Impact of Macro Environment on Crowne Plaza Business Strategy

This report presents a strategic analysis of Crowne Plaza, focusing on the impact of the macro environment and internal capabilities on its business strategy. It utilizes the PESTLE framework to assess political, economic, social, technological, legal, and environmental factors influencing the hotel's ope...Read More

INTRODUCTION
Business strategy is based on the set of competitive move and actions that mainly used
by organization to influence existing customers (Ginindza and Tichaawa, 2019). To increase
the overall business productivity as well as profitability in global marketplace. The report is
mainly focused on the macro environment which will influence on the overall business
capabilities. The report will be selecting the Crowne Plaza” for analyzing the business by
using PESTLE analysis framework. It provides the better idea about the organization whereas
how macro environment will impact on the organization capabilities. For business for
competitive analysis, it will be considerations of Porter’s five force model for determine the
existing competition within hospitality industry. At last, it will explain the different theories,
concept and model that help for providing the better strategic direction of “Crowne Plaza” in
business expansion.

LO1 Analyse the impact and influence which the macro environment has on a
hospitality organisation and its business strategies
Every organisation is highly affected by its external factors. This is because they exist outside
business and are not controlled and managed by it. Also, business has to work within a
specific boundary (Wang, and Wang, 2020). So, it is necessary to identify those external
factors which impact highly on organization. With that it becomes easy to develop strategies
and minimise impact. In order to do so there are several concept and model available.
likewise, as IHG operate in many countries so some factors as which directly affect growth of
hotel. (Islami, Mustafa and Latkovikj, 2020).
PESTLE is used to find out outside factors that impact on business operations. This
includes political, legal, social etc factors which are described as below
Political- It consists of change of laws and regulations, trade policy, government etc. (Wang,
and Wang, 2020). As IHG operate at global level. they have to follow rule and regulation.
However, in many countries political condition is unstable. So, it is directly affecting on
growth of Crowne Plaza hotel because with change in government they have to make
change in their policy and laws.
Economic-. Any change in economic growth highly effect on Crowne Plaza hotel business
operations. the factors are GDP, traffic rate currency rate etc (Lauer, 2019). thus, if there is
any change in it then it directly effect on growth of Crowne Plaza hotel (Kamran, and
Mudassar, 2020). IHG operate in countries like US, UK, Germany, etc. so they have to
depend on economic growth of that country. due to covid 19 many hotels such as Hyatt,
Hilton, etc. are affected as their sales and profits are declined due to lock down. similarly,
Crowne Plaza hotel is also affected in same way as due to lock down sales are declined
(Lauer, 2019). For example- rise in income of Indian people will allow them to spend leisure
time in hotel (Lauer, 2019)
Social- they are factors like needs, lifestyle of people. However, as Crowne Plaza operations
are related to hotel, they provide various types of services (Turner and Hesford, 2019). But
now people needs has changed. This is because of rise in income level. People require luxury
services and have become health conscious due to pandemic. Thus, it will highly affected on
business operations. due to covid 19 hotel needs to maintain hygiene and cleanliness (Tian
and Cao, 2019).

Technological- It has affected on Crowne Plaza operations in positive way. Moreover, in
hotel industry technological systems are installed like AI, robots. etc So, with more use of
technology it will ease in doing of operations in IHG. Through that, hotel will be able to
expand and provide service to more people. Alongside, the quality of services will be
maintained, and this will be useful in gaining their trust and satisfaction (Lauer, 2019) for
example – use of AI will maintain service quality level thus customer satisfaction is gained.
Legal- the factors includes health and safety, employment law, wages law etc. So, any
change in these highly impact on business operations (Tian and Cao, 2019). Moreover, as
IHG operate in at global level they have to follow different laws. However, many
governments is focusing on changing law to provide more health and safety to staff in hotel.
Therefore, it will highly effect on Crowne Plaza. They will have to form new policy and
procedures and install different health and safety equipment. Hence, training will be
provided, and staff has to work in different way, so it will effect on operations (Falcone and
Imbriani, 2020). for example- health and safety law affect operation as hotel has to ensure
proper safety to staff.
Environmental- it include factors related to change in CSR policy, etc which directly
influence Crowne Plaza hotel (Falcone and Imbriani, 2020) In recent times, due to covid 19
government is focused on cleaning of environment. However, as IHG operate in hotel
industry they will have to follow new policies and laws. Due to covid 19, hotels such as
Marriott, Hilton, etc. is affected as they have to maintain clean and green environment. also,
they have to follow new laws and policies to prevent covid infection. likewise, Crowne Plaza
hotel is impacted in same way. they have started greener stay program in many countries
(Turner and Hesford, 2019).
Therefore, it is stated that there are many external factors which will effect on Crowne Plaza
operations. They need to develop strategies for it. By that it will be easy to achieve goals and
expand in new market.
SWOT- this is a model which is used to identify strengths, weaknesses, opportunities, and
threats.
Strengths
The employee working in it are highly trained and experienced. Crowne Plaza is having
resources as trained work force which is motivated as well. The automation of service has
enabled in maintaining consistency with quality in services. So, it has enabled them to
increase and decrease service as per market demand (Turner and Hesford, 2019).

IHG is having a high innovation in developing of new services. It has enabled them to enter
in new market and successfully operate. Thus, they are having a high revenue stream in hotel
industry. Crowne Plaza is having a high level of customer satisfaction due to its strong and
positive brand image (Falcone, and Imbriani, 2020).
Weaknesses
Its profitability ratio is low as per industry average. The marketing of products and services is
not effective enough (Turner and Hesford, 2019). Its USP is not defined properly as
compared to other competitors in the market (Kamran, and Mudassar, 2020). The financial
planning is not done properly as hotel liquidity and current ratio are does not show effective
cash flow (Chun-Lai, Espino-Rodriguez and Baum, 2019).
Opportunities
By using new technology hotel can attract more customers by effectively doing marketing of
products and retaining of loyal customer (Wang, and Wang, 2020). Crowne Plaza hotel can
attract new customers from online channel. It will benefit in creating a large customer base
and investing in more online sales channel. They can generate more revenue as well from it.
They can decrease cost of transportation due to low shipping prices. This will help in
generating more profit and revenue from it. With change in customer trends, Crowne Plaza
can offer new services to them. It will be useful in allowing them to expand in new market.
Threats
Rise in competition from rivals can be a threat to Crowne Plaza as it will led to breaking of
large customer base. The change from physical to online business model can impact on
driven supply chain. The change in environmental laws can be a threat to Crowne Plaza
(Kamran, and Mudassar, 2020).

LO2 Asses a hospitality organisation’s internal environment and capabilities
In a business there exists internal environment as well which is within its boundary. So, it
also
highly influences on its growth and development. This is because these factors are within
organization. Thus, any change in its effect on business. Therefore, to identify those factors
there are several models and concept which is used. It is helpful in analyzing internal
capabilities as well.
Resource audit
It is based on the concept that can be understanding the strength as well as weakness of
resource
base of Crown plaza hotel. In another way, it mainly considered the quality of resource that
already available in the hotel. Furthermore, Crown plaza hotel is implementing an effective
strategy through resource audit. In crown plaza, it should be considered the different resource
audits such as Human resource, financial, physical as well as intangible.

Likewise, for Crowne Plaza, VRIO model will be used to identify internal
factor which are explained as below
the RBV of hotel is as follows :
HR- they are man power who perform all task and activities in hotel. HR are essential
resources that is required in Crowne Plaza hotel. there are total 36,463 staff working in
it. the staff is highly skilled and experienced who perform various tasks.
physical- they are those elements which is needed in doing operation such as machine,
computer system, building etc. these all are necessary elements in Crowne Plaza hotel.
there are total 3600 hotel in around 100 countries. thus, it is having extensive presence
in many countries.
operational – they are elements that is needed such as tools and machinery equipment. In
Crowne Plaza hotel it is required for various operations such as housekeeping, laundry
etc. the hotel operate in effective way as all functions are interrelated to one another.
financial – it is crucial element which is needed to perform task. Funds and capital are
required to buy resources in Crowne Plaza hotel. the revenue earned in year 2019 was
$4.3 billion. so, financial performance is highly stable of hotel.
Tangible- they are physical asset which include land, labor, etc. they can be brought from
market easily. For Example- Marriott hotel, it tangible resources are land, employees and
services.
Intangible – These are those assets which is not having any physical value. It includes
trademark, goodwill etc. However, in Crowne Plaza intangible are goodwill and logo.
VRIO is a model which is used to find out internal capabilities of Crowne Plaza hotel so that
whether competitive advantage can be gained or not. Likewise, the analysis is as follows
Valuable - it refers to valuable resources which helps in generating value and gaining
competitive advantage. In Crowne Plaza the resources that are valuable are employees. it is
because the staff working are highly skilled and knowledgeable. they possess high quality
skills to work at different roles. The organization is having skilled and experienced staff.
Also, service offered by them are highly innovative (Rahman, Islam and Ahmad, 2019). For
Example-
Rare - they are those resources which can be acquired by few companies are considered as
rare. Thus, Crowne Plaza’s employees are rare resources as other organizations can train staff
to become highly experienced. It will enable in achieving of goals in effective way and
gaining of competitive advantage.

Imitability - they are those resources which are costly to imitate. This means for other
resources it requires huge cost to acquire that resource. Therefore, Crowne Plaza’s innovative
products are costly to imitate. It needs huge investment for other hotels to copy it and gain
competitive advantage in the market by using it.
So, it is found that resources do not provide any benefit to hotel if there is no value
generated by them. thus, it is necessary for business to manage its procedure, structure etc so
that potential of its resources is increased (Kamran, and Mudassar, 2020).
Thus, it is evaluated that hotel internal capabilities are not enough which can be used to gain
competitive advantage. There are many rivals already operating in Crowne Plaza hotel. So,
there is stiff competition in it. However, with change in trends there is need to develop new
services. It will be useful in increasing capabilities. Besides, technology needs to be used as
well to enhance efficiency within operation (Amar, Syariati and Rahim, 2019).
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces
model to a given market sector
Porter’s five force of competitive position analysis that were developed in 1979 by
Michael E porter of Harvard business school as simplest framework for evaluating as well as
assessing the competitive strength, position of enterprise (Ginindza and Tichaawa, 2019).
This theory is to be consider as concept that can identify the competitive intensity,
attractiveness of market. The theory will help for identifying where power lies in current
enterprise condition or situation. Furthermore, it is helpful for understanding the entire
strength of business.
The porter’s five force is a holistic strategy framework that took a strategic decision
which help for analysing the current present competition level in global marketplace.
Threat of New Entrants
New entrants in hotel brings innovation which providing the better way to improve
overall business capabilities. In some situation, it is putting pressure on the InterContinental
hotels group through lower pricing strategy (Amar, Syariati and Rahim, 2019). Therefore,
The organization will be reducing the price/ cost for product as well as service. so as they can
easily targeting the large number of existing customer in order to generate value proposition
Crowne Plaza has managed all these various challenges that can build an effective barrier to
maintain safeguard its competitive edges. The threat of new entrant is low.
Nowadays, The economies scale has been changed in marketplace whereas
InterContinental Hotel Group PLC can expand the business across the world. Sometimes, it is

important for organization to produce the better quality of product as well as service at
reasonable price and gain the competitive advantage. The product differentiation is strong
within Crowne Plaza (Ginindza and Tichaawa, 2019).
Bargaining Power of Suppliers
The InterContinental Hotel can buy their raw material from multiple suppliers. It
always dominant the current position which automatically decreases margin of Hotel.
Sometimes, it is to be considered as a powerful supplier in Hotel enterprise where they
always user their negotiating power. The bargaining power of supplier is high (Chun-Lai,
Espino-Rodriguez and Baum, 2019). The causes are when large number of supplier and each
one has owned demand so that it directly affects on the overall enterprise profitability in
marketplace For Example- Crowne Plaza is implementing the product design by using raw
materials. If in case price goes upward which automatically shift to another one. Furthermore,
there are developing dedicated supplier whose enterprise depend on the organization. The
bargaining power of supplier is medium.
Bargaining Power of buyers
Nowadays, Buyers are very demanding a lot. If customers want to buy the better
offers which available by paying minimum cost as possible. It also putting pressure on
Crowne Plaza in term of profitability for long term business (Turner and Hesford, 2019). The
powerful customer base is InterContinental hotel group which has a higher bargaining power
because it provide the online medium to check availability of services. In this way, Crowne
Plaza provide the better facilities and services such as increasing discounts, offers.
InterContinental hotels group can tackle the bargaining power of buyers where they
will try to reduce the bargaining power. It will be increasing the opportunity to hotel in term
of sales as well as production process (Ginindza and Tichaawa, 2019). As rapidly innovating
the products which often seek discounts and offering the established item so that Crowne
Plaza hotel keep on coming up with innovation.
Threat of substitute
Threat of substitutes in Crown plaza is relatively low, expect in the time of recession
that can easily thrive threat. Whenever many people looking for cheap accommodation to live
in hotels. Generally, the market is price sensitive and target the audience which become
conscious client.
When a new item or service meet the similar customer requirements in different manner
(Rahman, Islam and Ahmad, 2019). In another way, it is mainly suffering the profitability of
Crowne Plaza hotel. For Example- Service like Dropbox and other Google drive are

considered as substitute to collect or store large amount of data (Rahman, Islam and Ahmad,
2019).
Furthermore, it can be applying the services rather than other item oriented the core
requirement of customer rather than what client is buying.
Rivalry among existing competitors
The Rivalry among existing players in the market which become intense and it will
drive low price. In Crown plaza, the intensity of rivalry is depending on the size of
competitors, equally balanced the competition which may lead to increase the high level. In
this way, the growth of Crown plaza business is greater than rate of growth of industry. The
rivalry become more intense in fixed price, particularly in carrying the cost industries such as
IHG.
In above discussion, it has been summarised about the competitive force of
InterContinental Hotel group which gain more complete analysis and impact on the business
profitability (Ginindza and Tichaawa, 2019). Sometimes, it is also identifying change trends
which always support for emerging business opportunities. Porter’s five forces is becoming
an important strategy for addressing the competition level in marketplace.
LO4 Apply models, theories, and concepts to assist with the understanding and
interpretation of strategic directions available to a hospitality organisation
There are different theories, model and concept that will help for Intercontinental hotel group
for assisting, understanding interpretation, direction of organization. The porter’s generic
strategy matrix which mainly highlights cost leadership and differentiation (Lauer, 2019). It
focus on the different choice of “Crowne Plaza” hotel which always dominated corporate
competitive strategy for over past decade.
According to model, the “Crowne Plaza” can select how they want to compete, based
on the competitive advantage. Cost leadership Strategy is based on the business which mainly
organising as well as managing its value added services. In order to reduce the price of
product as well as service. Sometimes, cost leadership is likely to interrelate with enterprise
feature which easily managing value chain and combined with high capacity utilization
(Islami, Mustafa and Latkovikj, 2020). “Crowne Plaza” as pursing some valance between
differentiation as well as low prices. The management of hotel to keep reduce the price and
attract more customer segments in marketplace. In another, it is important for understanding
the customer that give more superiors in some way that other by other competitors.
Sometimes, “Crowne Plaza” use strategy to emphasis on the creating low value due to their

uniqueness. It directly opposed to low price/ cost (Islami, Mustafa and Latkovikj, 2020). The
uniqueness can be easily achieved with the help of superior services, advertising and other
better supplier relationship which leading the organization. In order to differentiate the price
of services between one or more hotels. On the other hand, Focus Strategy is based on the
segmentation where it is targeting the potential customer through product as well as service.
“Crowne Plaza” consider focus strategy that have an able to determine their target market. In
order to meet their desirable goal and objective. The strategy can be differentiating the lower
price and emphasizes with price is become rare in IHG hotels.
Ansoff Matrix
It is based on the product or market expansion grid which mainly used tool or
platform by organization. In order to analyse or plan their strategies in term of growth. The
matrix is generally representing the different strategies that can be used to help the Crown
plaza hotel in term of growth and development (Islami, Mustafa and Latkovikj, 2020).. On
the other hand, it also helping to analyse the risk which associated with different strategies in
proper manner.

 Market Penetration: It is mainly referred the act of selling existing product as well as
service in marketplace. Crown Plaza hotel is one of greatest way for increasing
overall business productivity as well as profitability (Islami, Mustafa and Latkovikj,
2020).. This strategy will help for offering discounts to return the client results.
Crown plaza use this hotel which allows certain to avail offers, discounts.
 Market development: Crown plaza hotel use the strategy for promoting the existing
item in global marketplace. Generally, it help for opening a new outlet. It allows for
hotel to develop the product on the basis of customer need and requirement (Islami,
Mustafa and Latkovikj, 2020).. Crown plaza hotel employ to cater of new market
segment from different regions. In order to provide the new service in affordable
price.
 Product development: When a crown plaza hotel launch a new item into existing
market and always focused on the attracts more customers. This hotel can offer the
room with full of innovation which facilitates that were being offered.
 Diversification: it is another important strategy that help for promoting new item in
marketplace. Crown plaza hotel can integrate by planning as well as cooking their
own foods (Islami, Mustafa and Latkovikj, 2020).. In order to maintain the different
services such as transportation add more valuable services in proper manner.
Balance score card
 Balance score card is way in which Crown plaza hotel leader to gauge progress
towards the strategies objective in proper manner. it has considered the both non-
financial as well as financial KPI metrics (Rahman, Islam and Ahmad, 2019). In this
way, it help for measuring the overall business in different aspects.

Key performance indicator is the most commonly used to help crown plaza
hotel effectively manager and guide their progress (Rahman, Islam and Ahmad, 2019). In
this way, it support for identifying overall performance of organization.
Non-financial KPI
 Maintain the online rating score
 Customer satisfaction rate
 Net promoter score
Mission
statement
To enhance the overall business profitability as well as productivity.
Vision To acquire innovation for improving the current business efficiency and
performance.
Values The value of enterprise that help for expanding the overall capabilities and
abilities. In order to generate more value.
Strategic
priorities
It is mainly considered the specific goal statement which help for
providing the meaningful idea and time bound.
Strategic
objective
(SMART)
KP1 (Key performance indicator)
Financial  Available the net revenue per available room facilities.
 Estimate the total revenue and identifying average room rate per
guest.
Customer  Customer retention rate.
 Customer satisfaction score
Established the strong employee engagement
Internal
process
 Internal as well as external hotel goal
 Focus on the customer demand.
 Improve the information service and cost control
People  Maintain the quality of product as well as service

 Implement technology strategy to improve capacity of hotel
performance.
 Improve knowledge and skill
Financial  Available the net revenue per available room facilities.
 Estimate the total revenue and identifying average room rate per
guest.
Table: 1
Target plan and action plan
S.No. Target Plan Action plan Time intervals
1.  The crown
plaza hotel is
mainly
targeting the
travellers,
who will
spend quality
time with
families,
close friends
and special
guest.
Generally,
crown plaza
hotel provide
the better
quality of
service to
potential
guest so that
 Implementing
the effective
digital strategy.
 Target the
domestic
travel, local
drive-in
market.
 Providing the
discounts,
offers and
promoting the
hotel services.
 Market to loyal
members.
 Utilise
personalization.
2-3 month

they can
enjoy their
holidays.
Table:1

CONCLUSION
From above discussion, it concluded that Hospitality industry consider the business
strategy which always supports for providing better direction towards competitive advantage.
It can be identified the set of competitive moves, action that enterprise uses to attract more
customers, performance.
It has summarised about the Pestle analysis, VRIO framework which help for
analyses the impact and influence on the macro environment within organization. These
frameworks are efficient in term of internal as well as external analysis of macro environment
of InterContinental Group of hotels. Furthermore, the documentation has been analysing the
concept of Porter’s five force model and how it can appropriate for determine the competition
level in hospitality industry. However, it can be identified the various theories, concept and
model that assists to understand strategic direction of hospitality industry.

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