Elmtree Hotel: Comparative Performance and Business Expansion Analysis

This report provides a comprehensive analysis of Elmtree Hotel, a small UK-based hospitality business. It begins with an introduction to small businesses and the hotel's profile, including its size, objectives, structure, and type. A SWOT analysis identifies the hotel's strengths and weaknesses, followed by an analysis of its performance using comparative measures such as customer satisfaction, employee motivation, and operational quality, including financial performance metrics. The report then addresses actions to overcome identified weaknesses, ways to maintain and strengthen current performance, and recommendations for business expansion using the Ansoff matrix. It concludes with an assessment of existing business objectives, a revised business plan, an action plan for implementing changes, and an evaluation of the impact of proposed changes on the business and its personnel, including how these changes will be managed and monitored to improve performance.

SMALL BUSINESS
ENTERPRISE

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1: Profile of business to identify its weakness and strength................................................3
1.2: Analysis of the business using comparative measures of performance..........................4
..........................................................................................................................................................6
TASK 2............................................................................................................................................8
2.1: Actions to overcome the identified weaknesses with justifications................................8
2.2: Analysis of the ways for maintaining and strengthening the current performance.........8
2.3: Recommend new areas where the business could be expanded with justification.......10
TASK 3..........................................................................................................................................11
3.1: Producing an assessment of the existing business objectives and plans.......................11
3.2: Revised business plan to incorporate changes..............................................................12
3.3: Prepare an action plan to implement the changes.........................................................13
TASK 4..........................................................................................................................................14
4.1: Impact of the proposed changes on the business and its personnel...............................14
4.2: how the changes will be managed in the business........................................................15
4.3: Monitor improvement in the performance of the business............................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Small business are the companies which are owned by single or more than one
individuals for accomplishing a predetermined set of objectives and goals for gaining profit and
growth in the market. Such business employs limited number of workers with a small sales and
revenue. The number of small and medium enterprises contributes huge efforts for brining
change and development in the economy or country. The taken company is Elmtree hotel in this
report who is providing hospitality services in UK. This report will discuss comparative measures
of performance with the type, structure, size and objectives of the hotel for identifying its
weakness and strength. Analysis for maintaining performance and justifications to overcome
weakness to expand the business in new areas has provided. An assessment along with action
plan of existing business objectives and revise plans to incorporate appropriate changes has also
been discussed. Further the impact and management of proposed changes for improving the
performance of hotel.
TASK 1
1.1: Profile of business to identify its weakness and strength
Small business enterprise are the business having less than € 10m turnover and staff of
below 50 people. Elmtree hotel is a UK based hotel who is providing facilities such as luxury and
comfortable rooms, lounge, guests house, parking, food and various other modes of
entertainment to their potential customers who are seeking for their quality based services. This
hotel is providing hospitality services to the people in UK for their comfortable and luxurious
stay (Allen and Truman, 2016).
Size:This hotel is a small enterprise with a revenue of less than € 5m and employs a small
number of people.
Objective: To provide their quality based services to the clients in order to provide them
better accommodation and food during their journey for generating profit.
Structure: Elmtree hotel follows hierarchical structure. The CEO or Owner is the main
head and after that comes general manager of hotel. Various employees Under general manager
such as workers of food and beverage services, marketing and sales, room service, housekeeping
and maintenance departments.

Type: Elmtree is a sole proprietorship type hotel which is owned by a single person who
is the CEO of hotel (Barkham, Gudgin and Hart, 2012).
SWOT analysis for identifying strengths and weakness
Strengths Weakness
 Location of hotel is quite attractive
which positively impact the mind of
customers.
 Hotel is awarded by No.1 hotel in UK
for providing quality services.
 low budget for expansion and R&D
services.
 Delays in serving customer due to less
skilled staff.
 Less participation in government
activities.
Threats Opportunities
 Huge number of big competitors in the
UK hospitality sector.
 Government interference in the
business activities of Elmtree Hotel.
 Company can provide additional food
products in their hotel menu for
attracting more customers.
 Huge opportunities for hotel to expand
its services to all over UK using
mergers and acquisition with small
hotels.
1.2: Analysis of the business using comparative measures of performance
Comparative performance measure is the method of analysing performance of a business
or firm in order to determine its position and areas of improvement in the market. It is the most
difficult task done by employees or managers. It is also helpful in determining whether the firm
is achieving its goals or not (Bridge and O'Neill, 2012). The measures are given below:
Customer satisfaction: Expectations of customers for buying a product or services must
be met by providing better services. Elmtree should provide good quality services to its clients in
order to get customer satisfaction. According to the Assimilation theory of satisfaction,
customers consider the suitable hotels by differentiating in performance and services which are
provided by various hotels. The key elements for attracting customers in the hotel are
cleanliness, hygienic environment, price of the rooms and facilities and location. If the level of

the services provided exceed the expected level, then customer satisfaction is assured for the
hotel.
Employee’s motivation: Employees are backbone of the company and effects directly
from the implemented policies and strategies by the management. Thus it is the responsibility of
the management to motivate employees for achieving the goals set by organisation. For
measuring the motivation level various theories of motivation can be used by management for
motivating the employees (Draycott and Rae, 2011). Management of Elmtree should need to
understand the issues of workers and motivate them using required strategies and policies.
Operation quality: In this, Total Quality Management (TQM) can be implemented by
Elmtree hotel to determine the needs and expectations of the customers for delivering the
services. The aim of hotel is to serve quality services to consumers in a hygienic and healthy
environment at a reasonable price. The inadequacy in the planning, low motivation level among
employees can negatively effect the performance and the quality of services provided by hotel.

It is seen that company is able to achieve the objective of increasing the profit of the
company from year to year. In the current year the company has received a profit of Euro 159
million, where as in the previous year they have achieved the profit of Euro 98 million. This is
raised to 62% in the current year.
As the gross profit ratio of the company is 577/1008*100 which gives the figure of 57%.
as per industry benchmark it is considered as best figure.
Also the net profit ratio of the company is 159/1008*100 which shows a percentage of
15%. this needs to be increased so as to achieve more profit as per industry benchmark.

From the balance sheet of the company it is seen that they are having a current asset of
541 million Euros which is more than its previous year. It shows that the companies cash and
cash equivalents has increased in the current year. This shows a positive growth for the company.

TASK 2
2.1: Actions to overcome the identified weaknesses with justifications
Every company faces several issues and conflicts which needs to be overcome in order to
gain performance and productivity. Many barriers are directly or indirectly affecting the
performance of business firms as well as lowering the employee's productivity. Organisations
are concentrating on implementing new policies for performing well in the business which helps
in reducing these issues and conflicts. Several actions are described below:
Problem solving strategy: It is not easy for managers to track every employee's
performance and activities who are working in the hotel, which is considered as a main weakness
of Elmtree Hotel. In order to overcome this problem, management of Elmtree is focusing on
appointing new heads for each department whose responsibility is to track performance and
activities of their departments. The head of department will be responsible for establishing an
efficient communication system with employees for providing easy solutions of the problems
faced by employees (Dunning, 2013).
Provide training: Elm Tree Hotel is a small business due to which the management is not
able to provide additional training to the workers of hotel. The delays in serving is mainly due to
this unprovided training which can often leads to dissatisfaction among customers. For resolving
this, hotel should spend huge amount of money for providing training to the workers for
developing required skills for performing well in their assigned activities.
Conduct research: The Elm Tree Hotel is focused on conducting an effective marketing
research through which it is easy for firm to know about various present needs and wants of
customers, so that they can serve them in most efficient manner. Elmtree is focusing on
conducting a research analysis of market and their customers for determining the change in
behaviour and trends of customers as well as of market (Fassin, Van Rossem and Buelens, 2011).
Through this, they can identify the needs and demands of customers for serving them in an
efficient and effective manner.
2.2: Analysis of the ways for maintaining and strengthening the current performance
It is essential requirement of any small company to sustain and survive in the given
market due to huge competition from big players of industry. Maintaining and strengthening the

existing business performance is a difficult task for management which can be overcome by
innovative and creative ideas. Some of them are described below:
Market share: Market share refers to the share of products or services of a company in a
given market which is determined in percentage (Goffee and Scase, 2015). A standard percentage
must be maintained by the Elmtree as a market share for sustaining in the market for further
growth and success.
Business Penetration: For strengthening the performance of company, Elmtree needs to
penetrate different segments of the market by reducing prices of services and increasing the
quality of services provided to the customers.
Customer Relationship: Elmtree should establish close relationship with customers in
order to gain their loyalty and trust regardless of whether the client is existing customer or
potential customer. It will help company to attract these customer for visiting again.
Maintaining Performance: Management of Elmtree should need to monitor and evaluate
the performance and activities of their employees. Such measure will provide the details of
employees regarding efficiency, punctuality, productivity, absence, high labour turnover etc. for
understanding the behaviour and issues of employees for performing a task.
Product Quality: R&D department of Elmtree should continuously work to improve the
quality of services and facilities provided by hotel for ensuring customer retention. This will help
the employees to serve easily and conveniently to the customer without any issues or conflicts
among employees and customers (Gronum, Verreynne and Kastelle, 2012).
2.3: Recommend new areas where the business could be expanded with justification

Source: Ansoff matrix for expansion. 2008
Business expansion is considered as an important factor for a small firm in generating
more profit for the company. Organisations are working for developing new strategies for the
expansion of their business. Ansoff matrix is one of the most effective theories which is used by
various organisations for expanding their operations. There are four features of Ansoff matrix
which helps companies to chose suitable option for expansion which are discussed below:
Market penetration: Market penetration refers to the process of introducing new products
in a new market by the Elmtree. Adopting this strategy helps to increase market share and use of
products or services by the existing consumers for securing growth in the market.
Market development: It is the strategy which is adopted by various small businesses in
which existing services or products are introduced in the new market. It will enable Elmtree to
sustain in the new market using new pricing policies, supply and distribution chain.
Product development: Product development helps the Elmtree to introduce new and
improved product or service to the existing market. This strategy will allow the Elmtree to
develop new products, gaining insights on the needs and wants of customers and attracting new
potential customers towards the hotel.
Illustration 1: Ansoff matrix

Diversification: Diversification is adopted by organisations to develop a new and
improved product for entering in the new market. It is a risky strategy which requires huge
amount of investment.
Using Ansoff matrix, Elmtree can expand their business in the developed and developing
countries such as India, China, USA where the emerging market have huge opportunities for the
hospitality sector due to the high demand of quality services and products. The company can
improve their revenue and profit by entering into these new markets.
TASK 3
3.1: Producing an assessment of the existing business objectives and plans
Business Plan refers to the formal documentation in which information associated with
aims, objectives, mission etc. is provided of the firm. The business plan is necessary for guiding
the employees as well as to direct them for performing better.
Vision: To maintain the reputation of best hospitality firm in Llandudno Bay for
achieving the customer loyalty.
Mission: To provide the best quality products and services to the travellers and visitors at
reasonable prices for enhancing the profitability.
Strategic Objectives: The objectives of the firm is to expand its business operations in
other parts of United Kingdom. The firm also desires to provide its services to a large number of
customers for enhancing their satisfaction level. The company wants to expand its services
portfolio so that the customers can get more services while staying in the hotel. The firm has also
developed SMART objectives which are specific, measurable, achievable, and realistic and time
bound. The time period for achieving these objective sis 1 year and the target customer of the
hotel is upper class people or business persons.
Financial information
For entering in a new market, Elmtree needs sufficient funds for investing in marketing,
production, HR etc. The management of the hotel needs to develop an effective budget which is
given below:
Total forecasted budget
Budget (Millions €)

Particulars 1st year 2nd year 3rd year 4th year 5th year
Initial money 7000 10000 12000 10000 10000
Investment 3000 18000 25000 35000 18000
Total 10000 28000 37000 45000 28000
Marketing outlay
Promotion 12000 4000 9000 10000 4000
sales publicity 4000 4000 4000 4000 4000
Direct selling 4000 15000 5000 4000 4000
Total 20000 23000 18000 18000 16000
3.2: Revised business plan to incorporate changes
Vision: To enhance the market share of the firm for providing the best quality products
and services to the travellers and visitors at reasonable prices.
Mission: To maintain the reputation of best hospitality firm at global level for achieving
the customer loyalty.
Strategic Objectives: The objectives of the firm is to expand its business operations in
other countries for covering more market share. For expanding the business in new countries,
Elmtree should take decisions regarding the change in operations plan such as employees base,
policies, financial structure etc. for accommodating the changes. For implementing such changes,
Elmtree should need to adopt suitable strategies for entering into new market. Company needs to