of scale so that it automatically lower fixed cost per unit.
Bargaining Power of Suppliers
The InterContinental Hotel can buy their raw material from multiple suppliers. It always
dominant the current position which automatically decreases margin of Hotel. Sometimes, it is to
be considered as a powerful supplier in Hotel enterprise where they always user their negotiating
power. In order to extract the high cost from lodging field. The bargaining power of supplier is
high and lower its probability (Chun-Lai, Espino-Rodríguez and Baum, 2019). “Crowne Plaza”
is implementing the product design by using raw materials. If in case price goes upward which
automatically shift to another one. Furthermore, there are developing dedicated supplier whose
enterprise depend on the organization.
Bargaining Power of buyers
Nowadays, Buyers are very demanding a lot. If customer want to buy the better offers
which available by paying minimum cost as possible. It also putting pressure on “Crowne Plaza”
hotel in term of profitability for long term business (Turner and Hesford, 2019). The powerful
customer base is InterContinental hotel group which has a higher bargaining power. In this way,
“Crowne Plaza” provide the better facilities and services such as increasing discounts, offers.
InterContinental hotels group can tackle the bargaining power of buyers where they will
try to reduce the bargaining power. It will be increasing the opportunity to hotel in term of sales
as well as production process (Ginindza and Tichaawa, 2019). As rapidly innovating the
products which often seek discounts and offering the established item so that “Crowne Plaza”
hotel keep on coming up with innovation.
Threat of substitute
When a new item or service meet the similar customer requirements in different manner.
In another way, it is mainly suffering the profitability of “Crowne Plaza” hotel. For Example-
Service like Dropbox and other Google drive are considered as substitute to collect or store large
amount of data (Rahman, Islam and Ahmad, 2019). The threat of substitute product as well as
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service is becoming high. In this way, it offers value proposition which are uniquely different
from current services.
Furthermore, it can be applying the services rather than other item oriented the core
requirement of customer rather than what client is buying.
Rivalry among existing competitors
The Rivalry among existing players in the market which become intense and it will drive
low price. In order to minimise overall profitability of “Crowne Plaza” hotel. This organization
is mainly operates in competitive environment and doesnot take so much long term profitability
in global marketplace.
In above discussion, it has been summarised about the competitive force of
InterContinental Hotel group which gain more complete analysis and impact on the business
profitability (Ginindza and Tichaawa, 2019). Sometimes, it is also identifying change trends
which always support for emerging business opportunities. Porter’s five forces is becoming an
important strategy for addressing the competition level in marketplace.
P4 Range of different theories, concept and model that integrate, devise strategic planning for
InterContinental Hotels group (IHR).
There are different theories, model and concept that will help for Intercontinental hotel
group for assisting, understanding interpretation, direction of organization.
The porter’s generic strategy matrix which mainly highlights cost leadership and differentiation
(Lauer, 2019). It focus on the different choice of “Crowne Plaza” hotel which always dominated
corporate competitive strategy for over past decade. According to model, the “Crowne Plaza”
can select how they want to compete, based on the competitive advantage.
Cost leadership Strategy
This type of strategy is based on the business which mainly organising as well as
managing its value added services. In order to reduce the price of product as well as service.
Sometimes, cost leadership is likely to interrelate with enterprise feature which easily managing
value chain and combined with high capacity utilization (Islami, Mustafa and Latkovikj, 2020).
“Crowne Plaza” as pursing some valance between differentiation as well as low prices. The
management of hotel to keep reduce the price and attract more customer segments in
marketplace.
Differentiation strategy
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The strategy is based in the customer that give more superiors in some way that other by
other competitors. Sometimes, “Crowne Plaza” use strategy to emphasis on the creating low
value due to their uniqueness. It directly opposed to low price/ cost (Islami, Mustafa and
Latkovikj, 2020). The uniqueness can be easily achieved with the help of superior services,
advertising and other better supplier relationship which leading the organization. In order to
differentiate the price of services between one or more hotels.
Focus Strategy
This strategy is based on the segmentation where it is targeting the potential customer
through product as well as service. “Crowne Plaza” consider focus strategy that have an able to
determine their target market. In order to meet their desirable goal and objective. The strategy
can be differentiating the lower price and emphasizes with price is become rare in IHG hotels.
Bowman’s Strategy clock
Figure 1 Bowman's Strategy Clock
Source: Bowman’s strategy clock 2019
Bowman’s strategy clock is based on the model which help for understanding how IHG hotels
group compete in the marketing. Nowadays, it is looking at different combination of perceived
value, price. Sometimes, it has beguan to select an apporpirate position of competitive
advantage. It make sense of for IHG for establishing the business and also sustain a competitive
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position in global world (Islami, Mustafa and Latkovikj, 2020). By using model, it can be
improved the undersyanding towards strategic position, analyse and evaluate how current
stratgey useful for business growth as well as development.
Position: 1 Low Price, cost and low added value
It is a type of segment specific option where IHG do not usually select to the purpose of
compete. Sometimes, it is to be considered as bargaining basement where hotel don’t want to in
the certain position. “Crowne Plaza” hotel can apply the cost leadership strategy for selling large
number of product as well as service (Amar, Syariati and Rahim, 2019). In this way, it attracts
new and potential audience towards accommodation services. IHG will not win any client loyalty
but it has an ability to sustain itself. An effective quality of product should be maintained the
position but price always attract more customers.
Position: 2 Low price
“Crowne Plaza” will be selecting the option for their item, service when it will be lower
cost leaders. In order to operate their business under low price strategy and maintain the profit
margin. If IHG which has a lower price leader but have enough volume to maintain the position.
However, it can easily trigger price war on the basis of customer benefits and advantage.
Position: 3 Hybrid
Hybrid are considered as interesting where “Crowne Plaza” offer the better product as
well as service at reasonable price. Sometimes, it offering item with higher perceived value than
its low price competitors (Amar, Syariati and Rahim, 2019). In some situation, it has been
increased the issue related volume where IHG build the reputation for providing fair price for
good and services. IHG provide the discounts, offer for attracting a lot of existing customers.
Position: 4 Differentiation
It is another option when “Crowne Plaza” provide various service which offer unique
attributes that are valued by client. IHG can develop or design the service so that customer easily
differentiate with other competitors (Ginindza and Tichaawa, 2019). In order to gain competitive
advantage in marketplace. Brand value is important concept in term of differentiation which
allows for organization to maintain their quality of services.
Position: 5 Focus Differentiation
By using focus differentiation, “Crowne Plaza” offer high perceived value service against
high costs. This type of strategy is adapted by enterprise where customer gain service on the
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basis of value. It is not necessary that require real value but maintain perception of value which
enough for IHG to charge large premiums.
Position: 6 increased price as well as standards
“Crowne Plaza” hotel take a chance which simply increases their price without increase
value side. The higher price will be acceptable by customer if enterprise give best quality of
services. In this way, it automatically increase profitability as well as productivity in global
marketplace (Amar, Syariati and Rahim, 2019). IHG make some adjustment to their value as
well as price but it cannot running in long term proposition.
Position: 7 Low value/ high price
These type of low value and high price strategy will be implement in market where
“Crowne Plaza” hotel offer good or service (Amar, Syariati and Rahim, 2019). As consideration
of Monopolies, “Crowne Plaza” do not concerned about the adding value in their service. If
potential customer want to better offer so that IHG setting price or cost.
Position: 8 standard price/ low value
The IHG that pursues this type of strategy will easily loss market share. If enterprise has
become a low value in term of services (Amar, Syariati and Rahim, 2019). It is only way IHG
will set the service on specific price. In this way, it can be understanding the overall standard
price of accommodation services within organization.
CONCLUSION
From above discussion, it concluded that Hospitality industry consider the business strategy
which always supports for providing better direction towards competitive advantage. It can be
identified the set of competitive moves, action that enterprise uses to attract more customers,
performance.
It has summarised about the Pestle analysis, VRIO framework which help for analyses
the impact and influence on the macro environment within organization. These frameworks are
efficient in term of internal as well as external analysis of macro environment of InterContinental
Group of hotel. Furthermore, the documentation has been analysing the concept of Porter’s five
force model and how it can appropriate for determine the competition level in hospitality
industry. However, It can be identified the various theories, concept and model that assists to
understand strategic direction of hospitality industry.
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REFERENCES
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Online:
Bowman’s strategy clock 2019. Available
through:<https://www.tutor2u.net/business/reference/strategic-positioning-bowmans-
strategy-clock>
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