Analyzing Business Strategy: InterContinental Hotel Report

This report provides a comprehensive analysis of the business strategy of InterContinental Hotel, a luxury hotel chain. It begins with an introduction to the hospitality industry and the importance of business strategy. The report then applies various frameworks to analyze the macro environment, including PESTLE analysis, which examines political, economic, social, technological, legal, and environmental factors. Stakeholder analysis is used to identify key stakeholders and their influence. The internal environment is assessed using SWOT analysis, McKinsey 7S framework, and VRIO analysis to identify strengths, weaknesses, opportunities, and threats. Finally, the report evaluates Porter's Five Forces model to understand the competitive landscape, including the threat of new entrants, bargaining power of suppliers, bargaining power of customers, and the threat of substitute products. The analysis provides insights into how InterContinental Hotel can maintain and improve its market position.

Hospitality Business
Strategy

INTRODUCTION
Every industry focuses on their business strategy which can help you to gain more profit
advantage and improve their market situation effectively. Hospitality industry is connected with
service industry and performing their regular operations very effectively. Hospitality industry is
more concerned about their customer because the considered that customer is their goodwill. In
hospitality industry there are various type of sectors such as accommodation sector, hotels,
restaurants, fast food chains, takeaways, Leisure & outdoor catering, retail & food store and
business & industrial catering. To maintain all the factors affect early it is necessary for the
hospitality industry to prepare a specific business strategy which can help full to obtain more
profitability. For this report InterContinental hotel is considered which is most famous luxury
hotel that found in 1946 and it's headquarter situated in Denham , UK. The main motive of this
report is analyzing the micro environmental factors in term of this hotel. There is variance
models are apply tuna lies these factors such as stakeholder analysis, PESTLE analysis. This
report also identify internal environmental factor, utilize porter's five force model and other
model which are beneficial in the development of the organizational performance(Aderounmu
and Adepoju, 2019).
MAIN BODY
P1 Apply appropriate frameworks to analyze the macro environment for a given organization-
PESRLE Analysis
This analysis is helpful to identify the impact of external environmental factor on the
business. Intercontinental hotel conduct PESTLE analysis to analyze effect of external business
environment factor on the working of their hotel.
 Political Factors - This factor involve political stability or instability, taxation policies,
trade regulation, trade restrictions and many more factors which influence the
performance of inter continent hotel. Hotel can be concerned about dynamic business
activities so that it is necessary to maintain political stability(Ashton and et.al., 2017).
 Economical Factor - This factor is concerned about the economic development and
growth, employment rate, interest rate, inflation and recession. Intercontinental hotel is a

most famous in UK and provide their best contribution in the economy of the country by
generate more foreign currencies (Burke and et.al., 2018).
Figure 1, Scanning the Environment: PESTEL Analysis, 2016
 Social Factors - social factor contain specific cross cultural activities, purchasing power
of the customer, buying behavior of the customer, and taste and preference of the
customers. Intercontinental hotel is more focused on their customers and their
requirements so that they can fulfill all the expectations of their customers and clients. Technological Factors - This factor maintain changes and modifications in the
technologies. Intercontinental hotel adopt advanced level of technologies which can help
to improve the market growth. Artificial intelligence, automation is considered as the
specific techniques which hotel adopt (Dickerson and et.al., 2018). Legal Factors - Legal factors contain specific legal consideration, laws, policies and
procedures which is necessary to follow. Intercontinental hotel adopt all type of legal
regulations and consideration so that they can operate their business activities in an
effective way.

 Environmental Factors –This factor consider climate change activities and also analyse
population rate, pollution and other environmental activities so that intercontinental Hotel
can specifically maintain environmental sustainability in an effective. Hotel also so take
care about green marketing which can help full to protect the environment (Hughes and
et.al., 2018).
Stakeholder Analysis
Stakeholder analysis is considered as the integrated part of stakeholder management framework
which can help you to recognize the stakeholder in term of business. The main purpose to utilize
this analysis is to recognize those stakeholders who are involved in the business directly and
indirectly. Intercontinental hotel also use this analysis so that your manager can understand the
involvement of stakeholders in their business so that they can share their issues profit and other
activities with them. In this analysis, there are two types of stakeholders are involved like
primary stakeholders and secondary stakeholders. Primary stakeholders are those who are
participate in business activities directly. Secondary stakeholders are involved in business
activities indirectly. Intercontinental hotel differentiate all these stakeholders in term of power
interest and their participation which are explained below-
 High power, highly interested people - This type of stakeholders is more active in the
business activities and hold high power and interest. Intercontinental hotel consider this
type of stakeholders as a board of directors, top management and CEO (Indartono and
et.al., 2017).

Figure 2, Stakeholder Analysis, 2021
 High power, less interested people - These type of stakeholders have a power to rule the
business but they don't show their interest in their business activities. Intercontinental
hotel consider this type of stakeholders like investors, partnership & suppliers.
 Low power, highly interested people - Those stakeholders who hold low power in term
of business operations but their interest level is more in the business activities.
Intercontinental hotel involve this type of stakeholders as an employees, workers &
leaders (Kong, D. and et. al., 2020).
 Low power, less interested people - These kinds of stakeholders have low power and low
interest and their participation in the business activities is very minimal. Intercontinental
hotel consider this type of stakeholders as a labor and other contractors.

TASK 2
P2 Using appropriate frameworks analyze the internal environment and capabilities of a given
organization
It is necessary for the business to analyze their internal activities so that they can
maintain their performance as for the whole market place. Intercontinental hotel analyze the
impact of internal environment on their employees and leaders so that Hotel can understand their
capability level as per their job. To identify the impact of internal environmental factor it is
necessary to conduct SWOT analysis which can help full to identify the strength and weakness
of the hotel so that they can remove their threats and get future of opportunities (Kupp and et.al.,
2017).
SWOT analysis
Strengths Weaknesses
 Hotel can contain widely geographical
preference and also target on priority
markets.
 Intercontinental Hotel contain strong
brand image and implement strong
digital Outlook.
 Effective employee engagement is also
strength of the hotel.
 Hotels lead the customer experiences
and contain high level of satisfaction
rate of their customers.
Hotel contain a global preference which can
we shows there strong brand image at the
whole market place.
 Hotel regulates poor information
security system which is considered as
the main weakness.
 Constant shipped the rank ok of the
hotel worldwide.
 Purity security is also considered as the
weakness of the hotel (Leischnig, A.
and et. al., 2017).
Opportunities Threats
 Hotel consider the opportunity to
increase the effectiveness of
 High level of competition in the
hospitality industry can threat full for

international tourist travel which can
help full to improve their marketing.
 Hotel adopting advanced level off
technologies so that they can take
advantage of digital media and gain
more profitability.
 Intercontinental hotel can expand their
business in new geographical market
and improve their market share.
the marketing of the hotel.
 Constant increasing the
interdependency on the specific
intermediaries can be a threat for the
hotel.
McKinsey 7 S Framework
 Strategy - This strategy e is considered as the first framework which can help full to
prepare a specific strategy for the intercontinental Hotel so that total can effectively
improve their II value in at the whole market place.
 Structure - This framework is helpful to organize each and every operations in a
structured manner. Intercontinental hotel follow specific organizational structure so that
they can follow effective information and communication process with their managers,
leaders and employees (Martinez-Torres and et.al., 2019).

Figure 3, McKinsey 7S Framework, 2018
 System- This is contains as 3rd framework of this model that is spread the the affective
system within an organization. Intercontinental hotel follow a systematic system so that
all the task can be done in an systematic way. Shared value - This 4th framework of this model which can help full to shared specific
value that is useful to spread ethical consideration in the organization. Intercontinental
hotel also shared specific value which can help full to improve their market (Mzembe and
et.al., 2021). Style - This framework is all about adopted effective management and leadership style
which can improve the brand value of the intercontinental hotel. Effective leadership
style is also beneficial for each and every staff members so that they can perform their
tasks easily.
 Staff - This framework concentrate on the staff members of the hotel and also formulate
specific strategies which are followed by the staff members so that they can effectively
improve their performance level (Nagy, J. and et. al., 2018).

 Skills - This is last framework which determine the skills of the employees.
Intercontinental Hotel provides advanced level of training sessions so that their
employees can effectively develop new skills as for the current market situation.
VRIO Analysis
This analysis is considered the analytical techniques that can lead the resources
orientation framework which is mandatory to recognize the appropriate information that is
needed to take the appropriate decision. Intercontinental hotel used this most to develop the
effective Competitive strategy so that hotel cam gains more Competitive advantages. The
description of this analysis is given below -
Figure 4, VRIO: From Firm Resources to Competitive Advantage, 2016
 Valuable - These resources contain the value of the specific competencies so that
intercontinental hotel can maintain the force opportunities that are available by the
external & internal environment. Hotel providing high quality of services and
accommodation services to their clients and customers which can help full maintain hotel
value. To determine more value, hotel management provides specific training sessions
which can maintain the valuable resources (Nam and et.al., 2020).

 Rare - In this , those resources are considered which are contained by the some
organizations that is contained as rare resources. Rare and value resources both give
temporary advantage to the hotel. Doors hotels that are using similar value and resources
and also use same capabilities they can lead competitive parity. Inimitable - In this, rare and critical to maintain and square resources which are difficulty
imitate & can aid to give temporary comparative advantages. It is a fact that resources are
hard to imitate if entire resources are expensive for another Organization to acquire them.
 Organized - Resources are well organized and helpful to capture the specific value in
different situations. When hotel Manager can support to their staff members and process
all the culture and structures activities. Resources are valuable, rare & hard to imitate &
also organized that contains the long term value so that total can effectively achieve the
competitive advantage.
TASK 3
P3 Evaluating and implementing Porter’s Five Forces model
The Intercontinental hotel applies porters five force model and evaluates the competition
in the market by using competitive analysis to gain market share and revenue.
Porter’s five force model
This model is a tool of strategic management which was developed by Michael. E. porter
in 1979. It is related to corporate strategy. It is a corporate analysis model that regulates the
rivalry in the organization and the level of effectiveness and strength, weakness of the company.
The five forces involve the competition, new entrant, power of supplier, power of customer, and
threat of substitute product.
 Threat of new entrant- The intercontinental was facing high threat of
entrant as lodging creates innovation of doing things in new ways which forces to lower
the prices. The threat was faced if there is regulation support and high investment capital
to the new entrant. The threat of new entrant can be low if the hotel has substantial capital

and resources investment and product differentiation providing unique experience to the
customers
The hotel can tackle this situation by developing innovative differentiated products by
spending on marketing for creating strong brand identity. By achieving economies of scale
and innovation in new products and services it will achieve competitive advantage.
 Bargaining Power of Suppliers- The power was low faced by the intercontinental as
switching cost is low, lack of substitute product and product differentiation. The prices were
highly sensitive having the adequate market knowledge. The power can be high for
intercontinental if few suppliers exist and demand offering is high.
The hotel can tackle this situation if Supply chain efficiency is improved by building
large customer base through marketing efforts which creates brand loyalty.
 Bargaining Power of Buyers- The power is high faced by intercontinental as there is high
concentrated customer base. The power of buyer is high as too many sellers are available and
switching cost is low. The consumer has high market knowledge, price sensitivity and
purchase standard products which increase the high bargaining power.
To tackle this intercontinental hotel can target new market segment by marketing and
promotional strategies which leads to increase in loyalty and customer experience by raising
switching cost (Vongvisitsin and et.al., 2021).
 Threat of Substitute Products or Services- Intercontinental hotel face high threat of
substitute as customers have the alternative to use the product. The threat increase when
cheap substitute product is available by another industry offering superior quality same as
Intercontinental hotel and switching cost is low.
To tackle this threat should be reduced by emphasizing on the better services offered than
the available substitutes. High value and experience should be avail to the customers for
convince and switching cost should be raised by working on loyalty.
 Rivalry among Existing Firms- The rivalry for intercontinental will be low if there are
limited number of players or growth rate is high of industry. The products are highly
differentiated by targeting different segments and having market leader. The rivalry can be
high for intercontinental if customers are not loyal with the brands or market players are
strategically diverse targeting in same market.