Mandarin Oriental Hotel Group: PESTEL and SWOT Analysis Report

This report presents a detailed analysis of the Mandarin Oriental Hotel Group, a major player in the Hong Kong hospitality industry. The study begins with an overview of the company, including its structure, key management personnel, and financial performance. The core of the report involves a PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing the company's operations. The economic analysis explores GDP and inflation rates, while the social segment discusses wealth distribution and human development. The technological section focuses on tech adoption, and the legal segment covers labor and ethical considerations. The report then links these macro-environmental factors to the company's strengths and weaknesses, identifying factors such as service excellence, global presence, limited service offerings, and pricing challenges. The analysis also considers how the company's internal capabilities align with external opportunities and threats, providing a comprehensive understanding of its strategic position and potential for sustainable business practices. References are included to support the findings.

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The significance of evaluating the feasibility in the modern business world is
observed to be pretty prominent amongst the business organizations. The senior managers of
the organizations are observed to be inclined towards the evaluation of the feasibility of the
market before taking the important decisions such as the business expansions. Hence a
proactive evaluation of the impact of the macro environmental and the internal capabilities of
the companies become significantly important for the success of the comparison in
conducting their business operations in a sustainable manner (Cadle, Paul and Turner 2014).
The internal analysis provides important information regarding the capability of the company
in conducting their business in sustainable manner (Gürel and Tat 2017). The paper
discusses regarding the macro environmental factors that are affecting the business operations
of a company named as Mandarin Oriental Hotel Group and at the same time, it also
identifies the strengths and weakness of the company. The analysis of the macro
environmental factors are conducted with the application of the PESTEL Analysis. With a
precise understanding of the impact of the macro environmental factors, the paper provides
an important analysis which portrays the link between the strengths and weakness of the
company along with the identified macro environmental factors. Along with this, the paper
provides a brief overview of the company and its business operations.
Overview of the company:
Mandarin Oriental Hotel Group is one of the largest organizations operating in the
hospitality industry of Hong Kong. The company is an integral part of the Jardine Matheson
Group and the company was established in the year 1963 (Mandarinoriental.com, 2019). The
current headquarter of the company is placed in Hong Kong. The management team of the
company is observed to include the chairman of the company, Simon Keswick, the chief
executive of the group, James Riley, the Chief Financial Officer, Stuart Dickie, the Sales and
Marketing Director, Michael Hobson along with the Development Director and President,

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Terry Stinson (Mandarinoriental.com, 2019). The company observed to have their presence
in 31 different locations and that certainly increased the efficiency of the company which is
petty prominent with the generation of 4% improved combined total revenue
(Mandarinoriental.com, 2019). The Jardine Matheson Group owned company is able to
improve their financial condition in a significant manner which is visible with a 9%
increment in the net asset value per share (Mandarinoriental.com, 2019).
PESTEL Analysis:
Political:
With a precise focus on the government structure, it is evident that the political
system of the nation is largely influenced by the quasi- constitutional system. The political
system in the nation is observed to be divided into three different branches such as the
Judicial Branch, Legislative Branch and Executive Branch (Gov.hk 2019). The nation is
observed to face considerable number of revolutions over the years which has the possibility
to disturbing the political stability inside the nation. Having said that, the proactive
management of the issues from the part of the government along with the strong emphasis in
establishing the good governance is considered to be significant for the companies in
achieving a stable political environment inside the nation. The chosen country has the
possibility of getting affected by the partial political instability of the nation and at the same
time, the differences amongst the Pro- Beijing and Pro- Democracy is considered to be an
important factor capable of affecting the smooth flow of business operations of the company
in the nation.
Economic:
With a precise focus on the economic condition of the nation, it is understandable that
the total GDP (PPP) of the nation is 502 billion US dollars and at the same time, the per

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capita value of it is seen to be 66,517 US dollars (Tradingeconomics.com. 2019). On the
other hand, the total GDP (nominal) of the nation is seen to be 381 billion US dollars
(Ceicdata.com. 2019). Along with that, the per capita value of the GDP (nominal) is
approximately 50,542 US dollars (Ceicdata.com. 2019). Having said that, the company is
also observed to be affected by the inflation in recent years in a significant manner. However,
that did not hold back the growth of the nation as one of the most preferred business
destinations. Hence, the strength of the economic condition of the nation is pretty prominent.
The company has the possibility of conducting a sustainable business in the nation and ride
on the economic growth associated with the business market of the nation.
Social:
The nation is observed to have a score of 53.9 in the Gini Co- efficient aspect and that
signifies the unequal wealth distribution amongst the people of the nation (Oxfam.org.hk.
2019). At the same time, the urge of the government in continuously developing the society is
petty visible with a score of 0.933 in the Human Development Index (Hdr.undp.org. 2019).
The achievement of such high score in the Human Development Index portrays the high life
expectancy, education and per capita income amongst the people of the nation. Hence, it is
pretty visible that the county is able to achieve a significant growth over the years and that
increases the ease of the company in achieving efficient employees for the success
management of their business operations in the nation.
Technological:
The people of Hong Kong are observed to be significantly tech savvy. Along with
that, the increased literacy rates and the high score of the nation in the Human Development
Index have the potential of portraying the high acceptance level of the people of nation
towards the technology. The youth generation are significantly influenced towards the usage

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of various social media platforms. Along with that, the growth of the eCommerce business in
the nation is a significant proof of the fact that the people of the nation are inclined towards
the usage of the online business activities. Hence, it is pretty prominent that the company has
the chance to conduct their business activities with precise application of the technology and
at the same time, the company has the chance to provide better facilities to their employees
and customers.
Environmental:
The government of the nation is observed to be concerned regarding the detrimental
impact of the excessive construction activities of the companies operating in the hospitality
industry on the environmental balance of the nation. Hence, the company is observed to have
the liability of conducting their business operations through maintaining the ecological
balance of the region.
Legal:
With a precise focus on the labour and employment legislations of the nation, it is
understandable that the company has the liability to make sure that they do not violate the
legislations retarding the wage and work time characteristics (Labour.gov.hk. 2019). At the
same time, the company has the responsibility to manage the workplace health and safety of
the employees. Other than this the company has the necessity to manage the sustainability of
their business operations with precise application of the ethics. The tax rates of the nation can
be considered as a major concern for the managers of the company.
Link between PESTEL and Strengths and Weakness:
Strengths:

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One of the important strengths of the organization is the service excellence of their
employees. The active participation of the employees in training activities of the company
enabled them to achieve the technical skills of the hospitality industry and that certainly plays
a crucial role in improving the customer satisfaction. The training activity of the company is
divided into four different aspects such as the Move In Orientation for every employee of the
company, Move Up for the managers, Move Forward for the senior managers of the company
along with MBA for the general and senior managers of the company (Mandarinoriental.com,
2019). The high score in the Human Development Index clearly portrays the ease that the
company experiences in conducting these training sessions for the improvement of the skills
and competencies of the employees of the company.
Other than this, the company’s strong presence across the globe with their business
operations in 31 different locations plays a significant role in reaching out to their customers
with the services (Mandarinoriental.com, 2019). The ease that the company experiences in
recruiting higher number of employees for expanding their business, helps the company in
increasing their store presences.
Weakness:
The main weakness of the company is the limited service offerings. Though the
company is seen to expand their product and service offerings, however, the company till
date, is pretty limited with their offerings. Hence, it is understandable that the company’s
incapability in increasing their offerings can be a significant weakness of the company going
forward in conducting a sustainable business. It is evident that the company has the scope of
serving their customers with increased service offerings and the GDP of the nation certainly
reflects the ability of the customers in purchasing their services.

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Other than this, the pricing of the company is also a major concern for the company in
targeting a larger number of customers. The cost leadership developed by the other
competitor organizations such as Hotel ICON, The Peninsula Hotels and The Peninsula Hong
Kong has the capability to affect the profit margins of the company (Peninsula.com. 2019).
As the high Gini Co- efficient reflects the unequal distribution of the wealth amongst the
people of the nation, it is petty prominent that a major section of the local individuals will
prefer low priced services and under such situation, the selected company can face
considerable amount of problems in managing the business competition.

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References:
Cadle, J., Paul, D. and Turner, P., 2014. Business analysis techniques. Chartered Institute for
IT.
Ceicdata.com. 2019. Hong Kong SAR, China Nominal GDP Growth [1974 - 2019] [Data &
Charts]. [online] Available at: https://www.ceicdata.com/en/indicator/hong-kong/nominal-
gdp-growth
Gov.hk 2019. GovHK: Government Structure. [online] Gov.hk. Available at:
https://www.gov.hk/en/about/govdirectory/govstructure.htm
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International
Social Research, 10(51).
Hdr.undp.org. 2019. | Human Development Reports. [online] Available at:
http://hdr.undp.org/en/countries/profiles/HKG
Labour.gov.hk. 2019. Labour Department - Labour Legislation. [online] Available at:
https://www.labour.gov.hk/eng/legislat/content2.htm
Mandarinoriental.com 2019. [online] Available at:
https://photos.mandarinoriental.com/is/content/MandarinOriental/corporate-17arMOIL
Mandarinoriental.com 2019. Mandarin Oriental The Hotel Group. Learning & Development |
Mandarin Oriental Hotel Group. [online] Available at:
https://www.mandarinoriental.com/careers/what-we-offer/learning-development
Mandarinoriental.com 2019. Mandarin Oriental The Hotel Group. Luxury 5 Star Hotels &
Resorts Worldwide | Mandarin Oriental Hotel Group. [online] Available at:
https://www.mandarinoriental.com/

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Oxfam.org.hk. 2019. [online] Available at:
https://www.oxfam.org.hk/tc/f/news_and_publication/16372/Oxfam_inequality
%20report_Eng_FINAL.pdf
Peninsula.com. 2019. Luxury 5-star Hotel Group | The Peninsula Hotels. [online] Available
at: https://www.peninsula.com/en/default
Tradingeconomics.com. 2019. Hong Kong GDP per capita PPP | 2019 | Data | Chart |
Calendar | Forecast. [online] Available at: https://tradingeconomics.com/hong-kong/gdp-per-
capita-ppp