Strategic Management in Taj Hotel

This document discusses the strategic direction followed by Taj Hotel in the past 5 years, reviews the external environment of the company using PESTLE analysis, analyzes the strategic capabilities of the company, and suggests possible strategies to defend its core business. The document also includes insights on the industry challenges faced by Taj Hotel and the use of Ansoff's matrix for strategic planning.

Strategic Management
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 The strategic direction that the Taj has followed in the past 5 years and the way it has
developed.....................................................................................................................................3
TASK 2............................................................................................................................................4
Review the external environment of the company......................................................................4
The hospitality industry facing the company within its existing market domains.........................6
TASK 3............................................................................................................................................6
Further analysis with regards to:..................................................................................................6
TASK 4............................................................................................................................................7
Possible strategies that can be followed by Taj hotel in order to defend its core business.........7
TASK 5............................................................................................................................................9
Analysing and evaluating resource implications of recommendations that is been addressed by
Taj................................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Strategic management is the process of constant planning, supervising, analysis and
examination of all that is necessary for an organization to meet its goals and objectives. An
crucial concept for business owners and managers to obtain, strategic management allows
assessing business goals, objectives and plans. Taj is a chain of luxurious hotels and also the
subsidiary of the Indian Hotels Company Limited. The company came into existence by Tata
Group in 1903 and this report is all about the strategies directions that the company followed in
past 5 years, a detailed analysis of the industry in which the company works and future possible
strategies that organisation could follow.
TASK 1
1.1 The strategic direction that the Taj has followed in the past 5 years and the way it has
developed.
It has been observed that, under the aegis of its EARTH i.e. Environmental Awareness &
Renewal at Taj Hotels, the company’s vision and Tata values has been Benchmarking and
certifying their properties by EarthCheck since 2009. Further, through the quantitative
assessment of environmental and social performance in opposition to a property’s peers in
their industry, region and climate zone. Moreover, it has been observed that in 2006, with an
aim to give greater depth and develop bigger impact, that policy was encouraged to be an
internal campaign and commitment ‘EARTH’. This policy has been considered as the
cornerstone of all strategic and operational initiatives towards creating better environment
(Hubbard, Rice and Galvin, 2014).
Over last five years the Taj’s 9 EarthCheck Gold certified hotels have:
 Preserved sufficient energy to power over 53, 940 households over 1 year.
 Enough of water has been conserved to fill 338 Olympic sized swimming pools.
 CO2 emission has been decreased in order to take 6,675 cars off the road, and
 Enough of waste has been decreased to fill 186 shipping containers.
They also contribute towards the social improvement of their local communities by:
 Training & certifying diminished youth and differently allowed young adults in major
hospitality traits.
 Promoting of local art and craft forms.
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It has also been observed that, Taj has been famous in hospitality schools’ campuses for
being a kind-hearted and responsible company and all their stakeholders consisting some vital
vendors have been related with their over decades on the basis of the trust, openness and concern
for larger good. United Nations Global Compact Reporting, EarthCheck Certifications and
participation in Carbon Disclosure Project over the last few years have made organisation’s
commitment and efforts internationally applicable, visible & comparable with other good
practices in the industry.
TASK 2
Review the external environment of the company.
Pestle analysis is one the best tool that is used by the organisation in order to track the
impact of external environment on the business operations and their functions (Hill, Jones and
Schilling, 2015). With the help of Pestle analysis tool, Taj Hotel used to track the environmental
factors. There are six factors which are included in the PESTLE Analysis model P-political, E-
Economic, S-Social, T-Technological, L- Legal and E-Environmental.
Political Factor- This factors include all the laws, policies made by government of
country. India is democratic country and it is one the most powerful company in the world. The
political situation and condition of India is stable which is a great opportunity for Taj Hotel to
grow and develop their business (Mitchell and Leiponen, 2016). It is fact that for hospitality
industry is the backbone of the government. India runs on the federal form of government and it
is one of the largest democratic country in the world. The taxation system is also well developed
in India.
Economic Factors- This is one of the most important factor in external environment that
has great impact on the profitability of the business. The economy of India is stable and the GDP
of India is the 7th largest economy in the world which is the great opportunity for Taj Hotel to
expand their business. Hospitality industry is giving larger contribution to the economy of the
country. Taj is one of the hotel which has super contribution but it is true that all the factors of
economy such as inflation, taxation interest rates affect the operations as well as functions of Taj
Hotel.
Social Factor- This is the another factors which also affect the entire hospitality industry
as well as to Taj Hotel (David and David, 2017). It included the trends, behaviour, attitude and
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belief of customers that affects the operations and profitability of Taj Hotel. India's population is
about 1.2 billion and country has huge market for their operations. Thus, it is very difficult to
fulfill all the needs and demands of the entire population but in Taj Hotel there are variety of
rooms available.
Technological Factor- This is also one of the most essential factor that affects the
hospitality industry. India is developing country and it is highly advanced country in terms of
technology. Taj hotel used online payment, booking system to satisfy the customers. With the
online system, customers feel safe and secured. In addition to this, different types of machines
are also used by the staff members of Taj Hotel to make the work fast and efficient. for example,
vacuum cleaner.
Environmental Factor- This is the another factors that have a very serious impact on the
hotel industry. Environmental factors include weather, climate. In rainy season, flood, storm
bloks the entire business. People usually does not move in rainy season. But the Indian climate
has more stability which is the best opportunity for Taj Hotel to raise the profitability
Legal Factor- This is the factor which is most important for the growth and development
of hotel industry. In 2017, there are many changes in laws and legislation which has affected the
behaviour of organisation (Apenko, 2017). Law of discrimination, employment law, health and
safety and all other laws need to be followed for the smooth functioning of the organisation. Taj
Hotel follow all these laws and legislations.
Taj Hotel’s Competitive Advantage Among its Direct Competitors
Porter’s Five Forces Model- This is the best model which help to identify the forces of
competition in the market. There are five forces that give shape to entire industry as well as the
market which are Competition in the Industry, Power of Suppliers, Powers of Buyers, Threat of
New Entrants,Threat of New Substitute. THus, this is one the best model which is used to track
the level of competition as well as take advantage of competition.
Competition in the Industry- The range of competition is very high in hospitality
industry. It is because of differentiation in cost of products and services and the cost of switching
is low (Stead and Stead, 2014). The rate of growth need to be very high than the rate at which
business is growing. For example- Oberois Group, Starwood Hotel.
Power of Suppliers- The power is low in the hotel industry because of they are subjected
to the power of trained staff and labour as well as the personnel. Taj Hotel enjoys the benefits in
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the market as they did not need to do bargain with the suppliers and it has low as well as indirect
pressure on their competitiveness. Taj Hotel use to has to maintain benefit of cost in order to give
tough competition to its competitors as well as to become the most innovative hotel in the
market.
Powers of Buyers- The power of buyer tend to high when the concentration of buyers are
high. The buyer such as business class any any other used to purchase bulk of rooms, they use to
exercise higher control on the hotel industry. It also happens with the Taj Hotel. In order to
control the power of buyer, Taj Hotel already have discount offers on bulk purchasing and repeat
customers.
Threat of New Entrants- The threat of new entrant is low because it is not easy to open
the hotels as it require huge investment of fund. Taj HOtel is one the most powerful brand name
in INdia, thus they do not face the threat of new entrants.
Threat of New Substitute- In hospitality industry, the threat of new substitute is low.
When India is facing the period of recession, at that time hotel industry use to face this threat
because people are moving towards the cheap and inexpensive facilities of accommodation
(Frynas and Mellahi, 2015).
The hospitality industry facing the company within its existing market domains.
The industry of hospitality is one of the most dynamic sector across the entire world.
THis industry has the main intention to provide better customer satisfaction to the customers
through their services as they used to play the customers at their heart. All around the world,
hospitality sectors remain a key for economic development as well as job creation. In this
economy where transport has become more affordable and country borders are blurring
(Trigeorgis and Reuer, 2017). The range of competition is very high in hospitality industry as
Taj Hotel is also facing high pressure of competition in terms of technology and changing profile
of customers rapidly India.
TASK 3
Further analysis with regards to:
1 The extent to which company is facing strategic drift.
Strategic drift can be described as a gradual deterioration of competitive action that results in
the failure of the company to acknowledge and respond to alteration in the business environment.
Taj is considered as the leading hospitality brand that has introduced Tajness, as a strategic
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initiative which main purpose is to establish the collective good of the past to the future
customer. The competition for popular companies like the Taj Hotels is coming from a fast
growing competitive framework. In such a scenery, it is crucial to re-look at the brand offering
and its importance. Something which the Tata-group owned Hospitality Company is hoping to
attain with this roll-out (Šiugždinienė, Gaulė and Rauleckas, 2014).
2 Whether their vision and mission statement are aligned to the demand of the marketplace
Their mission is to improve the quality of life of the communities they serve globally
through long term stakeholders value creation based on leadership with trust. Also, vision wa
that 25% of the world’s population will experience the Tata commitment to enhance the
quality of life and communities. For this the company introduced Tajness as a strategic
initiative with purpose to do well of the past to the future customers. ‘Tajness’ a few years
ago, it developed the campaign around it’s the promise of ‘sincere care’. This strategy would
have an influence on numerous touch-points, & the first example to see the effect of the
improvement would be the flagship Taj Mahal Palace in Mumbai (Staessens, Kerstens and
Cherchye, 2018).
3 The company’s strategic capabilities
 Setting leadership and strategy right this includes bringing in a leader having strong
domain experience having offered with a global hotel chain for over 35 year.
 Improving the brand global partnership :- recently the management has launched Tajness
a brand philosophy that touches all aspects of the business, enhancing guest experience
across touchpoints was a major focus for the company’s strategic management.
Moreover, improving revenue management through discipline analytics to optimise
product availability and cost was also undertaken (Joyce and Paquin, 2016).
4 Use the Business Canvas Model to portray and describe the rationale and core logic of how
the company creates; delivers and captures value within its industry to its clients.
This model of business canvas refers to a strategic management and lean start-up for
developing a new existing business model (Dudin, Kucuri and Namitulina, 2015).
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TASK 4
Possible strategies that can be followed by Taj hotel in order to defend its core business
Taj is a luxury hotel that has been headquartered in express towers Nariman point. In
order to defend its core business, the company has to adopt some strategies. Therefore, taj hotel
adopted Ansoffs matrix that has been described as per below context-
Ansoff matrix
This model is the strategic planning tool that helps in providing the frameworks in order
to help the executives, senior managers and also marketers device strategies that helps in future
growth of the cited business (Hill, Jones and Schilling, 2014). Thus, the strategies has been
described as under.
Market penetration- This strategy helps Taj in trying to grow with the help of existed offers in
the market that is existed. In addition to this, it also tries in increasing the market share in
presented market. This strategy also involves to increase the share of market within the existing
market segments. It can be further achieved with the help of sales of products and services in
order to establish the customers. This also involves the finding of new customers in the existed
market. Taj wants to increase the sales of products and services with the help of promotion and
distribution. Thus, all this demand of the hotel can be accomplished with help of following-
● decrease in price
● Increase in promotion support
● Modest refinements of products
● Acquisition of competitors in the same market they wish to expand.
This strategy is possible when market is growing or where marketing mix elements are used.
Market development- In this strategy, the hotel taj will try in order to expand and diversify their
business into new countries. This is done by using the offers that are already existed. Thus, it
can be accomplished with the help of following factors-
● Analysing different segments of customers.
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● analysing foreign trends and markets
● New areas or regions to expand business.
● They must analyse the industrial buyer of goods that were sold previously only to the
households.
Product development- product development strategy can be used when the cited hotel tries to
create new products and services and target the existed markets to achieve long term growth
(Doz, 2017). It helps in extending the range of the product that is available in the existing market
of the firms. This includes following factors-
● They have to invest in research and development of the products that has been developed.
● Joint development with other countries.
● Buy the competitors' product and later promote it as its own.
● Acquisition of rights in order to produce product of others.
The success of this strategy mainly depends on development of the new products and services in
terms of existing markets. This success can be maintained by adopting this product development
strategy.
Diversification-
In this strategy the company tries growing the share of market with the help of
introducing new offering in the market that is existed and also new one (Ethiraj, Gambardella
and Helfat, 2018). This strategy is termed as the most risky one because it requires the
combination of both strategy as product and market development. Thus, this risk can be further
mitigated with help of undertaking related diversification and it could also have the potential in
order to gain the highest returns. If Taj hotel wishes to adopt this strategy , they must have clear
idea and complete information about its expectation in terms of gain from this strategy and an
honest assessment of risk. If the company wants to maintain the balance between both risk and
reward then they must adopt diversification strategy that will lead them with high profitability
and huge diversification in successful manner.
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TASK 5
Analysing and evaluating resource implications of recommendations that is been addressed by
Taj.
Taj hotels must adopt diversification strategy. With help of this strategy they can expand
their business in other markets or countries (Lasserre, 2017). Thus, for this they have to undergo
various measures. This key resource areas has been discussed as per below context-
● HR- The human resource management of Taj hotel must recruit and select the candidates
with high skill and talent with good experience in hotel. They must also undertake
training sessions related to the awareness of the demand of customers. Thus, for this they
must have the sessions of training and development. This will help them in diversify their
business in other countries of the world.
● Finance- in order to apply the strategy of diversification, the cited hotel must have
enough fund so that they can easily research and undertake surveys regarding present
trends in a particular country. Thus, to fulfil the requirement of the customers, they
should have known the present and upcoming trends of that country.
● Marketing- in terms of diversification, they must market their services and products by
promoting them in the market. They must address clear and true information about the
goods. This will help them in attracting huge volume of customers and their wish in order
to diversify will reach the boost.
● Technology- Technology plays significant role in expansion and diversification of
business. Today's generation is completely based on technology and social media.
Therefore, Taj hotel must have unique and innovative websites that will help them in
attracting huge volume of customers. They must also offer discounts and price on the
websites so that the customers may feel easy in order to compare their products and
services with others. This will help the company to reach the needs of the customers and
also fulfil it without any trouble.
● Operations- the operation department must be strong as they are the one who produce
goods of high quality. They must have complete and exact information about customers
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demand that may help them in meeting the demand of customers and also attract large
customers with enthusiasm.
Thus, with the above recommendations that has been provided in terms of diversification
strategy of Taj hotel will help them in dealing with customers of different areas in easy and
smooth manner (Morschett, Schramm-Klein and Zentes, 2015). This will lead in achieving long
term success and high brand image.
The negative part of this strategy is that it must have huge fund and high volume of
resources. In addition to this, it leads to slow decision making.
CONCLUSION
The above report concluded that strategic management is very important for each and
every organisation bit in hospitality industry it is the key to achieve the success. Strategic
management is the continuous planning, monitoring analysis of the business. This report also
concluded that strategic direction that the Taj Hotel has followed in the past and the way in
which strategic thinking has developed within the past 5 years. Further this study also
summarized the Pestle and Porter's, five model which is used to identify the factors of external
environment and competition. Moreover, business canvas model was also included in this
assessment and last recommendation was also given to the hotel for more development and
growth.
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REFERENCES
Books and Journals:
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal, 38(1), pp.42-63.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Stead, J.G. and Stead, W.E., 2014. Sustainable strategic management. Routledge.
Apenko, S., 2017. Human resource management of innovative projects in the context of business
strategy. Strategic Management, 22(1), pp.3-6.
David, F.R. and David, F.R., 2017. Strategic Management: A Competitive Advantage Approach,
Concepts and Cases (Sexteenth ed.). Essex: Pearson.
Mitchell, W. and Leiponen, A., 2016. Virtual special issue on innovation, intellectual property
and strategic management. Strategic Management Journal, 37(13), pp.E1-E5.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2015. Strategic management theory. Cengage
Learning,.
Doz, Y.L., 2017. Strategic management in multinational companies. In International
Business (pp. 229-248). Routledge.
Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic management. Strategic
Management Journal. 39(6). pp.1529-1529.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp.
978-3658078836). Springe
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic managment: Thinking, analysis, action.
Pearson.
Šiugždinienė, J., Gaulė, E. and Rauleckas, R., 2014. Redisigning the strategic managment system
in a time of fiscal crisis in Lithuania. Public Policy and Administration. 13(1). pp.36-49.
Staessens, M., Kerstens, P. J. and Cherchye, L., 2018. Data Envelopment Analysis and Social
Enterprises: Analysing Performance, Strategic Orientation and Mission Drift. Journal of
Business Ethics, pp.1-17.
Joyce, A. and Paquin, R. L., 2016. The triple layered business model canvas: A tool to design
more sustainable business models. Journal of Cleaner Production. 135. pp.1474-1486.
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Dudin, M., Kucuri, G. and Namitulina, A., 2015. The innovative business model canvas in the
system of effective budgeting.
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