Unit 41 - Hospitality Business Strategy

Hospitality Business
strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1 Using different frameworks examine the impact of macro environment .........................3
TASK 2............................................................................................................................................5
P2 Evaluate internal environment and capabilities of enterprises..........................................5
TASK 3............................................................................................................................................7
P3 Use Porter Five force model in relevance with organisation............................................7
TASK 4............................................................................................................................................9
P4 Apply concept/ frameworks for strategic planning in relevance with organisation .........9
CONCLUSION..............................................................................................................................10
.......................................................................................................................................................11
REFERENCES..............................................................................................................................12
BOOKS & JOURNAL.........................................................................................................12

INTRODUCTION
Business strategy is known as process for managing the strategies and plans of an organisation in
order to maintain competitive advantage within market. It is very important for an organisation
to analyse various factors before launching any new product or service within market. Several
decisions are made within companies for managing work and proper manner and analysing the
success of the company. The following report will provide information about business strategy
within hospitality industry. The organisation chosen for completing this report is Shangri-La
hotels and resorts. This is an Asian hospitality organisation which provides services across the
world. The headquarters of this hotel group is in Hong Kong. This hotel caters to the luxury
segment in Asia Pacific which provides services to customers by operating more than 90 hotels
across the world. This report will include various models of business that will help in managing
the strategic development of company. There is pestel analysis, SWOT analysis and Ansoff
matrix which will provide help in in understanding the business strategy effectively.
TASK 1
P1 Using different frameworks examine the impact of macro environment
Pestel analysis is defined as the strategic tool which is used for managing the success within
organisation by analysing the various factors that affect any organisation in attaining profitability
within market (Ahmad, Bakar, and Ahmad, 2018). There are various elements within the pestel
analysis that are used for determining the success of Shangri-La hotels and resorts within market.
Pestel analysis of this hotel chain is described below – Political factors - these are known as various rules and regulations given by Government
while operating organisation in any segment. there are various factors that affect
hospitality organisations to operate within market. It is important for management of
Shangri-La hotels and resorts to manage the work in proper manner and analyse that it is
essential for the management to work effectively and achieve organisational goals. the
various political factors that can affect Shangri-La hotels and resorts include terrorism,
political certainty, etc. Hospitality industry has to analyse the environment and
surrounding in which services are provided to customers. a case of small terror attack can

also influence hospitality organisation in negative manner. The ISIS has been increasing
nowadays and frequency of terror attacks across the world have been a threat to travellers
while they are enjoying at their destination countries (Alegre, and Berbegal-Mirabent,
2016). Another factor that affects a hospitality organisation like Shangri la hotel is
political certainty. This provides business of the region which has to be e stable for
increasing the demand of service. When the hotel is situated at a good locality and region
with stable climate in which more investors can invest your money will be a good choice
for the organisation. It is seen that customers are more prone for corporate meetings as
well as corporate travels file using five star hotel services provided by Shangri-La hotels
and resorts. The main reasons for hospitality industry to increase their profit is to provide
services where there is political certainty. US President Donald Trump provided trade
protectionist policy due to which it was very difficult for the hospitality organisations to
work at global level. Also, after this scenario of brexit, it was not easy e for the
companies to operate across the globe in in proper manner.in context of Shangri-La
hotels and resorts, there is political table situation in Asia Pacific region so there is no
problem for this organisation to flourish and increase the market share. Economic factors - these are concerned with economic elements of various countries in
which city hospitality organisation is providing services. It is essential for the
management of company to evaluate that it is operating in in growing economy as it will
contribute to organisation’s profit gradually. There are not foreign exchange gains
because of the depreciation within currency. Shangri la hotel operates in various
countries and apart from Japan and hongkong, the countries in which this hotel is
providing services, currency has been depreciated against US dollars. This negatively
impacted balance sheet of this organisation. While operating business, it is very important
to analyse the global interest rates. If there is an favourable global interest rates, that is
because of the increased protectionist policies then this effects business operations of
Shangri-La hotels and resorts. Social factors - these are the elements which are associated with needs and demands of
customers while providing them services. Social factors affect the hospitality
organisations in both manners positive and negative (Boella, and Goss-Turner, 2019).
There is reduction in overnight corporate stays as well as corporate meetings. This has

minimise the opportunity for Shangri-La hotel to increase the profitability. There is
economic uncertainty which has resulted in in reduced number of corporate meetings
within Shangri-La hotel. This organisation is involved in managing various corporate
meetings. As these meetings are minimised, the business of Shangri-La hotel is affected.
There is increase in in demand of providing services which provide feel of own home by
the customers. Technological Factor: Technology is an essential factor that affects the operations of any
organisation. It is important for the company that all work is done properly by using the
latest technology so that customers are happy. In context of the Shangri-La Hotels and
resorts, the management is using new and latest technology for providing service so that
they can increase the number of loyal customers. Environmental Factor: It involves climatic and weather condition which enforces both
favourable and adverse impact on growth of organisation. Due to increase in fuel prices,
it enhances the cost of travel and Shangri-La profit is affected. On the other hand, they
provide eco- friendly services to its customer which increase standard of living of people
of society.
 Legal Factor: Legal factor consists of various regulations and rules followed by the
organisation to work within the organisation effectively. It is very important for the
company to manage the work properly so that it is easy to work effectively and achieve
the organisational goals.
TASK 2
P2 Evaluate internal environment and capabilities of enterprises
SWOT Analysis is the framework which is used for assessing internal environment in
order to track situations and trends occurs in the market. It determines strength, opportunities,
weaknesses as well as threat which are going to be mentioned below:
SWOT Analysis
STRENGTH WEAKNESS
 Shangri la hotel is operating within
hospitality industry since many years
and it is a well-established brand.
 The main weakness of Shangri-La hotel
and resort is that however it is operating
globally but it is famous only in Asia

 This hotel organisation uses best
strategy for managing the
organisational structure and making
effective decisions for success of
company (Chen, 2019).
 Management of Shangri-La hotels
and resorts are visionary forecasting
and planning
Pacific region.
OPPORTUNITIES THREAT
 Shangri-La hotels and resorts are
doing the borrowing of company’s
profit in US dollars and Hong Kong
dollars. In case of economic
uncertainty, this organisation can
swap the policies and protect fund for
the group.
 This hotel organisation renovates
older and profitable hotels and
reposition them effectively in order
to enhance the profits. This will
require inducing of more capital
expenditure.
 There is opportunity for investing
into renovation of various old hotels.
 The threat for Shangri-La hotel and
resort is growing competition among
the hospitality industry within America
and Europe.
 As there is economic downturn on the
executive travelling, thus it is not easy
to manage the work effectively
 Global interest rate is becoming
unfavourable day by day which is threat
to Shangri la finance.
VRIO analysis is used by the organisations in order to assess various opportunities and
resources which can be used within the company for increasing the competitive advantage. This
model provides a comprehensive image which can be used while taking several decisions
regarding business operations. In context of the hospitality industry, this model will be useful for

managing the work in proper manner and analysing what are the valuable resources within the
company.
 Valuable - these are known as the resources which are used for providing value to the
customers. These are defined as the resources which are helpful in enhancing growth and
development of the organisation. It is essential for Shangri-La hotel and resort to
maximize profit and for doing this, it is important for the management to use the
valuable resources effectively e and manage customer experience properly.
 Rare – these include their resources within the company that are unique as well as
important for the operation of business processes. There are various rare resources which
cannot be copied from any other competitive organisation in market (Cheon,and Cheon,
2016). The Shangri-La hotel and resort has its own way of attracting customers and
increasing the market share within hospitality sector. The way of functioning like this
organisation is rare.
 Imitable - according to this factor, it is that resource which cannot be imitable by any
competitive organisation. It is important for the Shangri-La hotel that it is hiring talented
and skilled staff and providing them training so that they become effective for working
within the organisation and increasing profits of the company.
 Organised - these are the resources which provides information about managing of
business operations and activities effectively by analysing the strategies and plans
properly. This is seen that executives of Shangri la hotel develop effective strategies that
can be used for maximizing profits of the company.
It is analysed from the above analysis that Shangri la hotel has various opportunities to
expand the market share and enter into different segment where it can make more profit. The
main factor which will be helpful in managing business processes is to utilise the resources in
effective manner.
TASK 3
P3 Use Porter Five force model in relevance with organisation
The porter's five force analysis model was developed by Michael porter in the year 1979.
According to this model, there are five forces within market that affect the function and

operational efficiency of any organisation (Köseoglu, and et.al, 2019). In context of the
hospitality organisation naming Shangri-La hotels and resorts, the porter’s five forces analysis is
mentioned below Threat of new entrants – The threat of new entrant for Shangri La hotel is very high.
There is need for this hotel to develop effective strategies that will lead to increase
customer satisfaction level. It is very easy to enter into hospitality industry and thus,
Shangri La hotel has to emphasise upon managing good working. Customers are always
looking for differentiated products. Hence, it is easy for managing the new entrants as a
weak force. If any new entrant is there within the hospitality industry, the assess to
distribution network Is very easy. There are various government policies which have to
be adopted by the organisations to manage the business operations properly Bargaining power of suppliers - Shangri-La hotels and resorts have adopted service
leadership in order to purchase raw materials from suppliers. The bargaining power of
suppliers within hospitality industry is very low. If the Shangri-La hotels and resort is not
getting affordable price from one supplier, then they have opportunity to shift to another
supplier. There can be multiple suppliers within supply chain of Shangri-La hotels and
resorts. These are operating in various geographical locations and hence, the number of
suppliers varies. Bargaining power of buyers- in context of the hospitality industry, the power of buyers
is low. The main objective of hotel organisations is to provide effective services to
customers and manage the working in effective manner. In case of Shangri-La hotels and
resorts, it is very important to develop large customer base by providing them effective
services. This hotel provides all facilities and luxurious services to customers and in
return customers have to pay appropriate amount for that service. This hotel does not
compromise with services and hence, it takes effective amount for the provided service. Threat of substitute product or service - there are few substitute within the hospitality
industry. Shangri-La hotels and resorts provide effective services to two people and in
return they get attractive price (Marpaung, Pratomo, and Wicaksono, 2019). This hotel
chain can differentiate in products. This will provide an opportunity to see products as
unique and customers will not shift towards substitute product. Unique services are
provided to the customers by analysing the demands and needs in effective manner.

 Competitive rivalry - Shangri-La hotels and resorts are having good competitive rivalry
in hospitality industry. This hotel is having strong strategies that help it to enhance
market share and have good competitive advantage. The main aspect in which hospitality
industry depends is providing quality service and Shangri-La hotels and resorts are
properly managing their services by providing quality products and innovative services.
Shangri-La hotel and resort are managing customer base by increasing the effective
services.
TASK 4
P4 Apply concept/ frameworks for strategic planning in relevance with organisation
Igor Ansoff developed Ansoff matrix and it stated that current situation of a company
must be innovative so that there is profit earned. This matrix provides different ways for growing
several ideas and managing growth of company's products and services. Shangri La hotel is
having big opportunity in market and it will be beneficial for this hotel to penetrate into new
markets and increase market ratio. The concept of strategic planning is defined as the process by
which companies increase their competitive advantage within market. It is essential for
organisations to to manage the the achievement of goals and objectives effectively so that it it is
easy for the company to enhance the market share. In context of Shangri-La hotel, ansoff matrix
is described below –
 Market penetration - according to this strategy, the organisation can emphasize upon
selling existing product within existing market. Shangri la hotel and resorts are focusing
upon providing present facilities and services to the the customer base. They offer various
services like gym, swimming pool, 12, accommodation, gaming zone, banquet,etc. This
organisation is involved in in providing effective services to the customers so that it is
easy to to enhance the market share.
 Market development - according to this strategy, the business organisation is involved in
selling existing product in a new market. This is a risk full strategy for Shangri La hotel
as existing product or service is is launched within an unexplored region. There are
various promotional techniques like publicity, advertisement and sponsorship which are
useful for managing work within innovative market. In context of Shangri-La hotel, It is

seen that market development strategy can be used for enhancing the market share in in
new market place.
 Product development - in context of Shangri-La hotel, product development strategy is
one in which new or innovative product or service can be e introduced in existing market
and it is high in this hotel. This is very useful for the organisation to increase the loyal
customers (Okumus, and et.al 2019). When a new or innovative product or service is
provided to the customers, it is easy for the company to manage the success of
organisation.
 Diversification - according to this strategy, new and innovative products are sold in new
market and there is high risk strategy. The main objective of this strategy is to to increase
the number of customers by attracting them through innovative service. There is need of
involving into good advertising and promotions for working in this strategy.
It is analysed from the above strategies that for Shangri-La hotels and resorts, the best
strategy which can be used for enhancing the market share is diversification. In context of this
strategy, this hotel chain can increase the customer base as well as market share.
Strategic management plan is defined as the basic process for communicating in effective
manner and achieving the organisational goals in specified time frame. This management plan is
helpful for analysing and evaluating the strategy used by the company and what are the
limitations for this type of strategy or plan. Shangri la hotel is adopting diversification strategy
and it is providing new and innovative services to customers. This is helpful for managing
competitive advantage and ruling over market by providing new innovative service.
 Vision of the organisation - Shangri-La hotel and resort wants to be the most successful
organisation within the hospitality industry across the world.
 Mission of the organisation - mission statement of Shangri-La hotels and resorts is to to
enhance a market share by providing quality services and products to customers.
 Organisational strategy – Shangri la hotel and resorts is providing diversified products
and services to customers in order to achieve the organisational goals.
 Implementation - this is very important for an organisation like Shangri-La hotel and
resort to effectively implement the plants which is useful for enhancing market share.
 Evaluation - it is very important for Shangri-La hotel to validate the implementation of
strategic planning so that it is easy to evaluate success of the new strategic plan.

Strategic management plan
Management plan is basically a written document that consists of different Strategies and
objective that can be used for communication of the overall growth plan of organization
presently below discuss is the strategic management plan of Shangri La Hotel
Objectives:
1) Achievement of higher growth revenue 10% by the year ending 2020
Strategies
STP Analysis:
There are some of the strategies that can be adopted and for this STP analysis has been done:
Segmentation:
Total is segmenting the target Market by use of Geographic and psycho graphic method where
they are dividing their place of customers on the basis of their location and certain similar
characteristics that the process.
Targeting:
The management department of Hayat Hotel have decided to target their customers who are
having high financial competence as according to the quality of the services they have kept the
price is slightly higher and this is going to help them in higher revenue.
Positioning:
This is a strategy that is used for attainment of a significant position in the market as various
promotional tools and marketing campaigns will be adopted by Shangri La hotels for the purpose
of targeting their decided segment of market.
Tactics:
There are some of the taxes that can be used for the purpose of achievement of highest such as
there is requirement of marketing main as a tool to understand what are basic aspects that can
help in long-term sustainability for Shangri La hotels and achievement of organization objective.

CONCLUSION
From the above discussion, it is analysed that within hospitality industry, it is very important
for the organisations to manage the business processes effectively by analysing the external and
internal factors of business environment. These are helpful for managing the s work properly and
analysing different ways for using these strategies that can be e used for gaining competitive
advantage. Pestel and SWOT analysis Shangri la hotel reflects that there are various
opportunities within this hotel chain to expand the market share in different countries. VRIO
framework and ansoff matrix provides information about the strategies and resources which can
be utilised effectively for increasing the customer base as well as market share.

REFERENCES
BOOKS & JOURNAL
Ahmad, S.Z., Bakar, A.R.A. and Ahmad, N., 2018. An evaluation of teaching methods of
entrepreneurship in hospitality and tourism programs. The International Journal of
Management Education, 16(1), pp.14-25.
Alegre, I. and Berbegal-Mirabent, J., 2016. Social innovation success factors: hospitality and
tourism social enterprises. International Journal of Contemporary Hospitality
Management.
Boella, M.J. and Goss-Turner, S., 2019. Human resource management in the hospitality
industry: A guide to best practice. Routledge.
Chen, L.F., 2019. Hotel chain affiliation as an environmental performance strategy for luxury
hotels. International Journal of Hospitality Management, 77, pp.1-6.
Cheon, G. and Cheon, Y., 2016. A Study of the Relationships among Hospitality, Corporate
Social Responsibility, Quality & Price Value, and Customer Satisfaction: Focused on
the Five Star Hotel. International Journal of u-and e-Service, Science and
Technology, 9(10), pp.209-222.
Köseoglu, M.A., and et.al, 2019. Strategic Decision Tools and Organizational Performance in
the Hotel Industry. Journal of China Tourism Research, 15(1), pp.15-32.
Marpaung, A.T., Pratomo, A. and Wicaksono, A., 2019. Implementation of SWOT Analysis in
Determining Competitive Strategy On Catering and Conference Services in Hotels.
Okumus, F., and et.al 2019. Strategic management for hospitality and tourism. Routledge.
Online
Shangri-La.2020.[Online].Available through:<https://www.shangri-la.com/>