Hospitality Business Strategy: Analyzing Macro and Internal Environment, Competitive Forces, and Strategic Directions for Premier Inn

This report analyzes the impact of macro and internal environment on Premier Inn's business strategy using PESTLE and SWOT analysis. It also evaluates competitive forces using Porter's five forces model and recommends appropriate strategies to improve competitive edge and position of business in the market.

HOSPITALITY
BUSINESS STRATEGY

Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Critically analyse the impact and determinant of the macro environment on a given hospitality
business and strategies by applying appropriate models like PESTLE and SWOT analysis......1
Analysis of macro-environment in context to hospitality business to identify and communicate
strategic management decision ...................................................................................................3
Critically analyse internal factors and capabilities of business through an appropriate
framework....................................................................................................................................3
Evaluating internal environment to determine strengths and weaknesses of business's internal
capabilities,skill set and structure................................................................................................5
Critically Evaluating competitive forces for the business organisation with the help of Porter's
five forces model..........................................................................................................................5
Recommendation of appropriate strategies to improve competitive edge and position of
business in the market..................................................................................................................6
PART B............................................................................................................................................6
Different types of strategic directions available in context to Premier Inn using Porter’s Generic
Strategies..........................................................................................................................................6
Interpreting information through environmental and competitive analysis.................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic planning is a framework that helps business organisation in arrangement of operations
in such a manner to accomplish them efficiently. It includes framing different strategies and
plans that helps to achieve the organisational objectives. It can also considered as a tool to
influence management towards decision making and determining ways to perform several
business operations. Premier Inn hotels is a largest hotel brand of United Kingdom having more
than 800 hotels. It have wider control over the hospitality industry and provides aggressive
competition to their competitors. The management of this hotel also use strategic planning to
enhance profitability of business.
This report covers internal and external factors that helps the management of business in
strategic planning. For this analysis PESTLE/SWOT MODEL is used to enhance information
quality. It also highlights the aspects of strategic plans and strategic directions with different
theories and approaches. It also includes interpretation and recommendations to the strategic
opportunities and other growth platforms.
PART A
Critically analyse the impact and determinant of the macro environment on a given hospitality
business and strategies by applying appropriate models like PESTLE and SWOT analysis.
Every organisation have different impacts of macro environment or external factors on
their business operation. Business have to frame strategies by using different models and
approaches in their strategical planning (Cassinelli ). In context to hospitality business, Premier
Inn is applying pestle and swot analysis to influence their business strategies. The Pestle and
swot analysis of Premier Inn's strategies are mentioned below:
PESTLE Analysis: It is an external analytical tool that helps business organisation to determine
the uncontrollable factor affecting their environment. Premier Inn is using pestle analysis in
strategies formation by analysing its aspects. The factors used by hotel chain management is
mentioned below as: Political factors: These are the factors that helps business to make strategies and plans
which helps the organisation to achieve their organisational objectives. Government of
UK decides some supportive schemes for hospitality industry that can provide benefits to
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hotels, tourism and amusements businesses. So, Premier Inn can take advantage of these
schemes to make their strategies. Economical factors: These are the factors that includes economical aspects like rate of
interest, inflation, deflation and devaluation (Cerchione and Bansal, 2020). United
Kingdom have developed economy and business organisations. Falling inflation can
increase buying power of consumers in the market. So, Premier Inn have to frame
strategies for increase their sales in the target market. Social factors: These factors includes the concept related to society like consumer's
attitude, negotiation and other resources. Premier Inn is a well recognised hotel of UK,
people have positive attitude and reviews about them. So, they can make strategies to
enhance the positive attitudes in the community. Technological factors: These are the factors which include change in technology like use
of modern software, machines and other mechanism. Premier Inn can also takes the helps
of these factors to influence the technological change in their hotels. They can use new
machines to make food and serve customers. Legal factors: These are the factors which consists rules, regulations, acts and bills to
provide impact on an environment (Sun and Lee 2019). Premier Inn can make their
strategies by taking benefits of bill passed in UK to improve hospitality industry. They
can make their business more profitable through these legal factors.
 Environmental factors: These factors includes environmental aspects like laws relating
to pollution, environmental resources and population. Increase in population of UK may
leads to increase in consumers for every business. Premier Inn can make strategies for
their hotels to manage the mass consumers reveals by increasing population.
SWOT Analysis: It is the model that tells the business about the way to increase their efficiency
in decision making and strategical planning (Civera and Et. Al, 2020). Premier Inn is using swot
analysis to influence their efficiency of framing strategies by the help of business's concepts. The
aspects used by Premier Inn management is mentioned below as:
STRENGTHS WEAKNESSES
 Management of Premier Inn can take
help of location to make strategies.
Their hotels are located near airports
 Premier Inn have refund issues with
their customers to by making refund
strategies management can improve the
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that enhance tourists attraction.
 The hotel chain management have
reputed brand image that helps to frame
strategies for development of brand
equity. It helps to increase image in the
minds of people.
business structure in hotel chain.
 They have some of their hotel in UK
only. Management have to frame
strategies to increase global presence in
different economies by expanding
business organisation.
OPPORTUNITIES THREATS
 Premier Inn can have positive impact of
increase of tourism in UK. They have
to make strategies to deal with more
number of customers simultaneously.
 Framing plans to provide new variety
of decoration to their hotel room can
also increase customer attraction for
their hotels.
 Premier Inn have huge competitors in
the UK market. Management of the
business needs to frame strategies to
give aggressive competition.
 The regulatory bodies of UK can put
restrictions on the organisation.
Managers have to decide plans to face
these restrictions for better profitability
Analysis of macro-environment in context to hospitality business to identify and communicate
strategic management decision
From the above context it is analysed that, macro-environment helps the management of Premier
Inn to identify the aspects related to pestle and swot models. These factors helps the business
organisation to frame different strategies for the growth and expansion (Senbeto, and Hon,
2020). Determination of change in policies, rules and regulations helps the firm to take
immediate action that helps to minimise negative impact. Strategical planning with the help of
macro-environment factors can influence the position of business in market.
Critically analyse internal factors and capabilities of business through an appropriate framework.
Internal environment is an element of organisational structure that includes factors presents
within organisation and affecting business positively or negatively (Donthu and Et. Al, 2020).
The management of Premier Inn is using VRIO analysis which is mentioned below:
VRIO framework:
VRIO analysis helps the business management to focus on value, rarity, imitability and
organization to identify the capabilities of firm. Business use this analytical tool to enhance
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resources management that increase profitability. Components of VRIO analysis in Premier Inn
is mentioned below as:
Factors Value Rare Inimitable Organised
Marketing
expertise
   
Financial
resources
   
Employees  
Valuable: This component helps to sustain the business with competitive edge to provide value
for the business (Werner, 2021). Valuable factors for Premier Inn is given underneath: Marketing expertise: The management of Premier Inn is expert in strategies formulation
which leads to enhance business growth. It is much valuable for the hotel chain
management. Financial resources: The financial resource for this hotel is having high value for
business as it helps to conduct operational activities in the organisation.
 Employees: Premier Inn have high skilled employees in their hotels that helps to increase
customer's attraction and quality of services.
Rare: It is described as a quality of internal factor that is not easy to found in the business
organisation. They have rarity among them. Premier Inn also have some rare factors which are
described below as: Marketing expertise: The resource as a marketing expertise is not easy to found in other
business. It hardly present in some organisations and Premier Inn is one of them. Financial resources: Adopting of financial resource is also not an easy task. Having a
strong financial structure is rare in the businesses. Premier Inn is also making unique
financial strategies.
 Employees: Premier Inn provides training and development programmes for employees
enhancement. So, it is not easy to find skilled and trained employees.
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Inimitable: It includes the components which can not be copied by another organisations (Ruel
and Et. Al, 2020). The inimitable factors for Premier Inn is given underneath: Marketing expertise: The marketing expertise can not abled to be copied as it requires
knowledge, skills and experience which is gained by management of Premier Inn.
 Financial resources: The financial resource always depends on wealth and ratings of
business. The competitors does not have same ability to copy Premier Inn financially.
Organised: It is necessary to be organised the factors that is valuable, rare and imitable to the
business (FB Teixeira, 2022). Some organised factors in Premier Inn are as under: Marketing expertise: Premier Inn have well organised management structure that helps
them to provide expertise services for improving business.
 Financial resources: The company also have organised business resources which are
well categorised accordingly.
Evaluating internal environment to determine strengths and weaknesses of business's internal
capabilities,skill set and structure.
It can be evaluated that Premier Inn have capability in their internal environment to
achieve the desire goals. The management frame different strategies to influence the growth or
business and to attract the customers towards their hotels. New subsidies introduced by UK's
government can be a great opportunity for Premier Inn. Hospitality industry is influenced by
tourists coming to UK for their purposes and it also increasing the advantages for Premier Inn by
enhancing profitability. It also improves business structure in the economy.
Critically Evaluating competitive forces for the business organisation with the help of Porter's
five forces model
Porter's five forces: It is a framework that helps management of business comparing with other
organisations to analyse whether an organisation achieve their objective or not (Guix and Font,
2020). Forces used by Premier Inn to obtain the competitive advantage are mentioned below as:
 Competitive rivalry: In hospitality industry there are so many hotels working in UK's
market. Premier Inn have their competitors as Jurys Inn and Travelodge Hotels Ltd. With
huge market share. All the hospitality businesses are influencing competitive rivalry in
United Kingdom. This high competitive rivalry tends to decline the potential to earn
profit and create aggressive competition in market.
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 Threat of new entrants: The hospitality industry have high potential in development of
different businesses entering in market. Increasing number of entrants may leads to
contribute in high threat for Premier Inn. It influence distribution of market share among
different organisation that cause threats for hotel management.
 Bargaining power of suppliers: There are so many suppliers presented in the market so
Premier Inn have many choices. This can leads in providing low control to suppliers on
price of products. This low power of supplier contributes to increase the potential of
business to earn more profit.
 Bargaining power of buyers: Buyers may also obtain bargaining power in the market.
In context to hospitality industry large number of buyers are influencing high bargaining
power for Premier Inn. Due to high bargaining power of buyers the profitability and
control of business is declining faster.
 Substitution effect: Using substitute can cause crucial situation for a particular business
in competitive market. Availability of substitute is the present substitution effect for
Premier Inn. The high substitution effect can affect the business organisation negatively
as consumer start opting for another option. It also leads to decrease sales of a company.
Recommendation of appropriate strategies to improve competitive edge and position of business
in the market.
It can be evaluated from above context that there is high level of competition in the
hospitality industry that affects business of Premier Inn. The business have to face threat of new
entrants to obtain the competitive advantage in the market. The management have to set the
marketing tools that helps to attract more consumers and to achieve marketing goals. They can
also increase profitability of their hotels by building customer base that can abolish threat of
bargaining power of buyers.
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PART B
Different types of strategic directions available in context to Premier Inn using Porter’s Generic
Strategies
Strategic directions can be understood as the plans that are required to be implemented
for an organisation to fulfil its vision and goals (Gürlek, and Koseoglu, 2021). This is the set of
activities and decisions that a firm allow for a greater consistency in strategy over time. Porter's
generic strategies in this regard allows business executives to concentrates on the core element of
the firm's business-level strategies. Premier Inn uses several generic strategies in order to gain
competitive edge in the market, they are as follows:
 Cost Leadership Strategy: This is a generic strategy that is applied by Premier Inn hotel
to gain a competitive advantage in the market by producing low-cost goods and services.
 Differentiation Strategy: The hotels like Premier Inn uses emotional response of their
customers as a differential tool and provide them with the unique experience of their life.
 Cost Focus Strategy: Premier Inn provides higher quality services at comparatively low
prices during off seasons to attract more tourists or visitors.
 Differentiation Focus Strategy: Several hotels like Premier Inn convince their
customers to pay extra costs by organising various events in their premises. The events
involves the opportunity of higher gains or margins from the existing customers.
Recommending and justifying most appropriate growth platform and strategies for the Premier
Inn using Ans'off Matrix
Growth platforms are capital intensive techniques that take a long to scale its operations,
this is a part of strategic planning that lays the roadmap for company's expansion (King, 2019).
Ans-off Matrix is an helpful tool that is used by several stakeholders for developing appropriate
strategies for the purpose of expansion of their company. Four pillars of ans off matrix are as
follows:
 Market Penetration : The hotels like Premier Inn should offer their customers some
ever resisting discounts in order to increase their sales.
 Market Development : The Premier Inn should open new outlets in regards to reach
more & more customers, its accessibility to its regular customers should be increasing,for
better sales.
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 Product Development : In Premier Inn, there is a limit to the number of in-hotel
segments, they should involve more segments like in room gym or mini pool area. This
will add a remarkable luxurious experience in the mind of customers.
 Diversification : It involves higher risk but also a good source of high gains, Premier
Inn should involve different designs and couture to enhance the ambience of hotel.
Application of different theories to devise a strategic planning for Premier Inn
Strategic planning process refers to a process of an organisation in which the leader
creates, implements and evaluates the results of a plan that is executed (Laemers, 2021).
Strategic planning process of a company involves determining of strategies, prioritising
objectives, developing a good strategic plan, execution and managing of an effective plan and
reviewing the plan at last. The strategy planning process opted by Premier Inn involves the
embraced strategy position within the sub unit of a company. Application of these strategies
show a very competitive market structure faced within the harsh economic times in the
hospitality industry.
Producing a strategic management plan that has tangible and tactical strategic priorities and
objectives
Strategic management plan can be overseen as a document that helps to communicate the
objectives and directions to achieve the organisational goals (Pavlatos, 2021). Premier Inn hotel
have expertise management, that has constructed effective management plans for the
organisational activities. They are given below:
Background: Premier Inn is a UK based company having its headquarters in Greater London, it
is empowered by Whitbread Plc. It has over 840 hotels in UK and over 82,000 rooms in greater
locations.
Organisation structure: Premier Inn is among the most popular brands in hospitality
industry,that use functional and divisional organisational structure into their business. Functions
helps them to encourage specialisation and creation of self-determination and divisions leads
Premier Inn to make different segments providing flexibility in the hospitality business.
Vision: Premier Inn is proud on their culture by stating them supportive and their vision is to
enhance the growth of people directly or indirectly related to them. This hotel is providing top
training programmes and opportunities for growth and expansion of themselves and their
holdings.
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Mission: This hotel has decided to sell more of their offerings in the competitive market.
Management of Premier Inn have developed strategies to build the image of their hotel's mission
statement.
Marketing mix: Premier Inn uses marketing mix as a tool for different elements in business
organisation to meet its objectives. Management of Premier Inn involves 7P's of marketing mix
to develop strategical plans for their growth and expansion in hospitality industry. Place or
location is the element of this mix is mostly cimportant for this hotel.
Strategy formulation: Strategy formulation is a tool of strategical management plan which
Premier Inn uses to examine different factors which are necessary for the growth of business,
framed to achieve the organisational objectives.
Implementation: Premier Inn implements their strategies in the organisation by communicating
them to their staff and regularise their operations. Implementation is just next step to the
planning process, without implementation a strategic management plan of Premier Inn is not
functional in business.
Evaluation: Premier Inn have different team or department for evaluating their plans and
strategies in the business premises. Strategic evaluation is necessary to assess the business
performance for their goals and to determine needs for corrective measures (Reilly, 2018).
Interpreting information through environmental and competitive analysis
From the above information, it could be interpreted that Premier Inn has set the objective to
create positive and safe environment for its customers. By ensuring the installation of digitalized
locks room doors, key card access for the rooms to provide personalized security experience for
the guests. The organisation would become service oriented to provide world's best services to
their customers. The firm can set up augmented reality to provide them the delightful experience
of their life.
CONCLUSION
From the above report, it can be concluded that strategical planning and decision making
through various models and approaches are very helpful for a business to make strategies. Pestle
analysis helps the business to evaluate the macro-environment for the purpose of achieving
organisational objectives. On the other hand, VRIO and competitive forces also heps the
management of business to influence strategical plan.
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REFERENCES
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hospitality services through the behavioral perspective model. Journal of Vacation
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Guix, M. and Font, X., 2020. The Materiality Balanced Scorecard: A framework for stakeholder-
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King, K., 2019. Using Artificial Intelligence in Marketing: How to harness AI and maintain the
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Laemers, S., 2021. The Five Dysfunctions of a Team—A Leadership Fable. Research in
Hospitality Management, 11(3).pp.265-265.
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Pavlatos, O., 2021. Drivers of management control systems in tourism start-ups
firms. International Journal of Hospitality Management, 92.p.102746.
Reilly, P., 2018. Building customer centricity in the hospitality sector: the role of talent
management. Worldwide Hospitality and Tourism Themes.
Ruel and Et. Al, 2020. Digital business strategizing: the role of leadership and organizational
learning. Competitiveness Review: An International Business Journal.
Senbeto, D.L. and Hon, A.H., 2020. Market turbulence and service innovation in hospitality:
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Service Industries Journal, 40(15-16).pp.1119-1139.
Sun, K.A. and Lee, S., 2019. Competitive advantages of franchising firms and the moderating
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Werner, A., 2021. Making the living wage work in SMEsEvidence from accredited employers in
the UK hospitality sector. In The Living Wage (.pp. 79-90). Routledge.
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