Strategic Management Report: Analyzing Sheraton Hotels and Resorts

This report provides a comprehensive strategic management analysis of Sheraton Hotels and Resorts, examining its operations within the hospitality sector. The report begins with an executive summary and an introduction to Sheraton, followed by an in-depth external environment analysis, including suppliers, market intermediaries, partners, customers, and competitors. It also covers the macro environment, including demographic, economic, physical, technological, political-legal, and socio-cultural factors. The analysis extends to industry dynamics, strategic group issues, and the application of corporate strategy models, particularly the Cascade Strategic Planning Model, to suggest strategic directions. The report then delves into business-level strategies, such as expansion, operational auditing, and pricing. Furthermore, it identifies challenges faced by Sheraton due to dynamic changes, including increased fixed costs and seasonal fluctuations, and reviews strategic options and organizational flexibility. The report also recommends ways to manage essential changes for strategy execution, including models for strategy execution and strategies to achieve set visions. Finally, the report compares the Blue Ocean Strategy and "Great by Choice" concepts, concluding with key findings and references.

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management
(Student Details)

STRATEGIC MANAGEMENT 2
Executive Summary
The given report is about the change management in hospitality sector in reference to Sheraton
Hotels and Resorts. It shows all the relevant changes required in the present hospitality
environment. Sheraton has faced many changes in its internal environment as well as external
environment. To manage the change becomes important in this sector. This report highlights
various strategies that Sheraton should adapt to remain stable in the market. Its competitors has
already studied the market and made innovative moves. In order to gain competitive advantage
over its competitors, Sheraton has to apply various models and theories to gain back its position
in the global world.
There is no doubt that Sheraton has made a huge impact on the hospitality sector by making
great expansions in the past years, but if it still wants to grow and expand; it has to make its
change management very effective.

STRATEGIC MANAGEMENT 3
Contents
Task 1...............................................................................................................................................4
Introduction..................................................................................................................................4
External Environment Analysis- Sheraton Hotels and Resorts...................................................4
Industry Dynamics and Strategic Group Issues...........................................................................6
Corporate Strategy model to suggest strategy direction..............................................................7
The Cascade Strategic Planning Model....................................................................................7
Business Level Strategies.............................................................................................................9
Task 2.............................................................................................................................................11
Challenges faced by Sheraton Hotels and Resorts due to dynamic changes.............................11
Reviews of Strategic Options.....................................................................................................11
Organizational Flexibility..........................................................................................................12
Task 3.............................................................................................................................................13
Ways to manage the essential changes to execute strategies.....................................................13
Model for Strategy Execution....................................................................................................14
Hrebiniak’s Model for Strategy Execution............................................................................14
Strategies to achieve the set vision............................................................................................15
Task 4.............................................................................................................................................16
Blue Ocean Strategy...................................................................................................................16
Great by Choice.........................................................................................................................16
Comparison................................................................................................................................16
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

STRATEGIC MANAGEMENT 4

STRATEGIC MANAGEMENT 5
Task 1
Introduction
Sheraton Hotels and Resorts
Sheraton Hotels and Resorts is a global hotel chain; and Marriott International is its parent
company. It was established in Springfield, Massachusetts, USA in the year 1937. Sheraton
currently operates 441 (approx.) hotels with 155620 rooms, including locations in Asia Pacific,
North America, Central and South America, the Middle East, Europe and the Caribbean. Emest
Henderson and Robert Moore are the founders of Sheraton.
External Environment Analysis- Sheraton Hotels and Resorts
Sheraton’s external environment includes all the factors and forces that influence its business.
The micro analysis factors are discussed below:
1. Suppliers
Sheraton is a global chain; to maintain the global standard, it purchases materials and other
products from various parts of the world. The main aim is to maintain the quality of the product
to gain maximum guest satisfaction. The list of suppliers from whom the company makes
purchases is mentioned below:
 Guangdong Eliya Hotel Linen Company Ltd. (China)
It supplies hotel linen, sets, bedding, pillows and table cloth (Alibaba, 2019).
 Nantong Wedding Supplies (China)
It supplies bathrobe, towel, bath rug and bed linen to the Sheraton chain.
 Foshan Shangdian Hotel Furniture Co. Ltd. ( China)
Makes supply of hotel bedroom furniture, hotel dining furniture and villa furniture.

STRATEGIC MANAGEMENT 6
2. Market Intermediaries
Sheraton has tie-ups with online market intermediaries to increase its sales. There are various
online platforms such as Trivago and Hotwires, who work as market intermediaries for the hotel.
3. Partners
Sheraton is a subsidiary of Marriott International.
4. Customers
The customer profile of Sheraton is much diversified. All types of customers prefer staying in the
hotel. It provides accommodation facilities to a diverse range of guests; such as, luxury travelers,
family, and business travelers. Presently, it is focusing on attracting more business travelers,
honeymooners and vacationers (Cheah, 2018).
5. Competitors
Hilton, Holiday Inn, Hyatt and Marriot are its major competitors.
6. Public
The macro analysis consists of much broader environment which affects the hotel as a whole
and do not cause any impact directly.
Macro factors are mentioned below:
Demographic environment
Sheraton is taking initiative to promote demographic marketing. It aims to attract millennial
travelers, as it believes that they are no different from people with higher age group (Tse, 2016).
Economic environment
Industry is highly dependent on economic conditions. The robust schedule showing the new
openings of hotels indicates that the hotel chain is optimistic and is enjoying growth in the
economy globally (Langfield, 2014).

STRATEGIC MANAGEMENT 7
Physical environment
Sheraton puts all its attention to meet the environmental standards while performing its business
activities. It focuses on long tern social benefits and ensures environmental sustainability by
considering Global Reporting Initiative (GRI).
Technological environment
The Government has made certain agreements to open new markets. Sheraton has been
successful in adopting new technologies and entering into free trade agreement with the
Government to get an opportunity of entering new markets (Fernfortuniversity, 2019).
Political-Legal environment
Sheraton is planning to open more hotels worldwide in the coming years (Hospitalitynet, 2017).
Its expansion indicates that it is seriously complying with the rules and regulations of the
concerned countries where it is located. All the legal and political laws are understood before
entering into a new countries or state.
Socio-Cultural environment
Social and cultural factor makes the future book of Sheraton look very good as the number of
travelers has increased. Most of the travelers spend more on their stays. Australians pays the
maximum on their travel. A cultural change that may bring some impact on Sheraton includes an
increased number of Asian travelers. The people from America and Europe have specific
demand related to their travel, such as luxury resorts and packaged tour (QSpace, 2017).
Industry Dynamics and Strategic Group Issues
In the hospitality sector, the thing that remains constant is the change. As an hotelier, we need to
keep a check on emerging trends to ignore guest disappointment and to maintain competitive
advantage over its competitors. Sheraton’s priority has now changed, earlier the hotel was
focused on increasing the number of customers, but now it is highly concerned in providing
outstanding experience to the guests so that they keep visiting the hotel regularly (Morozova,
2017).

STRATEGIC MANAGEMENT 8
We are upgrading the top Sheraton hotels to the new Sheraton Grand tier to match the guest
expectations in a better way. Sheraton Grand will showcase the best properties to deliver prime
quality designs and comfort (Rai, 2015). To maintain a good image of the brand a s a whole, it
has differentiated its normal hotels with the premier ones. The new luxury Grand chain has
attracted many investors to restore historic properties to build new iconic hotel. Sheraton is
focused in increasing technology by adding smartphone check-in system, key-less entry and
introduction of robots. It has taken technology to another level by inventing the digital crown
jewel, which is not visible to the guests (Boulton, 2016). This software enables the hotelier to
automatically change the pricing of the properties by applying hundreds of variables of supply
and demand. Therefore, the three major trends responsible for changing the hospitality sector
are:
 Frequent change in guest expectations and their behavior
 Guest journey dependence on technology
 Different service requirements
The major issue that the hospitality industries face is the challenge of rapid growth in the sector
that brings more competition. While analysis the issues related to competitors, it was found that
some guests are facing cultural issue, operational issue and even quality issue as the competitors
were running ahead in providing better quality and experience (Ting, 2018). The major
competitors of Sheraton are Hilton, Hyatt and Holiday Inn; and they are providing outstanding
service and stay facilities to the luxury travelers which the company failed to do in the past years.
Corporate Strategy model to suggest strategy direction
A corporate strategy model is essential for the overall growth in the planning process. The model
best suitable for hospitality industry to determine the right strategic direction is discussed below:
The Cascade Strategic Planning Model
This model is easy enough for the executives to implement it. The important elements of this
model are goal and governance. The goal element includes the vision statement, values, focus
areas, objectives, KPIs and projects. The Governance elements include monthly updates, project
updates and KPI exceptions.

STRATEGIC MANAGEMENT 9
The Cascade Model (Wright, 2019)
The model will successfully bring a lot of benefits to Sheraton Hotels and Resorts, through the
cascade model the hotel will be able to highlight its vision and bring a light of value to it. it will
be very easy to identify the focus area and state down the objective of the hotel on the basis of
the most important area. Once the goal strategy is prepared, the officials of the hotel can start
making the monthly strategic updates to ensure that the hotel has selected the right strategic
direction. Another important requirement of governance elements is project updates; it is the hoc
updates that are designed against the project level to highlight which part needs progress and
update. KPI expectations are included in the model to help when the tolerance level of the
project is uncontrollable and actions are required to bridge the gaps. Once the hotel will start
following the footstep guided by the cascade model, it will develop a tool that can be utilized for
creating the plan and the execution of the plan.

STRATEGIC MANAGEMENT 10
Business Level Strategies
Sheraton Hotels and Resorts should concentrate on the following strategies in order to move
towards the strategic direction:
Expansion Strategy
Implementation of expansion strategy is essential for all the global chain hotels. The growth and
economic condition of a chain can be easily determined by looking at its expansion speed.
Operational Auditing
In order to confirm that the hotel is generating the desired and expected level of profitability, the
operational auditing of hotels is must.
Technical Auditing
To ensure the hotel’s optimal maintenance, technical auditing becomes necessary.
Investors and Funding
The development and plans of a project cannot be started before identifying and conveying the
investors of the project.
Acquisition Management
Managing acquisitions and its integration of the project, development and its monitoring is an
important part of due diligence process.
Feasibility Analysis
This strategy will help in minimizing the risk related to the investment decision. It will also
allow support in the process of determining and securing the operators and investors.
Price Change Strategies
In the hospitality sector, the change in price is a most common issue. The change in price can be
managed by developing relevant strategies for it. The manager of the hotel should make
calculations to figure out that the price change do not have any negative impact on the demand

STRATEGIC MANAGEMENT 11
for the rooms. Therefore, pricing strategy is the most important strategy among all the mentioned
strategies, as it will show impact on the competitors rating process.

STRATEGIC MANAGEMENT 12
Task 2
Challenges faced by Sheraton Hotels and Resorts due to dynamic changes
The continuous growth and development of hospitality sector can be seen in various countries
and also in an international level. Various hotels implement different types of business model to
solve issues that they are facing due to dynamic changes in the internal and external
environment. The most common issue faced by Sheraton is increase in the fixed costs, which
tends to reduce the revenue streams. It deals with a lot of fixed costs such as payment of salaries,
bills and expenses on sustaining various facilities. The managers should come up with some
strategies to reduce such fixed costs. The expansion of hotel decreases due to insufficient supply
of fund.
All the challenges are interconnected; low funds will force the managers to keep the
accommodation charges high. Such an increase in the charge will leads to high operational cost.
The customers are always looking for best services with maximum comfort and minimum cost.
This situation results into a deadlock between the customers and the hotel.
Another challenge faced by Sheraton is fluctuations caused due to seasons. The challenge is to
maintain and improve business during the off-periods. As the fixed costs are increasing and the
profits are low in the off-season period. The solution to this problem is the involvement of
Government to facilitate relaxation or concession to the industry. Another way of solving this
world is by providing extra security to the visitors to attract more tourism.
In the present world everything is online. The internet has a very significant role to play; internet
is the source through which the visitors gain knowledge about luxurious services offered by the
hotel. Sheraton has to match up the standard that other hotels have maintained to showcase their
online presence.
Reviews of Strategic Options
To expand the business, the hotel needs sufficient resources, such as people and money.
Sheraton’s expansion strategy should be implementing in such a way that it can obtain market
shares of the competitors by takeovers or through similar tactics. The hotel can take assistance
from banks traditional banks or loans to support expansion. The loan amount should be