Strategic Management Report: IHG External & Internal Analysis

This report provides a comprehensive strategic analysis of InterContinental Hotel Group (IHG). It begins with an executive summary and introduction that places IHG within its business context, including its financial status, operations, strategy, and key competitors. The report then delves into an ana...Read More

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Strategic Management
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Executive Summary
The report has thrown light in analysing and understanding the external along with internal
environment analysis of Inter-Continental Hotel in the competitive business environment. In
the current scenario of the business scenario, there are different levels of uncertainties
regarding the future which will be impacting the effectiveness of the companies negatively.
In such scenario, the proper analysis of the external as well as internal environment is
essential for understanding their position in the market in a positive manner. In such scenario,
the SWOT along with PESTEL analysis are needed to be analyzed which will be capable of
improving their position in the competitive market.

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Table of Contents
Introduction................................................................................................................................3
Analysis of the External Environment of Inter-Continental Hotel............................................3
Analysis of the Respective Hotel Industry through Porter’s Forces Model Analysis................5
Analysis of Internal Business Environment Through VRIO Analysis......................................6
Critical Evaluation of Strategic Position of Company Through SWOT Analysis.....................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Inter-Continental Hotel is one of the British Multinational Hospitality companies
which is headquartered at Denham, Buckinghamshire, England. The company was founded in
the year 2003 and the number of locations in which the company is serving is around 5723
till the year 2018. The company IHG is capable of owning different brands which includes
the InterContinental, Six Senses Hotels, Kimpton Hotels and Resorts along with others. In
addition, there has been high level of hike or increase in the level of revenues in the last few
years which include US$4.627 billion till the year 2018 and the number of employees
employed with the company till 2019 includes 36643 which means that they are capable of
generating high income. In addition, the main competitors of the company include the
Marriot International, Hyatt along with Wyndham Destinations (ihgplc.com, 2020). The
proposed strategy of IHG is to provide their customers with utmost care and services with the
high level of satisfaction during their stay and make them feel comfortable.
Analysis of the External Environment of Inter-Continental Hotel
IHG is operating in the competitive business environment as there are different other
competitors which are performing really well and it can be impacting their performance to a
large extent. In such scenario, the external business environment of the company in the place
wherein they are operating needs to be examined to understand the level of threats along with
opportunities for improving their level of performance.
Political Factors- The political stability is the main requirement for success in the
hotel industry, however, in case of UK, the different terrorism acts in London in 2005, it
termed UK as the set of the extremist religious companies which accommodated. There were
different risks of terrorism which caused uncertainty for the business of IHG in the UK

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market. In such scenario, IHG has been spending heavily on the different lobbying purposes
for improving their performance in such kind of political scenario successfully (Troiano et
al., 2016).
Economic Factors- It is the second aspect wherein the international along with
national situation are impacting situation of IHG business. For instance- At the times of
Olympics, there were different hotels which were booked and after the Olympics was over,
the situation was completely different (Rouva et al., 2016). Due to the economic crisis in the
year 2007 and 2009, the sales of the hotels went down by 20% and in such scenario, UK
faced with significant challenges and risk of another economic crisis.
Social Factors- IHG brand is highly effective and popular among the different
international visitors and United Kingdom is one of the most common destinations for
shopping lovers. In the current scenario, the changes in the pattern of the individuals is
changing and impacting performance of the company wherein the business performance is
impacting as the people are preferring to stay in hotels that are less costly.
Technological Factors- The development of the technological infrastructure in
relation to catering industry have high impact on the performance of IHG. The different
matters which are related to energy usage along with costs and potentiality for innovation
within industry is impacting performance of the company (Naidoo et al., 2016). The hotel
bookings have been sophisticated in current scenario which helped the company in improving
their business and generate the high level of revenues growth.
Legal Factors- It is the other important source of the performance of the IHG and it
includes immigration rules and procedures of getting the visa for UK as they are becoming
strict. In addition, there are different restriction rules on Visa which can be impacting the
performance of the company (Mujanovic & Damnjanovic, 2018).

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Environmental Factors- IHG is capable of incorporating the different kinds of
sustainable and CSR operations in the company for improving their performance which
impacts their business in a positive manner (Ihgplc.com, 2020).
Analysis of the Respective Hotel Industry through Porter’s Forces Model Analysis
Bargaining Power of Buyers- It is high in nature as there are different other hotels
which are present in the market of UK which are offering similar services at lower price. It is
impacting performance of Inter-Continental Hotel in a negative manner. Moreover, there is
inclusion of the third-party travel websites which reduces the switching costs which can be
impacting the firms as a whole (Denault, 2018).
Bargaining Power of Suppliers- It is high as there is low differentiation across the
industry and the low switching costs can be helpful in understanding that the IHG can be
facing difficulty in improving their position. As there are less suppliers, therefore, they will
be taking the advantage of the same and it can be influencing growth prospects of company.
Threat of the Substitutes- It is medium in nature as there are different other
alternatives present in the market and low kind of cost of switching can be causing the buyer
power to be high.
Threat of New Entrants- It is medium as in order to enter in the market of hotel
industry, there are different rules and norms which are needed to be followed for gaining and
attaining the respective position in market which can be difficult at times (David, David &
David, 2017).
Competitive Rivalry- It is high as well as the main competitors include Hyatt
International, Marriott International or Hilton Hotels. In such scenario, the IHG hotel has no

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more than 40% of the share in the competitive market which can be influencing their
performance as a whole (Business Standard.com, 2020).
Analysis of Internal Business Environment Through VRIO Analysis
With the help of the VRIO analysis of the Inter-Continental Hotel, there are different
resources which are valuable, rare, inimitable and organization. The VRIO Analysis can be
showcased with the help of table for understanding their position and their state of gaining
competitiveness in the market.
Particulars Valuable Rare Inimitable Organization Result
Location and
Site
Yes Yes No Yes Temporary
Competitive
Advantage
Strength of
the Brand of
IHG
Yes Yes Yes Yes Sustained
Competitive
Advantage
Positioning Yes Yes Yes Yes Sustained
Competitive
Advantage
Superior
kind of
hospitality
Yes Yes Yes Yes Sustained
Competitive
Advantage
Employee
Benefits
Yes Yes No Yes Temporary
Competitive

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Advantage
Managed
Vision of the
company
Yes Yes No Yes Temporary
Competitive
Advantage
From the analysis of the VRIO of IHG Hotel, the main aspect which has been learnt is
that the company needs to mainly focus on the management of the vision, benefits provided
to the employees along with location as these are the few aspects wherein IHG is lacking.
The site can be improved through the incorporation of the different kinds of unique aspects
which are related to the distribution network and the financial resources that will be
beneficial for gaining competitiveness.
Critical Evaluation of Strategic Position of Company Through SWOT Analysis
Strengths
The presence of the company is across the
world that will be helpful in improving
their effectiveness in serving the different
customers (BBC.com.uk, 2020)
Drive for the competitive advantage is the
other strength wherein the different
researches have been capable of indicating
the fact that IHG is one of the premium
brands and it is trying constantly in
reinventing themselves (Asseraf, Luis &
Weaknesses
The excessive focus on expansion is the
first weakness which can be impacting
growth of IHG as it can be becoming
impossible for them in improving and
maintaining their standards negatively
(BBC.com.uk, 2020)
The overemphasis on the standardization of
the product is the other weakness that can be
impacting the growth of IHG which brings

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Shoham, 2017)
Focusing on the innovation is the other
strength of the company which needs to be
implemented by IHG through integrating
innovation along with commitment in
achieving the goals successfully.
down the morale of employees
Opportunities
Focusing on personalization is the first
aspect that needs to be implemented by the
IHG as the customers prefer personalized
attention along with willing to pay for it.
Increase in the global travel is the other
opportunity which can be adopted by IHG
through the increase in the tie ups that will
be creating improvement in the process of
maintaining their effectiveness in the market
Threats
High and stiff competition is the major
threat that can be impacting performance of
the company which will be creating pressure
on generating high level of revenues and
profitability successfully (Aderounmu &
Adepoju, 2019)
Vulnerability to the different terrorist
attacks is the other aspect of threat which
can be impacting the performance of the
company in a negative manner (Aderounmu
& Adepoju, 2019)
From the SWOT analysis of the IHG Hotel, it can be seen that the company needs to
be focusing on the personalization which will be creating high level of impact on the growth
of the company as a whole. In such scenario, it can be seen that the terrorist attacks along
with vulnerability to the same which can be impacted in a positive manner.

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Conclusion
Therefore, it can be concluded that from the external and internal analysis of the Inter-
Continental Hotel, it can be seen that there are different political instabilities and other level
of stiff competition that can be impacting the growth of the firm in a negative manner. In
such scenario, the different personalization of the services along with the increase in the
global market are the two approaches that needs to be improved as it will be capable of
improving the growth prospects of the company as a whole.

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References
Aderounmu, A. F., & Adepoju, A. O. (2019). Analysis of Forest Based Mortar and Pestle
Marketing in Oyo State, Nigeria. Journal of Economics, Management and Trade, 1-7.
Asseraf, Y., Luis, L. F., & Shoham, A. (2017). The “Marketing Flexibility–Marketing
Planning” Paradox and New Product’s Performance: An Abstract. In Marketing at the
Confluence between Entertainment and Analytics (pp. 1389-1389). Springer, Cham.
BBC.com.uk (2020) Inter-Continental Hotels Group (online) Retrieved from
https://www.bbc.co.uk/news/topics/cp7dm4nmm5kt/intercontinental-hotels-group
[Accessed on 18th March 2020]
Business Standard.com (2020) InterContinental Hotels Group fast-tracks India expansion
with 14 hotels (online) Retrieved from
https://www.business-standard.com/article/companies/intercontinental-hotels-group-
fast-tracks-india-expansion-with-14-hotels-118091200509_1.html [Accessed on 18th
March 2020]
David, M. E., David, F. R., & David, F. R. (2017). The quantitative strategic planning matrix:
a new marketing tool. Journal of strategic Marketing, 25(4), 342-352.
Denault, J. F. (2018). The Handbook of Marketing Strategy for Life Science Companies:
Formulating the Roadmap You Need to Navigate the Market. Taylor & Francis.
Ihgplc.com (2020) About Us- Inter-Continental Hotels Group Plc (online) Retrieved from
https://www.ihgplc.com [Accessed on 18th March 2020]
Ihgplc.com (2020) Annual Reports of Inter-Continental Group Place (Online) Retrieved from
https://www.ihgplc.com/investors/annual-report [Accessed on 18th March 2020]

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Mujanovic, E., & Damnjanovic, A. (2018). Marketing management and social
entrepreneurship. Economic and Social Development: Book of Proceedings, 77-88.
Naidoo, V., Donovan, J., Milner, T., & Topple, C. (2016). Entry modes as a component of
international marketing strategy: a mixed-method analysis of higher education
services. In International Marketing of Higher Education (pp. 47-82). Palgrave
Macmillan, New York.
Rouva, E., Lalou, P., Skordoulis, M., & Chalikias, M. (2016). Viral marketing analysis and
evaluation: the case of the Greek consumer market. International Journal of
Electronic Customer Relationship Management, 10(1), 28-38.
Troiano, S., Marangon, F., Tempesta, T., & Vecchiato, D. (2016). Organic vs local claims:
substitutes or complements for wine consumers? A marketing analysis with a discrete
choice experiment. New Medit, 15(2), 14-22.