TLH314: International Hospitality Management - IHG Analysis Report

This report provides a comprehensive analysis of IHG, a leading international hotel company. It begins with an introduction highlighting the growth of the hospitality industry due to globalization and increased travel. The core of the report is divided into three parts. Part A presents a SWOT analysis, evaluating IHG's internal strengths and weaknesses, as well as external opportunities and threats. Part B focuses on a PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing IHG's operations. Finally, Part C explores strategic frameworks including Porter's Generic Strategies, Ansoff's Matrix, and Nykiel’s Fourteen, offering insights into IHG’s strategic positioning and growth strategies. The report concludes with a summary of findings and includes a list of references.

International
Hospitality
Management
Contents

INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
SWOT Analyses..........................................................................................................................3
PART B...........................................................................................................................................6
PESTEL Analyses.......................................................................................................................6
PART C...........................................................................................................................................8
Porters Generic Strategies, Ansoffs matrix and Nykiel’s fourteen..............................................8
CONCLUSION..............................................................................................................................12
REFERNCES.................................................................................................................................13
INTRODUCTION
With the increase in globalisation and liberalisation, the movement of people across the
nations has increased. People travel because of various reasons these reasons may include

business meetings, pleasure, events, weddings and so on. In such cases as the craze or percentage
of travelling among the people has also increased the business of hospitality business and
services to a great extent. People who travelled need some place to stay, hotel services provide
the space to travel to stay their when they have travelled to some other place. There are different
types and variety of hotel services according to the needs and budgets of the guests. For
reference purpose this report has taken an example of a company, IHG. It is a British company
which was founded in the year 2013 by Patrick Cescau. It is a multinational company which is
engaged its business in providing the hotel services to the people. The company is spread around
100 countries.
This report discusses the SWOT analyses of the company, in which the strengths,
weakness, opportunities and threats of the company has been mentioned. The external analyses
has also been included. Apart from this the report also includes about the Porter's generic and
Ansoff Matrix of the company.
PART A
SWOT Analyses
The SWOT analyses considers as an internal analyses in which the organisation internal
resources get evaluated and compared. The strengths and the weakness are considered as an
internal analyses whereas the opportunities and threats are the external analyses. SWOT stands
for strengths, weaknesses, opportunities and threat. It is considered as an important analyses for
evaluating the resources and forming the required strategies. It is one of the methods for micro
analyses. In SWOT analyses:
Strengths are the unique qualities which the organisation has. These qualities make the
organisation different from other companies.
Weaknesses are the weak points or the areas where the organisation lacks behind (Evans, S., and
et.al., 2017). At these points the organisation can work and convert them into strengths.
Opportunities are the area of field where the organisation can explore more for its growth and
survival purpose.
Threats are the risks which the organisation is prone to. Organisation can prone with these risk
and to reduce or eliminate such risks they can form the strategies accordingly.
The SWOT analyses of the IHG company is as follows:

Strength:
 The organisation has invested a huge amount in providing the professional training and
development program to its employees or staff members. Due to this the company has
very much skilled and professional workers which is considers as a biggest strength for
the company. The staff members are also very much motivated as their organisation
provides them with necessary development programs for themselves.
 The IHG group has adopted the system of automation of activities in which they
according to the demand scale up and scale down the labour force. With this system, they
are able to save much of their costs.
 The company with its strong expansion activity and strategies has build up the new
streams for its revenue (Maniora, 2018). Its expansion and diversification into the new
markets has enabled them in earning new profits and become a globally strong hospitality
company with excellent services.
 The company has successfully survived the economical risk through operating at various
markets.
 IHG company is also has adopted the advanced technology as their system which has
enable them in serving the customers very well.
 Apart from this the company also a very good account in bringing the innovation into
their system and the services they offered to its guests.
Weaknesses
 Company's long term growth has got impacted as they has high days inventory as
compared with the other companies or competitors.
 They also need to invest more into technology as the company is planning for its more
expansion in which in the markets where it has not step in yet.
 It has also been noticed that the company's net contribution and profitability ratio is
below the average percentage (Johnson and et. al., 2017).
 The IGH company needs to work more upon their product positioning and market
segmentation as they are not properly done. Apart from this the company also does not have done their financial planning properly.
They did not have distributed the funds to the departments properly.
Opportunities

 The company has a chance to gain more competitive advantage through market
development. Market development is a strategy in which the organisation targets a new
market with the same product. This help the organisation in increasing their share into the
market as their growth gets increased.
 The cost for transportation and the prices for the shipping has also got decreased which
helps the organisation in saving its cost to some extent. Through this the organisation can
gain competitive advantage (Mohelska and Sokolova, 2016).
 The new technology would help the hotel in serving the customer with more efficiency. It
also enables the organisation in bringing ease into their operations and activities.
 With the online introduction of the company, it has enable the organisation only in better
serving the customers. As the customers can view the premises at the online site of the
company along with the services and packages that has been offered by the company.
This has opened a new channel for sales for the company. The new trends prevailing into the market has opened the new opportunities for the
company. This has been helped in bringing new streams for profits and growth into the
business.
Threats
 Increase into the cost for raw materials can be prove to be a threat for the company as it
can increase the prices of the services they offers to the guests. From this the company
gets into the big risk of loosing their customer base.
 Shortage of professional and skilled employees at some of the places where the company
has expanded proven to a threat for the company as their image gets damage when the
staff member does not behaves as per the stated code of conduct.
 Any unfavourable political change into the market can put a great impact into the
activities and operations of the organisation (Navissi and et al., 2017). Also any change
into the rules and regulations by the legislations would also put an impact upon the
company. For example, Rise in the pay for employees has forced the company in increase
the prices for their services offered as they was not ready to doing an kind of compromise
into their profit margins.

PART B
PESTEL Analyses
The pestel analyses is the external analyses in which the organisation performs the factors which
are external or out of the reach to the organisation but puts the great impact upon the
organisation workings. These macro environment does impact the organisation. The analyses of
these factors are very much important as the organisation forms their future goals and strategies
accordingly. The pestel analyses of IHG company is as follows:
POLITICAL FACTOR:
There are different political factors which affects the activities of Intercontinental Hotel
Groups which lead to the profitability in the long term in different markets of different countries.
As Intercontinental Hotel Groups is doing business in various countries it must frame its business
policies in such a manner so that it will remain easy for its survival in different political system
(Oldman and Tomkins, 2018). There must be a proper analysis of the below mentioned political
factors while starting the business in a new country and entering the market of that country:
1. How important is the hotel industry in that particular country.
2. Political stability of that country.
3. Laws related to Intellectual Property Rights.
4. Level of corruption in that country.
5. Rate of taxes imposed.
6. Finding about the existence of any authority that regulates the price mechanism for
consumer services.
7. Laws related to anti trust which are concerned with hotel industry
8. Any particular legislation related to wages and what all benefits would be given to the
employees.
ECONOMIC FACTOR:
While entering into a new market or a new country it is the most necessary to analyse the
economic factors which are going to have their impact upon the business. Many economic
factors can make a significant impact upon IHG such as:
1. Inflation in the country
2. The Present GDP of that country and possibilities of its growth.

3. Unemployment rate in the country because in a country if the employment rate will be
high then it is highly probable that IHG will get the workers with a lower wage.
4. Whether the market is monopoly or oligopoly5. The stability of the economy of that country.
The value of the currency of that country and what is the currency exchange rate for the
purpose of determining profitability if the business is done on international level.
SOCIAL FACTOR: The social factor is concern with the knowing the true attitude, perspective
and behaviour of the customers as they would help the company in ascertaining the perspective
of the customers on a particular topic. The social factor also helps the company in understanding
the taste, preferences and current trends of the people (Pham, Pham and Pham, 2018). Through
the social factor, The IHG gets to know about what the customer actually are looking for when
they go for availing the hotel services, the needs for which the customers gets happy, the
approaches for which the customer satisfaction can get increase and all. Through knowing about
all that the company can create the services or modified their services which the organisation
offered. The IHG has establish such a huge business because they first analyse the market need
of the customers and then they form the offered services. Through the proper segmentation of
class structure, the organisation has planned their services offered according which can targets all
kinds of customer class.
TECHNOLOGICAL FACTOR: The technological factor are the factors which includes the
technological awareness and advancements into the company or in economy. Through
technological advancements the company can bring ease into their operational activities. The
company IHG has brought up the latest technology into their system which has enable them in
serving their customers in a better way. The company has full account for their customers
through which they can know about which customer has been loyal with them for long. To server
these loyal customers the company provides some different offers or packages to pay them back.
The company also has adopted the information management system in which the can save, store
and share all kinds of operational activities which have been taken place into the company
(Sanden, 2016). Through this system the company gets to know about the inventories they have
yet, the staffs informations, the guests or the customer lists and the so on. The adoption of latest
technology has also put some change in the cost structure of the company. Apart from this the

technology has also have helped in increasing the value chain for the company as the services
which the organisation got to offer to the guest is very much different.
ENVIRONMENT FACTOR: The environmental factor includes the rules and regulations
which the economy has prevail in concern to the environment. Different regions have different
types of policies in regard to environmental factor. Before making an entry into the new market,
an organisation needs to study about its environmental laws and issues. The company IGH has
adopted the operational activities which are sustainable for the environment, these activities or
processes are eco- friendly to the environment as they does not produce any harm substance.
Apart from this the company has also promote the sustainability development and tourism. The
IHG company promotes the sustainability development through the adoption of the practices and
the technology which are eco friendly. Like prohibiting the use of plastic items or plastic bags,
usage of the products that can be recycle or reuse. Usage or promotion of public transports and
so on. .
LEGAL FACTOR: These are the rules and regulations which are formed by the legislations. It
includes the laws which are formed by the unions for labour, fundamental company's law which
is mandatory to follow and etc. It is obligatory for all the organisation to follow all these rules if
they want to pursue their operations into the market. It has been noticed that in various countries
the rights for the intellectual property are not so robust or proper, causing problem for the
company in the preservation of their rights. The company IHG follows and obeys all the rules
and regulation related to the legislation. This has also helped the company in forming their trust
among the customers and market.
PART C
Porters Generic Strategies, Ansoffs matrix and Nykiel’s fourteen
The porter's generic strategies of IHG group is as follows:
Cost leadership: The cost leadership is the strategy in which the organisation attains the cost
leadership through producing the products at a cheaper price or cost. Here the organisation tries
to cut the cost of its production has much as possible (Shuen, 2018). The focus is not given much
at differentiation but on attaining the low cost for the product. Through this strategy the company
and well target upon the middle class people as the services which are offered by the company
can easily would get afford by these people. The company puts its major focus on accessibility

and affordability; they offered services are such that they are easily accessible by all and easily
affordable by the middle class people. Apart from this the IHG company can also have the
services which are for above average or for higher class people. The organisation dos provide the
packages or services for all kinds of class group but its major focus is at middle class people.
Apart from this , the company often comes up with many discounts offers and packages for the
people so that they can meet their sales target. These discounts and offers help the company in
increase in their sales as they work as an attraction for the customers.
Differentiation
It is another generic strategy which is included into the porter’s generic model. In differentiation
is a strategy in which the organization focuses in bringing the unique feature or differentiation
into its products. The organization gain competitive advantage through these unique product
offering or features. The company IHG uses the combination of both the cost leadership and
differentiation to serve or cater the market of their customers. The company uses this strategy
through:
 The company brings differentiation through innovation in its products. The company has
rise a health care concern among the customers can has also adopted the systems or
practices which promotes the good health care among the customers. The concept for
health care has enabled the company in maintaining the differentiation into the service
offered. The IHG company had planned to expand is line for product after they studied
about the growing interest of healthy health among people. This also has created the
scope for opportunities of the company.
 Differentiation has enabled the company in standing out form the competitors. The
company has unable to create a strong hold in the market. The IGH Company uses the
strong mode of marketing, advertising and promoting of products to gain the
differentiation. For the endorsement purpose the company has made an huge investment
into this.
 Some other factors for differentiation include the strong brand presence, good image of
the company, excellent experience the customers had with hotel and etc. All these factor
does count as differentiation as it helps in making them unique from others.
Focus strategy:

Focus is a porter generic third strategy in which the organisation tries of put focus upon some
particular segment. This helps the organisation to gain the competitive advantage in the area
where it has put its focus. The organisation IHG has used this strategy as:
 By putting the focus upon the strategies of low cost and the production of innovative
services. The company has also put focus in bringing the change in their packaging
and designs for their products to create a psychological change into the minds of
customers and also for maximizing the value for bucks.
 The major focus for the company was on low cost (Yuan and et. al., 2020). That how
they can satisfy the needs for their customers in a best possible way by bringing the
low cost as much as we can.
Ansoff matrix
The Ansoff matrix has the following four strategies and the IHG company uses these
strategies in a following way:
Market penetration: In this strategy the organisation tries to increase the demand of its current
demand through increase in the sales. In this the company increases its sales at the current \or
existing market only. As in the case with IHG company, the company tries to increase its sales
through the huge investments into advertising and promotional activities. The company also
came up with many offers and discounted offers to increase the sales of the hotel. That’s how the
company achieves its sales target also. Through the right use of advertising, promotions and
discounts offer the company increase its market share. The market penetrations activity is the
primary activity which the IHG Company uses in its operations.
Product development: In this strategy the company focuses in providing the new product into
the existing market. The company develops a whole new product in which they targets the
market in which they already are existing. The company uses this strategy when they found the
limited growth opportunities into the market in which they currently exist. Its strategy is also
adopted when the current product line has become obsolete for the company. Due to the high
competition among the hospitality industry it has putted burden upon the company, IHG in
bringing the innovation or some development into the product line. Development helps the
company in bringing the new services to cater the market. The product line for the IHG company
has become too broad for them, these product development has been the thing for the company

since it got start. This strategy also helps the company in bringing the cost low by using the
existing resources in launching the new product.
Market development: The market development is a strategy in which the company expand its
current market by entering into the new markets with the same products. The company IHG has
expanded its market or say business by offering the same hospitality services to that new market
even. This has helped the company in increasing the market growth and market share.
Diversification: In diversification, the company targets the whole new market with the whole
new product. This strategy is very much riskier for the company as the product or the service
through which the company is targeting is new and also the market which the company targets
are also new. The company IHG has majorly focused in relative diversification in which the
degree for the risk is quite low.
Nykiel’s fourteen:
The model has a total of 14 strategies which are:
Horizontal expansion: The IHG tries to bring expansion for a particular line for product line to
another when target to some other market.
Geographic expansion: The Company is operating in around 100 countries.
Product Hybridization: The company brings diversification in its services when targets to some
new market.
Specialisation: The company focus on attaining the cost leadership in getting its cost low as
much as possible.
Product tiering: the company performs the segmentation according to the economic growth,
demographic and social segmentation.
Product re branding: The IHG has put a huge investment into the endorsements and
promotional activities (Zakaria, Hashim and Ahmad, 2016).
Non franchising: The IHG has some restrictions upon using the name of the company,
company’s ownership and etc.
Franchising: It has followed a very well planned strategies before entering into a new market.
Brand collection: The company takes the full advantages from the limited packages or offers, it
offers to the customers.
Management contracts: The company is very much experienced in establishing itself into the
new market as it has already expand itself in around 100 countries.

Vertical and horizontal integration: The company gains competitive advantage through the
proper investment into marketing and advertising activities.
Singleness: The IHG single handily is managing all the operations and activities. It is also
managing the activities of the hotels expanding in various countries.
Value rated products and services: the company launches the services so that they can satisfy
the needs or wants of their customers very well.
Global positioning: The IHG Company has the global presence in the world. The company is
expanded at almost all the countries and has shown its excellent services all around.
CONCLUSION
From the report presented above, the SWOT analyses, Pestel analyses, Ansoff matrix has
been mentioned. The report also discussed about the porter’s generic strategies and Nykiel
fourteen strategies.

REFERNCES
Books and Journals
Evans, S., and et.al., 2017. Business model innovation for sustainability: Towards a unified
perspective for creation of sustainable business models. Business Strategy and the
Environment. 26(5). pp.597-608.
Johnson, G., and et. al., 2017. Exploring strategy (No. 11th e). Pearson.
Maniora, J., 2018. Mismanagement of sustainability: What business strategy makes the
difference? Empirical evidence from the USA. Journal of Business Ethics, 152(4),
pp.931-947.
Mohelska, H. and Sokolova, M., 2016. Smart, connected products change a company’s business
strategy orientation.Applied economics. 48(47). pp.4502-4509.
Navissi, F., and et al., 2017. Business strategy, over-(under-) investment, and managerial
compensation. Journal of Management Accounting Research. 29(2). pp.63-86.
Oldman, A. and Tomkins, C., 2018. Cost management and its interplay with business strategy
and context. Routledge.
Pham, T., Pham, D. K. and Pham, A., 2018. From Business Strategy to Information Technology
Roadmap: a practical guide for executives and board members. Taylor & Francis.
Sanden, G. R., 2016. Language: The sharpest tool in the business strategy toolbox. Corporate
Communications: An International Journal.
Shuen, A., 2018. Web 2.0: A Strategy Guide: Business thinking and strategies behind successful
Web 2.0 implementations. O'Reilly Media.
Yuan, Y., and et. al., 2020. Business strategy and corporate social responsibility. Journal of
Business Ethics. 162(2). pp.359-377.
Zakaria, N. S., Hashim, M. K. and Ahmad, S. A., 2016. Business strategy and
performanceofsmes in the manufacturing sector. International Journal in Management
& Social Science. 4(5). pp.254-261.

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