Analysis of Macro Environment and Internal Capabilities for NH Hotels

This report analyzes the influences and impacts of the macro environment on NH Hotels and its strategies. It also evaluates the internal environment and capabilities of the hotel using appropriate frameworks. Additionally, it applies Porter's Five Forces model to assess the competitive forces in the market sector for NH Hotels.

Business Strategy

Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
P1. Appropriate frameworks for the analysis of influences and impacts of macro environment on
selected enterprise and its strategies..................................................................................................3
M1 Critically analyse the hospitality macro environment to determine and inform strategic
management decisions.......................................................................................................................5
D1 Critique and interpret information and data applying environmental and competitive analysis to
produce a set of valid strategic directions, objectives and tactical actions for a hospitality
organisation.......................................................................................................................................5
TASK 2.................................................................................................................................................5
P2 Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks.....................................................................................................................5
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set.................................................................7
TASK 3.................................................................................................................................................8
P3 Applying Porter’s Five Forces model, evaluate the competitive forces of a given market sector
for a hospitality organisation.............................................................................................................8
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes............................................................................................................................................9
TASK 4.................................................................................................................................................9
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for a
given hospitality organisation............................................................................................................9
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.........................................................................................................................................11
CONCLUSION...................................................................................................................................11
REFERENCES..................................................................................................................................12

INTRODUCTION
Business strategy involves actions and decision made by the entrepreneur so that
organisational task can be achieved. With proper business strategy the hotel can get a
competitive position in the market so that they can appeal the interest of internal and external
stakeholder (Charter, 2017). For a better understanding NH Hotels which has it’s headquarter
in Madrid, Spain is taken. The company comprises of various hotel, restaurant and resorts to
make pleasant trip of the customer. This report cover topics like impact of macro or external
environment within hospitality business. Determine internal environment or capabilities of
the hospitality sector. Moreover, implement Porter’s five force model in order to examine
competitive forces and devise strategic planning for hospitality organization.
TASK 1
P1. Appropriate frameworks for the analysis of influences and impacts of macro environment
on selected enterprise and its strategies
The business major challenges is to take care of external environment, it affects the
business growth by a huge margin. The company is aware about it and they do complete
analysis of macro environment to overcome future challenges. In order to analyse the macro
environment and its impact on performance the manager of the company use various
framework are discussed.
PESTLE ANALYSIS
The company under this analysis try to determine key elements which can affect the
firm and make decision to counter the external factor which can affect the firm. It helps the
firm to have the knowledge about existing situation and what can be done to bring the
potential positive changes. It consists of six elements which are as follows:
Political factors: It plays a major role especially when it is about the economy of the
country. NH Hotel main motive is to attract the foreign tourism so that they can get more and
more revenue and at the same time expand globally. Taxation is levied heavily on hospitality
industry and NH Hotel is no exception, govt. gets lot of revenue out of it. Any political issues
may reduce tourism like terror thread to a country, so industry need to deal with such type of
factors also.

Economical factors: It includes many factors such as taxation, inflation, GDP,
population and many more. Economic change brings a significant change in the behaviour of
the firm (Feldman, Amit and Villalonga, 2016). The tourist coming for seminars, conferences
and corporate meeting ask for more amenities and also pay more the services they have asked
for. NH Hotel see this as an opportunity and they try to exploit it as much as possible.
Social factors: Demand of the companies services and products are affected with the
change in social factors. The company works on satisfying the customers by identifying their
needs and then fulfilling them. The company works on meeting the culture of the society and
try to satisfy the community in which they are working.
Technological factors: The hotel is well aware of the fact to sustain the competition it
is necessary to adopt updated technology. The use of updated technology may help the hotel
to get a competitive advantage over their rival firm. Even the guest of today has become
informed and advance, they also prefer hotels with updated technology and automation. They
feel like with the availability of latest technology they are more safe and secure. People
coming for business meeting look for WIFI and many hotels including NH Hotel provides
this technology to its customers.
Legal factors: legal factor have a close link with political factor. There are some rule
and regulation which the company need to follow in an economy, those are called legal
factors. It also includes safety and health law which is essential in a hotel industry. People
only get attracted to those hotels which are legal and well rated in terms of security.
Company need to take care of all legal element in an economy, if found guilty it may hamper
the goodwill of the company.
Environmental factors: weather change may impact the operation of the hotel and
sometimes can be the reason for the decline in the revenue of the business. Sustainable
development need to kept in focus as motive of the company should be doing development
while using eco friendly technique (Grant, 2016). It will gather the interest of more tourist as
they will also like to stay in environment friendly hotels. Various natural calamity like
earthquake, flood may affect the hotel operation and employee are trained on how to tackle
such situation in favour of company benefit.
So these are the external factors which can affect the working of the hotel. Hotel need to
properly analyse those factors so that they can get positives out of it in favour of them.

M1 Critically analyse the hospitality macro environment to determine and inform strategic
management decisions
The NH Hotel is one of the leading hotel in Madrid and it has its operation all over the
world. The industry deals with tourist and guest so it is very important for the hotel to do
complete analyses in external or macro factors. The company need to thoroughly analyse the
cultural background of the customer and pitch them product and services accordingly. The
manager of the hotel need to identify the needs of the customer and try to met them. If the
hotel has done their homework on external analysis, they can maintain good and healthy
relations with the customers (Grayson and Hodges, 2017). So it is very necessary to have
knowledge about the external factors as they are beneficial as well as harmful for the hotels,
having the proper knowledge will help in reducing damage and increasing profit of the hotel.
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions for a
hospitality organisation
The hotel need to take care of environmental factor also as most of the country
focuses on preserving the environment. Over-exploitation of the resources need to be stopped
and focus should be put on sustainable development. Strategy that the hotel can follow is
using renewable resources, which is good for the nature. At the same time hotels need to
focus on what their competitor are doing and they need to find a better way to out perform
them. The hotel industry should give a proper message to the tourist about using environment
friendly approach.
TASK 2
P2 Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks
Internal environment is also as important as the external environment for NH Hotel. It
comprises of culture of the company, human resources, environment and many other factors.
With this study the manager of the hotel can identify the strategy which need to be
implemented or changed for NH Hotel.
Strengths
One of the major strength of the hotel is it
provide a safe and secure accommodation to
Opportunity
The customers are getting heavily pushed
towards digital media. So digital media has

the public. As the brand is well known to the
public they will be more than ready to stay at
the hotel without any second thoughts. The
hotel industry is paying huge % of taxes, so it
is contributing to the country economy. The
hotel labour cost is low which makes the
profit margin higher as compare to other
hotels in the competition.
become the platform for the hotel to advertise
them and to get more market share from all
over the globe. Hotel can use technology to
their favour in marketing the product and can
share the packages on basis of demographic
segmentation (Hill, 2017).
Weaknesses
The hotel has certain weaknesses as well.
Being a premium hotel, the rates charged is
very high which not all the customer can
afford, resulting in restricted market share.
Season play a vital role, in off season there
are less number of tourist resulting in less
business (Financial and Strategic SWOT
Analysis, 2018).
Threats
With increase in opportunities the
competition has also increased, lot of new
hotels are getting established which result in
more competition and decreased margin of
profit. With the recent pandemic of COVID
19 tourism has stopped and it is predicted
that the tourism business will remain down
for couple of months at least, as the focus of
each and everyone is on their health so they
are least bothered to travel right now unless
or until there is an emergency.
VRIO ANALYSIS
It is another internal assessment done by the hotel which helps them in certain ways.
It analyse the resource and capability the hotel has in this competitive market. This tool is
used so that the manager of NH Hotel can make some effective decision in favour of
organisation. Following is the VRIO analysis in context to NH Hotels:
Capabilities Valuable Rare Inimitable Organised
Patents ✔ ✘ ✘ ✘
Global ✔ ✔ ✘ ✘

distribution
channel
Brand image ✘ ✔ ✔ ✘
Quality of
services offered
✔ ✔ ✔ ✔
Valuable: As mentioned in the above table global distribution channel, brand image,
quality of services offered is the valuable component of the NH Hotel. Brand image helps in
gaining the confidence of the customer and because of it they select the hotel for there stay
and luxury usage.
Rare: The service providing secret of the hotel is the rare component they have. The
hotel never compromised on services to the customer. They go an extra mile to satisfy their
customers. It ultimately results in retention of the customer and more greater things.
Inimitable: The things which competitors cant copy fall under inimitable. Service
providing secret and distribution channel falls under this section as far as NH Hotels are
concerned.
Organised: Hotel follows rule and guideline, proper training is given to the staff so
that special services is given to the staff (Johnson, 2016).
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set
From the above information it can be said that assessment of internal environment
may lead to smooth functioning and coordination with the company. The manager of the
hotel had done complete SWOT and VRIO analysis and it will help the company to find out
internal problems. The analysis will give manager the way on how to approach to any
problem in internal environment. It tells the NH Hotel has lot of strength like security and
brand image along with that they are getting government support. At the same time some
weaknesses are also there like off season and premium rates can’t be afford by all customers.
The hotel needs to counter everything and find out the best way to increase margin (Morden,
2016).

TASK 3
P3 Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation
With proper study of Porter’s 5 forces the hotel can get the competitive advantage
they are looking for to sustain in the industry for a longer duration.
The porters 5 forces are as follows:
Competition in the industry: the competition in hotel industry is immense which
results in huge rivalry. The reason is there are lot of competitor and the cost of product
differentiation and switching cost is low. All the hotels require huge capital so expectation in
profit also increases, resulting in an intense competition.
Potential of new entrants into the industry: the capital required in hotel industry is
huge, but if someone can afford such type of capital they generally try their hands on it. The
reason is simple the profit margin is also huge in hotel industry and anybody can enter into it
given that they can invest. Investment is the only hindrance here. The competition is large
because the tourism is increasing day by day. Tariffs are mentioned on basis of location and
guest ratio, in this case new entrants have bit of disadvantage.
Power of supplier: it is relatively low. The demands of the hotels are huge.
Especially when the hotel is staged at tourist attracted places. In order to get better of the
competition the hotel should have cost benefit so that they can sustain in the market. The
hotel is old and they have already maintained the relations with there supplier resulting in less
bargain.
Bargaining power of buyer: The hotel are ready to bargain with those who are
looking for bulk hotel rooms. They are trying to offer them best price in the industry so that
they can take their offer (Müller, Buliga and Voigt, 2018). Bargaining power of buyer is
restricted when they are looking for single room or less room. Bargaining power completely
depends upon the situation also.
Threat of substitute: the threat of substitute from other industry is relatively low.
The people who are looking for economical price may opt for motels, hostels etc. but when
talking about bulk booking hotel does not face any problem of substitution. They can make
them different by providing technology and product and services enhancement and price
differentiation.

Thus, on the basis of framework it has been analysed that NH Hotel needs to significantly
upgrade its services on the basis of innovation in terms to satisfy target market. This can be
effective help to wipe out the competitive pressure by establishing desirable strategy to gain
organisational success.
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes
The company can use the above mentioned framework to their favour. They need to
analyse all external factor which can give them competitive advantage and need to work on
them. The NH Hotel has commenced their businesses in tourist places so that they can get
more people floating to their hotels. The hotel tries to use technology to their advantage to get
the advantage of first mover and get competitive edge for a long duration of time. The hotel
try to analyse their competitors and frame out measures to overcome them.
TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation
Ansoff matrix comprises of four component, they are listed below:
Market penetration: Within this strategy the company concentrate to offer customer
reasonable rates with qualitative services in the prevailing geographical market. Application
of this strategy can help NH Hotel to widen its market share because here low prices are set
to deliver supreme quality of services in order to maintain strong customer base (Ortiz‐de‐
Mandojana and Bansal, 2016).
Product development: Based on this strategies of the hotel, the manager takes
decision to launch new product or technology in the existing geographical region. This can
help the customers of NH Hotels to gain wider options in the product line of company. Also
the latest technique is designed on basis of innovation after taking constructive feedback from
the customer.
Market development: The hotel focus on diversifying its offering in new market
which may be alike existing ones. This strategy can assist the company to expand its
customer base and enhance the profitably margin by managing needs of foreign customers.
Diversification: Extensive market research is done under this technique because it
involve huge risk as company rely on trying new things and adopting new technology. The

company have effectively adopt this strategy in terms to carry out global operations and
address the needs of diverse customers systematically.
Hence, amongst diverse strategy Product development strategy is recommended for
NH hotel as it helps in building up advance strategy and delivering quality services for the
success of hotel.
STP
Segmentation: It helps in dividing the large market into smaller sub sets for better
classification of market. The hotel on the basis of geographical and psycho-graphic segment
launch new product and try to provide better services to their customer by identifying what
they actually wants.
Targeting: Targeting refers to the process of selecting potential customers to whom
the company target. The manager of NH Hotel has targeted to high income group people that
can be part of different occupation like sportsmen, professional or entrepreneur and are
inclined towards premium services during their stay and qualitative products.
Positioning: The company can significant position there hotels to tourist destination
so that they can get the crowd they have desired for success (Trevisan, 2016) .
Strategic management plan: It is the written document which consists of effective
strategy in terms so that priorities can be set and resources can be configured which
strengthens the internal operations of an organisation. Herein, the company strategic business
plan is to give premium services to its customer and offers to the regular customer to satisfy
the requirement of people within existing market and retaining the customer and building
ever lasting relationship with their regular customers.
Strategies
Promotion: Promotion helps to spread the awareness about innovation which finally
leads to increase in demand of the rooms. HN Hotel depend more on the digital technology
such as use of website, social media, affiliate market, SEO and so on to reach out to the
prospects for premium customers looking for a stay. Along with that company can use
articles and blogs where it can deeply demonstrate the advantages and USP of the hotel.

Research and development: This strategy will be used by NH Hotel to determine the
preferences of customer and gain insights about market dynamics. This can effectively attract
the interest of potential customer towards service oriented approach.
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives
The hotel had made strategy on how to attract more and more customer so that market
share can be increased and it will lead to competitive advantage in future. The manager has
set tangible and tactical strategic priorities for the same (Wood and Logsdon, 2017). The
hotel wants to attract premium customers by providing them qualitative services and new
experiences on their stay at NH Hotel. The objective of the hotel is to concentrate in services
and identifying what customer need and working on it so that it can be provided to them in
immediate basis.
CONCLUSION
The report focuses on external and internal factors which can affect NH Hotel
operation. All the factors has been thoroughly analysed and with the knowledge of those
factors, those are used for organisation benefit. The report talk about various model like
PESTLE analysis, VRIO analysis, ANSOFF matrix, SWOT analysis and many more. The
report also discuss about the strategy which the hotel is adopting to increase their market
share and sustain the competition for a long run.

REFERENCES
Books and Journals:
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Feldman, E. R., Amit, R. and Villalonga, B., 2016. Corporate divestitures and family control.
Strategic Management Journal. 37(3). pp.429-446.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing
function. Macmillan International Higher Education.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Morden, T., 2016. Principles of strategic management. Routledge.
Müller, J. M., Buliga, O. and Voigt, K. I., 2018. Fortune favors the prepared: How SMEs
approach business model innovations in Industry 4.0. Technological Forecasting
and Social Change. 132, pp.2-17.
Ortiz‐de‐Mandojana, N. and Bansal, P., 2016. The long‐term benefits of organizational
resilience through sustainable business practices. Strategic Management Journal.
37(8). pp.1615-1631.
Trevisan, E., 2016. The Irrational Consumer: Applying Behavioural Economics to Your
Business Strategy. Routledge.
Wood, D. J. and Logsdon, J. M., 2017. Theorising business citizenship. In Perspectives on
corporate citizenship (pp. 83-103). Routledge.
Online:
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