Essay on Porter's Five Forces Analysis: Burj Al Arab Hotel Industry

This essay provides an analysis of the Burj Al Arab hotel using Porter's Five Forces model, focusing on two key aspects: the power of suppliers and the threat of new entrants. The analysis reveals that the bargaining power of Burj Al Arab's suppliers is relatively low due to the hotel's global purchasing sc...Read More

ESSAY

Table of Contents
INTRODUCTION...........................................................................................................................3
1. Power of suppliers aspect of Porter's Five Forces..............................................................3
2. Threat of new entry aspect of Porter’s Five Forces. ..........................................................5
CONCLUSION .................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Porter's five forces analysis is a technique for measuring competition of the business. It is
used to evaluate the working of an organisation in comparison of other organisations. It uses five
forces to analyse the intensity of competition occurring in the market. It combines forces of
micro environment with the forces of macro environment in order to evaluate the accurate
results. It is used to analyse the current status of the business in order to analyse its functioning.
This essay is based on the power of suppliers and threat of new entry aspects of Porter’s five
forces.
1. Power of suppliers aspect of Porter's Five Forces.
Porter's five forces analysis is a technique of measuring competition in the business. It is
used to evaluate the current working status of the business in order to make desired changes.
The whole criteria of Porter’s Five Forces Model revolve around the five distinctive
measures which are used to evaluate the competition of the business.
HIGH END luxurious hotels provide various kinds of facilities to their visitors in order
to provide them comfort and satisfaction (Dobbs, 2014). As the competition is rising, it is very
important for the industries to identify their strength and weaknesses in order to provide the
effective results. For expanding business in HIGH END industrial sectors, it is very important
for the organisation to conduct overall feasibility study of the market in terms of growth,
technology, economic and all other factors; this will help them to conduct business activities
effectively. In United Kingdom, there is large number of HIGH END hotels so for expanding
business in such sectors, it is very crucial to examine the overall information of the competitors
attached to it.
When the organisations need to enter in the HIGH END market, it is very important for
them to analyse the overall market. The power of supplier of Hotel Industry is comparatively
low, the hotel industry is only subjected to the power of labour, trained staff and personnel and
the industry encompass the huge requirement of them. HIGH END industries are not effected by
the bargaining power of the suppliers and on the other hand it has low and indirect pressure upon
their competitiveness. If the new entrants wants to maintain the competitive advantage in the
HIGH END industrial sector, it is very important for them to provide some unique offering to
their customers.

Whenever organisations wants to enter in the HIGH END industrial sectors, it is very
crucial for them to analyse the market, as group of individuals wants to expand their business in
luxurious hotel industry, it is important for them to gain information about the other HIGH END
luxurious hotels of United Kingdom, so as to maintain their standards. This will include gaining
information regarding all the top hotels which are present in the UK. The major dominant of
HIGH END hotels in UK are Hilton and Marriott, the services and the offering provided by them
is remarkable, and there suppliers are also very prominent.
The new organisation who wants to expand their working HIGH END industry can use
tools of strategic competition for analysing the HIGH END market.
The hotels and resorts of UK are highly luxurious and provides unique qualities to their
customers. Every year approximately 12 to 15 % of the organisations shifting their business
functions or it can be said that converting their business operations into hotel and hospitality
sectors for enhancing their profitability as it provides 20-30 % more profitability in comparison
to the other sectors of the industry.
In HIGH END hotels like Hilton, Grand Hyatt and Marriott the power of supplier is low,
as these organisation made worldwide purchase from more than 4000 suppliers globally and the
bargaining power of the supplier is low there are number of suppliers who are ready to offer their
products and services to such HIGH END industries
Moreover, the importance of order volume for Hilton and Marriott suppliers is paramount
and there is no supplier switching cost for such HIGH END hotels in most cases.
HIGH END hotels run supplier diversity program that ensures purchasing from, and the
development of, socially diverse suppliers Every business constitutes various competitors and
especially in HIGH END hotel industry, there are various numbers of choices available for the
people so in such situation, it is very essential for the organisation who wants to expand their
working into HIGH END industries to conduct proper study of the market on regular basis. In
this way, they can come up with proper strategies and regulations.
The first and foremost step for any industry before expanding their business is to
examine the market in which they want to expand their operations. Analysing competition is
also one of the most important task conducted by the organisational members so that they can
apply proper measures to overcome the barriers. For managing stable position in the market, it is
very important for the industries to maintain their competition so that people will choose them

over any offering. Before expanding business in the market it is very important for any business
organisation to make sure that whatever techniques and measure taken by them are of high
standards and up to the level of the core customer.(Greenspan, 2015). There are some basic
norms and regulation which are necessary for establishing HIGH END hotels these norms are
some kind of facilities which should be offered by the business so that they can give the certain
rating to their organisation. Analysing the market revolves around gaining all the information
which are related to measure the working of the market. It includes evaluating technological,
economic, social and political aspects related to the market. Organisations who wants to expand
their working by providing unique features to their core customers and analysing the competition
in the market which in turn helps them to execute better offering than their rivals. Supplier
power includes number of suppliers, size of suppliers, unique features offered by them,
substitute ability and changing cost. According to the various surveys it has been seen that hotel
and hospitality industries functions their business in high competition market. Every year
approximately 12 to 15 % of the organisations shifting their business functions or it can be said
that converting their business operations into hotel and hospitality sectors for enhancing their
profitability as it provides 20-30 % more profitability in comparison to the other sectors of the
industry. (Indiatsy, 2014).
2. Threat of new entry aspect of Porter’s Five Forces.
Due to rise in competition it becomes very crucial for the industries to maintain the
services provided by them in order to enhance their business. For HIGH END industries it is
very crucial to maintain their quality standards so that they can maintain their popularity among
their customers.
The main aim of HIGH END industries is to provide level of comfort and satisfaction to
their customers. As the competition is increasing, it becomes very essential for the organisation
to offer something new and unique to their customers. This in turn helps in earning their trust
and loyalty. The main criterion around which such industries revolve is to provide full amount of
satisfaction to their customers. It is also very important for the industries to examine their target
audience and work according to that.
This will help them to provide services according to the customer’s desires and the
expectation in order to gain their trust and loyalty (Porter, 2014).

Threat of new aspect of porters five forces analysis revolves around this concept.
Whenever new entry establish in the market it becomes huge problem for all the existing and
dominating industries because new offerings always attract customer in such cases it become
very difficult for the existing industries to maintain their popularity.
In UK there are number of HIGH END hotels and they always come up with some
variations in order to maintain their competitive advantage. As, Hilton announces Mexico
expansion with two beach-front properties in the resort destination of Cancun, Waldorf Astoria
Cancun and Hilton Cancun. Set to deliver a truly unforgettable experience for guests,
the Waldorf Astoria Cancun will feature 150 exceptionally appointed guest rooms and suites,
with waterfront or mangrove-facing terraces and private balconies.
New entries come along with innovations, creativity and their new methods of
conducting activities this in turn puts pressure on the existing industries (Geels, 2017). In case of
hotel Hilton, entry of Marriott international is one of the huge phase of stress for Hotel group of
industries Hotels can defeat their competitors by reducing their costing and pricing strategy and
by providing new offering to their core visitors. As the competition is increasing, it is becoming
very difficult for the organisations to overcome the barriers and it is very crucial for them to pass
measures that can prove to be beneficial for them. Worldwide holdings of Hotel has to manage
all the challenges faced by them in order to safeguard all the organisational barriers.
On the other hand for reducing the threats of new entrants Grand Hyatt decided to expand
its business by providing open pools for the superclass rooms into their hotels. This will help in
attracting the new customers as well as their attention and attraction towards the hotel.
In order to remove the barriers from the organisation it is very essential for the
organisations to manage their worldwide holdings. Threats of new entrants can be handled by:
innovation of new services and modifying products will help in attracting new and old customers
and these in turn helps in generating popularity of the organisation in the market. It will also help
in folding old customers. Economic scale helps in providing goods and services to each and
every social group present in the society.(Zhao, 2016). By initiating research and development
programs to find out the core results in order to identify their core customers so that they can
handle the requirements and needs of the customers.
HIGH END Hotel based industries revolves around the parameters of management and
hospitality. If organisations wants to start their business in hotel sector and specially if they want

to open hotel in United Kingdom, it is very important to have appropriate knowledge about how
to deal and handle the visitors of the hotel and provide honour and respect to them in order to
meet their desires and outcomes.
Research and development will help the organisation to identify the expectations and the
needs of the customers. HIGH END industries define their level of standard on the regular basis
and it became dynamic problem for the new entrants because such organisations are considered
as a dominating firms of the sector. Threats of new entry includes time and cost of the entry,
knowledge of specialist, scale of economy, advantages of costing, protection to technologies and
entry barriers. As per the reports presented by several hotel industries it has been seen that due to
the facilities provided by the HIGH END hotels in UK, there is increase in international number
of tourists by 12%.
These factors affect the working of the organisation. For maintaining stability in the
market it is very crucial for the industries like Hotel group of hotels to regulate and maintain
their level of standard on the regular basis. Such techniques reduce the profit sharing ratio for
new organisations. In such situations it become quite difficult for them to overview the standard
maintained by the dominant industries. Hotel Hotel is one of the most dominating industry in the
field of hospitality and hotels because of the offerings and variations provided by them to their
core customer.
As hotel and hospitality industries are full of competition, it is very important for the
organisations to maintain their quality and their standards. The major threat of HIGH END
hotels in UK is economic and political turbulence in most countries. The major competitors of
HIGH END hotel sector in UK are, Marriott International; Hotel Hilton; Star-wood Hotels and
Resorts, as per the reports of 2014, hotel hilton is very popular among the customers of all over
the world .
Porter's five forces analysis is used to measure the current competition and growth and
success of the business in order to mark the required and desirable changes. It is a measure to
evaluate the working of the organisation in comparison to other industries(Yunna, 2014).
Porter’s five forces are implemented in business to evaluate the regulations of the business in
order to make the desired changes. Changes are conducted on the basis of the internal and
external forces applied to the business. This technique is prove to be very beneficial for so many

organisations because it helps in analysing and evaluating the current working position of the
business and helps in identifying the rivals and the competitors of the business (Obeng, 2016).
UK HIGH END hotel industrial sector is full of competition, so if the organisations
wants to expand their business in such market, then in such case analysing the facts and figures
regarding the market is essential.
They should also bring some unique features, so as to provide something different to
their customers. Unique can features can be in term of interior of the hotel, providing highly
luxurious accommodations and many more features that can prove to be beneficial in making
some position in the dominant HIGH END hotel sector.
There are various numbers of hotel in United Kingdom, if the organisation wants to
initiate their business in hotel sector in United Kingdom. The Tower Hotel, Premier Inn Epsom
Central, Rosewood London, The Dorchester and Hotel 41 are the high competition for any new
entrants in the hotel industry of the United Kingdom. Because their competitive advantage these
industries plays a dominant role in the hotel sector industries in United Kingdom.
Facilities that HIGH END hotels provide to their customers in UK, HIGH END Hotels in
UK, provides very luxurious and remarkable facilities to their visitors in order to enhance their
level of satisfaction and comfort level. These includes rooms with premium views and balconies
and swimming pool area in each and every cottages. The luxury which one can see in HIGH
END hotels of UK is incomparable, they organise various kinds of cultural and traditional events
at their hotels in order to increase the customers attention and to maintain their uni-quality. Such
HIGH END facilities make the stay of the visitors very adventurous and memorable. United
Kingdom is the hub of tourist as every year number of individuals from al over the world come
to visit United Kingdom.
In UK, there are number of famous hotels which provide a comfort stay to the visitors,
but the HIGH END luxurious hotels of the United Kingdom are different from any of the
country of the world. The services and the hospitality provided by them is remarkable and it can
be said that they really respect their customers, such behaviour attract the customers to not only
visit the hotel again but to also visit the country again for holiday or vacation purpose as it
provides them a sense of satisfaction, the HIGH END hotels of UK, provides means of
transportation for their visitors through out their stay and also facilitates with with full details of
tourists attraction and also personal guides free of cost. And on the other hand the food and other

facilities which are provided by such hotels is also not comparable with the others, as their only
motive is to make the stay of their visitors comfortable and luxurious. The four seasons HIGH
END hotel of London is very famous among the visitors through out the world.
CONCLUSION
From the above essay, it can be concluded that for any organisation, especially
hospitality and hotel industries, it is very crucial to maintain quality in their standard and
offerings so that they can earn the trust and loyalty of their core customers. Porter’s five forces
analysis is an important strategy to evaluate the current growth and success of the business and
to analyse the competition in order to maintain the sustainable position in the market. These
techniques are best suitable for organisations like HIGH END Hotel so that appropriate
measures and survey can be taken by the firms to increase their profitability and productivity.

REFERENCES
Books and Journals:
Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review. 24(1). pp.32-45.
Greenspan, R., 2015. Walmart: Five forces analysis (Porter’s model). Panamore Institute.
Indiatsy, C.M., 2014. The Application of Porter’s Five Forces Model on Organization
Performance: A Case of Cooperative Bank of Kenya Ltd. European Journal of Business
and Management. 6(16). pp.75-85.
Porter, M.E., 2014. How smart, connected products are transforming competition. Harvard
Business Review. 92(11). pp.64-88.
Yunna, W., 2014. The competition situation analysis of shale gas industry in China: Applying
Porter’s five forces and scenario model. Renewable and Sustainable Energy Reviews. 40.
pp.798-805.
Zhao, Z.Y., 2016. Competitiveness assessment of the biomass power generation industry in
China: A five forces model study. Renewable Energy. 89. pp.144-153.
Obeng, E., 2016. Survival of The Fittest: How Competitive Service Overlap and Retail Format
Impact Incumbents’ Vulnerability to New Entrants. Journal of Retailing. 92(4). pp.383-
396.
Geels, F.W., 2017. Disruption and low-carbon system transformation: Progress and new
challenges in socio-technical transitions research and the Multi-Level
Perspective. Energy Research & Social Science.
Zobel, A.K., 2016. Does patenting help or hinder open innovation? Evidence from new entrants
in the solar industry. Industrial and Corporate Change. 25(2). pp.307-331.
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Inagait, P. C., 2018. The Role of Operations in Organizational Effectiveness. [Online].
Available through: < http://smallbusiness.chron.com/role-operations-organizational-
effectiveness-73178.html>.