Hilton Hotel Growth Plan: A Business Development Report

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PLANNING FOR GROWTH

TABLE OF CONTENTS
Introduction..................................................................................................................................................1
Task 1...........................................................................................................................................................2
P1 Analyze key considerations for evaluating growth opportunities and justify these considerations
within organizational context..................................................................................................................2
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix for selected UK
based organization...................................................................................................................................4
M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context.............................................5
D1 Critically evaluate specific options and pathways for growth, taking into accounts the risks of each
option and how they can be mitigated.....................................................................................................5
Task 2...........................................................................................................................................................7
P3 assess the potential sources of funding available to businesses and discuss benefits and drawbacks
of each source..........................................................................................................................................7
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate source of
funding for a given organizational context..............................................................................................8
D2 Critically evaluate potential sources of funding with justified argument for the adoption of a
particular source or combination of sources, based on organizational needs..........................................8
Task 3...........................................................................................................................................................9
P4, M3 Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business..........................................................................................................................9
D3 Present a coherent and detailed business plan that demonstrates knowledge and understanding of
how to formulate, apply and achieve business objectives successfully.................................................12
Task 4.........................................................................................................................................................13
P5 Assess exit or succession options for a small business explaining the benefits and drawbacks of
each option.............................................................................................................................................13

M4 Evaluate exit or succession options for a small business comparing and contrasting the options
and making valid recommendations......................................................................................................14
D4 Provide critical evaluation of the exit or succession options for a small business and decide an
appropriate course of action with justified recommendations to support implementation....................14
Conclusion.................................................................................................................................................16
References..................................................................................................................................................17

LIST OF TABLES
Table 1: Pro Forma Profit and Loss (in £).................................................................................................11
Table 2: Pro Forma Balance Sheet (In £)..................................................................................................12

Introduction
Planning for achieving the growth is important to the business as it ensures in giving the competitive
objective. In the present report, the study will be related to the hotel Hilton growth for planning. It will
include competitive advantages, porter’s generic strategy and new product or service strategy to meet
the advantages. The report will also explain sources of funding and recommendation on the adoption of
one or two will be given with justification. The systematic business plan considering financial and
operational strategies of the hotel Hilton will also be shown. At the end, the study will discuss exit or
succession strategies with giving suggestion on the one suitable for the hotel Hilton. Hotel Hilton is the
UK based organization offering effective hospitality services across the world.
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Task 1
P1 Analyze key considerations for evaluating growth opportunities and justify these considerations
within organizational context
Competitive advantage to the business is to make the optimise use of available resources to increase the
growth and revenue of the firm. Hotel Hilton competitive advantage is to offers digital hospitality and to
maintain this, organization digitalization efforts initiatives are connected with mobile services, booking
channels, data driven personalization and loyalty, privacy and guest experience. However, useful
integration of the digitalization develops additional synergetic positive influence on the business
(Cesaroni and Consoli, 2015). Hotel Hilton and resorts for meeting the challenges to have continuity in
its competitive benefit in long and short term perception as it seen by present or new players in market
to impact negative on the market share of Hilton hotel. Due to these considerations, it is important that
organization should consider the new products and services of the hotel along with Porter’s generic
strategies to manage its competitive advantage.
New Product and service strategy
On the timely basis, organization shall remain innovative in producing the new products and services to
maintain the competitive advantage. On this the role of innovation, product life cycle, growth option and
collaboration can be considering in new product development of hotel Hilton.
Innovation: This model shows the relationships in six simple manners to grow in concern with four
quadrants such as evolutionary, differentiation, fast frail and revolutionary. Innovation budgets very
definite and in that case hotel Hilton has to lower down the risk and concentrates on the most
appropriate bets (Visnjic et.al. 2016). The particular percentage is given to all four models like
evolutionary that include new features and experiences. Differentiation includes new offerings and new
models and revolutionary includes new offerings, new models and new customers. Lastly, fast fail
include considering new models and customers. Innovation is the foundation for introducing the new
products.
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Product life cycle: A new product will progress through various stages in sequence that starts from
introduction, growth, maturity and decline (Stark, 2015). The hotel has to consider the product life cycle
stages so that marketing mix and marketing strategy can be planned accordingly.
Growth option: Once the product is introduced in the market, the hotel will seek to get brand
preferences from the customers so as to raise the market share. For increasing growth, product, pricing,
distribution and promotion options has to be seen. New product quality and add on features and support
services shall be there.
Collaboration: The Hilton hotel will also get the benefit to enjoy the competitive benefit even in case of
new product as collaboration is the effective strategy especially if the concern is related to the new
product introduction (Porter and Kramer, 2019). It reduces the risk but at the same time the profit
sharing also has to be done.
Porter’s Generic strategies
This strategy is basically divided into three parts in relation to the hotel Hilton to manage its competitive
advantages.
Cost leadership strategy: This strategy is appropriate when the organization is able to use its resources
by adding values to the activities so that production can be reduced. Many of the hotel organizations
consider this strategy as they can attract large number of customers by keeping the prices low (Bertozzi
et.al. 2017). Hotel Hilton also has to do the same and it can be done through forecasting correct demand,
economies of scale, technological benefits, outsourcing or experience or learning effects.
Differentiation strategy: This strategy is appropriate depending on the customer persuading by offering
superior quality products from its competitors. This strategy gets the positive response when the
organization actually offers some unique product or services.
Focus strategy: This strategy works on market segment of the product instead focussing on entire
market. However, this strategy is generally used with the differentiation or lowest cost that depends on
the organization objective (Cavaleri and Shabana, 2018).
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It is recommended to the firm that hotel Hilton shall take into account the focus cost leadership strategy
especially when they introduce new products or services in the market parlance for attracting the
customers towards their services.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix for selected UK based
organization
For identifying the opportunities for maintaining the growth, the hotel Hilton management can use
Ansoff’s growth matrix. This matrix helps the firm and the marketer to deploy the future growth
strategies in the business for meeting the long term objectives of the hotel Hilton based in UK. The
matrix is divided into four elements that are elaborated below:-
Market penetration: The products and services of the hotel will be sold in the present market of UK
only. The only point is to consider the factor of innovation to get continuity, customer trust and loyalty
(Grant, 2016). For the successful products and services of the hotel Hilton the more sales opportunities
can be resulted through keeping the price low, raising the promotional activities, rivalry acquisitions in
homogenous market and correct refinement of products.
Market development: The hotel gets the opportunity by expanding themselves in the new market by
presenting their existing offerings along with minimal service or product development. In this case, the
different customer segment, foreign market expansion and new areas. Hotel Hilton has to offer
uniqueness in product by digitalization, takes economies scale benefits, and newer market shall not be
new and market buyers are intrinsically profitable.
Product development: As the organization look on to the decline stage in the existing market, they can
get the opportunity by introducing new products in existing market. But on this, hotel Hilton has to
spend huge amount in research & development, acquiring right for production, product buying or joint
development as well.
Diversification: The focus of the organization is to increase the market share by introducing new
offerings in entirely new market (Gurcaylilar-Yenidogan and Aksoy, 2018). This strategy is very risky
as product and market development is also needed. Thus, this strategy is not been recommended due to
high risk but when the organization is highly developed and will not be impacted in any way then they
can take this as the opportunity to enjoy competitive benefits. Further, if the organization goes for
unrelated diversification then more risk and cost is involved.
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M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context
For getting the competitive advantage and growth in the business, it is essential to consider the
analytical framework given for hotel Hilton. The Ansoff’s framework offers four main strategies and it
is dependent on the organization nature and size and market demand that which option for growth is to
be taken. Market penetration supports in giving the major targeted audience as it reduce the price with
maintaining quality. It will also get through selling more products to the established customers or by
determining the new customers in present market. The use of aggressive promotion and distribution will
also give successful results (Ansoff et.al. 2018). Market development increases the uncertainty along
with increment in risk as well as huge resources and investment will be increased. The economies of
scale advantage will also be resulted if end result is increasing.
Product development also includes risk, if the product results into failure and organization receives non
acceptance from the customers for the new product. Hotel Hilton if want to go for this strategy has to
ensure its effectiveness and non effectiveness first. Effectiveness in the sense as it has capability to
increase the market share and targeted audience and on other side, non effectiveness means high risk can
bring high challenge for the business for failure in product. Diversification includes two types of
diversifications that are related diversification and unrelated diversification. Related diversification
related to the relationship and therefore it develops capable synergy among the firms in present business
and the market space. Unrelated diversification means the business accumulation without having any
interrelationship in any way (Ansoff et.al. 2019). This strategy effectiveness is increase in substantial
growth through showing brand in unrelated business also but high risk also can disturb the whole
business of hotel Hilton.
Therefore, on discussion on the framework it can be said that hotel Hilton should give more weight to
the market penetration growth option as risk is also less involved and also guarantees in increasing sales
and market share.
D1 Critically evaluate specific options and pathways for growth, taking into accounts the risks of each
option and how they can be mitigated
Market penetration is evaluated to be the most production growth option as it includes the less risk. The
reason for adoption of this strategy is that it results into fast growth, economic benefits, and combat
competitors but at the same it is also evaluated that at few time this option is not able to meet the
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production costs and even miss the opportunities when they make the prices low. Hotel Hilton image
will also be impacted negatively even on single product also this strategy is used. The use of technology
can also be done for success of the market penetration strategy. Product development includes risk
higher then market penetration as it can result into product failure (Eyvrigh, 2016). But the risk can be
reduced if the organization makes enhanced use of social media platform and high digitalization for
getting the success for the new product by offering information and generating growth.
Market development also supports in getting the high growth to the business. But it is also riskier then
market penetration. The benefit of this strategy is that new customers, growth and business revenue. The
risk can also be lowered down with the use of promotional advertisement for the new market of hotel
Hilton on social media and digitalization (Cesaroni and Consoli, 2015). Lastly, diversification risk level
is the highest but the advantage of this strategy is that supports in risk minimization of capital loss in
organization investment portfolio. The risk is also reduced through advertisement of product on digital
and technological platform to make aware about the hotel Hilton brand has diversified its business.
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Task 2
P3 assess the potential sources of funding available to businesses and discuss benefits and drawbacks of
each source
For increasing the growth of the hotel Hilton across UK, the need of investment is always needed. The
organization becomes incapable in expansion and growth if they do not have sufficient funds for
deployment. The main sources of funds that are presented to the hotel Hilton for growth expansion are
elaborated below:-
Bank loans: This source means borrowing the amount for set time with agreed schedule of repayment.
The amount of repayment will be based on the duration and size of loan and the interest rate. For
growth, the organization can take loan from the recognized financial institutions. The advantage of this
source of funding is that organization can keep entire control with no external involvement on business
operations along with that loan is also temporary and interest amount is also tax deductible
(Schwienbacher et.al. 2015). The major drawback of the bank loan for the hotel Hilton business growth
that it is tough to qualify and rate of interest are very high.
Crowd funding: It means collection of fund by the common public through issuing shares or through
internet. The main advantage of crowd funding is that immediate way for raising the finance, valuable
marketing form, receives feedback and expert guidance also, public relations testing can also be done,
tracking progress, will get loyal customers who were investors and lastly the alternative option in place
of bank loan for the hotel Hilton growth. But limitation is that it creates interest prior to business growth,
business reputation is adversely influenced if growth planning fails as well.
Peer to peer (P2P) lending: P2P lending is the common practice of lending the funds to the individuals
or to the businesses through online platform that links borrowers with lenders (Segal, 2015). The benefit
that the hotel Hilton will get through P2P is more accessible finance source as is also has less credit
rating and get loan at low interest rates but credit risk is very high, it not legal as per legislation and no
government protection on this source of funding.
Venture finance: It means investors give fund to start the business which is supposed to be of long term
growth. It is mainly effective for small business or new startups. The benefit of this source of finance is
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that it is act as the additional resources and business expertise is also resulted from it but its main
limitation is that hotel Hilton could loss the control as it is just like equity financing.
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate source of
funding for a given organizational context
The above mentioned sources have their own advantages and limitations but they are suitable in one or
the other form. The sources of funds are bank loan, venture financing, P2P lending and crowd funding.
But for the hotel Hilton, it is suggested to the organization to consider the bank loan for arranging the
funds for business growth and expansion. The reason for this adoption is that financial institution
offering finance is the most recognized form. The business will use as the suitable part of the financial
structure. The second justification is that banks easily give them loan as hotel Hilton has established
record of profits and due to this they will have easiness in paying interest and loan amount ( Dittmer,
2015).
The organization will also have the flexibility to the use the money according to own wish which is not
possible in venture financing. Hence, from the other finance source, the use of venture financing can
also be done as hotel is already in the growing stage and no pressure is there for the repayment for the
funds arranged.
D2 Critically evaluate potential sources of funding with justified argument for the adoption of a
particular source or combination of sources, based on organizational needs
Hotel Hilton major need is to expand their business operations that ensure the successful growth to the
business. The appropriate option selected is bank loan financing and venture financing. It is critically
evaluated that hotel Hilton will get positive impact through bank loan financing as it will include fixed
external debt that has to be paid every month with principle amount. It creates the pressure on the firm
that loans have to be repaid. The equity or venture financing option is also suitable for increasing the
growth of the business of hotel Hilton. Hilton focuses on digitalization objectives in offering services to
the customers therefore the organization has to consider the demand of the stakeholders. There demand
can be fulfilled through arranging the funds from the common public only. It means venture financing
also suitable source of funding (Martin, 2015). Further, debt and equity financing can be used in
combination to meet the business growth expansion for long run.
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