Mitigating Risks through Strategic Decision-Making

Short-Term Decision for Grabbing Clear Opportunities

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
OVERVIEW OF HOLIDAY INN...................................................................................................1
Strategic objectives of Holiday Inn........................................................................................1
Strategy...................................................................................................................................3
Corporate Governance of Holiday Inn...................................................................................4
STRATEGIC DECISIONS..............................................................................................................4
Strategic Planning...................................................................................................................5
SWOT Analysis......................................................................................................................6
PEST ANALYSIS..................................................................................................................7
Expansion strategies of Holiday inn.......................................................................................8
Strategic analysis of Holiday inn............................................................................................8
NON-STRATEGIC DECISION......................................................................................................8
RISK..............................................................................................................................................10
Recommendations-...............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Holiday Inn first chain of hotel was founded in 1952. Changing business conditions and
demographics have resulted in loss of market dominance by Holiday Inn. In order to be
successfully established this report has been conducted. This report has identified the Objectives,
Mission and Vision of the company. It has identified the difference lying between business and
corporate strategy in context to the company. Furthermore, the strategic decisions making
process and factors affecting such decisions are briefly outlined. Lastly the report has signified
the analysis of risk assessment and recommendations that shall draw future strategies is depicted
in the below report.
OVERVIEW OF HOLIDAY INN
Holiday Inn is a franchise of Intercontinental Hotel Group (IHG). IHG is among the
world's largest global hotel company and having the largest room occupancy. It has begun its
operation in Lahore in 1996. It is among the only international brand working in Lahore.
Holiday Inn was originally a US motel chain and today is one of the World's largest hotel
chains with approx. 435,299 bedrooms in 3,463 hotels globally encountering over 100 million
guest every night. It is a multinational company having its base situated in 3 cities London, Rio
de Janeiro and Atlanta.
Strategic objectives of Holiday Inn
It is highly important for organizations to set up an achievable and realistic objectives
which help company meet their desired level of performance with efficiency (Sedlak, Ćirić and
Ćirić, 2013).
The strategic objectives of holiday Inn are-
1. Using our own insight to make our brands as the first preference or choice for their
guests.
2. Delivering consistent customer experiences.
3. Enhancing hotel profits by encouraging more guest’s visits.
4. Making a global presence.
5. Building a strong partnership.
Bifurcation of Holiday Inn objectives are-
Long Range objectives:
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1. to gain more revenues
2. to become a leader in the hotel industry
Short range objectives:
1. To provide friendly, caring and courteous services to their customers.
2. Satisfying its guests as more welcomed a providing better services.
Corporate Vision statement-
Corporate vision is a short, inspiring and a succinct statement of organization intending to turn
itself into what the organization stands to attain at some point in the future, often stated in terms
of competitiveness (Dent, 2012).
Holiday Inn Vision
“Aspires to become the primary source of hospitality in the communities it seeks to serve
by providing their customers with the best possible experience they can gain and by becoming
good neighbors.
Brief explanation of its vision statement-
To be the primary source of hospitality among the communities which it seeks to serve
by providing its customers the best possible experience. Their vision is to continue exceeding the
expectations of their customers, owner and stakeholders. They withheld the passion to deliver
high standards of genuine services. They celebrate the diverseness of people and recognize
employee quality as its primary aim towards success (Helms and Nixon, 2010).
Furthermore, it encourages innovation, embrace changes and undertake divergent actions.
Their vision is to develop their business at a progressive rate through high signs of knowledge
and learning.
Corporate Mission statement-
A mission statement is a formal abbreviated written statement reflecting the purpose for its
existence within the organization (Sadler, 2003).
Holiday Inn Mission statement
To bring a difference in lives of individual they encounter by working in tune with them for
delivering commitment, personalized and superior hospitality services withholding a strong
moral system and active participation in community.
Brief explanation of its mission statement-
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Their aim is to offer its guests a comfortable and uncomplicated hotel experience. They
pledge a genuine service with the esteem level of care empowering employee to make
themselves more committed to serve its promise with dignity.
Their core values are based on integrity, continued improvements and quality commitments.
Strategy
Strategy is a plan or course of action whereby a pattern of organizational activities is
set to derive the policies, objectives and goals to meet the desired state.
A business operating in a single field can outperform within that industry by developing
and exploiting its competitive advantage for turning it into profitability. Competitive advantage
can be gained by developing strategies differently for different levels -
1. Corporate level of strategy- these strategies are adopted by the top level management that
aim at optimizing company operations focusing on business profitability and growth. The
corporate strategy focus on the attaining constant returns and comparing it with the
investments made after acquisition of initiating a complementary business (Lane, 2007).
The corporate level strategies that can be undertaken by Holiday Inn are-
 Expansion oriented strategies
 Competitive advantages
 Gaining high ratings
 Acquisition management and integration related strategies
 Investments and funding to meet the high development plans and ambitions etc.
2. Business level of strategy- the business strategy is often undertaken by middle level
managers who sought to accomplish the corporate strategic initiatives. Corporate and
business strategy work together to influence each others efforts to meet the targets of
business unit. The different business level strategies that can be adopted by hotel are-
 Expansion is possible when managers focus on enhancing the brand images of
Holiday Inn.
 Enhancing quality
 Increasing operating efficiency by installing new technologies in its branches.
 Procuring issues from the lower level and communicating the same to the top level
management for meeting the staff contentment.
 Attaining high level of market share
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3. Functional level strategy- this strategy is developed by the lower level management
which focus on breaking down the corporate strategies into small ones and strive to attain
such strategies to fulfill the corporate level strategies (Gannon, Doherty, and Roper,
2012). The key focus functional strategy is to attain corporate and business unit
objectives and strategies by maximizing resource productiveness. This can also be said as
a departmental level of strategy.
 High valued services
 Quality assurance
 Customer satisfaction
 attaining net profits
Corporate Governance of Holiday Inn
The system of ruling, practices and processes through which a company gets directed and
controlled. Corporate governance incorporate balanced interests of stakeholders within the
company. These include their stakeholders, management, customers, suppliers, finances and
community.
It broadly refers to the processes, mechanism and relations through which corporations
can be controlled and directed. The hotel has been able to attain customer’s satisfaction and
positive stakeholder engagement. It also fulfills its employee's desires and meets their level of
expectations (Bose, 2008).
Commitment to maintain high standard of corporate governance is one of the key values
of Holiday Inn. As Holiday Inn is a part of IHG group, it has a dual listing on London Stock
Exchange (LSE) and New York Stock Exchange (NYSE) it has clearly set down the governance
principles as UK Corporate Governance.
STRATEGIC DECISIONS
One of the key essential of business to create and run their business to meet the mission
or vision of the business. Holiday Inn is required to develop strategic decision making to meet
the goals and company aim for accomplishment. Strategic decision making is an ongoing process
which involves different strategies that help in attaining goals and developing alternate
strategies.
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The strategic decision making will help company make decision to meet the level of
uncertainties which calls for both long and short-term business strategies.
Decision-making is a skill whereby crucial decisions regarding allocation of resources
and undertaking commitments for attaining of economic activity.
Strategic Planning
Strategic planning is a process which is undertaken by the organization for development
of a plan for attainment of the overall long term objectives. In this highly competitive world it is
very important to analyze the business environment, determining a budget oriented plan or
forecasting based planning. The Holiday Inn must engage itself in the strategic planning which
clearly states that both internal and external situation is bought on track (Slack, Chambers and
Johnston, 2007).
A strategic Planning process shall involve the following steps:-
1. Mission and Objectives- Mission statements depicts company's business vision, including
the identifying the unchanged values and purposes to guide the pursuit of future
opportunities.
2. Environment Scanning- this in particular indicate Holiday Inn to scan internal analysis
and external analysis. For internal analysis company can adopt the SWOT analysis and
for the external analysis company can adopt PEST analysis which will help in drawing
industrial analysis.
3. Strategy formulation- provided the information from environmental scanning both
internally and externally, business now needs to meet superior profitability by developing
competitive advantage over its competitor. This can be gained by formulating strategies.
For this Holiday Inn can consider Michael Porter Generic strategy from which firm can
choose.
4. Strategy Implementation- the strategy so formulated above is implemented by means of
programs, procedures and budgets. The manners in which strategies are implemented
have a due impact on the organization. The implementation may not lead to success if
strategy is misinterpreted or in cases where lower level managers show resistance
towards its implementation (Berger and Huntington, 2002).
5. Evaluation and Control- the implementation of strategy is required to be monitored and
adequate adjustments are required to be made for keeping it updated and sustaining the
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competitive edge of the company. The evaluation and control consists of the following
steps-
 Defining the targeted values for such parameters
 Performance measurements
 Making adequate changes
 Comparing the measured results with a pre-determined results
SWOT Analysis
SWOT analysis is a mode which assists in undertaking effective decisions. A successful
business is build on enhancing the strengths, correcting the weaknesses and acquiring the
business opportunities and protecting the business from key vulnerabilities. It is a common
strategic tool that can help managers in examining the internal and external factors which are
likely to influence company goals (Anand and Ward, 2004).
This method help in assessing the overall business environment and spotting onto exploit
the new opportunities faster than its competitors.
The Strength, Weaknesses, Opportunities and Threats analysis help in undertaking
business decisions effectively in this process.
STRENGTHS: these are the favorable internal factors that company can use to accomplish its
goals and objectives
The basic strength of Holiday Inn resorts is to appreciate its guests and draw their feedback
through comment cards.
1. Company has been able to sustain a reputable image by drawing out positive perceptions
for high quality products or services (Afiouni, 2013).
2. Quality conscious: Good qualitative service standards are maintained by the hotel.
3. High recreational facilities
4. The holiday Inn infrastructure is unique and appealing to man. They have a built in
technical approach.
WEAKNESSES: these are negative internal factors which inhibit the company to attain its goals
and objectives.
1. Their cost of production has increased due to structural and administrative changes.
2. The budgetary constraints have restrained the advertisement budgets of the company.
3. There are limited room facilities.
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4. Parking place is not adequately maintained (Greasley, 2007).
OPPORTUNITIES: these are the positive external factors which a company requires for
accomplishment of their goals and objectives.
1. Holiday Inn has planned to launch low rated packages which help them attain a strong
brand image.
2. World-over people are moving towards the quality which satisfies its needs rather than
attaining the feeling of turning into elite. Therefore, holiday Inn not only seeks to provide
them satisfaction but also help them achieve pride for themselves.
THREATS: These are the negative internal factors that inhibit a company to attain their goals
and objectives.
1. The major threat faced from the competitors like providing lowered rates of services.
2. Having branches globally it can face issue like political instability
3. Negative propaganda of competition
PEST ANALYSIS
PESTLE analysis is an abbreviated term which look onto hotel aspect from different
perspectives like P for political, E for economic, S for Social, T for technological, This analysis
help in analyzing the external factors that are affecting the business environment in a negative
aspect (Barnes, 2008).
The elements involved in PEST analysis are-
1. POLITICAL- the changing requirements of government has resulted in Holiday Inn to
use Kinley instead of Acquafina. Usually there are agreements formed separately
between their government and hotels which has influenced people to stay in the hotel,
this shows that government has a major impact on hotel.
2. ECONOMICAL- the increasing rate of inflation in economy has led to income disparities
among the customers. People belonging to elite class usually prefer to stay at Holiday
Inn. Economic conditions also hamper or strengthen the growth of Holiday Inn.
3. SOCIAL- The people of elite class and who are brand conscious are impelled to choose a
multinational hotel for its stay.
4. TECHNOLOGICAL- the replacement of conventional TV to LCD has driven customer
demands, incurring extra costs on its customers.
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Expansion strategies of Holiday inn
Holiday inn has developed the growth and development of the business unit significantly
in the global market. The expansion and growth measures have helped the company in creating
wide impact on the profitability of the company. The company was adopted the measures of
franchising for expanding the business growth in the international market. This measures has
helped the Holiday inn in developing effective brand image in the global market while ensuring
the profitability and growth measures within the economy. Intercontinental group holds the right
of the company while enhancing business operations through franchising helps in managing the
business functions efficiently (Baker, 2007).
Strategic analysis of Holiday inn
Holiday inn has developed an effective measure of creating a global brand image within
this competitive market. The global branding strategy adopted by the company is localization
strategy. The organization focuses on adapting the local branding measures in order to attract the
local consumers. This strategy has helped the company in creating a wide impact on growth and
development of the organization in the local market. The global brand name of the units is
promoted by analyzing the needs and requirements of the consumers of the market.
The positioning strategy of the company focuses on differential positioning strategy
which efficiently focuses on targeting on the families. The values and objectives of Holiday inn
has developed a well-established image of the company as a low cost accommodation measure
for families (Crook, Ketchen and Snow, 2003). This has helped the business in developing high
impact on consumer perception thus enhancing high demand in the market. The branding
strategy of the company has also helped the company in developing a safe and friendly
perception for holiday inn within global economy. The organization has adopted both traditional
and modern means of promoting organizational services. Advertisement, internet marketing,
print media marketing etc. has helped the business unit creating a wide impact on overall growth
of business unit.
NON-STRATEGIC DECISION
Non-strategic decision-making involves day-to-day operational activities for running the
organization business. These are short-term oriented decision-making and are required to be
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fulfilled. These decisions are taken spontaneously and in comparatively less time than the
strategic decisions.
The Non-strategic decisions mainly focus on the day to day operational decisions. These are
undertaken by lower-level of management and are based on facts which do not require much of
the business judgments (Pierson and Heyman, 2011). These decisions are required to be
undertaken by managers possessing following qualities-
1. Rational decision-maker
2. well-informed
3. Flexible
4. Smaller-scale.
These decisions having short-term horizon and having a repetitive occurrence are often taken
under all fields.
A Human Resource manager of Holiday Inn might require to undertake non-strategic decision-
making in the following area-
1. Enhancing Employee Relations: Operation HR function are maintaining policies,
ensuring compliance and managing the disciplinary issues and complaints. They play a
role in aligning their strategic goals with the hiring strategies to attain business goals
(Jeffs, 2008).
2. Recruitment- HR professionals seeking operational role participate actively in conducting
background check and company environment. They also play key role in hiring of
temporary staff to eventually meet the short-term goals.
3. Performance- Operational performance management includes administering the reviews,
compensation and benefits.
A Finance manager might require non-strategic decision-making in the field of finance
where penny cash transaction is to be conducted. At times, financial manager of Holiday Inn
might also seeks to make decisions in allocation of resources and undertaking operational actions
at various point of time. Where the transaction amounts minimal and doesn't require permission
from higher level managers for carrying out such transaction. Then such non-strategic decision-
making is conducted to meet the emergency needs.
A marketing manager might require non-strategic decision-making in order to conduct
market analysis and deriving customer demands. There are situation where the decisions are
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undertaken on the basis of day-to-day operations and to analyze the growing needs of guests in
Holiday Inn for a spontaneous response. In such cases the marketer is allowable to undertake
operation decisions and presume the guests demands. Such non-strategic decision can be
undertaken to grab clear opportunities. But such decisions are for only short-term and cannot be
dragged on for long-term (Sekhar, 2009).
RISK
This refers to the potential of losing something subsisting valuable for the organization.
The value may be in terms of monetary or non-monetary. Risk is also perceived as a deliberate
interaction with the uncertainties. Uncertainty is an unpredictable, uncontrollable and
unmeasurable risk occurring as a consequence of action.
As a part of IHG group, Holiday Inn has believed in being a responsible business with a
robust place and effectiveness in risk management along-with internal controls. IHG has held
over its responsibility by establishing board of Audit Committee, Executive committee and other
committee who have collectively assisted in management of risk at the hotel (Porter, 2008).
Risk management is made possible through its identification, assessment, and mitigation
and monitoring of the uncertainty. Holiday Inn can look upon conducting the risk assessment by
identification, prioritization and information of decisions on risk mitigation. In order to mitigate
the risk situation analysis can be referred which will help in assessing the risk lying internally
and external environment.
Recommendations-
1. The hotel must look onto sustaining its goodwill among their customers. This can be
made possible by its effective involvement is few corporate social responsibility
activities.
2. Employees must be given requisite training to meet the changing perspectives of
customers.
3. More financial resources must be served in this sector to mitigate the impact of risk and
uncertainties on the company.
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CONCLUSION
From this report it can be articulated that different strategy is a plan or course of action
which is undertaken to meet the objectives and goals set out. In order to undertake adequate
decision-making SWOT and PESTLE analysis has been done (Strategic Analysis (SWOT,
PESTEL, Five Forces) of McDonalds. 2012.). It has been shown that a non-strategical decision-
making involve operational activities carried on for day-to-day activities. Moreover, it has been
seen various committees are formed to mitigate the risk persisting in Holiday Inn.
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