University Assignment: Karma Hotel's Environment Analysis and Strategy

This report provides a comprehensive analysis of Karma Hotel, a medium-sized hotel located in Bondi Beach, Sydney. The report begins with an executive summary and table of contents, followed by an introduction that outlines the hotel's features and location. The core of the report involves a macro and micro-environmental analysis, utilizing the PEST model to examine political, economic, social, and technological factors, and Porter's Five Forces to assess competitive dynamics. The Value Chain model is also applied to identify potential values and competitive advantages within the hotel's operations. The report then develops an overarching business strategy, including vision and mission statements, and emphasizes the importance of Corporate Social Responsibility (CSR). Strategic directions are proposed, considering the environmental analysis and the hotel's limitations. The report concludes with a summary of findings and recommendations for the initial year, along with references to supporting literature.

Running head: INTERNATIONAL HOSPITALITY INDUSTRY
International Hospitality Industry
Name of the Student
Name of the University
Author note

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Executive summary
Karma is a medium sized hotel that has around 250 air-conditioned rooms, all fitted with private
bathrooms. This report is composed with the aim of analysing the present macro and micro
environment of the hotel. Porter's Five Forces Model, PEST, and Value Chain models were used
for this process. Vision, mission and CSR related strategic approaches were developed, with final
recommendations provided for the initial year.

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Table of Contents
Introduction......................................................................................................................................3
Macro and Micro Environment Analysis........................................................................................3
Overarching Business Strategy........................................................................................................5
Strategic Direction...........................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Karma is a medium sized hotel that has around 250 air-conditioned rooms, all fitted with
private bathrooms. The hotel even contains a lobby lounge, a full-service restaurant and a pub
bar with snack service. There is a separate enclosed garden and some of the outbuildings get
used as office or storage. The hotel has its location at Bondi Beach in Sydney, which is in itself a
world-class tourist attraction, attracting huge visitors each year. This report is composed with the
aim of analysing the present macro and micro environment of the hotel. Porter's Five Forces
Model, PEST, and Value Chain models would be used for this process. Vision, mission and CSR
related strategic approaches would be developed, with final recommendations provided for the
initial year.
Macro and Micro Environment Analysis
PEST
The strategy team chose PEST model for macro environmental analysis. It has the
capability of analyzing the external factors that have an impact on the organization. PEST is
short for Political, Economic, Social, and Technological factors (Gupta, 2013).
Political Australia is a democratic nation that has a
capitalist system (Walker, 2012). The political
forces of this country do not hamper with
legitimate business activities.
Economic The economic development in this country is
fast. The commercial quotient of the Bondi

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Beach area is high.
Social Australia as a country boasts of
multiculturalism and is highly migrant. The
Bondi Beach area experiences visits from a lot
of international visitors.
Technological Australia has invested a lot in R&D and the
country has become technologically advanced
in their industries in a fast and advanced
manner.
Porter’s Five Forces
The strategy team chose Porter's Five Forces model as their main tool for external
analysis of the five factors that help analyse the fundamental competitive situation of any
industry - Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of New Entrants,
Substitutes and Rivalry (Dobbs, 2014).
Bargaining Power of Suppliers Low - Sydney being a metropolis, it boasts of
many suppliers. Therefore, majority of the
suppliers and their products are substitutable.
Bargaining Power of Buyers Medium – Many of the international tourists
have high demand for Bondi Beach and they
have huge purchasing power. At the same time,
they are extremely concerned regarding the

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hotel’s quality.
Threat of New Entrants Low – the barriers to entry are high as huge
amounts of funding is required to be able to
enter the hotel industry at Bondi Beach.
Threat of Substitutes High – as the products and services of the hotel
can be imitated and replaced easily.
Competitive Rivalry High – as there is high level competition due to
most of the hotels not being dominated.
Majority of the products of the hotel are costly
and similar.
Porter's Value Chain
The strategy team made use of Porter’s Value Chain model for determining the possible
values of the resources and the competitive advantage, which directs to the view that each step is
valuable for resource utilization, as that influences the ultimate creation of value and competitive
advantage for the business (Michelini & Fiorentino, 2012). For Karma hotel at Bondi Beach, the
main products are the rooms and the dining facilities. The production and sales elements of the
service asks for investment from each link. Therefore, in the analysis of the value chain for
Karma, each step of the hotel’s operation would be influencing the end value and competitive
advantage.
Overarching Business Strategy
Vision

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The vision for Karma hotel is having a long-term impact on the people who visit them,
their potential customers and the local community they operate in. Karma is on the path of
becoming the first choice of hotel for their patrons, employees and the communities they expand
in after Bondi Beach. Within a year it would be difficult for Karma, a medium sized hotel, to
acquire market segment monopoly.
Mission
The mission of Karma would be representing their specific business scopes for their
purposes and operations that would also relate to proper allocation of resources and action
decisions. Karma’s main mission are:
 Making the guests happy at all times of their stay (Smith & Ong, 2015)
 Guests would be always choosing Karma whenever they are visiting Bondi Beach
Ethical Business & Investment of CSR
At the heart of Karma’s operations and business is ethics, which would make them pay
more attention to corporate social responsibility (CSR). CSR for Karma would imply them
focusing in their stakeholder, market, finance, environment and community. Benevolent changes
and investments made in CSR would help Karma acquire sustainable development (Chernev &
Blair, 2015).
Strategic Direction
The developed vision and mission, with the help of macro and micro-environmental
analysis, would affect Karma’s administration categories, including their exact operational
measures. Karma lacks the capability of participating in the price war with its competitors, only

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have option of choosing blue ocean strategy, produced differences and carry out the development
of niche market. The first decision would be of cooperating with organising with travel agencies
and targeting the markets that are emerging currently, like India, China, and other South East
Asian countries (Brotherton, 2012).
Karma has a sustainable operational strategy. Therefore, its operations are completely
subject to the needs of ethical business. As the decision is to be taken for the next year, the
hotels’ CSR would be more worried about the community aspect and make use of citizenship
strategy. The CSR strategy would be of building a CSR fund from every booking - a good way
of serving the local community and benefitting the hotel (Hilson, 2012).
Conclusion
In conclusion, the environmental and resource analysis of Karma hotel was properly done
with the help of PEST, Porter’s Five Forces and Value Chain models. The management has been
able to develop an appropriate vision, mission and a completely ethical business operation
approach, including CSR and its investments. Limitations are existing in the model and
environmental monitoring, which is required to consider account internalities and externalities.
More strategic research of the environment is required on this front, so that it is made sure that
the team’s strategic mission gets fulfilled in the first year of operation itself.

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References
Brotherton, B. (Ed.). (2012). International Hospitality Industry. Routledge.
Chernev, A., & Blair, S. (2015). Doing well by doing good: The benevolent halo of corporate
social responsibility. Journal of Consumer Research, 41(6), 1412-1425.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Gupta, A. (2013). Environmental and pest analysis: An approach to external business
environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.
Hilson, G. (2012). Corporate Social Responsibility in the extractive industries: Experiences from
developing countries. Resources Policy, 37(2), 131-137.
Michelini, L., & Fiorentino, D. (2012). New business models for creating shared value. Social
Responsibility Journal, 8(4), 561-577.
Smith, R. A., & Ong, J. L. T. (2015). Corporate social responsibility and the operationalization
challenge for global tourism organizations. Asia Pacific Journal of Tourism
Research, 20(5), 487-499.
Walker, D. (2012). Anxious nation: Australia and the rise of Asia 1850-1939. Anxious Nation:
Australia and the rise of Asia 1850-1939, xv.