Hospitality Business Strategy

This document discusses the application of frameworks, analysis of macro environment, internal environment and capabilities, and the use of Porter's Five Forces model in the hospitality industry. It focuses on the business strategy of the Savoy hotel and its impact on competition and market trends.

Unit 41 - Hospitality
Business Strategy

Table of Contents
INTRODUCTION.....................................................................................................................................2
P1 Apply frameworks, analyse impact and influence of macro environment on given organisation.3
P2 Examine internal environment and capabilities of a given hospitality organisation.....................4
P3 Apply Porter Five force model in relevance with given organisation............................................7
P4 Apply concept/ frameworks for strategic planning in relevance with organisation......................8
CONCLUSION.......................................................................................................................................10
REFERENCES.........................................................................................................................................12
Books & Journal:..............................................................................................................................12

INTRODUCTION
Business strategy is used by many organisations to take competitive benfit in market.
In market, competition is increasing at rapid scale & it is not possible for enterprise to survive
without using or adopting strategies or tactics. In hospitality sector, many scales of
competitors have been increasing and many firms are using different types of strategies. The
Savoy, a famous 5 star hotel on headquartered in UK. Hotel is famous for its panoramic view
of river across Savoy place and Thames Embankment. This report comprises of PESTEL
Analysis, SWOT, porter five force models and range of theories, concepts and models. With
assist of business strategy it becomes easier for enterprise to run their business smoothly &
effectively. It is wider and broader concept which is to be used and understood in appropriate
way.
P1 Apply frameworks, analyse impact and influence of macro environment on given
organisation
Environment in business affects the productivity and progress at deeper level. It is
crucial to implement strategy for business so that it is easy to run functions and operations
properly. So, it is essential to be aware of market and trends so that changes are adopted in
management effectively. The Savoy hotel is also get influenced by these macro environment
factors and to analyse them firm use PESTEL Analysis.
PESTEL Analysis
This is tool which is adopted by enterprise to analyse and examine impact of elements
so that decision making is done properly. It is time consuming but is used by many firms so
that they carry out their activities in proper manner. Also, when using this it is responsibility
of manager to make ensures that tool is being used appropriate manner (Boella, 2019). So,
main aim of using this model is to analyse the market and be aware about market situations

and changes so that resources, manpower and capital is used in appropriate way. So, it
includes various elements which are discussed below-
Political factors- These are those in which labour law, environment law, trade
restrictions tec. are involved. It depicts the degree up to which involvement of government in
economy is present. In this, The Savoy is affected by this element such as increase of labour
and higher taxes have deep impact on their business and slow down their business. These are
controllable and non- controllable factors depending upon the level of situation (van der
Meulen, 2018).
Economic factors- In this, it includes factors such as inflation and deflation,
unemployment, interest rates etc. These are non-controllable elements which and slow down
the growth & overall develop of business. Implication of BREXIT has changed the industry
sector and is creating a problem for The Savoy to access the global market. Also, as they
import many resources from outside the country, interest rate is rising at rapid scale
(González-Rodríguez, 2018).
Social factors- Further comes the social elements which includes population, age
distribution, culture etc. They also have impact on business because in hospitality industry
different types of customers visits the hotel and it is crucial to analyse the market and
understand all what stimulates customers to visit hotels. In relevance with chosen firm, they
serve variety of services and dish such as American, Italian, Chinese etc. so that guests are
able to select according to the choice of preference (Rhou, 2020).
Technological- In this competitive world, importance of technology has increased
and all firms are using technology in their firm. It includes usage of advanced tools and
devices, software, hardware etc. Augmented reality is also been used by many entities to use
resources and products in effective way. In relevance with selected entity, they use online
management system and as chances of frauds and digital theft are rising, it is necessary for
them to update their technology and make it safe as well as secure.
Environmental- This comprises of climate changes, pollution, weather, waste
management. Many companies put them priority in business so that they perform social
responsibility properly. These elements are plays crucial role in growth of firm. In context to
The Savoy, they need to be more aware about such factors because it might increase their
goodwill in market.
Legal- This comprises of laws, rules, regulations, contracts, agreement etc. In
hospitality industry, legal factors exist and have deep impact on business productivity.
Neglecting these might cause a huge problem for overall development of enterprise. In
relevance with The Savoy, legal department of hotel make ensures that activities, operations,

agreements or contracts are being carried out after under legal and government
considerations.
So, the above paragraph depicts that external environment affects that business at
deeper level. It helps the business to prevent from external threats and conflicts or assist in
understanding them in effective way. Moreover, through macro environment factors new
ideas/ thoughts are also generated which are then adopted for solving problems.
P2 Examine internal environment, capabilities of a given hospitality organisation
Internal environment are also known as micro environment and which are crucial for
business to examine those factors in appropriate way. To analyse these elements, enterprise
adopts the SWOT Analysis. Market is wider and firm need to be aware about trends and
factors which affect the business activities.
SWOT Analysis- It is tool which is adopted by corporation to analyse and examine
their internal capabilities so that correct decisions are taken in future perspectives. Also, to
implement it in proper way it is also essential to have accurate and reliable information about
the market & competitors so that problems do not occur in near future. In context to The
Savoy, they also this tool and has been discussed below-
STRENGTH
 Main strength of hotel is that it is old
and famous hotel in London which
offers panoramic view (Scott, 2016).
 Another one is that it has goodwill in
market and which assists them to
acquire large customer ratio.
 Further, customer market share of
hotel is high and also they have
strong base.
WEAKNESS
 The hotel provides ample number of
services and dishes but do not have
efficient skilled staff.
 Another weakness is that labour cost
in hospitality industry is increasing
which makes growth of firm slow
(Masih, 2019).
 Also, many other hotels are there and
say local hotels which deals in same
services and dishes which makes it
difficult for enterprise to survive in
market.

 Because of implications of BREXIT,
they face many problems when
expanding the business.
OPPORTUNITY
 The Savoy Hotel has opportunity to
be joined up with other businesses or
hotels to expand their activities in
global market.
 With increased demand of
panoramic view by customers,
chosen firm also has opportunity to
increase their price of service which
can enhance their profitability too.
THREAT
 As the competition is increasing, they
are on the target of other hotels which
are planning to make them down.
 Further, due to current situation of
COVID19, tourism and hospitality
sector has gone down and this has
affected profit as well as of firm &
also it will take time to get back in
normal state.
 Taste and demands of people are
changing drastically with changing
environment and with this firm might
have to change their infrastructure.
SWOT Analysis is essential for business as it helps them to make decisions and
implement strategies in appropriate way. It is necessary to have proper knowledge of
appropriate model which are beneficial for business.
VRIO Analysis- Another model which is used by firm for determining the internal
capability is VRIO which helps entity to evaluate their resources proper way. In context to
The Savoy they also use this analysis so that they can use their resources in optimum way.
With help of this tool, firm prepare strategies and tactics in easier way. This tool includes
several elements are mentioned below-
Valuable- The first factor is valuable in which firm identifies the value of their
resources that which resource is most valuable for enterprise. In relation with The Savoy,
there use their valuable resource in such a manner that they achieve goals as well as
objectives in effective way. Their valuable resource is their staff and employees.

Rare- In this, how unique is resources are analysed and accordingly they are used. It
is crucial to identify the rareness of valuable resources so that they are used in proper manner.
In relation with chosen hotel, by examining this they strengthen their base and value in
market. Rare the resource is, better the price and value it will have in market (Aksu, 2019).
Imitable- Many firms are present with same products and purpose. Imitable is
defined as degree of making copy of products, design etc. Thus, it is mostly done when
market of same product is wider. In relevance with The Savoy, hospitality industry is
increasing and there local and medium hotels which can intimates the firm strategies. It is
responsibility of manager to make ensures that if someone intimates their resources or
products, they take legal actions (Yadav, 2019).
Organised- This specifies that weather company has organised system or not.
Organisations are able to achieve goals as well as objectives only when there well organised
management system. It is important to have organised management so that it become easy for
them to carry out activities and operations effectively. In relevance with selected brand, they
have an organised structure and which helps them to manage and maintain discipline as well
as work is done in smooth way.
So, explained above matter states that having knowledge about market is essential and
it is necessary for every enterprise to adopt them so that progress and performance level of
entity increases. Furthermore, it also become possible for them to expand their activities,
functions & operations as such frameworks also help in decision making.
P3 Apply Porter Five force model in relevance with given organisation
Competition ion market is increasing at rapid scale and it is becoming difficult for
firm to survive. To face their competitor and rivals, many organisations uses different types
of tools and models so that they deal with challenging task and situation. In hospitality
industry, it has become essential to be take competitive advantage as more new businesses are
coming up and introducing new innovations. Analysing the degree of competition is also
crucial so that strategies are adopted and implemented accordingly. A firm without
implementing strategies cannot survive in market (Cleberg, 2019).
In context of The Savoy hotel, they also use different models for implanting strategies
and examining tactics such as Porter Five Force Models. It is framework which is used by
entities to examine the level of competition in a specific sector. To conduct this, accurate

credentials is required regarding the market and rivalries so that correct measures are
adopted. Through Porter Five Force model, it is easy to implement effective strategies. This
includes several forces which have been mentioned below-
Threat of entry- In hospitality industry, it chain of hotels is wider and is till
widening. Threat of entry is basically high when there are less government rules and
regulations, market is small, customers are many and sellers are less, etc. are some of the
main factors which depicts that new entry affects existing business at deeper scale. In
relation with The Savoy, there are many local restaurants and hotels as well as street shops
are there which provide same quality of foods and dishes at affordable prices. This affects the
sales and profit of company at larger scale (Schawel, 2018).
Bargaining power of buyers- Then comes the buyers which also have a high power
when suppliers are many and buyers are less, switching scale is frequently dynamic, numbers
of substitutes are present or buyers are sensitive to price. Mostly, buyers often demands
bargaining power so that they get products or materials at affordable rate. In relation with
chosen firm, they keep their bargaining power at moderate level so that relationship is
maintained in market with vendors. Furthermore, with an increase in competition leads to
have low bargaining power in some of the areas.
Bargaining power of Suppliers- Vendors are also important part of business because
they are the sources through which customers receives products and goods. Suppliers also
wish to keep their bargaining power high with aim of providing low quality of product to
buyers and gaining profit at higher scale. Power is high when buyers are less, resource is rare,
etc. It is crucial to have positive relationship with suppliers because they help firm to
arranging the necessary resources. Thus, selected hotel manager assures that suitable supplier
is chosen for further process. They select the vendors on the basis of their goodwill, loyalty
and attitude.
Competition rivalry- Further arise the competition rivalry in a specific sector. In
hospitality, competition rivalry is increasing and power is also high. In UK, 28% profit. In
generated via hospitality as well as tourism industry rivalry ad competition both are
increasing at rapid scale. In UK, chain of hotel has raised that competition rivalry of business.
In relevance with The Savoy, they also have many competitors like The Ritz, Plaza etc. This
is the main reason why every entity implements strategies as well as tactic (Vargas-
Hernández, 2019).

Threat of substitutes- A substitute is defined as replacement of good or products
with another one with same specifications. As the new businesses are entering, threat of new
substitutes is also enhancing which has affected sales as well as profitability of firm.
Customers switch easily when they find relatively more suitable products at affordable prices.
Moreover, this forces hotel to expand their product line and with a broader level. Also, it is
becoming difficult for them to understand the dynamic change of need and requirement of
customers. To deal with this situation, selected hotel is extending theirs service and dish line
so that end users have variety of operations and do not switch to other (Loredana, 2016).
Thus, analysing of discussed matter shows that competitive advantage becomes easier
to acquire with help of appropriate tools and frameworks. So, going through the above
specified Porter Five force states that there are some forces in market which has both
negative and positive impact on business and are to be considered as crucial because they
also help in taking competitive advantage in this era of competition.
P4 Use frameworks for strategic planning in relevance with enterprise
In business, is necessary to implement strategic planning for higher growth as well as
well as overall development. It is defined as activity or process in which firm strengthen their
position, expand their operations and make ensure that everyone in firm is focused towards
achievement of goals as well as objectives.
Vision- Main vision of company is to access the global market.
Mission- Mission of firm is to provide a total satisfaction to customers by providing
them with quality of services.
Objectives - To deliver acquire the market share growth and increase sales.
With help strategic planning, it becomes easier to run business and take decisions
effectively. Many firms also use tools to implement strategy such as Ansoff Matrix. It is
widely used for implementing strategies and adopting them within in a management.
Ansoff Matrix
It is tool which is adopted by many firms to plan & prepare strategies for the business
growth in market. Through this model, it guides corporation to select which type of strategy
which can give more profit and high internal rate of return. In this, it is divided into four
quadrants which is discussed below-

Product development- This stage reflects that in existing market, new product is
developed. When new product is launched in market, proper research is conducted which shows that
whether to introduce new product or not. Firm introduce new product when they wish to extend their
line or sales of that product is good. In relevance with The Savoy, they have introduced new services
in existing market such as they are planning to introduce Google bots to hotel to take orders from
customer.
Market development- This specifies that introduce of new market with existing
product for business. In this aspect, it is mostly used to gain more growth in customer ratio.
In this, Risk associated with this is high because market is unknown and chances of problems
and negative result is more (Indartono, 2017).
Market Penetration- This is safest aspects as in this existing product is used for
existing market. In this, main motive is to understand and maintain the changing need as well
as demands of customers. In relevance with selected hotel, they can adopt this strategy as for
development and larger market share growth of customers (Bocken, 2020)
Diversification- Then it introduces new product into new market. Risk associated with this is
relatively high because in this market is uncertain and product is results in that market are also not
known. This type is strategy is mostly used by those entities who are financially stabled and do not
have to worry about loss or any problem if occur. Thus, in relation The Savoy, it is not effective
strategy for them to use this one.
After a brief examining of above paragraph, it is stated that strategic planning is
important for business to adopt suitable strategy for entity. Thus, Ansoff matrix has been
explained so that it becomes easy for hotel to adopt the most appropriate option. It is duty of
manager to make ensures that all strategies are carefully examined and then which is
beneficial for corporation is used appropriately.

CONCLUSION
After analysis of above report, it is concluded that in hospitality, business strategy
plays crucial role. With hep of business strategy, firm achieve goals and objectives in most
effective manner. Also, models, tools, and frameworks are to be used in such way that results
are positive and problems or conflicts do not occur. Implementing business strategy is not
easy and requires skills as well as knowledge and high level of expertise of a particular field.

REFERENCES
Books & Journal:
van der Meulen, 2018. Strategic sourcing and the relation between contribution to corporate
startegy and sustainable development.
Boella, 2019.Human resource management in the hospitality industry: A guide to best
practice. Routledge.
González-Rodríguez, 2018. Revisiting the link between business strategy and performance:
Evidence from hotels.International Journal of Hospitality Management,72, pp.21-31.
Rhou, 2020. A review of the business case for CSR in the hospitality industry.International
Journal of Hospitality Management,84, p.102330.
Scott, 2016. Strategies for retaining employees in the hospitality industry.

Li, 2019. Capital structure in the hospitality industry: The role of the asset-light and fee-
oriented strategy.Tourism Management,70, pp.124-133.
Paramadita, 2019. Using PESTEL Framework to Analyze User-Generated Content Usage on
Social Media: The Case of Indonesian Tourism and Travelling Business on
Instagram. In The 1st Workshop on Multimedia Education, Learning, Assessment and
its Implementation in Game and Gamification in conjunction with COMDEV 2018.
European Alliance for Innovation (EAI).
Masih, 2019. Market Capturing and Business Expansion Strategy for Gluten-Free Foods in
India and USA Using PESTEL Model.Agricultural Sciences,10(02), p.202.
Aksu, 2019. Development of Health Tourism in Turkey: SWOT Analysis of Antalya
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Yadav, 2019. SWOT Analysis of Micro Entrepreneurship and Start-ups in
Haryana.International Journal of Business and Economics Research,8(6), p.399.
Cleberg, 2019. Strategic Success: The Ansoff Matrix vs. The Balanced Scorecard.
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Wiesbaden.
Loredana, 2016. The Use Of Ansoff Matrix In The Field Of Business. InMATEC Web of
Conferences(Vol. 44, p. 01006).
Vargas-Hernández, 2019. The Link between a Firm´ s Internal Characteristics and
Performance: GPTW & VRIO Dimension Analysis.REBRAE,12(1), pp.19-30.
Indartono, 2017. VRIO and THES based development of university competitive advantage
model in formulating university strategic plan.International Information Institute
(Tokyo). Information,20(10A), pp.7275-7283.
Bocken, 2020. Sufficiency Business Strategies in the Food Industry—The Case of
Oatly.Sustainability,12(3), p.824.