Hospitality Business Strategy: Analyzing Impact and Influence of Macro Environment

This document discusses the implementation of appropriate frameworks to analyze the impact and influence of the macro environment in hospitality business strategy. It explores the use of stakeholder analysis, PESTLE analysis, Ansoff's growth matrix, and SWOT analysis. It also explains the evaluation of organizational capabilities using the VRIO framework and the implementation of the Porter five force model to evaluate competitive forces in the market sector of the organization.

Hospitality Business Strategy

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Implement of appropriate frameworks to analyse the impact and influence of macro
environment............................................................................................................................3
TASK 2............................................................................................................................................8
P2 Evaluation of organisational capabilities by implementing appropriate framework........8
TASK 3............................................................................................................................................9
P3 Understand of Porter five force model and its implementation for evaluating competitive
force in the market sector of organisation..............................................................................9
TASK 4..........................................................................................................................................10
P4 Implement of different range of theories, model and concept that devise strategic planning
for organisation.....................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Hospitality business strategy is defined as the management of the entity what helps
workforce to attain organisational goals and objectives. The major objective of business strategy
is to establish goals and objectives so as to mould and understand environment so as to
implement planned strategy within all the present department of the business. By undertaking
various opportunities and considering threats, strategic management motivates and put on most
effective strategy which is best suitable for current business. This report is prepared so as to
understand concepts of hospitality business strategy with the background of Premier Inn. The
hotel chain was founded in the year 19887 and headquartered in UK. They are having more than
800 hotels around the world with more than 72000 rooms with luxurious services. This report
highlights various frameworks which are having prominent role in influencing business strategy
along with internal and external factors within business environment (González-Rodríguez and
et. al., 2018).
TASK 1
P1 Implement of appropriate frameworks to analyse the impact and influence of macro
environment
Vision- The major mission of Premier Inn is to fulfil their promises so as to get recognised
with distinct identity in the marketplace and obtain high customer loyalty.
Mission- The major mission of the hotel is to offer professional and personal services
which are flexible so as to provide remarkable stay to their customer.
Strategy is defines as considerable tool which is helpful for the organisation so as to
render effective plan of action in which organisational task can be completed in desired manner.
In the context of Premier Inn the hospitality business strategy is helpful for them in managing
operation of their workforce headed for organisational goals and objectives. In the present case,
there are various operations for instance visitors, restaurant and maintenance which are
performed by Premier Inn. In order to manage all the organisational functions so as to maintain
robust strategies by which task can be achieved in stipulated manner (Prud’homme and
Raymond, 2016).

Framework to understand macro environment
Stakeholder analysis
This term is referred as making of effective process which are recognised by individuals
that are having high impact over activities and operations of Premier Inn. This renders
advantages to the business in which interest level can be enhanced. There are some steps which
are elaborated as under:
 Step 1: This step recognises quantity of stakeholders with the help of collecting
information from various aspects such as organisational department, employees,
resources and suppliers.
 Step 2: By taking acknowledgment from number of stakeholders which are categorised
on the basis of certain factors such as according to participation level and on the basis of
hold power. Moreover, it is divided into various parts that are explained as below:
 High interest and power: In the context of premium high interest is drawn from
customers as in term of operation and internal functions by which power to take
decision are given to them.
 High power and low interest: Within this category stakeholders are having high
interest in business so they perform organisational objective in effective manner. The
major example of this type of this type of stakeholders is suppliers.
 Low power, high interest: Within this category low power hold by stakeholder but
at the same time they possess high level of interest. The example could be taken of
customers.
 Low power and low interest: With this stakeholders do not have any power so they
face challenge in managing organisational operations.
 Step 3: With the help of recognition of stakeholders now it is the responsibility of
management of Premier Inn to render all information regarding task completion to
their stakeholders so as to implement proper strategy (Varelas and Georgopoulos,
2017).
PESTLE Analysis
PESTLE is an analytical framework which is used by the management of business so as
to recognise all the external factors and their impact on the business. In the context of Premier
Inn they are using this framework so as to analyse prominence of external factors and recognise

opportunities in them for business expansion in appropriate way and to understand macro
business environment.
 Political factor: This is very important for hospitality business they admit all the
governmental rules and regulations in their operation which are existed in the country.
This helps them to control and manage their business in effective way. In the context of
UK, the government is very flexible for tourist and other visitors so this is helpful for
premium to set their strategy in such a way that these governmental policies have positive
implications in their business (Cheah, Ho and Li, 2018).
 Economical factor: These factors are associated with GDP value of nation, in context of
UK the country is having high GDP rate and income level but at the same time due to
Brexit many rigidness has been implemented by government. This has created challenged
for premium and their business operations as well.
 Social factor: These factors are associated with buying power of civillions, in context of
UK the country is having high purchasing power and at the same time people are prone to
use hotel services. So this factor is creating opportunities for premium for enhancing their
customer approach and meeting demands of increasing trends of hotel bookings in
considerable manner.
 Technological factor: These factors are associated with using emerging technology in
business so as to stay updated with latest market trends. Technology is helpful for
premium in completing their organisational task in given time frame by which high
efficiency can be attained by them. Similarly this factor is having positive implications on
premium that by using emerging trend such as social media they can collect reviews of
their client in real time manner by which any modification can be introduced in prompt
manner.
 Environmental factor: This factor is related with ecosystem and weather. Hotel services
are booked by visitors at various seasons and UK is known to be favourable places for
hospitality business as weather is pleasant so this is rendering high opportunities for
premium in making high bookings during peak seasons time. (Hauck and et. al., 2016)
 Legal factor: These factors are associated with governmental laws which are required to
be obeyed by business so as to avoid any law suit litigation. UK is having strict laws for

hospitality industry so for premium this is necessary that they put their high emphasize on
their factor so as to boost up their operational efficiency.
Ansoff’s growth matrix
With the help of taking consideration of Ansoff matrix in the business it become easier
for the organisation to understand pros and cons of each expansion method and recognising their
potential strategy among them. From perspective of Premier Inn growth matrix is mention as
below:
 Market penetration: Within this strategy existing products are sold in existing market.
This is the most simple and easy strategy that can be adopted by hospitality business.
Under this strategy Premier Inn may offer discounted services to their customer so as to
become price make and by this they can penetrate their services in local market and
enhance their goodwill as well.
 Market development: This strategy is all about exploring a new market which has not
been served along with existing product offerings. Within this Premier Inn can utilise this
strategy and study geographical areas so as to expand their operation in the market in
which yet they do not have. This is helpful for them to enhance their market serving
along with high customer base (Ariyani and Daryanto, 2018).
 Product development: This strategy involves launching new services in existing market
so as to enhance ease for customer and become market leader in another segment. In this
context Premier Inn may use this strategy and offer affordable package stay for tourist in
order to enhance their sales and get prominent market position as well.
 Diversification: This is the most risky strategy in which new services are launched in a
brand new market. This can be used by Premier Inn in order to enhance their market sixe
along with high services or product diversification.
From the above discussion it can be concluded that for premium the best suitable strategy
could be market development. This helps them to earn more profits and embrace success in
short span of time. Furthermore with the help of market development Premier Inn can build
up robust customer base and enhance their market presence.
SWOT Framework
SWOT is a strategically tool which is used by businesses so as to examine their strengths
and opportunities so as to eliminate their threats and weakness in order to get prominent position

in the market and enhance their market share. SWOT analysis in context of Premier Inn is
mentioned as below:
Strength
 Premier Inn is largest hotel chain of UK
and known for their home like and
comfort stay.
 Premium is giving high support to the
economy of countries as in their
business operations.
Weakness
 Cost of operating is high in case of
premium which creates challenge for
them to compete with their rivals.
 They are having operation at global
level and some of the nations are
having high tax rate which diminishes
their overall profit.
Opportunities
 Some of the developing countries are
proving huge opportunities for
premium to grow their business along
with flexible trade policies.
 Inn current time numbers of tourist are
increasing so this is giving immense
opportunities to premium in expanding
their business to the new era.
Threats
 Due to global presence, rules of
foreign trade are followed by them
which turn to be complex.
 Due to Brexit and recession these
factors are having negative impact on
premium and this is providing
challenge to them for their effective
operations (Tajeddini, Ratten and
Merkle, 2019).
TASK 2
P2 Evaluation of organisational capabilities by implementing appropriate framework
Internal Environment for work is an important aspect that leads management to achieve
their work and goals by developing a fresh new strategy. Moreover, it is important to analyze the
internal work environment to understand the needs of team and formulate a new appropriate
strategy that can lead the work to be done more efficiently and effectively. This evaluation helps
Hotel Premier Inn to carry on its work in effective manner (Heath, 2018). Some frameworks that
are generally used to acknowledge internal work environment are as follows: -
Resource Based View Strategy- According to analysis of Hotel Premier Inn it has been
noticed that they are following resource based view strategy to have better decision making

process. It has also been a great contributor in maintaining their market sustainability.
Hospitality Industry is majorly consisting of Services, which are intangible in nature so their
some part of focus always remains on to make sure all customer needs are satisfied and they
deliver all the services efficiently and effectively in the manner expected with proper cost control
and positive work environment (Bulley, 2016).
VRIO Framework
VRIO is short abbreviation used for 4 terms having their individual meaning those are
Valuable, Rare, Imitable and Organized and it is generally considered as a Strategic tool in major
organizations. Hotel Premier Inn utilizes VRIO strategy to analyse and maintain all its resources
and amenities that plays part in satisfying customer needs and requirements:-
 Valuable Resources: This type of resources includes those, which provide great
advantage to the organization, and considered valuable in terms of success and monetary
terms as well. This generally includes Employees and research department of Hotel
Premier Inn that are involved effectively in satisfying customer needs and requirements.
 Rare Resources: These resources are used as assets by the organization and are not
available easily in the market as and when required. Research department is one of the
fine examples of rare resources for Hotel Premier Inn as they provide time-to-time
market analysis and provides creative ideas to complete all works timely using innovative
techniques.
 Imitable Resources: Services and amenities offered by Hotel Premier Inn to are similar
to the services provided by other hotels in the Hotel Industry which is even mandatory.
The only addition or change to this is that those similar services should be provided in the
creative manner, which might provide you market edge over their competitors. So high
cost imitative services are necessary for services having fast and high quality attributes.
 Organized Resources: To ensure customer satisfaction and cost effective services it is
necessary and mandatory for Hotel Premier Inn to organize and manage all their
resources systematically and efficiently. This will ensure two things for sure one is that
customer will get what they want and expect and organization will be able to manage its
resources efficiently and effectively along with that (Omsa, Abdullah and Jamali, 2017).
With carrying on the above internal work environment analysis and analysis of various type
of resources through VRIO framework for Hotel Premier Inn and hotel industry as an whole

better results can be achieved and effective and efficient strategy can be formulated. It also
plays a vital role in analysing brand value of Hotel Premier Inn and satisfies customer needs and
requirements effectively.
TASK 3
P3 Understand of Porter five force model and its implementation for evaluating competitive
force in the market sector of organisation
With the help of porter five force model market forces can be understood by businesses
which are having high implications. In the context of premium this framework is explained as
under:
 Competition in the hospitality industry: The competitive forces within hospitality
industry are very high that is a composite aspect for premium. This force is creating high
challenges as switching cost for customer is nil so premium is required to introduce
distinctive services so as to get powerful existence within marketplace (Agyapong, Ellis
and Domeher, 2016).
 Potential of new entrants: In hospitality industry government in having high
intervention and at the same time this demands high initial capital outlay. So this force is
having low impact over premium but at the same due to existence of intense competition
premium is required to reduce their functioning cost in order to enhance their
profitability.
 Power of supplier: Within this context supplier power is low due to presence of n
numbers of supplier in the market along with zero switching cost. In the context of
Premier Inn they are having low threat of supplier and this helps them to fulfil market
demand in considerable manner.
 Power of buyers: Within hospitability industry customers are known to be the drivers
and this threat is high as always due of availability of high competitors and zero
switching cost. In the context of premium this power is high and in order to deal with this
they are required to position their brand in a unique manner so as to get sustainability.
 Threat of substitute products: The threat of substitute is high in hospitality industry as
there are so many substitutes in the market which are providing homogenous services. In

order to tackle this Premier Inn is required to make their services differentiated so that to
capture more customer and become market leader (Gürel and Tat, 2017).
TASK 4
P4 Implement of different range of theories, model and concept that devise strategic planning for
organisation
Porter generic strategy
With the help of this strategy various benefits can be obtained by business. In the context
of Premier Inn this aspect is elaborated as under:
 Cost leadership: Cost leadership strategy is utilised by Premier Inn so as to complete
their operational task in low cost. This is helpful for the management in getting high edge
of market and attracts price sensitive customers (Dombrowski, Krenkel and Wullbrandt,
2018).
 Differentiation: Within this strategy management is focused on making their services
differentiated in the marketplace so as to get distinct position. In the context of Premier
Inn tis strategy can be adopted by them which are helpful to add more value to their
business.
 Focus strategy: Within this strategy on a particular narrow aspect whole focus of the
business organisation is drawn in order to get high edge in competitive market. In the
context of Premier Inn within this strategy middle level customers are targeted which
could be highly advantageous for them to expand their market share.
Strategic management plan
Vision: The major mission of Premier Inn is to fulfil their promises so as to get
recognised with distinct identity in the marketplace and obtain high customer loyalty.
Mission: The major mission of the hotel is to offer professional and personal services
which are flexible so as to provide remarkable stay to their customer.
Tactics: In this aspect the major tactic used by Premier Inn is to establish direct
interaction with their customer so as to get proper feedback which could be helpful in modifying
services as per needs of customer. Along with this marketing mix is used by Premier Inn that is
elaborated as under:
Product Premier Inn is known for providing home like services to their

customer and they are adapting high opportunities in the market so as
to get development of their business (Soler and Gémar, 2016).
Price Premier Inn is rendering services of high value and pricing strategy
used by them is premium pricing as they are involved in providing
premiums services.
Place The major focus of Premier Inn is to locate their hotels in city centres,
suburbs and near to airport so as to provide ease to their customer and
enhance their market share.
Promotion After analysing current trend social media strategy is used by them, in
order to promote their product within marketplace. This is helpful for
premium to promote their services at global level with least cost
application (Rothaermel, 2016).
Financial budget
Particular Amount
Start-up capital 20,000
Investment 6,000
Marketing 4,000
Human resources 5,000
Total 35,000
Implementation: At this stage all the strategies are reviewed by management, financial
aspect is having high implications in organisation as this helps the business to utilise procured
resources in effective manner. Finance budget is essential for completing all the business
activities within allocated cost so as to avoid any fund shortage. In the context of premium
various performance indices are used by them such as KPI and benchmarking so as to get to
know about effectiveness of the project.

CONCLUSION
Form the above report it can be concluded that business strategy is having high
implications on business and this play effective role in attaining organisational goals and
objectives. The major role of business strategy is to utilise procured resources in most effective
manner so as to get high end over success in minimum time. With the help of porter five force
models, VRIO, SWOT, PESTLE internal and external environmental capabilities are examined
ad utilised in considerable manner. At last by understanding macro and micro environment
desired results are received by business in order to have effective control over business (Hitt,
Ireland and Hoskisson, 2016).

REFERENCES
Books and Journal
Agyapong, A., Ellis, F. and Domeher, D., 2016. Competitive strategy and performance of family
businesses: moderating effect of managerial and innovative capabilities. Journal of
Small Business & Entrepreneurship. 28(6). pp.449-477.
Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO
Framework: Development of Scale for Resource and Capabilities Organization (Case
Study: XYZ Company Animal Feed Business Unit). Asian Business Research
Journal, 3, pp.9-14
Bulley, D., 2016. Migration, ethics and power: spaces of hospitality in international politics.
Sage.
Cheah, S., Ho, Y.P. and Li, S., 2018. Business model innovation for sustainable performance in
retail and hospitality industries. Sustainability. 10(11). p.3952
Dombrowski, U., Krenkel, P. and Wullbrandt, J., 2018. Strategic Positioning of Production
within the Generic Competitive Strategies. Procedia CIRP, 72, pp.1196-1201.
González-Rodríguez and et. al., 2018. Revisiting the link between business strategy and
performance: Evidence from hotels. International Journal of Hospitality
Management, 72, pp.21-31.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research. 10(51).
Hauck and et. al., 2016. Stakeholder involvement in ecosystem service decision-making and
research. In OpenNESS ecosystem services reference book/Potschin, M.[edit.]; et
al. (pp. 1-5).
Heath, R.L., 2018. Issues management. The International Encyclopedia of Strategic
Communication, pp.1-15.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and cases:
Competitiveness and globalization. Cengage Learning.
Omsa, S., Abdullah, I.H. and Jamali, H., 2017. Five Competitive Forces Model and the
Implementation of Porter’s Generic Strategies to Gain Firm Performances.
Prud’homme, B. and Raymond, L., 2016. Implementation of sustainable development practices
in the hospitality industry. International Journal of Contemporary Hospitality
Management.
Rothaermel, F.T., 2016. Strategic management: concepts (Vol. 2). McGraw-Hill Education.
Soler, I.P. and Gémar, G., 2016. The impact of family business strategies on hotel room
prices. European Journal of Family Business. 6(1). pp.54-61.
Tajeddini, K., Ratten, V. and Merkle, T. eds., 2019. Tourism, Hospitality and Digital
Transformation: Strategic Management Aspects. Routledge.
Varelas, S. and Georgopoulos, N., 2017. Porter’s competitive forces in the modern globalized
hospitality sector–the case of a Greek tourism destination. J Tour Res, 18, pp.121-131