Applying Analytical Frameworks for Hospitality Business Strategy

This report discusses the application of analytical frameworks to analyze the macro and internal environment of a hospitality business. It explores the impact of macro factors on business strategies and evaluates competitive forces using Porter's Five Force Analysis. The report also provides insights into strategic planning for the hospitality concern.

Unit - 41

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
PART A...........................................................................................................................................1
Applying appropriate model or framework to analyse macro environment impact on strategies
of particular hospitality business.................................................................................................1
Analysing internal environment addition to capabilities of the hospitality firm by using
frameworks..................................................................................................................................3
Appling framework of Porter’s Five Force Analysis for evaluating competitive forces of
market sector for the company....................................................................................................6
PART B...........................................................................................................................................7
Applying theory or model and devising strategic planning for the hospitality business.............7
CONCLUSION AND RECOMMENDATIONS............................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is combination of decisions along with actions attempted by an
organisation with the aim to accomplish objectives and uphold competitive position (Agnihotri,
2016). In hospitality sector, devising business strategy is among important activities which are
performed by management of companies. It creates vision addition to direction for entire
enterprise. To gain information related to hospitality business strategy, Mandarin Oriental Hotel
Group is selected. It is well popular large global entity in hospitality sector. It has its roots in the
industry since 1963 and with passage of time, the company has bloomed into global hospitality
conglomerate in 27 countries with 41 hotels.
The present report is all about environmental analysis along with strategic growth
management plan on the basis of recognised or appropriate analytical frameworks to analyse
macro and internal business environment. It also includes evaluation of competitive forces by
applying Porter’s Five Force Model. At last, various strategic directions available to the
company are analysed and strategic planning is prepared for the hospitality concern.
MAIN BODY
PART A
Applying appropriate model or framework to analyse macro environment impact on strategies of
particular hospitality business
Overview of hospitality organisation: Mandarin Oriental Hotel Group is among luxury
hotels, residences segment as well as resorts in Americas, Asia along with Asia. The group
enjoys global presence with its headquarters located at London, Hong Kong, Atlanta and
Washington D.C (Mandarin Oriental Hotel Group, 2020.). The mission of Mandarin Oriental
Hotel Group is to delight and meet satisfaction of guest in complete manner. The vision of the
hospitality company is to be recognised as best luxury hotel group across the globe. The values
of the entity are related to integrity, leadership, hospitality, teamwork and ownership.
Macro environment: The environment which is not bound by geographies and results in
direct bearing on business operations is described to macro environment. It engrosses set of
external elements or factors which influences development efforts, strategies, tactics and
practices of company positively or negatively (Altinay, Paraskevas and Jang, 2015). Factors that
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are part of macro environment are analysed by strategic managers of Mandarin Oriental Hotel
Group through PESTLE Analysis framework.
PESTLE Analysis: It is an analytical tool which mostly all companies use for tracking
environment in which they are current operating or are planning to expand. It includes six factors
that directly impacts operational strategies of businesses. In relevance to Mandarin Oriental
Hotel Group, the factors that impacts on business and strategies are as analysed:
Political: Cornerstone of any hospitality policy is needed for political stability as to
provide safety to hoteliers and tourists at global level. UK enjoys reputation of stable political
system wherein government provides welfare services to hotel groups as well as gives discount
access to their products, equipment and services as per new trends which impacts positively on
strategies adopted by Mandarin Oriental Hotel Group to operate in the nation. In contrary, the
policies and decision taken by the political system for COVID – 19 for the pandemic satiations in
order to shut down the organisational premises for temporary duration impacts negatively on its
strategies to generate earnings.
Economic: It concern direction along with nature of economy wherein business operate
such as disposable income, interest rate, business cycle and etc (Andraos, 2016). For example, in
UK, number of travellers for business purposes has reduced influences strategies of Mandarin
Oriental Hotel Group negatively on its occupancy. At same time, by increasing some discounts
and making attractive promotions, the hotel is able to make profits above the break event and
meet satisfaction of customers for leisure events. It is also analysed that varying exchange rate
impacts on profits as revenues generated on day one generally become different sum at the time
transported to domestic nation of the entity.
Social: Social environment comprises of broad societal trends that impact hotel enterprise
and its devised strategies (Aronoff and Ward, 2016). One of most profound social change in UK
in recent years is entry of women in large number into labor market. It is analysed that women
are making more money and travel more that impacts positively on Mandarin Oriental Hotel
Group as it greatly expands demand of the offerings such as spa treatments, weddings, fitting
rooms and so on which increase revenue level of the entity by selling diverse product range.
Technological: UK’s government is making emphasis on technological efforts for
accelerating technology innovation along with adoption in hospitality industry. It impacts
positively on Mandarin Oriental Hotel Group as technological program organised by the
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government that is Tourism Technology Fund provides financial support to the company to
adopt updated and innovative technologies such as Robotics, Augmented reality, search engine
optimisation and chat bots. It impacts on strategies related to enhancing visitors experience as
well as improving business efficiency positively.
Legal: In UK, hospitality employment covers Medical leaves and attention, overtime,
equality, Uniforms and Laundry, minimum wages and so on that is mandatory for all companies
working in it to adhere (Ballings, Van den Poel and Bogaert, 2016). For example, corporate
strategist of Mandarin Oriental Hotel Group pays lot of attention towards implementing
standards related with health and safety, timely payments, bedroom safety and so on for
protecting its employees together with guests that impacts positively to reduce chances of any
accidents at workplaces.
Environmental: UK’s government has made it compulsory of all hospitality industry to
participate in campaigns for protecting environment. For example, one of campaign in which
managers and employees of Mandarin Oriental Hotel Group participated is Waste Disposal
Campaign for protecting environment of the nation which impacted positively on its strategies.
This resulted in saving operating cost addition to increase business profits. Moreover, the hotel
group also concentrates on reducing electricity consumption particularly in low occupancy
duration that results in reducing energy cost and meeting diverse customer requirements
positively (Brotherton, 2015).
The application of PESTLE Analysis helps corporate strategist of Mandarin Oriental
Hotel Group to analyse factors which impacts drastically on the strategies and making relevant
solutions to deal with all.
Analysing internal environment addition to capabilities of the hospitality firm by using
frameworks
Internal environment: Organisational events, situations and elements that are within its
boundaries and influences practices addition to behaviours is defined as internal environment
(Evans, 2015). To assesses internal environment and its capabilities, strategists of Mandarin
Oriental Hotel Group use frameworks of SWOT Analysis and VRIO analysis. The frameworks
are as applied in context to the hospitality group.
SWOT Analysis
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An analytical tool which identifies internal strengths and weaknesses together with
external threats and opportunities is described as SWOT Analysis. It is used to evaluate strategic
positions and preliminary stages of procedures related to decision making. SWOT Analysis of
Mandarin Oriental Hotel Group is the following:
Strengths Weaknesses
 Mandarin Oriental Hotel Group
provides legendary services along with
exquisite facilities to its guests.
 It has good reputation in hospitality
industry.
 The location wherein it is established
attracts large customers and influences
them to buy its offerings.
 Organisational structure of Mandarin
Oriental Hotel Group is not compatible
as per existing business model which
restricts its expansion in adjacent
segments.
 Authority line of the hotel group is so
high in which decision making takes lot
of time (Gardetti and Torres, 2017).
Opportunities Threats
 Adoption of functional organisational
structure is an opportunity for the hotel
group to make its structure compatible
with the required models (Gehrels and
Gehrels, 2019).
 Stable cash flows gives opportunities to
managers of Mandarin Oriental Hotel
Group for making investment in
various adjacent segments.
 As Mandarin Oriental Hotel Group
operates in numerous nations, it
exposes threats of currency fluctuations
and volatile political environment in
markets across globe.
 Growing strengths of domestic hotels
and changing technologies in global
market is potential threat for the
business.
VRIO Analysis
Business analysis framework that assist in analysing firm’s resources and capabilities
through which it achieves competitive advantage in the industry is defined to VRIO Analysis. In
association with Mandarin Oriental Hotel Group, VRIO Analysis is below:
Capabilities and
resources of
company
Valuable Rare Inimitable Organised
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Site and
location
✓ X X X
Superior
hospitality
✓ ✓ X X
Staff members ✓ ✓ ✓ ✓
Valuable: An organisation has certain valuable resources and capabilities which help sin
exploiting opportunities as well as defend from major threats. In context to Mandarin Oriental
Hotel Group, its valuable capabilities are superior hospitality, staff members, site and location.
The superior hospitality services delivered by the company to its guest as valuable for it as they
enhances customer values and provides them satisfaction. The site and location of the entity are
also valuable as it attracts large customers and gives customer favorable experiences that result
in attainment of competitive advantages over rivals. Staff members of the hotel are valuable as
they have huge ideas to sustain in competition and attaining high edges over rivals (Hoffmann
and Coste-Manière, 2016).
Rare: Resources of establishments that are not adopted and used by other businesses are
termed as rare. Staff members addition to superior hospitality is the rare capabilities of Mandarin
Oriental Hotel Group which grant huge competitive advantages of it. the employees hired by the
company are extraordinary and competent to those that are with its rivals and this makes its staff
members rare in competition. Superior hospitality which is provided by the managers to its
customers are not the same that are used by competitors and this gives the entity diverse benefits.
Inimitable: Capabilities that other companies finds costly to imitate and are unable to
imitate are known as inimitable (Jauhari, 2017). In context to Mandarin Oriental Hotel Group, its
staff members are costly to imitate by other hospitality companies. The hotel group has hired
best talents that have huge competent and other skills and also loyal towards the business.
Organised: Individual resources do not provide advantages till they are organised as well
as exploited to do so. Hotel group such as Mandarin Oriental Hotel Group have organised its
staff members through training and development so that they are fully usable for attaining
competitive benefits in the industry.
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With SWOT Analysis addition to VRIO Analysis, strategists of Mandarin Oriental Hotel
Group are able to assess internal environmental factors that impacts business to achieve
competitive benefits as early as possible.
Appling framework of Porter’s Five Force Analysis for evaluating competitive forces of market
sector for the company
Porter’s five force analysis: Michael E. Porter is known as founder of the model (Leung,
Wen and Jiang, 2018). It comprises five forces that shows abilities of entities to serve customers
and generate margins of profit. The main aim of using the framework is to evaluate
competitiveness or attractiveness or profitability on market sector. For example, Mandarin
Oriental Hotel Group works in market sector of Hospitality industry in various countries. By
using the model, corporate strategists of Mandarin Oriental Hotel Group are able to evaluate and
apply results of the model in the market sector. Forces of the model in context to Mandarin
Oriental Hotel Group are evaluated and applied below:
Threat of entrants: As per the results of the force, it is analysed that hospitality industry
generate huge profits and influences various companies to make attempts to enter in it. The
factors that define threat of entrant are switching costs, high capital requirement, government
restricted policies and many more. New entrants come with innovation which gives high entrant
threat to Mandarin Oriental Hotel Group. However, to enter in the market sector, high capital and
diverse advertisement is required among new entrants to make unique position.
Threat of substitute: Hospitality industrial sector have relatively low substitute available
that results in low threats of substitute (Linneberg, Madsen and Nielsen, 2019). Substitutes are
those offerings that give similar benefits to customers. For example, when prices for rooms of
Mandarin Oriental Hotel Group are high then customers looks for cheap accommodations in
hostels, motels and at relative places which gives high substitution threat to the entity.
Extent of industrial rivalry: Rivalry in the market sector of hospitality industry is generally
high as large number of global hotel groups works in it. in case with Mandarin Oriental Hotel
Group, its competitors are Hilton hotels and resorts, Sheraton hotels and resorts, InterContinental
Hotels Group, Hyatt Hotels Corporation, Accor Hotel and many more. All these are key players
in global hospitality industry that gives high extent of industrial rivalry to Mandarin Oriental
Hotel Group.
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Supplier’s bargaining power: The force defined willingness of suppliers to increase or
reduce prices (Murillo and King, 2019). When Hospitality Company has limited alternative
suppliers then it gives high bargaining powers to suppliers as in this case, organisation has no
option but to buy the material sat high prices. It is evaluated that hospitality industry is vast and
includes large number of suppliers. It is also analysed that Mandarin Oriental Hotel Group has
large supplier chain and relations with diverse suppliers that gives low powers of bargaining to
suppliers and do not faces switching cost also.
Buyer’s bargaining power: Buyers are the customers that have huge potentials to take
prices down. The force includes importance of customer as well as cost level at the time when
customer switches towards other products or offerings in the industry. In hospitality industry,
wide options are available for customers and this gives high bargaining power to them (Pappas
and Bregoli, 2016). At same time, Mandarin Oriental Hotel Group provides large options to its
buyers and also changes its price structure for offerings in case customers think they are high.
From the evaluation and applications of results of Porter’s five force model, it can be said
that managers of Mandarin Oriental Hotel Group frames effective strategies together with make
emphasis on various other plans also.
PART B
Applying theory or model and devising strategic planning for the hospitality business
As per the environmental and competitiveness analysis, it is evaluated that Hospitality
Company have various kinds of strategic directions (Van der Wagen and White, 2018).
Moreover, corporate strategy manager is required to devise strategic planning to achieve success
in the industry. In this context, available strategic directions with Mandarin Oriental Hotel Group
are analysed with the application of Ansoff Victor growth theory that is as follows:
Ansoff growth vector model: A strategic planning model which provides suitable
framework for assisting corporate managers to devise strategies with the hope of future growth is
known as Ansoff growth model. It was identified by Igor Ansoff. The strategies to look towards
opportunities for growth to Mandarin Oriental Hotel Group are as follows:
Market penetration strategy: With this strategy, an organisation makes attempt to grow in
existing market region with current offerings (Van Ginneken, 2019). The reason of using the
strategy is to increase market share in the existing scenario. When strategists of Mandarin
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Oriental Hotel Group will adopt market penetration strategy they will be able to achieve high
market share within current segments.
Market development strategy: The strategy is adopted to make expansion into new regions
of market with current offerings and minimum developments in services. At the time managers
of Mandarin Oriental Hotel Group have aim to meet different customer segments, making
presence on new areas of nation then they may use market development strategy.
Product development strategy: The strategy assists an organisation to create totally new
products for targeted segment of current market (Wang and Chung, 2015). It includes extending
range of offerings of company in current market. Product development strategy may be adopted
by managers of Mandarin Oriental Hotel Group for enlarging current markets.
Diversification strategy: The strategy is mostly used for the purpose of growing market
share through launching new products in entire new region. This is most risky strategy among
all. In order to enter in new market with new offering, strategic manager of Mandarin Oriental
Hotel Group can execute workings with diversification strategy.
Among the all, recommended growth platforms and strategies to managers of Mandarin
Oriental Hotel Group are market development and product development strategies as these both
will help the company in making strong move in new regions along with meet demands of
current segments through making limited improvements in offerings.
Strategic management plan
It is defined to preparing procedures for the company to achieve desired objectives
through pursuing strategies effectively (Agnihotri, 2016). In context to Mandarin Oriental Hotel
Group, strategic planners have devised the strategic plan for further growth:
Executive summary: Mandarin Oriental Hotel Group is the top global hospitality
organisation that provides comfort, security and safety to its colleagues and guests. It has
existence in nearby 31 countries with more than 10000 rooms and 13 residences. The strategic
plan includes mission, vision and strategic objectives of the company. It also includes strategies
and tactics to achieve growth (Brotherton, 2015).
Organisational mission: Mission statement of Mandarin Oriental Hotel Group is to
serve guests and visitors in the manner which completely meets their needs.
Organisational vision: Vision statement of Mandarin Oriental Hotel Group is to become
most preferred and popular hospitality entity that serves customers with luxury facilities.
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Strategic objectives: Objectives of Mandarin Oriental Hotel Group are as follows:
 To enhance profit margins by 15% till 2024.
 To diversify organisational presence in more than 2 nations till 2027.
 To improve experiences of customers by 24% by 2024 (Linneberg, Madsen and Nielsen,
2019).
Strategies: To achieve the objectives, strategic managers of Mandarin Oriental Hotel
Group will adopt market development together with product development strategies. This will
provide a path to meet existing market needs and introducing unique offerings in the current
market. Moreover, with these strategies the hospitality entity will be able to open its premise in
untapped markets within defined duration.
Tactics: Various types of tactics to meet objectives will be used by managers of
Mandarin Oriental Hotel Group. Some of the tactics are Pay Per Click, email marketing,
advocacy, referral and many more to promote the brand and make presence in untapped market
region (Gardetti and Torres, 2017).
Implementation and evaluation: All the defined strategies and tactics will be put in
action so to gain effectual results in accordance to the defined criteria. At same time, evaluation
measures of benchmarking along with KPI will also be adopted to meet deficiency gaps among
desired performances and achieved results.
CONCLUSION AND RECOMMENDATIONS
In accordance to the report, it is concluded that hospitality business strategy reflects success
and failure of firm in meeting identified objectives. Macro environment plays various roles in
impacting business and its strategies that are analysed through PESTLE Analysis. Internal
environment is mixture of certain events, structure, systems and resources which are identified
through SWOT Analysis. To evaluate attractiveness and competiveness in specific market sector,
Porter’s five force model is applied for the reason. Strategic management plan includes
information about strategies and tactics that the entity implements to meet objectives. The
managers of the company are recommended to adopt market development and product
development strategies for achieving growth in the market sector.
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REFERENCES
Books and Journals
Agnihotri, A., 2016. Extending boundaries of blue ocean strategy. Journal of Strategic
Marketing. 24 (6). pp.519-528.
Altinay, L., Paraskevas, A. and Jang, S. S., 2015. Planning research in hospitality and tourism.
Routledge.
Andraos, J., 2016. The algebra of organic synthesis: green metrics, design strategy, route
selection, and optimization. CRC Press.
Aronoff, C. and Ward, J., 2016. Family business ownership: How to be an effective shareholder.
Springer.
Ballings, M., Van den Poel, D. and Bogaert, M., 2016. Social media optimization: Identifying an
optimal strategy for increasing network size on Facebook. Omega. 59. pp.15-25.
Brotherton, B., 2015. Researching hospitality and tourism. Sage.
Evans, N., 2015. Strategic management for tourism, hospitality and events. Routledge.
Gardetti, M. A. and Torres, A. L. eds., 2017. Sustainability in Hospitality: How innovative hotels
are transforming the industry. Routledge.
Gehrels, S. and Gehrels, S., 2019. Pelican Hotels & Resorts’ Considerations for the Future',
Employer Branding for the Hospitality and Tourism Industry: Finding and Keeping
Talent.
Hoffmann, J. and Coste-Manière, I. eds., 2016. Luxury strategy in action. Springer.
Jauhari, V. ed., 2017. Hospitality marketing and consumer behavior: Creating memorable
experiences. CRC Press.
Leung, X. Y., Wen, H. and Jiang, L., 2018. What do hospitality undergraduates learn in different
countries? An international comparison of curriculum. Journal of Hospitality, Leisure,
Sport & Tourism Education. 22. pp.31-41.
Linneberg, M. S., Madsen, M. T. and Nielsen, J. A., 2019. Micro-level translation of corporate
sustainability: When strategy meets practice in the Danish hospitality sector. Journal of
Cleaner Production. 240. p.118159.
Murillo, E. and King, C., 2019. Why do employees respond to hospitality talent management.
International Journal of Contemporary Hospitality Management.
Pappas, N. and Bregoli, I. eds., 2016. Global dynamics in travel, tourism, and hospitality. IGI
global.
Van der Wagen, L. and White, L., 2018. Hospitality management. Cengage AU.
Van Ginneken, R. ed., 2019. Hospitality Finance and Accounting: Essential Theory and
Practice. Routledge.
Wang, Y. C. and Chung, Y., 2015. Hotel brand portfolio strategy. International Journal of
Contemporary Hospitality Management.
Online:
Mandarin Oriental Hotel Group. 2020. [Online]. Available through:
<https://www.mandarinoriental.com/>
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