Critical Analysis of Hilton Hotels' Business Strategy and Development

This report offers a comprehensive critical analysis of Hilton Hotels, a leading hospitality conglomerate. The study begins with an executive summary and company overview, followed by an in-depth examination of Hilton's internal strategic factors using the McKinsey 7S model, and external factors through PESTEL and Porter's Five Forces analyses. A SWOT analysis is presented to evaluate strengths, weaknesses, opportunities, and threats. The report delves into Hilton's core competencies, dynamic capabilities, and sustainable competitive advantage, evaluating its current strategies and suggesting alterations for maximizing its competitive edge. The analysis concludes with strategic capability assessment, recommendations, and references, providing a detailed understanding of Hilton's business strategy and its position within the hospitality industry. This report is a valuable resource for students seeking to understand strategic analysis and business development within the hospitality sector.

Running head: Critical Analysis: Hilton 1
Executive Summary
The project intends to identify the strategic factors affecting the hospitality industry. For
the analysis, Hilton is selected for the study. Secondary data, news articles and literary works
have been consulted to comprehend the environmental aspects that affect the business. It is
observed that Hilton stands to be the market leader in hospitality sector. Hilton implemented
numerous business strategies that gave the company competitive advantage over the rest.
Nonetheless, it is evident that the company lacked expertise in digital content writing and
social media skills. It is recommended that Hilton impart digital training to their employees and
recruit social media marketer to accelerate their growth further.

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Critical Analysis: Hilton
Table of Contents
Executive Summary.........................................................................................................................2
1.0 Introduction................................................................................................................................4
2.0 Company Overview...................................................................................................................4
3.0 Internal Strategic Analysis Tools...............................................................................................4
3.1 Hilton: McKinsey 7s analysis................................................................................................5
4.0 External Strategic Analysis Tools.............................................................................................7
4.1 External Environment- PESTEL...........................................................................................7
4.2 Industrial Environment- Porters Five Forces.......................................................................10
5.0 SWOT analysis........................................................................................................................12
6.0 Organisation core competencies..............................................................................................13
7.0 Dynamic capabilities...............................................................................................................14
8.0 Organisation sustainable competitive advantage.....................................................................15
8.1 Present Strategy for creation of competitive advantage......................................................15
8.2 The rightness of the strategy................................................................................................16
8.3 Success of the strategy and future aspects...........................................................................16
8.4 Alteration of Strategies for maximizing competitive advantage.........................................17
9.0 Strategic Capability.................................................................................................................18
9.1 Analysing the best approach towards strategic execution...................................................18
10.0 Conclusion.............................................................................................................................18

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Critical Analysis: Hilton
11.0 Recommendation...................................................................................................................19
Reference list.................................................................................................................................21
Appendices....................................................................................................................................24

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Critical Analysis: Hilton
1.0 Introduction
In this cutthroat competition, organisations are formulating edge-cutting schemes to float
in the market. Business strategy outlines advanced policies and schemes that accelerates the
growth of the organisation. The company considered for analysing the business strategy in this
report is Hilton Hotels Corporation (Blanchard, 2018).
Hospitality sector is people oriented and the entire success of the trade depends solely on
the relationship between the clients and the employees. Employees at Hilton Group Corporations
are trained to foster the culture of serving people (Ondieki, & Kung’u, 2013). The main aim of
this report is to excavate the aspects of hospitality business that made Hilton group one of the
leading hotels in this industry.
2.0 Company Overview
Hilton Hotels Corporation is one of the leading hospitality conglomerate spread
throughout the world. It is headquartered in America. Conrad Hilton established the organisation,
back in 1919. Since that time, the company advanced gradually and in contemporary situation, it
is spread in more than 109 nations. Initially, Conrad Hilton focussed on establishing the superior
most hotel in Texas. His commitment, focus and approach to bring something innovative to the
clients paved his journey of success. President and CEO of Hilton group claims that the workers
serve the guests with passion and love, even beyond the physical facilities of the organisation
(Corporatereport.com, 2019a).
3.0 Internal Strategic Analysis Tools
This section will evaluate the dynamics of hospitality sector and dynamics that made
Hilton Hotels stand out in the competition and become the market leaders.

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Critical Analysis: Hilton
3.1 Hilton: McKinsey 7s analysis
McKinsey model of 7s is the device that evaluates the internal aspects of the business
structure with the help of seven critical internal business dynamics. These dynamics comprises of
structure, strategy, shared value, style, skills, staffs and system within the organisation. These
elements are evaluated to assess whether the aspects aligned in accordance with company’s
growth and expansion strategies (Alshaher, 2013).
Figure 1: McKinsey Model of internal factors
(Source: Singh, 2013)
This framework is applicable to analyse the business design of Hilton Hotels
Corporation. This model facilitates in implementing new schemes, identifying the challenges

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Critical Analysis: Hilton
faced by the organisation and renovating the organisational design. The seven factors of
McKinsey in respect to Hilton Hotels is elucidated below:
Figure 2: McKinsey Model used by Hilton
(Source: Corporatereport.com, 2019b)
 Shared Value: In the depiction above, it is evident that Hilton has placed shared values
aspect in the core of its agenda. The primary agenda for this step is to value their
employees and guide their behaviour that has implications on their performance. As the
chief product of Hilton Hotels is to serve the customers, behaviour and attitude of the
employees gains the prime spot (Corporatereport.com, 2019b). Strategy: Hilton’s business strategy concentrates on differentiating their entire service.
The organisation differentiates their service based on quality of their service and

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Critical Analysis: Hilton
advanced level of information and communication integration. This group of hotels
classifies the service based on client recognition, position, status and achievements. It
provides customer centric service to the users. Systems: the company provides excellent facility to their clients. It offers facility for
quality control, consumer reservation system, and employee performance and worker
retention system. Structure: Hilton Hotels Corporation is gigantic firm. For effective monitoring of the
hotels, the organisation maintains hierarchal structure. Style: This represents the approach of managing employees and training the individuals
for the customers. Organisation conducts workshops to develop their employees and
impart appropriate skills (Naipinit, Kojchavivong, Kowittayakorn, & Sakolnakorn, 2014). Staff: Hilton Hotels do not depend on the HR manager only for monitoring their staff.
Special manager are recruited to monitor the workers. Skills: The hotel identified their unique business skills and nurture those attitudes within
their employees to represent unified image of the brand in Australia and worldwide
(Corporatereport.com, 2019b).
4.0 External Strategic Analysis Tools
4.1 External Environment- PESTEL
PESTEL analysis is the framework that scans the external environment of the business
that has profound impact on the performance of the company. This analytical device helps the
organisation to enter new markets during expansion or to launch new products.

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Critical Analysis: Hilton
Figure 3: PESTEL factors
(Source: Yuksel, 2012)
The aspects of the macro-environment evaluated by PESTEL are discussed in the section
below in correspondence with the Hotel giant –Hilton Hotels Corporation:
 Political Aspects: Political environment of the country highly influence the operational
dynamics of the industry. The degree of support for new industry, relaxation for foreign
investment and other government regulations in Australia play dominating role. Political
stability of the current government in Australia, corruption level, tax policies and labour
laws of Australia are matter of concern for Hilton. Moreover, CSR activities, education
level, health regulations are evaluated. Political instability and terrorism activities
adversely affect the hospitality sector (Yuksel, 2012).
Australia’s political condition is relatively stable, transparent and economically
sound. Australian governance bagged the position in the global top five position in Index

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Critical Analysis: Hilton
of Economic Freedom. The nation offers safe and progressive environment to Hilton
Hotels for developing their business (Rumbens & Guttmann, 2019).
 Economic Aspects: National and international economic status affect the growth of the
organisation. Economic growth in Australia will escalate the expansion of Hilton Hotels.
For instance during any world class tournaments, Hilton Hotels are over booked and the
organisation makes lots of profit. In addition to this, disposable income highly influences
the hospitality industry. More the net income of the Australian citizens, greater will be
there disposable income and higher standard of living. More number of individuals can
afford the luxuries of the resort. However, in recent times Australia evidenced fall in their
real estate business adversely affected their income level, which made the citizens
cautious while spending money (Rumbens & Guttmann, 2019).
 Social dynamics: Broad range of social norms affect the business of Hilton hotels in
Australia. Hilton is well-renowned brand in hospitality sector and visitors all around the
planet visit Australia for relaxation and business. Evolving patterns of consumer lifestyle,
demographic profile and local norms have profound impact on the business of Hilton in
the country.
 Technological factors: Australia is technologically developed nation and promotes
technical expertise. The Hilton group of industries incorporates advanced forms of
technologies in their system. This organisation has introduced online booking system,
feedback mechanism and facility management in their branches.
 Environmental issues: State, Federal and local government bodies in Australia jointly
implements and monitors ecological protection acts. The administration in Australia is
very stringent about their environmental policies. Hilton Hotels Corporation has to

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Critical Analysis: Hilton
comply by the environmental norms for smooth functioning of their units in the nation
(Business.gov.au, 2019).
 Legal obligation: Australian government have implemented large number of business
registrations and restrictions. Goods and service tax, Tax file Number, Australian
Business Number are few of the restrictions implemented by the government. Australian
government has also incorporated restrictions over visa. This limitation has adversely
affected Hilton service as tourists come from all over the world (Business.gov.au, 2019).
4.2 Industrial Environment- Porters Five Forces
Porter’s five forces analogy is the tool that analytically evaluates the business
environment within the same industry. This very technique helps in analysing the forces within
the industry that influences the profitability ratio of the organisation (Bharwani, & Mathews,
2012).
Figure 3: Porter’s Dynamics
(Source: Author’s creation)
NewEntrantThreatPowerofBuyersPowerofVendorsSubstitutionThreatCompetitiveRivalry

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Critical Analysis: Hilton Threat from the existing rivals: Hilton hotels belong to premium class of resorts. The
competition level in this class of hospitality industry is fierce. Shangri-La, Hyatt
Regency, Four seasons, Park Hyatt are just few of the names in Australia that are giving
tough times to Hilton. The organisation divested their income to different sections of the
business, which is leveraging their business. Competition with the new entrants: the barriers to entry in hospitality industry is low,
which is not supporting the business for Hilton. Large number of hotels and resorts are
coming up in tourist locations of Australia and worldwide, giving intense competition to
this brand. Negotiating power of vendors: Hilton has introduced a unique program named, Supplier
Diversity Program, which allows the organisation to purchase from diverse range of
vendors, giving them uniqueness and cost leadership. Bargaining power of vendors are
low in case of Hilton, as the company buys their supplies from large number of vendors.
The firm provides a platform for competition among the vendors to serve such a large
estate. Threat from substitute services: In hospitality sector, especially in Australia substitute
services are irrelevant. The clients are generally tourist or business class people. The
customers do not have an option of substitute other than relatives’ place, the ratio that
tends to be so negligible that Hilton do not face any challenge in this sector. Bargaining power of buyers: Hilton encounters huge pressure due to negotiations from
customer end. The clients has huge range of hotels to select from the luxurious range of
resorts. Therefore, the clients enjoy high bargaining power in this aspect (Hilton.com,
2019).

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Critical Analysis: Hilton
5.0 SWOT analysis
SWOT analysis is the strategic evaluation of the core elements of the organisation itself.
It gives an opportunity to utilise their core competencies and improve in the domains where the
company lacks behind. This tool aid in self-evaluation. This evaluation is based on evidences,
facts and real data available to the executives of the firm (Robinson, Fallon, Cameron, & Crotts,
2016).
Table 1: SWOT analysis: Hilton
Strength
 Strong dealer network
 Outstanding reputation in market
 Superb track record
 Large investor network
 Heavy returns on expenditures
 Excellent customer feedback
 Skilled and trained employees
Weakness
 The firm encounters problem while
integrating their work culture at
different nations. The company is
originally established in America.
Working culture in Australia is quite
diverse.
 The liquid asset ratio of the company
suggests that the financial planning of
Hilton is not effective.
 Hilton do not invest appropriately in
the fields of research and
development.
 Hilton is facing huge attrition rate.
Employees are leaving their jobs at
Hilton frequently, which adversely