Hospitality Business Strategy

This report analyzes the impact of macro-environment factors, internal environment, and Porter's five forces on the business strategy of Rosewood Hotels & Resorts in the hospitality industry. It explores the opportunities and threats presented by political, economic, social, technological, environmental, and legal factors. The report also assesses the strengths, weaknesses, opportunities, and threats of the organization's internal environment using SWOT and VRIO analysis. Additionally, it examines the power of the five forces in the industry, including the threat of new entrants, bargaining power of suppliers and buyers, threat of substitute products, and rivalry among existing competitors.

Hospitality
Business
Strategy

Contents
INTRODUCTION...........................................................................................................................................3
Part A...........................................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1: Macro-environment factors...............................................................................................................3
TASK 2..........................................................................................................................................................5
P2: Internal environment.........................................................................................................................5
TASK 3..........................................................................................................................................................7
P3: Porter’s five forces.............................................................................................................................7
Part B...........................................................................................................................................................8
P4: Application of a range of theories, concepts and models..................................................................8
CONCLUSION.............................................................................................................................................10
REFERENCES..............................................................................................................................................12

INTRODUCTION
The relationship which is shared between the guest and the service provider is known as
hospitality in which the guest pays a specific amount to be able to avail the service (Ahmad,
Bakar and Ahmad, 2018). Business Strategy is framed by organizations so that they are able to
frame methods to get ahead of their various competitors who are operating within the market.
This is much required by the hospitality organizations nowadays because they need a specific
strategy for getting a competitive edge within the market. For this report, Rosewood Hotels &
Resorts has been chosen which is a large hospitality chain having hotels all around the world. In
this assignment, specific focus will be made on analysis of impact of macro-environment,
assessment of a hospitality organization’s internal environment, evaluation of outcomes with the
use of Porter’s Generic Strategies. Also, application of models, theories and concepts will be
made as part of this project.
Part A
TASK 1
P1: Macro-environment “factors”
Macro-environment factors refer to various types of external factors which can create an
impact on the business of any organization. They can be analysed using PESTEL analysis. The
PESTEL analysis in the context of Rosewood Hotels & Resorts is as follows-
Political factors- Political factors are those situations which create an impact on the
profitability of the organization as they are dynamic and can change anytime (Aithal and Aithal,
2016). These factors impact the business of Rosewood Hotels & Resorts because they can either
increase or decrease its level of profits.
 Opportunity- If government policy is lenient towards businesses then it creates an
opportunity for businesses like Rosewood Hotels & Resorts because it can lead towards
increase in their profits.
 Threat- If there is an increase in tax rates by the government then it can lead towards a
decrease in the level of profits of Rosewood Hotels & Resorts.
Economic factors- Different types of economic situations can prevail in the market
creating an impact on the profitability of the firm. These factors can impact the business of
Rosewood Hotels & Resorts because they are directly linked with the economy of country.

 Opportunity- If the economic growth of the country is increasing then it will naturally
have a positive impact on the business of Rosewood Hotel & Resorts because it will help
the hotel a lot by increasing its revenues and subsequently the level of profits in the
future.
 Threat- If the disposable income of the customers falls due to economic slowdown then
they will not prefer to stay in a luxury hotel like Rosewood Hotel & Resorts which will
therefore become a threat as it as it can result in decrease in the overall level of profits.
Social factors- In a society, there are certain factors which can create an influence on the
operations of the organizations (Atrash, 2018). They can create an impact on the business
of Rosewood Hotels & Resorts because this will lead towards an increase or decrease in
its profitability.
 Opportunity- Change in lifestyle attitudes of customers has led towards them increasing
their spending by preferring to stay in luxury hotels like Rosewood Hotels & Resorts.
Therefore this offers an opportunity to increase the level of profits.
 Threat- Cultural barriers in certain sections of society stop certain people from staying in
luxury hotels like Rosewood Hotels & Resorts. Thus this creates a threat for them as their
level of profits can reduce.
Technological factors- In the business environment there can be frequent changes which
can be witnessed and thus there is a requirement that an organization makes the desired
adjustments with them (Chen and et.al., 2016). These factors create an impact on the
business of Rosewood Hotels & Resorts because they create a direct or indirect impact on
the level of profits.
 Opportunity- Technology incentives offer an opportunity to Rosewood Hotels & Resorts
because by developing their technology they can easily meet the needs and requirements
of a dynamic environment.
 Threat- If Rosewood Hotels & Resorts is not able to innovate according to the changing
needs and demands of the market then it will naturally lead to a decrease in its revenues
and level of profits.
Environmental factors- The rising consciousness of the customers towards the
environment is a factor which should be considered by the organizations. These factors
can impact the performance of the organization both in the short-run and long-run

because they are likely to create an impact in the future as the customers are increasingly
becoming more and more environment-conscious.
 Opportunity- If Rosewood Hotels & Resorts is able to provide the right facilities to the
customers and clients by being environment-conscious in its approach then it will
naturally lead to an increase in its profits.
 Threat- If Rosewood Hotels & Resorts is not able to provide its facilities by being
environment-conscious then it can decrease its profits.
Legal factors- In different countries there are rules and regulations which are required to
be considered by the organizations for their business operations (González-Rodríguez and
et.al., 2018). These factors are likely to create an impact for the organizations like
Rosewood Hotels & Resorts because they have to follow the legal rules and regulations
of the country where they are operating in.
 Opportunity- If Rosewood Hotels & Resorts follows the legal rules and regulations of
the country then this can create an opportunity for it to increase its profits.
 Threat- If Rosewood Hotels & Resorts is not able to follow the legal rules and
regulations of the country then this will create a threat for it by decreasing its profits.
TASK 2
P2: Internal environment
It refers to an assessment of the factors which influence the level of profits of an
organization (Jogaratnam, 2017). It can be assessed using SWOT analysis & VRIO analysis.
SWOT analysis-
SWOT analysis refers to an analysis of internal environment of the organization by an
assessment of its strengths, weaknesses, opportunities and threats (Katou, 2016). SWOT analysis
of Rosewood Hotels & Resorts is as follows-
Strengths Weaknesses
 Massive customer base- Rosewood
Hotels & Resorts has a massive
customer base which acts as their
strength as they can increase their
profits by providing their customers the
required level of satisfaction.
 Large-scale operations- Rosewood
 Low efficiency- There has been a low
efficiency in the services of the chain in
the recent years. This has led to
dissatisfaction among some of their
customers and clients and therefore has
created a weakness for the chain of
hotels.

Hotels & Resorts is a very big chain of
hotels which operates in many
countries in the world. Thus this act as
strength for Rosewood Hotels &
Resorts as it can earn more profits in
the future without facing any kind of
issues and problems.
 Marketing strategies- Marketing
strategies of the organization has left a
lot to be desired as its competitors are
much ahead of it and therefore this has
created a weakness.
Opportunities Threats
 Demand generation- There is a lot of
demand for the hospitality services in
the market and therefore demand can be
created for the services which are
offered by Rosewood Hotels & Resorts
which offer an opportunity for
increasing the level of profits.
 Innovation- Rosewood Hotels &
Resorts can use innovative tactics so
that they are able to attract more
customers and clients towards their
services without facing problems and
issues.
 Increasing competition- The level of
competition in the hospitality industry
is increasing a lot. Therefore this can
lead towards creation of problems for
Rosewood Hotels & Resorts as their
level of profits can reduce.
 Economic slowdown- The global
economic slowdown has also affected
the profits of different types of
organizations all around the world.
Thus Rosewood Hotels & Resorts has
also been affected due to this economic
slowdown which has led to a decrease
in its profits.
VRIO analysis-
It refers to a management tool which is used by the organizations so that they assess the
strength of their different types of resources which they have which will help them in securing a
competitive advantage in the future time period (Konovalova and et.al., 2018). VRIO analysis in
the context of Rosewood Hotels & Resorts is as follows-
Resources Valuable Rare Inimitable Organized
Brand Image    
Customer
Service
  
Level of services  
Global Presence 
The analysis is as follows-
 Valuable- Brand Image can be termed as valuable because it creates a lot of value for the
organization. Customer service is valuable because satisfying customers is very important
for a business. Level of services is valuable because the entire business of the hotel is
dependent on its services. Global Presence is valuable because it offers the hotel a chance
to earn more profits in the future time period.

 Rare- Brand Image is rare because it has been made after providing the customers best
services for so many years. Customer Service is rare because not every organization is
able to provide such services. Level of services is rare because not every hospitality
organization is able to provide it in a standardized and efficient manner. Global Presence
is not rare because many of the hospitality organizations have a presence in different
countries.
 Inimitable- Brand Image is inimitable because it is very difficult to copy it. Customer
Service is inimitable because the company provides a lot of satisfaction to the customers.
Level of services is not inimitable because they can be provided in a standardized and
efficient manner by other firms also. Global Presence is inimitable because a lot of firms
are operating in international market nowadays.
 Organized- Brand Image is organized because it has been created with a lot of efforts.
Customer Service is not organized because there are sometimes there are problems in
serving the customers. Level of services is not organized because they because
sometimes there are complaints by the customers. Global Presence is not organized
because in some places proper control and monitoring activities are not taking place.
TASK 3
P3: Porter’s five forces
It is a model which is used so that the firms are able to analyze the impact which is put b
y the various forces on their overall operations and profitability level (Porter’s Five Forces,
2016). The analysis in the context of Rosewood Hotels & Resorts is as follows-
Threat of new entrants- It refers to the chances of new firms in the market where the
organization operates in (Martínez-Pérez, García-Villaverde and Elche, 2016). In the context of
Rosewood Hotels & Resorts this threat is high because a lot of new entrants have arrived in the
hospitality industry. By providing better services at a much lower cost they can decrease the
profits of the chain. Therefore this force has a high power. This is so because hospitality industry
offers a bright chance to new organizations to set up their business and target right customers
and clients to increase their profitability without any problems and issues.
Bargaining power of suppliers- It is the power which the suppliers hold to influence the
prices of the inputs (Orantes-Jiménez, Vázquez-Álvarez and Tejeida-Padilla, 2016). Therefore,
in the context of Rosewood Hotels & Resorts this force has a low power because the hotel
operates in hospitality industry which is a service industry and therefore there is no role of
suppliers in its industry. This is so because the bargaining power of suppliers has no impact on
the hospitality industry as it is basically a service industry.

Bargaining power of buyers- It refers to the power the buyers have to influence the
business of the organization. In the context of Rosewood Hotels & Resorts the buyers refer to the
customers and clients of the hotel. This force has a very high power as the customers and clients
are treated like kings in the hospitality industry. They have to provide top-quality services so as
to ensure that they are fully satisfied with the services received for the price they have paid for
availing them. This is so because the bargaining power of buyers will be there because they wish
to receive the best services for the price which they are paying.
Threat of substitute products- It refers to the power of substitute products to influence
the business of the organization (Peters and Kallmuenzer, 2018). For Rosewood Hotels &
Resorts it has a low power because it operates in the hospitality industry where there are no
substitute products and there are only services which are offered to the customers as well as
clients. This is so because in this industry this threat does not exists.
Rivalry among existing competitors- It means the level of competition in the industry
in which the firm is operating in (Petronella, Swart and Anne Taylor, 2018). The management of
Rosewood Hotels & Resorts should consider its power to be high because there is a very high-
level of rivalry which is existent there among the various competitors in the market. If one hotel
chain is decreasing its prices then the other chains also have to follow because they have to do so
in order to sustain in a highly-competitive market. This is so because competition in the
hospitality industry is on a higher side.
Justification- From this analysis, it can be seen that 3 out of 5 forces have a high power
for Rosewood Hotels & Resorts and the remaining 2 have a low power. Thus, it can be said that
the organization has to make sure that it is able to deal with these forces effectively and
efficiently so that they are able to achieve their short-term and long-term aims and objectives.
Part B
P4: Application of a range of theories, concepts and models
Ansoff Matrix- It is used as a tool in management so as to identify the various strategies
which can be targeted by the companies for ensuring their growth in the market in the long-run
(Prud’homme and Raymond, 2016). It can also be used by Rosewood Hotels & Resorts which
will help them to devise an appropriate strategy which ensures their growth in the future time
period.
The analysis of this matrix in the context of Rosewood Hotels & Resorts is as follows-
 Market penetration strategy- It can be used by the companies to target their existing
market with more goods and services. For Rosewood Hotels & Resorts this strategy will
be highly effective to make sure that they are able to target their existing market with new
services in their hotel.

 Market development- This strategy can be used by firms so that they are able to enter
into new markets through adopting expansion. In the context of Rosewood Hotels &
Resorts this strategy can be highly effective as they can target various markets which are
lying untapped.
 Product and development- To acquire a strategic edge in the market the application of
this strategy can be made by the managers of the organizations (Vlachos, 2016). In the
context of Rosewood Hotels & Resorts this strategy will be highly useful because they
can bring innovative services to attract more customers and clients.
 Diversification- This strategy can be used by the companies when they can enter into
markets by bringing entirely new goods and services for the customers. This can be used
by Rosewood Hotels & Resorts if they enter in a new market.
Justification- Rosewood Hotels & Resorts should select Product and development
strategy so that it can innovate in its services and provide the right choices to customers.
Therefore in this manner, the hotel will achieve its aims and objectives easily.
Bowman' s strategic clock- It is a framework which is used by the organizations so that
they can identify the various strategies which can be adopted in order to succeed in the
market. The strategies which are available under it for Rosewood Hotels & Resorts are as
follows-
Low Price and Low Value Added (Position 1)- In this position, the organizations focus
at pricing their products at a low price and these goods provide a low value to the
customers. For the hotel, it can be adopted by offering services which are priced lower
and do not provide significant value.
Low Price (Position 2)- Here, the firms are required to aim at keeping the prices of their
products lower so that they are able to target more customers. In the hotel, this strategic
an be adopted so that they can acquire strategic advantage.
Hybrid (Position 3)- In it, the organizations are required to ensure that they offer their
products and services at lower costs and also differentiate them from the competitors to
be able to achieve the goals and objectives easily. It can be adopted by the hotel.
Differentiation (Position 4)- Here, the companies are required to differentiate their
products from the competitors. Thus for the hotel it is important that they adopt it by
making their products and services look different.

Focused Differentiation (Position 5)- In this strategy, the organizations can adopt a
particular strategy for a specific segment within the market. In the hotel this will lead
towards ensuring that the right clients are targeted.
Risky high margins (Position 6)- In it, the products and services are priced higher and
there is nothing significant which can be offered to the customers. Thus it is a risky
strategy to be adopted by the hotel and they should avoid it.
Monopoly pricing (Position 7)- Here, the businesses can set a particular price in the
market if they enjoy a monopoly and can earn higher-level profits. Thus for the hotel the
use of this strategy can be made if it enjoys a monopoly in the market.
Loss of market share (Position 8)- In it, a mid-range price can be set for the products
and services and low value is offered to the customers. For the hotel, use of this strategy
can create problems and issues.
Justification- Rosewood Hotels & Resorts should make the use of Hybrid strategy so
that they are able to ensure that they offer their services at lower costs and target more
customers and clients.
Strategic plan- For facing the competitors in the market there is a requirement for the
organizations to be able to create a Strategic plan. In it, the firms would be required to
identify the appropriate approach which can be adopted by them to be able to attain the
strategic aims and objectives which they have set (Yoon, Jang and Lee, 2016).
The strategic plan of Rosewood Hotels & Resorts is as follows-
Particulars Details
Mission The mission of Rosewood Hotels & Resorts
is to provide excellent services to their
clients by providing them the ultimate
luxury experience.
Vision The vision of Rosewood Hotels & Resorts
is to make sure that it gets a long-term
strategic edge in the market. This can be
done if it incorporates its plans properly.
Values  Respect- Hotel aims to respect its
clients.
 Humility- Hotel’s staff aims to be
humble in providing their services to
the clients.
 Integrity- Hotel’s staff aims to
maintain the integrity to serve the

clients in an appropriate manner.
Objectives  In the short-term the hotel plans to
bring the required innovations in its
services.
 In the medium-term the hotel plans
to attract more clients so that it can
increase its business.
 In the long-term the hotel plans to
get more market share so as to make
sure that it is able to maximize its
profits.
Strategies The hotel needs to adopt aggressive
marketing strategies which will help it in
realizing its goals and objectives. Therefore
the right strategies are required to be
adopted by the hotel.
Summary To summarize, this strategic plan focuses on
the mission, vision as well as values of
Rosewood Hotels & Resorts. Also, it makes
its focus on the objectives which are
required to be set for different time-periods
and the strategies which they can adopt to
meet them effectively. Thus if this plan is
used effectively and efficiently then this can
lead towards higher profitability level of the
organization. The firm can therefore easily
obtain a strategic edge in the market against
the competitors.
CONCLUSION
From the above report, it can be concluded that hospitality services are provided by
different organizations. They are required to prepare a business strategy for succeeding in the
market in the long-run period of time. The macro-environment can be analyzed using PESTEL
analysis and internal environment can be analyzed using SWOT analysis and VRIO analysis.
Porter’s five forces model is very effective so as to find out the impact created by the forces.
Also, Ansoff Matrix can be used in order to prepare a growth strategy and a strategic plan helps
organizations to devise effective strategies so that the right approach can be adopted in the future
time period by companies for facilitating achievement of their goals and objectives.

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