Ritz Hotel London: Strategic Analysis of Hospitality Business Strategy

This report provides a comprehensive analysis of the business strategy of the Ritz Hotel London. It begins with an introduction to business strategy and its importance, followed by an analysis of the macro environment using PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors influencing the hotel. The report then assesses the internal environment and capabilities of the Ritz Hotel, utilizing SWOT and VRIO analyses to evaluate its strengths, weaknesses, opportunities, and threats, as well as its valuable, rare, inimitable, and organized resources. A stakeholder analysis is also included to identify key stakeholders and their interests. Furthermore, the report applies Porter's Five Forces model to the hospitality market sector, evaluating the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and the intensity of competitive rivalry. Finally, the report concludes by summarizing the key findings and their implications for the hotel's strategic direction.

Hospitality Business
Strategy
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Table of Contents
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................4
LO1 Analyse the impact and influence which the macro environment has on a hospitality
organisation and its business strategies.......................................................................................4
LO2 Assess a hospitality organisation’s internal environment and capabilities.........................7
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a
given market sector......................................................................................................................9
Model of Porter's five forces........................................................................................................9
LO4 Apply models, theories and concepts to assist with the understanding and
interpretation of strategic directions..........................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCE................................................................................................................................13
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INTRODUCTION
An outline and action which is taken by an organization for the purpose of developing their
business and completing the projects is called as business strategy. The success of any business
depends on strategy and planning which is formulated by management by understanding the
market and providing the products and services. A strategy explains how a company plans to
complete in market and how it intends to grow profits (Luo, 2018). The management is the
person who plays important role by conducting market research by selecting the right strategy.
To understand about this Ritz Hotel London has been selected that is large size hospitality
industry that provides different types of services and products which can help to develop the
organizational performance.
LO1 Analyse the impact and influence which the macro environment has on a hospitality
organisation and its business strategies
About Organization - Ritz Hotel London is 5 Star hotel located in London, England. This
is one the world best hotel where number of rooms is available and offering range of services
which can help to develop the organizational performance. This organization established in 1906
and designed by specialist. The management have good skills and abilities to work who
introduce new products and services for the purpose of managing higher performance. This can
help to bring the changes and maintain higher performance. The hotel is operating with branches
in over 30 nations. This is reputable due to its high quality services and modern rooms (Cullen,
and Calitz, A. P. 2018).
Missions: To provide the finest personal service and facilities for guests who will always
enjoy a warm, relaxed and ambiance.
Vision: To delivered high level of experience to their customers and becoming a leading
organization in global market.
Objectives: The objectives of Hotel Ritz London are:
 To provides the high quality of services in hotel industry.
 To influence local and international level of customers.
 To increase the profitability up to 70% and managing the all functions.
 To maintain sustainability and competitive advantages within 2023.
The definition and meaning of strategy
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Strategy is defined as planning which governed by management in expectation of
integrating all organizational activities, brining changes, and meeting the goals effectively. In
relation to Hotel Ritz London, management use the strategy for running and managing the
organizational functions in changing environment (Nikabadi and Hakaki, 2019).
Macro Environment – This explained as situation that exists in the economy as whole
rather than particular sector or region. This involves inflation, employment, spending, and fiscal
policy.
PESTLE Analysis – This is a framework which uses by organization for the purpose of
knowing which factor might be affects its organizational performance and how to control that
explained below:
Political: This involves fiscal policy, tax rates, government regulation, stability of
government and others that affects the business. After Brexit between UK and Europe
government has been changed and formulated new Trade policy that created the difficulties for
Hotel Ritz London to sale their services in European country. This reduced the sale. On the other
side, government of UK wants to bring changes in their country growth so it provides the
subsidy to hospitality industry and marketing campaign which can help to increase the number of
customers and increase the organizational performance.
Economical: This involves economy aspects such as inflation, interest rates, population
growth and buying power of customers. In UK, inflation rates are high that can limits the buying
power of customers and reduce the sales of Ritz Hotel. On the other side, less interest rate in
selected country can increase the business performance by influencing number of customers and
providing them hotel services (Cosenz, Rodrigues, and Rosati, 2020).
Social: This consider needs and demand, health and safety, growth rate, age, distribution
career and cultural barriers which arises while running a business. As whole world is facing the
pandemic where people become health consciousness and they stopped to buying staying and
food services from any hotel industry according to government regulation that affected the
business negatively. Other side, providing different kind of sanitized services, safe and healthy
food, clean and sanitized rooms and others services in Pandemic can attracts the large number of
customers and increase the organizational sales.
Technological: This can be explained as innovation, new technology and new products
which influence the customer and maintaining higher productivity. The Hotel Ritz London is
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using new technology and services which can help to run the business in competitive
environment (López, 2020).
Legal: This involves antitrust law, discrimination, consumer protection law and health
and safety laws that needs to follow. In context to Hotel Ritz London, make sure their all
employees, and customers that organization is following health and safety laws, anti-
discrimination, food safety, and others laws which are required to operate the business. This
factor impacts positively.
Environmental: This factor involves weather, climate, changing in environment,
minimum wastages and others that impacts on business performance. The Ritz Hotel is focusing
in environmental factor and make sure customers and government that organisation is reducing
wastages, participating in CSR and increasing the sustainability (Hill, 2017).
Stakeholder analysis
This can be explained as important structure which uses by management for the purpose
of knowing their stakeholders and their rights in the organization. This states how stakeholders is
performing their roles and responsibilities. The explanation of stakeholder analysis in context to
Hotel Ritz is defined as;
Interest Level
Power Level HIGH LOW
HIGH Owners Government
LOW Employees Consumers
High Power with high interest: The management and owners are those who have whole
control and power to make decision and bring the new technology. In relation to Ritz Hotel,
owner and management have high power and low interest who conduct the market research and
bring new products accordingly which can help to get competitive advantages.
High powers with low interest – Government is playing important role formulate the
regulation for all business as having power but also having lower interest. In relation to Ritz
Hotel London, government is having high power and low interest which can help to operating a
business and managing higher performance.
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Low powers with high interest – Employees are categorised in shareholder matrix
where they holds low power and high interest. In relation to Ritz London, Employees have lower
power as they cannot make any decision but having interest in each function and activity
(Lorenzo, Rubio, and Garcés, 2018).
Low power with low interest - In relation Ritz, Hotel guests who comes to visit having
low power and interest as they does not having any right to participate in any function. In case
prices go high then customers can switch towards other organization.
LO2 Assess a hospitality organisation’s internal environment and capabilities
Internal environment along with organisational capabilities
Internal environment – This defined as internal resources and capital which having in
organization and used to operate a business and managing higher performance. To run a business
it is important to have good understanding about internal activities and bring the improvements
which support the business. The internal analysis of Ritz Hotel is defined below:
SWOT analysis – This is a structure which used by management of organization for running
their business and bringing the changes in their functions. The Swot analysis of Ritz hotel is
defined below:
Strength Weakness
 The Ritz Hotel is presenting at best
location and places across the world.
 The employee selection procedure is
different and keeps best quality of
employees.
 It has diversified product and services
portfolio in hotel industry.
 The organization use customer
feedback and appraisal which helps to
retain the customers.
 This offers different kind of services
by maintaining protocols.
 Face problems to provide the high
guest experience.
 Negative response of some customers
that affected sales.
 Fluctuation in demand and services.
 Standard products that attracts only
high class people.
 Having competitors who are selling
same kind of products.
Opportunities Threats
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 This grow a presence for its luxury
products and services.
 The hospitality industry is
growingip[ by 20% where number of
branch can be open.
 Setting online market where services
are offered and deliver through online
system.
 Conduct the market analysis and
introduce new products.
 Changing in climate and culture of
customers.
 Occurrence of pandemic.
 Keeping high prices of their services
which reduced the sales.
 Changes in currency and others.
VRIO analysis
VRIO analysis is the main structure for organization to state the rare, inimitable, valuable,
and organized resources which can help to develop the organizational performance. The Ritz
hotel is larger organization that organising various resources which are important to run a
business. The resources are as explained:
Capabilities Valuable Rare Inimitable Organised
Financial
resources
✔ ✘ ✘ ✘
Human
resources
✔ ✔ ✘ ✘
Brand image ✘ ✔ ✔ ✘
Marketing
channel
✔ ✔ ✔ ✔
Valuable – Financial resources, human resources, brand image, and marketing channel
are the valuable resources of company which are used to operate all functions, providing
products and services and attaining the competitive advantages. Financial resources are used by
management of Ritz hotel to buy the raw material, employees salary, bringing new technology,
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and other activities which can help to develop the organizational performance (Maemunah, 2019.
).
Rare – This means products and services which are rarely available and affects the
business activities. Human resources are the important for any organization who understand
their roles and responsibilities which can help to develop all functions and activities. In relation
to Ritz Hotel, skilled and experience employees are working which is not easy for other company
to get. This can help to bring and adopt the changes in company and attain high productivity.
Inimitable – Brand image is the inimitable sources which should have in organization
and improve the performance. The Ritz Hotel is larger hotel that offers different types of
products and services in changing environment and increase the brand image. The management
make investment in interior and exterior structure and also bring changes in their hotel services
which can help to attain higher performance (Syed, 2020).
Organised – Marketing channel is the one resources which used by Ritz Hotel for the
purpose of managing all functions and activities. The management uses social media, print
media, press media, and others to promote their services which can help to develop business
performance (Oyekunle, 2018).
Cost benefits analysis – This is a systematic process that uses by businesses to analyse the
business decision and increasing the profit margin. This is the sum of all potential rewards that
bring by management for the purpose of managing performance and productivity. The
management of Hotel Ritz use this analysis for delivering hospitality services at lower cost and
generating profitability by managing all functions and activities effectively.
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given
market sector
Model of Porter's five forces.
The aim of organization is to attain higher profitability and competitive advantages by
organising all functions and activities. The model of five force are used to complete the goals
and managing higher performance that is defined below:
Bargaining power of buyers – In Ritz Hotel bargaining power is moderate, as this hotel
provides different types of food and staying service that attracts customers. in case organization
has increase the prices then customers can go towards other hotel so management has to provide
affordable prices of services.
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Bargaining power of suppliers – To providing foods, and getting records of visitors
suppliers are used by organization who have high power and they can charge high rate from
organisation. This can be create the challenge for Ritz hotel provide the hotel services by paying
lower to suppliers. This create the higher cost for organization and affects the profitability.
A threat of new entrants – This means entrance of new comers in business environment
who start their business. In relation to Ritz hotel there is moderate power of new entrance who
enter in to new market. This can be challenging situation which affected business performance
positively (Morozko, Morozko and Didenko, 2018).
Threat of substitutes – This means products provided by organization are also available
at other which can reduce the organizational sales. In relation to Ritz Hotel there is moderate
threat of substitution which can impacts negatively on organizational sales and profitability.
Competitive rivalry – This state the competitor who are existing in the same industry
and impacts on sales. In relation to Ritz Hotel main competitors are intercontinental Hotel,
Rosewood, Marriott and others that create the higher level of competition and affected
profitability.
Balanced Scorecard – This can be explained as analytical tool that s connected with
company strategy and vision which can help to develop the organisational performance. The
management of Ritz Hotel, uses balance scorecard to analysis the organizational and employee’s
performance then introduce the strategy which can help to meet the company’s vision and goals.
This also helps to develop the organizational productivity in changing environment effectively
(Sanders and Wood, 2019).
Applying the Ansoff matrix to product/market strategy
Ansoff’s growth matrix: This can be explained as strategic planning tool which uses by
organization for the purpose of growing their business and managing the higher productivity.
The Ritz Hotel is using Ansoff growth matrix that is defined below:
Market development: This strategy is related to selling existing products in new market
which can help to attracts the large number of customers. In relation to Ritz Hotel, management
can use this strategy by entering in to new market that influences the number of customers and
develop the business performance (Drucker, 2020).
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Diversification: This can be explained as strategy which uses to sale new products and
services in new market which attracts old and new customers for the purpose of developing the
business activities. Hotel Ritz is using diversification strategy which can help to develop the
organizational productivity and profitability.
Market Penetration: This strategy is align with introducing existing products in existing
market which can help to operate the business. Hotel Ritz can be use this strategy by providing
its accommodation services in existing market which develop the organizational performance
and brand image (Correani and et.al., 2020).
Product development: This means to introduce the new products and services by using new
technology and innovation which can help to improve the customer experience and higher
profitability. Hotel Ritz can be use this strategy by providing new products and services which
can help to attain the competitive advantages and maintain the higher performance.
Diversification strategy is adopted by Hotel Ritz which can help to attracts the existing and
new customers. This can help to develop the organizational productivity and profitability. The
management conduct the market analysis and introduce the new products which can help to
manage the all functions and activities effectively (Nosratabadi and et.al., 2019).
LO4 Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions
Bowman strategy clock – This strategy highlights on how organization can position its
products and services. The management of Hotel Ritz uses this strategy to state the position of
their business and maintaining the higher performance. The position is defined below:
Low price – This strategy is related to providing the products and services at lower prices
and generating higher margins. This can be use by Hotel Ritz by providing food and
accommodation service at lower services (Appiah‐Adu and Blankson, 1998).
Hybrid strategy – This strategy is related to adding the value of their products that contains
nature and activities which are used to develop the business functions. The management of Hotel
Ritz use this strategy for product differentiation and creating the high valued in market. This will
help to convince that bring the change for influencing customers.
Diversification – This strategy is related to allocating the capital in different ways and
reducing the exposure which can help to manage the all functions and activities. This is adopted
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by Hotel Ritz by offering different products and services which can help to develop the
organizational performance (Marom, Lussier and Sonfield, 2019).
Monopoly pricing strategy – This strategy is show the company position in market where
products are selling at high prices in whole market which can help to bring the changes and
managing the all functions. Hotel Ritz is focusing on monopoly pricing strategy that prevent
organization from increasing prices and attaining higher performance.
Integration activities
Vertical integration – This strategy explains as where organization owns and control over
its distributors, suppliers and retail location for increasing the value of products and services
effectively. Hotel Ritz is applying this strategy for controlling over its suppliers, distributors and
others for the purpose of increasing organizational functions and productivity (Trevisan, 2016).
Horizontal integration – This planning is connected with organizational process where
production of goods and services increasing in same part of supply chain. The Hotel Ritz is can
focus on internal expansion via acquisition, merger and expansion which can help to attaining
the competitive advantages and profitability.
CONCLUSION
From the report it can be concluded that strategies are the important which helps to
complete the task in effective time period. In absence of business strategy a business cannot be
grow and be sustain in competitive environment. PESTLE analysis and stakeholder analysis are
used to get the how it impacts on business and their contribution in business activities. Business
plans helps to run a business and attain goals.
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REFERENCE
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business, capabilities and strategy. What general performance factors are found in the
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