Business Health Check Report: Hospitality Sector Analysis, Strategies

This report provides a business health check analysis focusing on the hospitality sector, specifically using Merlin Entertainments Plc as a case study. It begins with an introduction to business health checks and the chosen company, followed by an examination of the business's objectives, both short-term and long-term. The report then delves into the factors impacting the business, employing SWOT, PESTLE, and Porter's Five Forces analyses to evaluate internal and external influences. It also explores potential improvements, highlighting the application of Ansoff's Growth Matrix. The report further assesses the effectiveness of the business, proposes plans for improvement, and evaluates the current skills of management and staff, outlining strategies for skill development. The report provides a comprehensive overview of the business's strengths, weaknesses, opportunities, and threats, offering insights into strategic planning and operational enhancements within the hospitality industry.

Business Health Check

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Objectives of business in hospitality sector:.........................................................................4
1.2 Impact of various factors on the business:............................................................................6
1.3 Potential improvements in business operations: ..................................................................8
D1. Contribution of Ansoff’s Growth Matrix in the improvement of Merlin Entertainments
Plc:...............................................................................................................................................9
TASK 2..........................................................................................................................................10
2.1 Effectiveness of business....................................................................................................10
2.2 Plans to improve the business effectiveness......................................................................11
M2. Evaluation of how effectiveness of business can contribute to the organisational growth.
...................................................................................................................................................12
D2. Evaluation of development plan which can lead to the improvement in business.............13
TASK 3..........................................................................................................................................13
3.1 Evaluation of the current skills of management and staff...................................................13
3.2 Plan for developing management and staff skills...............................................................14
M3. Analyse of current experience, skills and abilities of management and staff...................16
D3. Various methods that can be used to develop the skills of management and staff............16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17
this place is called commercial real estate. ...................................................................................2

INTRODUCTION
In any organisation that operated in hospitality sector, a business health check should be
required to maintain sustainability in its business operations and processes. This helps in
creation of clarity in the operations and provides positive environment for adopting changes
in the field of hospitality. For better understanding of business health check, Merlin
Entertainments Plc is chosen which deals in hotel business and operates in 127 attractions,
19 hotels and 7 holiday villages in 27 countries. This report is divided into three task; first
task describes the understanding of business focuses, its objectives and factors that impact
on the business of an organisation. Second task tells about plan development stage for
business involving review of business effectiveness whereas third task explains current skills
of management and staff and related matters. This report also describes the plans required to
development of requisite skills in the management team and staff of the organisation.
TASK 1
Brief history of Merlin Entertainments Plc:
It is a British-based company headquartered in Poole, Dorset. It is listed on London stock
exchange and is a constituent of the FTSE 250 Index. Nick Varney, Andrew Carter and senior
management team of Vardon Plc establishes Merlin Entertainments Plc in December 1998 by
process of management buyout. Merlin Entertainments is the second-largest amusement park
corporation by annual attendance.
1.1 Objectives of business in hospitality sector:
Long and short-term objectives of the hospitality sector business are as follows:
Long-term goals: Long-term objectives includes specific improvements in the competitive
position, return on investment, employee relationship and productivity and these are intended to
achieve over a period of five years or more (Porter and Tanner, 2012). For growing a business,
there is a requirement to have some long-term goals; as a result, company may work towards
achievements of such long-term goals. These includes the following:

 Maintain the business and increase profit
 Expand the business and offer other distinctive services
 Increase shareholders wealth
Maintain the business and increase profit:
For enhancing Merlin Entertainments Plc’s profits, there is a need to find its key profit
drivers and thereafter, make plans & strategies to enhance the profits from these key profit
drivers without increasing costs at the same time. Another way to enhance the profits and
maintain business operations is to set benchmarking standards for its critical business processes,
evaluate them with actual performance of staff, and accordingly take corrective actions.
Expand the business and offer other distinctive services:
An organisation like Merlin Entertainments Plc should have this goal, because it helps in
diversification of business in other places other than domestic location. An organisation in this
sector should also provide other distinctive services related to its core business products and/or
services. For expanding the business, there is a strategy called market penetration, which may
assist the management to grow and expand its operations. In this strategy, price of the products
and/or services should be reduce to attract the new customers with lower price. Another strategy
to widen the reach is to expand distribution channels for distribution of its products (Inoue and
Yano, 2012).
Increase shareholders wealth:
The main goal of an organisation in this industry is to increase the shareholders wealth in
long run by utilising funds in best efficient and effective manner. For achieving this, Merlin
Entertainments Plc should set some standards of working for its staff, employees and
management to reduce the wastage of its key resources. Preparing budgets may be one strategy
to control and supervise the workings of personnel of the company.
Short-term goals: A short-term goal is something, which an enterprise wants to do in near
future that helps the company to make big change in business and assist in achieving its long-
term goals. This goal is set for achieving over period of one year or less, it includes the
following:
 Create publicity
 Offer customers with best services
 Best use of management skills

 Cover initial cost and expenses
Create publicity:
The first most goal of any company is to create publicity of its products and/or services
that it provides to the potential customers. This will enhance the market demand of company’s
products, which will lead to increase its sales and ultimately earning high profits. For this,
company can do so by giving more advertisements in the newspapers, T.V. and through other
modes. An initial advertisements cost may lead to tremendous publicity of the company among
the target customers.
Offer customers with services:
A short-term goal of an organisation working in this industry should include serves its
potential customers by providing best services so that customers may get satisfied.
Consequently, Merlin Entertainments Plc can earn higher profits for its stakeholders.
Best use of management skills:
The important goal of an organisation is to optimum use of its management personnel’s
skills. This is necessary for business perspective because by optimum use of skills, an
organisation can achieve its vision, mission and objectives.
Cover initial cost and expenses:
It should be the short-term goal of any organisation in hospitality sector to recover its
initial cost and expenses to achieve profits in short run. This is also mandatory for its survival in
the long run because is an organisation is not able to recover its initial cost then it cannot survive
in long run (Goins and Pye, 2013).
1.2 Impact of various factors on the business:
In a business environment, there are various factors that have influences on the functioning
of the business operations and processes. Some of them factors reside within the organisation
and some are outside the organisation, consequently these are categorised as an external and
internal factors based on source of these factors. These factors can be explained in detail by
following analysis strategies:
 SWOT Analysis
 PESTLE Analysis
 Porter’s five Forces
SWOT Analysis:

Swot analysis is important tool for evaluating the internal and external factors, which
affect the business of an organisation and for finding the actual strategic position. SWOT
analysis are as follows:
Strengths Weakness Opportunities Threats
Merlin
Entertainments
shall find is
internal factors
that provides
strengths to
the company.
for example,
qualifies
personnel,
competitive
advantages
etc.
Weakness are the
qualities that prevent
an organisation
achieve its mission,
vision and so more.
Organisation should
identify those factors,
which influences
company in
downgrading of its
operations.
These external factors
are present in outside
environment.
Opportunities assist the
company in achieving
its goals and objectives
in long run. An
organisation should be
careful to recognise
opportunities and take
benefits from them for
growth of business.
Threats are those external
factors that act as barrier in
smooth functioning of
business operations.
Organisation must require
identifying these threats
and accordingly taking
corrective measure for
efficient functioning of
business.
PESTLE Analysis:
PESTLE analysis is an analytical tool, which assist the organisation in making strategic
planning. This is required to conduct for obtaining knowledge of external factors affects the
business operations. It is to be done in following manner:
 Political factors: These are the factors, which is brought by the political institutions that
creates pressure on the organisation by providing various restrictions or initiatives. For
example, Government policies, government term and change, grants and political trends
etc.
 Economic factors: These factors are key determinants of economic performance of the
company. economic factors includes exchange rate, inflation rates, disposable income of
consumers and so on, any change in these economic factors lead to positive or negative

impact on the business functioning of an organisation working in hospitality sector
(Abdelhak, Grostick and Hanken, 2014).
 Social factors: An organisation as if Merlin Entertainments Plc should require evaluating
social factors because it can affects the organisation in both short and long run.
Therefore, the management before setting strategic plans must consider any frequent
changes in these factors.
 Technological Factors: These factors are related to innovations in the technology that
may affect the operations of Merlin Entertainments Plc either in favourable or
unfavourable manner.
 Legal Factors: These factors include specific laws and regulations, which are followed by
the all organisations operated in that geographical location in which such laws and
regulations are in force. A company should be necessary to into consideration these
factors while doing business in other countries where laws are different as compared to
its domestic company.
 Environmental factors: These factors becomes important due to the increasing scarcity of
the raw materials, pollution targets and climate change. Organisation should provide
awareness to its employees and staff about the optimum use of its key resources and
make plans to survive smoothly in a situation of natural calamities.
Porter’s Five Forces:
This theory is based on the concept that there are five forces that determine the
competitive strength and attractiveness of an organisation. Porter’s five forces assist in
determining which is the key area in business, which is essential for its success. Porter’s five
forces are as follows:
 Supplier power: In this, organisation need to set the prices, which is more beneficial for
its business operations. This is determined by number of suppliers available, relative size
and strength of the supplier and the cost of switching one supplier to another.
 Buyer power: This includes an assessment that how potential buyers set the prices down
and this is determined by numbers of buyers in the market, importance of each individual
buyer to the organisation and so on.

 Competitive rivalry: In this, organisation needs to determine the number and capability of
the competitors in the industry. Many competitors, offering undifferentiated products and
services, will reduce market attractiveness.
 Threat of substitution: It is a threats for an organisation where there are number of
substitute products available in the market. It will increase the likelihood of customers,
which want to use other substitute products.
 Threat of new entry: if an industry makes more profits then it may attract new entrants
which can reduces the profits of the existing organisations. For avoiding this situation, an
organisation need to establish some barriers to entry (Tong, Song and Zhu, 2013).
1.3 Potential improvements in business operations:
Improvements in a business operation can be achieved by applying Ansoff Growth Matrix.
Improvements should be required for its growth in long run to make higher profits. This is as
follows:
Ansoff Growth Matrix:
It is also known as the Ansoff Product-Market Growth. In this matrix, there are four ways
to grow and improve a business model and it should be presented in diagram form, which is as
under:
The procedure of this matrix are as follows:
Market Penetration:

Market penetration is the less risky strategy because it uses the existing resources and
capabilities. In a growing market, maintaining a same market share is enough to grow in this
stage.
Market development:
In this stage, organisation should develop another market for its product so that sales can
be increases and consequently, improvement in business can be achieved. However, in this
strategy, there is a more risk than simply increasing the market share in the existing market.
Product Development:
This strategy may be suitable when organisation’s strengths is related to its potential
customers instead of its particular product itself. In this strategy, Merlin Entertainments Plc can
improve its business by strengthen its customers by developing its core products.
Diversification:
This is the more risky strategy among all four strategies of Ansoff Matrix because it
requires development in both products and market. However, diversification should be
reasonable taking into account of other factors and an important advantage of diversification
include entry in the attractive industry and reduction in overall business portfolio risk.
D1. Contribution of Ansoff’s Growth Matrix in the improvement of Merlin Entertainments Plc:
By applying Ansoff’s Growth Matrix, Merlin Entertainments Plc may improve its core
business processes. It can use any of four strategies of this matrix for improvement in the
functioning of its operations. For example, as selected company is leading company in
hospitality sector, Merlin Entertainments Plc can use diversification strategy to enhance its
profitability (Senić and Marinković, 2013).
TASK 2.
2.1 Effectiveness of business.
Business effectiveness- It can be defined as a kind of process which is related to
achieving goals and objectives on given time and as per the available resources. Eventually, it is
necessary for the organisations to be effective and innovative towards their objectives. In the
context of , the effectiveness is measure by various factors which are mentioned below: Products and services- The products and services are two different terms. Eventually,
product refers to a kind of commodity which can be seen or touch and satisfy the demand

of customers. While services are not the physical goods and transferred from seller to
buyer. Herein, it is necessary that these products and services should be effective and able
to satisfy the need of customers. Like in the Merlin entertainment plc, they provides a
wide range of services to their customers in multi-pal countries so it is necessary for them
to provide effective services so that effectiveness can be improve. Marketing- It is related to the promoting the products and services so that sales can be
increase. In this aspect it is necessary that how effectively companies are promoting their
products and services. This is an important factor to measure the effectiveness of
companies. Like the Merlin entertainment plc, promote their products and services by use
of different marketing channels. Yet they are required to follow some other strategies
which can enhance their selling and profitability. Sales- It can be defined as the transfer of products and services from seller to buyer in
return to money. If company's sales are decreasing then effectiveness will be low as well
as if sales is high then effectiveness will be high. So sales is directly linked up with the
effectiveness. In the Merlin entertainment plc, their sale growth is high and increasing
continuously which defines the effectiveness. Finance- This is the key for all kind of organisations, in the absence of it companies can
not perform their activities and operations. So it is an important element to measure the
effectiveness. In the Merlin entertainment plc, they have source of finance which is
earning from selling of services and products. Apart from it, they do not have any another
source of finance. Staffing- It is associated with the group of employees who performs different kind of
tasks and activities as per own skills and abilities. If organisations have good skilled staff
then automatically effectiveness will improve. This is why because if staff is skilled and
capable then they will be able to satisfy the need and demand of customers. Such as in the
Merlin entertainment plc, their staff is well skilled and capable that helps in meeting the
customers requirement. Apart from it, they do not have all their employees skilled this is
an issue for them. Business image- It can be defined as the reputation of companies which is earned by
providing better products and services to the customers. If company's brand image is

good then effectiveness will be high. Like in the Merlin entertainment plc, their goodwill
is high because of quality service and products.
 Record keeping- It is necessary for the companies to keep the record about customers so
that they can take feedback. If organisations have detailed record about the customer's
information then it will be beneficial in improving the effectiveness. For example in the
Merlin entertainment plc, they have record about customer and accordingly they provide
services as per their preference which improves their effectiveness.
2.2 Plans to improve the business effectiveness.
Business planning- The business planning can be defined as a kind of process which
consists information regarding to the organisational goals and objectives. As well as it consists
methods to achieve these goals. In the Merlin entertainment plc, they are required to prepare
business plan which can improve their effectiveness. Herein, below the way of preparing plan of
Merlin entertainment plc is mentioned below:
 Research- It is the first step of preparing a business plan. Under this, companies are
required to conduct a research about product, market and objectives. Due to this
companies can evaluate about actual position in the market. In the Merlin entertainment
plc, this is required for them to do the appropriate research about the condition of their
products and services in the market.
 Determining the purpose of plan- This is the second step for developing the business plan
in which the purpose of plan is discussed. Basically, it is necessary to communicate the
objective of plan among all the members of organisation. Herein, Merlin entertainment
plc their objective is to improvement in the some aspects such as marketing, financing,
staff etc. So the purpose of business plan should be clear, achievable and realistic.
 Collection of needed resources- The next step is to gathering needed resources so that
purpose of development plan can be achieved. As well as in this the resources are
collected as per the goal of development. Like in the Merlin entertainment plc, their
purpose is to improving the above mentioned aspects such as marketing, finance and
sales. So it is necessary for them to gather the resources accordingly.
 Implementation of plan- It is a kind of step which is related to the putting the plan into
action so that desired result can be achieved. In the aspect of Merlin entertainment plc, it

is necessary for them to put the development plan into the action. Eventually, this is the
necessary step to follow otherwise the plan can not be success. Such as in the above
respected company, their objectives can be achieved if they will apply their plan into the
action.
 Review and corrective action- This is the last step of the plan. In this stage the plan is
evaluated by certain standards. As well as if plan does not succeed then corrective action
is taken. Herein, the Merlin entertainment plc they evaluate their plan after
implementation and take suitable steps if outcome is not desirable.
M2. Evaluation of how effectiveness of business can contribute to the organisational growth.
The effectiveness of business is very important in the context of the organisational
growth. If all the aspects of company are effective then automatically it will help in improving
the growth. Such as in the Merlin entertainment plc, their different aspects like products,
services, sales and business image are good that helps them in growing. On the other hand, some
aspects like staffing, marketing etc. are not in better condition and due to this their growth is not
good in these areas. So overall, the effectiveness of the business into different areas can help into
the growth (Thorat and Neuman, 2012).
D2. Evaluation of development plan which can lead to the improvement in business.
The development plan helps to the companies in improving the different areas for which
it is prepared. It consists various aspects such as time frame, resources to achieve the goals and
objectives of development plan. Herein, the Merlin entertainment plc development plan the
purpose of plan is to improve the marketing, sales and staffing skills. For this purpose it is
necessary for them to implement all the steps of development plan in a systematic manner so that
their target can be achieve. Their development plan consists some steps which are needed to be
follow as well as each step includes some parameters. So overall, the business development plan
of the Merlin entertainment plc is suitable and as per their desirable objectives.