Strategic Management in the Australian Hotel Industry

This assignment delves into the complexities of strategic management within the Australian hotel industry. It requires students to conduct a thorough analysis utilizing various frameworks such as PESTLE, Porter's Five Forces, and Corporate Social Responsibility (CSR). The analysis should shed light on the key challenges and opportunities facing hotels in Australia, considering factors like government policy, economic trends, competitive landscape, and ethical considerations. The goal is to provide a comprehensive understanding of how strategic decision-making can contribute to the success of hotels in this dynamic market.

Running head: STRATEGIC HOTEL MANAGEMENT
STRATEGIC HOTEL MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive summary
Karma is one of the medium-sized hotels in Sydney which consist of 250 rooms and the hotel is
surrounded by a garden. The report shed light on the aim and analysis of macro and
microenvironment of the hotel and also highlights the possible competition and best strategic
approach for the company. Mission, vision, objective and strategic approaches are the
development scenario that creates barrier for the company whereas innovative features enhance
the progress of the company for developing the business.

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Table of Contents
Introduction......................................................................................................................................3
Macro and Micro Environmental Analysis......................................................................................3
PEST............................................................................................................................................3
Porter’s Five Forces.....................................................................................................................6
Value chain analysis....................................................................................................................9
Strategic Mission, Vision, and Ethics..............................................................................................9
Vision...........................................................................................................................................9
Mission......................................................................................................................................10
Business Ethics..........................................................................................................................10
Overarching strategies and business directions.............................................................................10
Recommendations..........................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
Karma hotel is one of the medium range hotels in Sydney and middle-class people
generally love to visit there for their professionalism and their development day after day. The
Karma Company has expanded their business in different places and trying to maintain their
good reputation in Australia. They have earned a good amount of revenue from hotel sector.
Karma has 250 air-conditioned rooms and all the rooms are filled with separate bathrooms.
There is separate lobby lounge and a pub bar is also available on the rooftop so a pleasant
environment is waiting for their customers (Aissa & Goaied, 2016). The hotel is located at the
Bondi beach in Sydney and the entire hotel is surrounded by the flower garden so it makes a
world-class attraction for tourists. In this report, macro and microenvironment analysis of the
hotels is presented. Dealing with that process PEST analysis, Porter’s Five Forces and Value
Chain models would be used and these will justify the mission, objectives and strategic approach
of the company. The recommendations also develop the final approach of the analysis and
provide a strategic dimension to ensure overarching.
Macro and Micro Environmental Analysis
PEST
In case of PEST, possible Political, Economic, Social and Technological factors are the
important aspects for an organization. This is the best way to analyze the environmental situation
and the required possible steps in terms of setting a new strategy.
Political Australia is a democratic country and they
have a good base of business development.

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Their government is assisting enough to
establish a small and medium business at level.
So they give all sorts of low-interest loans,
grants money and provide tax and tariff
concessions (Asbfeo.gov.au, 2018). The
government is also taking care of import and
export facilities and employing people and
deliver marketing ideas and sales innovations
so that business can sustain (Galliers &
Leidner, 2014). The government also prevents
the imposition of Royal commission in small
business and that somehow helps small
businesses.
Economic The economic development is fast and it is also
encouraging new business opportunities to
develop the business at its level. Especially in
case of export ventures business obligation and
traditional values are important
(Asbfeo.gov.au, 2018). Capital accumulation
and use this capital for the development of
business resources and supply chain is the most
important section. Increase in working capital
and small business export facilities also

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encourage the economic development of the
country (Nieves & Segarra-Ciprés, 2015).
Social The place where the hotel is the situation is the
best place for people. The essence of multi-
culture realism and experience a high level of
accommodation facility is the important factor
of this social distribution. Foreign people also
love that place as the location of the hotel and
the comparatively low rate of hotel fare is the
main competence of this hotel (Gannon, Roper
& Doherty, 2015). Australian people
understand their capacity of expenditure and
thus this kind of hotel has made an impact over
them and socially acclaimed a much.
Technological Technological advancement is the most
important phase of the hotel. Innovation and
technological development is the key factor for
pulling a large number of people towards them
(Turner et al., 2017). In that scenario, fast and
advanced development is the key factors that
considered the improvement and providing
better infrastructure for the hotel to enhance
their condition through innovation. Australia

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has invested a lot of money in research and
development and for that reason, they expected
some good outcome from their associates.
Table 1: PEST Analysis
(Source: Gupta, 2013)
Porter’s Five Forces
The next theoretical strategy is Porter's five forces and this tool is used for the external
competitive situation analysis and also states the market position and the development of the
company. Bargaining power of Suppliers, Bargaining power of Buyers, Threats for new entrants,
Substitutes and Competitive Rivalry are the main aspect to understand the situation.
Bargaining Power of Suppliers Suppliers are the concern criteria for the hotel
business. Resources are essential in that
scenario and most of the resources are coming
from the international market. The balance
situation in the domestic and international
market for the sake of resources is the key
factor of supplying scenario (Elbanna, 2016).
Majority of the supplying products are
depending on the quality, if this is not
maintained in that situation then resources can
be substitutable. Thus, the Low power of

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supplier has noticed in that scenario.
Bargaining Power of Buyers Bondi beach is one of the attractions for people
and they love the place for its innate beauty. So
the demand curve is always high in that factor.
Another fact is very important in that segment
is the low-cost rooms and accommodation
facility with every other amenities. A hotel
must change the dimension of their people
choice and understanding of living style.
Quality of the hotel is good though they hotel
considered as middle-class hotel and according
to that price has been set. Thus, a good demand
sustained in that scenario (Ivanova, Ivano &
Magnini, 2016).
Threat of New Entrants There are low entrants available in Bondi
beach. The section of beach is quite costly, so
there is less chance for small and medium
quality hotel to establish their business over the
section. In case of a big hotel, competition is
not acceptable in that situation (Abrate &
Viglia, 2016). Price range is altogether
different from a medium hotel. At the price,
Karma delivers their rooms are quite

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impossible for big hotels to do so, due to their
status and reputation.
Threat of Substitutes High chances of substitution threat are there. In
most of the cases, quality and service can be
replaceable (Brotherton, 2012). In that
scenario, other hotels take that same resources
and mould their infrastructure according to this
hotel and provide a solid threat to them. This is
the major uncertainty of this section.
Competitive Rivalry Competition, rivalry, and domination are the
most common and related part of this industry.
High level of competition in terms of
resources, product and quality is an issue and
majority of the hotel cost at this level are
similar (Chernev & Blair, 2015). This is the
most challenging aspect for hotel management
to gain trust from customers and deliver that
amount of quality assurance to them, that
customer love to come back.
Table 2: Porter’s Five Forces
(Source: Dobbs, 2014)

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Value chain analysis
The value chain analysis considers the basic competitive advantage and value of
resources in which advantages can get for the organization. This is a directive way in which
organizational steps and creations are evolved through the innovative business mind and provide
the best business advantages for the sustainable condition (Asbfeo.gov.au, 2018). The place,
price, quality, and production are important for maintaining the value chain. In case of place,
Bondi beach is very attractive and it contains such good amount of natural beauty that attracts
people a lot. On the other hand, Karma is not a high-class hotel in terms of hotel fare. So people
have to invest less amount of money in that segment. The quality is not an issue for Karma, they
deliver quality food and brought from the good resources, so according to the price range they
deliver good quality food and people love to have those (Gupta, 2013). Competitive advantage is
persisted in that section but the innovative way of using the resources is the main attraction for
this kind of hotel. At last, in case of value gradation, production enhancement and establishment
of production is the most important factor (Dobbs, 2014). There are some influencing factors and
these factors are influencing business issue and scenarios that provide competitive advantages to
the hotel and deliver a secure place for Karma to do their business in an ethical way.
Strategic Mission, Vision, and Ethics
Vision
The vision of the Karma hotel is to provide better quality in terms of services so that
customers get satisfied with their service and happy to get back at their hotel. On the other hand,
for the first year business plan, they have stated some additional discount for selected customers
and promote their business at its highest end. Bondi beach is a well-known place of Australia if

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beach expanded then business will extend a bit, other than this medium range business will
sustain.
Mission
The mission of Karma is to operate specific business scopes and purposes for the
development of the business. There are some alternative resources and allocate proper decision
to get the mission. Making guests happy and choosing Karma for every time is the prime mission
of the hotel. Management has to look about the promotional activity, so that impact over
customers and guests will sustain.
Business Ethics
For ethical business representation, Karma has to take care of Corporate Social
Responsibility. This is a good way to understand people mindset and hen showcase company’s
service as per the need of customers (Walker, 2012). There are some investments; some focusing
factors like stakeholders, environment, community, and finance and market stability are also
influence this kind of situation and that help to reach a large number of people and company
develop through this process.
Overarching strategies and business directions
Through the mission and vision of the company all the affecting factors that include all
the operational measure like stakeholders initiation, logistic, production development all this are
important and relevant for getting a competitive advantage (Hilson, 2012). Karma has lack of
capability in terms of the price war with competitors and they are choosing the blue ocean
strategy to develop the niche market of their production. The first operation is their resources and
that is the reason they have organized all the possible resource factors (Smith, & Ong, 2015).

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Then logistics is their concern and through the emerging market and the operational strategy,
CSR will also manage the customer understanding as well. Hotel benefit and use of local
citizenship always fruitful for the company and that engrossed through the operation process.
Recommendations
The basic recommendation factor changes the possible way of business re-infrastructure
that will be more presentable as per the need of sustainable business condition. The same
situation happens in this scenario where the innovative assumption and technological
implementation will be the key recommendations for business. Innovation like e-booking of
hotel rooms, payment facilities like the introduction of wallet and sensor door locks system all
these are an important recommendation for their development (Michelini & Fiorentino, 2012).
CSR must work on the domestic and international level and expand their business operation
internally and externally so that economic factors will operate as the main agenda. Promotion is
another aspect that can spread the dimension of the business at its level best and through the
promotional system lots of other stakeholders, partners will come to take this business away
from its territory.
Conclusion
Therefore, from the above findings, it can be concluded that macro and the
microenvironmental process of business strategy formulation that justifies the requirement of
business and provides the extended limitation of small and medium business is the key process
of operation. CSR, investment, logistic, stakeholders, innovative business styles and ethical
consideration of business is important in that section that suggests possible takeover scenario that
considers the best results for a better business extension.

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References
Abrate, G., & Viglia, G. (2016). Strategic and tactical price decisions in hotel revenue
management. Tourism Management, 55, 123-132.
Aissa, S. B., & Goaied, M. (2016). Determinants of Tunisian hotel profitability: The role of
managerial efficiency. Tourism Management, 52, 478-487.
Asbfeo.gov.au (2018) Small business and Family enterprises retrieved from:
http://www.asbfeo.gov.au/ [Accessed on 11th February 2018]
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social responsibility. Journal of Consumer Research, 41(6), 1412-1425.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
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