Report on the Savoy Hotel's Business Strategy and Competitive Analysis

This report offers a comprehensive analysis of the Savoy Hotel's business strategy. It begins by examining the impact of the macro-environment using PESTLE analysis, followed by an assessment of internal strengths and weaknesses via SWOT analysis. The report then delves into the hotel's internal environment and capabilities through the McKinsey 7S and VRIO models. Competitive analysis is conducted using Porter's Five Forces, and strategic options are explored with the Ansoff Matrix and Bowman's Strategy Clock. The study provides insights into the hotel's mission, objectives, and goals, as well as its strategic direction within the competitive London hospitality market, ultimately offering recommendations for the Savoy Hotel's sustainable growth and market positioning.

Hospitality Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Discuss and analyse the impact of macro environment on the Savoy Hotel and its business
strategy.............................................................................................................................................1
Mission...................................................................................................................................1
Objectives and goals...............................................................................................................1
Define strategy........................................................................................................................2
Pestle analysis.........................................................................................................................2
SWOT analysis.......................................................................................................................3
Discuss and analyse the internal environment and capabilities of the Savoy hotel.........................5
McKinsey 7s Model...............................................................................................................5
VRIO Model...........................................................................................................................6
Discuss the competitive analysis using the Porter’s five force model.............................................8
Porter’s five force model........................................................................................................8
Ansoff Matrix.......................................................................................................................10
Discuss and apply the Bowman's theory to understand and interpret the strategic direction
available to the Savoy Hotel..........................................................................................................12
Bowman’s strategy clock.....................................................................................................12
CONCLUSION..............................................................................................................................14
References:.....................................................................................................................................15
Books and Journals...............................................................................................................15

INTRODUCTION
Business strategies and their analysis is very important in the current dynamic business
environment within which organisations of different industries operates because it help the
organisation bye by providing them different concepts of business strategy and their practical
implementation by which businesses can gain sustainable and potential position in the
marketplace (Moktadir and et. al., 2020) Hospitality sector there the main focus of the
organisation is to attract the guest and provide them with the best experience for which business
strategy helps them in gaining the business intelligence which provides them with competitive
advantage. Implementing good and effective business strategy for the organisation helps them to
make larger profit and to make the business sustainable for the long run. The present report is the
study of Savoy hotel a 5 Star luxury hotel based in London which comes under the UK
hospitality industry. The hotel is considered as the first luxury hotel of the Britain. The report
will discuss about the influence of macro environment on the hospitality industry using the
various analytical frameworks. Further in the report the internal environment analysis and the
strategic capabilities of the organisation are discussed. The report applies the porter's five force
model to analyse the competitive environment as well as the Ansoff matrix to understand the
strategies that are beneficial for the hotel. At last to understand the strategic direction available to
the hospitality organisation bowman strategy clock theory is applied within the report.
Discuss and analyse the impact of macro environment on the Savoy Hotel and
its business strategy
Mission
The mission of Savoy hotel is to become one of the largest premium luxury Hotel of the world
and lifetime treasure experience to their guest.
Objectives and goals
The objective of the Savoy hotel is to increase the sales of their restaurant by 20 % at the end of
this year.
The goal of the Savoy hotel is to convert all of their operations and services ecological and
environment friendly to reduce the carbon emission.
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Define strategy
Strategy is an imperative part of the organisation in order to attain the desired goals and
objectives and pursue the consumers with the products and services offered by the organisation.
The strategy like product development will help the organisation to increase their restaurant sales
with new product (Khalifa, 2020).
Pestle analysis
Pestle Analysis in context of Savoy hotel to analyse the factors of macro environment and their
impact on hotels business operations is discussed below:
Figure 1: What is PESTLE Analysis, 2021
(Source: What is PESTLE Analysis, 2021)
P- Political The UK has stable political conditions and also there is the reduction in
the Tourism VAT which provides the opportunity to Savoy to increase
their sales and profitability with emergence of more consumers (Frederick
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and Parappagoudar, 2021).
E- Economic The UK’s economic stability was low due to the impact of Covid- 19
which has also impact the financial situation of Savoy as consumers
disposable income has reduced and labour cost is increased (BURKE,
ROBINSON and Choi, 2020).
S- Social With the growing concern of consumers towards the healthy and organic
food which is seasonal the company has opportunity to diversify its menu
with new dishes as per customers demand. There is increase in trend of
travelling in different countries which is also an opportunity for the Savoy
to use the influencing tactics to attract tourists.
T – Technological The technology is growing so is the trend of digitalization hence, it is
recommended to Savoy to use latest technology marketing strategy like
social media marketing to grab the opportunity to attract and promote
product and service globally to larger audience.
L – Legal The changes in the legal laws related to employment and labour laws and
health and safety law is the threat to company as if not timely updated and
complied with law can make the company part of law suit (Do, 2020).
E - Environmental The government is concerned for the environment safety and so are
consumers. Therefore, it is the opportunity of the Savoy to promote the
sustainability in the organisation and to make the organisation
environmental safety and world’s first carbon free hotel.
SWOT analysis
The SWOT analysis of the hospitality industry in context of Savoy hotel to analyse the internal
strengths and weaknesses and the external opportunities and threats are discussed below:
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Figure 2: SWOT Analysis, 2021
(Source: SWOT Analysis, 2021)
Strengths Weaknesses
 The products in services offered by the
organisation a premium in quality as
well as unique and give beat experience
to the guest.
 The hotel has outstanding and highly
skilled staff (Kosior, 2021).
 The company has high price which
make them restricted from capturing
middle class and lower class
consumers.
 The Savoy hotel does not have
acquisitions and mergers with the top
technological brands that make them
less updated with technology.
Opportunities Threats
 The hotel is not well expanded in the
foreign market therefore market
development is the biggest opportunity
 The covid-19 has major impact on the
hotel which is threat to hotel to again
cover back their losses (Tahiri, Kovaçi
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for hotel to expand.
 Savoy hotel has a opportunity to launch
premium card service with different
benefits and discounts for regular
visitors to maintain their loyalty with
firm.
and Bushi, 2020).
 The company has of competitors who
have same services with low price due
to which is pressurized to reduce their
price which can affect their quality as
well as profit margins.
Discuss and analyse the internal environment and capabilities of the Savoy
hotel
McKinsey 7s Model
The McKinsey 7s model is effective organisational internal analysis framework useful in
aligning and reinforcing the strategies with the internal factors of the organisation for the
successful growth. The McKinsey 7s model in context of Savoy Hotel is explained below:
Figure 3: McKinsey 7S Framework, 2018
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(Source: McKinsey 7S Framework, 2018)
Hard elements
Strategy: In Savoy hotel the management team should clearly communicate the strategies and
their strategic directions in terms of mission and vision of the organisation among their staff
members to guide them and direct them towards the objectives of the company (Bovsh and et.
al., 2021).
Structure: Savoy hotel has hierarchical organisational structure thereby maintaining the effective
flow of information between the various departments in order to maintain hassle free and
coordinated working environment for effective implementation of strategies.
Systems: hotel has highly technologically advanced departmental systems to gather their
information and plan in delegate their task between the different members of the department. All
the systems of the organisation are connected with the central highly part system for their
interrelationship.
Soft elements
Shared values: Savoy hotel is the luxury hotel that is known for their premium quality service
and products as a core value to communicate effectively with each other to foster their services
for the better experience of the guest and also to motivate the employees towards the common
goals.
Style: in Savoy hotel the managers use different types of leadership styles for the better guidance
and engagement of the employees in the decision making process. The company owner believes
that in order to run the organisation effectively with their employees the company must have
integration of leadership styles (Leeman, 2021).
Staff: Savoy hotel has large number of employees that are highly skilled and provided with
consistent in-house training. The Savoy hotel has Michelin chef for their restaurants and
excellent bar tenders and waitress and waiters for the better service of the food and beverages.
Skills: the skills of the workforce are highly commendable and unique and rare which adds value
to the organisation as well as provides the competitive advantage to the Savoy hotel which is
hardly substitutable.
VRIO Model
Resource based view is a strategy in which the resources are considered as the key element for
the superior performance of the organisation and for the competitive advantage. The VRIO
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strategic analysis framework is a resource based view model that helps the organisation in
analysing their internal resources and capabilities by uncovering and protecting them to gain
competitive advantage for long term. The VRIO model in context of Savoy hotel is discussed
below:
Figure 4: Breakdown of VRIO analysis, 2021
(Source: Breakdown of VRIO analysis, 2021)
Resources Valuable Rare Inimitable Organised
Pricing YES NO NO NO
Supply chain YES YES NO NO
Human power YES YES YES NO
Brand Image YES YES YES YES
Valuable: the Savoy hotel has the valuable manpower, brand image, supply chain and the pricing
strategy which makes them standout in the front of competitor’s and helps them in gaining
competitive advantage from the long run. The company’s manpower is the more valuable
resource as they have unique skills and are highly trained with latest technology and hospitality
standards (Munas and Arun, 2020).
Rare: The Savoy hotel has most rare supply chain with multiple suppliers from different
geographical locations that provide fresh and organic food supplies. The firm also has rare
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human power as well as Brand image which help the company in achieving their objectives as
well as facilitate the development and growth inside the firm.
Inimitable: the hotel’s manpower is not only unique with their skills and talents but are also
diversified in nature and also contains the differentiable knowledge and understanding about the
ethics and discipline which inimitable. Similarly Brand image is also inimitable as it
incomparable with other competitor’s.
Organised: The brand image of Savoy hotel is organised and relevant due to its performance and
is protected from the unethical and illegal practices or misconducts for the long term future of the
organisation.
Discuss the competitive analysis using the Porter’s five force model
Porter’s five force model
The porter’s five force model is the theory consists of five factors that help to conduct the
competitive analysis of the organisation and their impact over the operations of the business. The
competitive analysis of Savoy hotel through Porter’s five force model is discussed below:
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Figure 5: Industry Analysis Using Porter’s Five Forces, 2020
(Source: Industry Analysis Using Porter’s Five Forces, 2020)
Threats of new entrants (low)
The hotel industry the new entrants bring innovation which puts the pressure over the
hotels like Savoy that has high prices thereby challenging them to lower their pricing strategy
(Lacaze, 2020). Savoy hotel is an oldest luxury hotel which is known for its premium price and
quality therefore tackle the new entrants in efficient manner by using the product differentiation
strategy. Also with impact of Covid- 19 the economics of scale of the industry is relatively low
which stops the entrants from easy entry.
Bargaining power of suppliers (low)
The number of suppliers in the hotel industries a lot more compared to the buyers which
means that supplies have low bargaining power as the products provided by the suppliers unless
differentiated and also has minimal switching cost. Savoy hotel buy their raw materials at the
low cost from the suppliers and also has a multiple suppliers in its supply chain.
Bargaining power of buyers (high)
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The type of industry in which Savoy hotel operates has buyers which are considered in
upper or upper middle class lots of demands in terms of quality and service for which they are
paying which makes their power high in the hotel industry. Therefore company has to regularly
develop new services and products to reduce the bargaining power of the buyers and streamline
its sales.
Threats of substitutes (low)
In the hospitality industry in which Savoy hotel operates has a few substitutes available
that are high in quality and also a way more expensive. As company owns large amount of profit
with its premium and luxury services which a known for their quality and higher prices and
making difficult for others to bring their substitutes (Shang, Choi and Kan, 2020).
Competitive rivalry (high)
The competitive rivalry in the hospitality industry especially in the hotel sector in which Savoy
hotel operates is high as big hotels like Holiday inn, Premier Inn etc. bring tough competition
with their differential products and services and also with their pricing strategy.
Ansoff Matrix
Strategic positioning is it term that helps to reflect the kind of position and organisation
holds within its industry as a matter of performance. The strategic positioning will be on the
basis of two things premium price or low price for the products and services of the company.
To analyse and develop the strategic positioning of the Savoy hotel, Ansoff growth vector matrix
is used for the marketing planning which will help the organisation to analyse and choose the
correct strategy for their growth which will set the strategic direction for the growth and
development of the hotel.
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