BSM 783: Hospitality Business Strategy Assignment Help
1. Analyse and identify macro-environmental issues that may have an effect on the company's competitiveness and strategy
2. Identify and analyse the industry attractiveness for hospitality organization in Switzerland.
3. Establish and evaluate the company's core competencies and capabilities to establish the degree of competitive advantage.
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Introduction
This report aims at the discussion of macro-environmental analysis and also the industry analysis of hospitality sector of Zurich. In this context, the researcher would highlight the market opportunity of Sheraton Hotel, Zurich in case of successfully running the business in the market of Zurich. On the other hand, the researcher would also decide to describe the market competencies and business capabilities in this segment. It is noted that the Sheraton hotel and resort is a popular international hotel chain, which is owned by Marriott International. The organisation was founded in the year 1937 by Emest Henderson and Robert Moore. The Headquarter of the hotel is in the US. The organisation has been operated its business across the global market and there are approximately 500 hotels in the market (Sheraton, 2019).The organisation has been serving its functioning millions of travellers in the globe.
Macro-environmental analysis
In order to successfully run a business in the global market, an organisation needs to conduct an in-depth analysis whether the market is favourable or not for the expansion of a business. In this context, the researcher has conducted the macro-environmental analysis such as PESTLE analysis.
PESTLE analysis
Political:The political scenario of Zurich is highly stable for successfully running the business. The stability of political scenario is dependent upon the higher degree of dependability of the businesses. According to Reinhardtet al., (2017), the federal structure of Zurich is so strong that it can create an association between the businesses and the government. The government also encourages the foreign investors to invest more, so that the economic growth rate can be increased more. On the other hand, the organisations would get opportunity to successfully running the businesses in the market of Zurich. The strong legal infrastructure is able to combat the corruption of the country. Therefore, being a corruption free region, Sheraton would not need to face any political challenge in case of running the operations.
Economic:The economy of Zurich, Switzerland is highly stable and the GDP growth rate of the country has been increased by $672.4 billion at the end of 2018 compared to the previous year (Barkauskas, Barkauskiene and Jasinskas, 2015). On the other hand, the Swiss currency is favourable for the business investment. From this point, it can be mentioned that running the business of Sheraton in Zurich is beneficial for the business growth. Based on the growth rate trend of the economy, it can be anticipated that the economy of Zurich will be flourished more in the future and hence, the household consumption will be increased correspondingly. As a result, the citizens of the place are capable to afford the price of the services of Sheraton as well as the citizens will like to take the services from this hotel chain more.
Social:Population of Canton of Zurich is 1504346 approximately as per the report of 2017, and the economy of the region is highly labour intensive (Du, 2016). This refers that the Sheraton would not face any difficulties to recruit the efficient labour for the operational purposes. On the other hand, the region is multicultural and multi-racial and hence, diversified work culture is beneficial to bring creativity in the business of Sheraton. As a result, Sheraton will be capable to get highly eligible labours for improving the organisational performance.
Technology:As per the discussion, it can be stated that Zurich is technologically advanced and the government also encourages the businesses in the implementation of innovative techniques in the businesses. Therefore, the hospitality industry of Zurich would be capable to explore the businesses successfully. In the opinion of Islam and Pattak (2017), technological innovation has positive influence in the operations of the businesses. Moreover, technological infrastructure is beneficial for improving the business culture, organisational efficiency and the relationships.
Legal:According to Müller et al., (2016), the Swiss business law is popular for the stability and quality across the global market. As per the business law of Zurich, all of the employees would need to be treated equally. Therefore, no one in the workplace would be deprived or affect the performance level of the employees due to the absence of workplace discrimination. In order to successfully run an international business in the Zurich market, the organisation requires to consult the Swiss arbitrators in order to resolve the international dispute.
Environmental:In order to keep the surroundings clean and clear, the government of Zurich is concerned to follow the environmental law. As a result, the organisations would require to focus about the minimisation of the emission of wastages to water and land. In addition, emission of carbon emission is also required to be reduced for maintaining the ecological balance.
As per the above discussion, it can be mentioned that the market of Canton, Zurich is favourable for successfully running the business of Sheraton. The political and the economic environment of the region are mostly favourable for expanding the business more in the Zurich market. However, the organisation only requires to be concerned about the minimisation of wastages from the operational process.
As per the statement of Götz, Herold and Paha (2016), it can be stated that the political, economic, socio-cultural and technological aspect of Canton, Zurich is favourable for the business expansion of Sheraton. Since, the region in corruption free, therefore, Sheraton does not face any difficulties or political challenges in successfully running the business. Moreover, the government of the country in turn encourages the foreign investors to invest more and hence, being a large hotel chain, Sheraton would get opportunity and government encouragement for successfully running the business in the market of Canton, Zurich. According to Rios-Morales, Brennan and Schweizer (2016), Swiss government does not allow the start-up firm to open its outlets in the market of Zurich. However, Sheraton is a popular hotel chain, therefore, this firm will get opportunity in successfully expanding the business of Canton, Zurich.On the other hand, the government of Zurich also facilitates the companies in the implementation of technological innovation in the operational process, so that the efficiency in the business can be improved. As a result, with the implementation of technological innovation, the management of Sheraton will get opportunity to meet the demand of the customers by improving the operational excellence. For instance, with the knowledge management system, the organisation can share information among the stakeholders and hence, transparency among them can be maintained. It is noted that the knowledge management system is one of the essential components of technological innovation, which can achieve the goals of the businesses. This is the other opportunity for successfully exploring the business of Sheraton in the market of Canton, Zurich. Conversely, the socio-cultural aspect of Zurich is favourable for the business of Sheraton since the business culture of the region strives to the engagement of different cultured employees in the organisation. The diversified work culture would in turn bring innovative ideas and creativity during the operational process. Furthermore, equality is one of the major prime advantages of socio-cultural aspect of the region and hence, all of the employees get motivation towards the achieving of goals of the business.
On the contrary, emission of carbon from the operational process of the organisation is one of the major restrictions of the environmental aspect of Zurich. It is known that a certain percentage of wastages are disposed to the environment in case of hospitality business. In order to survive the business in the market of Zurich, Sheraton requires to userecycling products, which are easily bio-degradable to the air. It can minimise the disposal of wastage to the environment. On the other hand, the organisation does not need to use polymerised goods in the operational process as well as also does not need to throw it to the air; otherwise it affects the land and water bodies of the region.
Industry analysis
Similar to the macro-environmental analysis, an organisation also requires to conductindustrial analysis for identifying the competitiveness of the target market. With the help of this industrial analysis, Sheraton hotel chain can identify the behaviour and the approaches of the rival firms in the target market. In this context, the researcher would need to conduct Porter's five forces analysis for conducting the industrial analysis. As opined by Mathooko and Ogutu (2015), Porter's five forces analysis can identify the strengths and weakness of the industry based on the behaviour and the presence of the competitors in the target market. More specifically, with the help of the Porter's five forces analysis, an organisation can figure out the competitiveness of the industry of the target market. The model is dependent upon five components or forces of the industry and these are industrial rivalry, threats of new entrants, bargaining power of the suppliers, bargaining power of the buyers and lastly the threats from the substituted goods. More specifically, it can be stated that the Porter's Five forces analysis is able to understand the business competitiveness in the target market as well as to identify the potential profitable business strategy. It is noted that the hospitality industry of Canton, Zurich is monopolistically competitive in nature. As per the concept of monopolistic competition, it is an imperfect market structure, where the available products and the services are not perfectly substitute, rather they are closely substituted. Based on this market structure, the Porter's five forces analysis for Sheraton Hotel Chain in the market of Canton, Zurich will be discussed.
Porter'sFive forces analysis
Sammut-Bonnici and Galea (2015) cited that in the year 1979, the tool was developed by the Harvard Business School Professor Michael Porter. The importance of Porter's five forces for analysing of industrial analysis in this context would be highlighted.
Bargaining power of the consumers:The bargaining power of the customers for getting the services of Sheraton Hotel chain services is low since the number of luxurious HotelChain Company is less in the market of Canton, Zurich. As a result, it can be stated that Sheraton would get an opportunity to successfully explore the market of Zurich. More specifically, if the customers are satisfied with the services and the pricing strategy of Sheraton, then they would not like to switch their preferences to the other companies. However, since the number of luxurious hotel chain is less, therefore, the opportunity of switching the preferences of the dissatisfied customers to the other firms is very less. This is highly beneficial for maintaining the sales percentage of a company in a monopolistically competitive type market structure. This is the reason, why the bargaining power of the customers is less and they are bound to pay the price of getting the services from Sheraton Hotel Chain.
Bargaining power of the suppliers:As per the market structure, the bargaining power of the suppliers is very high for the luxurious hotel chain since the quality of products, raw materials and services are playing an essential role in this industry. In addition, only a few suppliers are available in the target market who supplies the good quality products and raw materials to the organisations. This is the reason, why the bargaining power of the suppliers is very high. In the opinion of Sheehan and Bruni-Bossio (2015), labours are the prime suppliers of the hospitality industry of Canton of Zurich. More specifically, the hospitality industry is highly associated with the suppliers for increasing the availability of services to make the customers satisfied. This is the reason, why the suppliers are playing the important role in the business and hence, the bargaining power of them is high.
Threat of new entrants: The threat of new entrants is moderate to low. In order to enter and run a business to the market like Zurich, the organisations require to getpermission from the government. For obtaining such permission from the government, the firms may face challenges. Moreover, the Swiss government restricts the entrance of new start-up firms for the purpose of business expansion.On the other hand, for successfully exploring a business to the target market, an organisation also requires to have enough funds in their accounts. Since, Sheraton is global firm, therefore, it does not need to face the issue like lack of funding in the target market. From this point, it can be stated that the threat of new entrants in the hospitality industry of Zurich is not high.
Threat of substituted goods:In this regard it can be mentioned that the threat of substituted goods in very high. The restaurant and hotel industry is highly competitive in the Zurich market. If the organisation will start to increase the price level for their offered services, then, the customers may switch their preferences and will like to take the services from the other restaurants or hotels. Though, being luxurious hotel chain Sheraton charge higher prices from the services, however, it does not need to charge lump sum amount from the customers. Then it will be a major threat for the business of Sheraton in order to expand it in the target market.In addition, the Zurich market provides opportunity to the businesses to explore the market, therefore, the substituted firms will get an edge to expand the businesses in this target and it will affect the business performance of Sheraton in long run.
Competitive rivalry: The number of luxurious and other hotel chain across the market of Canton, Zurich is very high and hence, it can be said that the competitive rivalry of Sheraton Hotel Chain is very high. Though, the threats from new entrants are low, nonetheless, due to the high competition from the large number of restaurant and hotels the threat of competitive rivalry is very high.
As per the above discussion, it can be inferred that Sheraton is at the leading position in the Canton, Zurich since the number of luxurious hotel chain is absent in the market. However, the threat of the substituted goods is very high and hence, it affects the sales of Sheraton. Apart from maintaining the pricing strategy, the organisation also requires to brig unique business strategy for improving the business performance in the competitive market. On the other hand, since the suppliers have strong participation in the industry, therefore, Sheraton also requires to maintain strong collaboration with them. In this context, knowledge management system will help to improve the internal collaboration of the organisation and hence, the management of the company can achieve the goals in the business. On the other hand, the customers will be satisfied more with the services of Sheraton.
Core competencies and capabilities
SWOT analysis
As opined by Vargas-Hernández and Garcia (2019), SWOT analysis is beneficial for the businesses to identify the internal weaknesses of the businesses and hence, the organisations can assign required resources for fixing the problems. More specifically, SWOT analysis is useful for improving the current situation of a business and consequently, the performance by the organisation can also be improved. The core competencies of the business of Sheraton can be determined with the help of four factors and these are described in the following:
Strength:Since Sheraton Hotel Chain is a global brand, therefore, the strong brand identity strengthen the willingness of the customers of target market even after entering to this new market. For instance, the organisation has been operating its business across 70 nations. From this point, it can be stated that the strong brand presence of the company is capable to successfully run a business in the target market over the existing rival firms. In addition, the organisation is capable to attract a large range of customers of the target market with the help of strong marketing campaign. On the other hand, strong brand presence is useful for working as the word-of-mouth marketing strategy, which in turn fetches the attention of the customers towards the company over the competitors. Knott (2015) cited that the organisation offers diversified services both for the middle income group customers and also for the executives.
Weakness:Though, the organisation is coming up with innovative ideas in the market, however, the ideas are replicated by the rival firms. The rival firms also target to offer these innovative services to the target customers in terms of lower prices for attracting their awareness more over Sheraton. However, Hernández and Garcia (2018) argued that the loyal customers would not switch their preferences to the other firms since they seek better services over the price optimisation strategy, especially in the hospitality industry. Replication of innovative business ideas affects the uniqueness strategy of Sheraton. On the other hand, the opportunity of exploring the luxurious consumer goods and promotion across the global market has been declining, which in turn affect the sales percentage of the organisation in the target market after the business expansion (Indartono and Wibowo, 2017).
Opportunity:The Sheraton has opportunity to expand its business also in the developing countries since the available luxurious services by the organisation are affordable in nature. In addition, the hospitality business in the Swiss market, more specifically in Zurich has been growing with the passage of time and hence, based on this analysis, it can be inferred that Sheraton can also make it successful after the business expansion to Canton of Zurich. On the other hand, partnership of Sheraton with Microsoft adds extra benefits in the business expansion by creating the campaign like "The Link Sheraton" (Indartono and Wibowo, 2017). It helps the organisation to boost up its ranking in the hospitality of the target market.
Threat:Though the market structure of Zurich hospitality industry is monopolistically competitive, however, the luxurious hotel chain sector is highly competitive. It would in turn increase pressure on Sheraton for maintaining the revenue earnings and sales percentage in the target market. Riddle, Peters and Funnell (2016) opined that some of the major competitors of Sheraton are ACASA Suites, Holiday Inn, 25hours Hotel Langstrasse etc. Though, Sheraton is in the leading position in Zurich, however, if the firm will not be capable to maintain consistency in its performance, then the market share in Zurich will be declined sharply. Therefore, for maintaining the sales in the competitive market, the organisation requires to be concerned about the continuous implementation of business innovation for making the services unique than the rival firms.
VRIO analysis
In the opinion of Habib, Hossain and Essien (2016), VRIO analysis has significance in the business to protect the organisational resources as well as capabilities for achieving of long run competitive advantage in the business. It is dependent upon four essential tools such as valuable, rare, costly to imitate and organised to capture the value.
Valuable:Though Sheraton is a luxurious hotel chain brand, however, the organisation is capable to deliver the services to its target customers in terms of the lowest cost. Therefore, the business of Sheraton is valuable for managing of strong business segmentation as well as customer preferences. On the other hand, the hospitality industry of Zurich is highly competitive and if the performance of Sheraton would be declined then it would be a major threat for the business. In this context, it can be stated that the location of ACASA Suites is attractive to the visitors, for instance, it is located near the airport and hence, the customers shows their willingness in availing the services of the hotel over the other firms. However, () argued that the location of Sheraton in also convenient to the customers and if the customers would come down by flight, train or car, they do not need to waste their time in searching of this hotel. Therefore, from this point it can be stated that apart from the luxurious hotel chain business, location of the hotel in Zurich is identified as the prime and valuable resource to the business over the rival firms. In addition, it would be the business opportunity to explore and strengthen the business of Sheraton more successfully.
Rare: The customer loyalty program implemented by Sheraton is completely rare and hence, the followed business strategy by the organisation is beneficial to earn 84% of the total sales percentage based on the contribution of 23% of middle income level of customers (Sun, Tong and Law, 2017). On the contrary, no other hotels of Zurich are offering such loyalty program or loyalty bonus to the customers. This is the business principle of Sheraton for maintaining of long term relationship with the company being satisfied and will like to take services of Sheraton in case of visiting to the other countries.
Costly to imitate: No, it is not so costlier to imitate by the rival firms and hence, replication of services sometimes affect the sales of Sheraton. However, risk of the intellectual property rights is low. On the other hand, the attraction of talent acquisition similar to Sheraton by the competitors is difficult. For instance, the human resource management of Holiday Inn encourages in the practicing of diversified and multiple work culture and hence, the organisation has potential to imitate and adopt the premium organisational practice of Sheraton. It may affect the sales percentage of Sheraton if the competitor firm would offer the similar organisational services to the customers in terms of lower price than Sheraton. Consequently, it would be affected for the financial position of Sheraton in the market of Zurich.
Organised to capture value:The leadership strategy and the management policies of Sheraton hotel chain are unique in nature (Morris et al., 2018).The strategies can capture additional business valuation for improving the revenue earnings compared to the rival firms. For instance, brand loyalty of Sheraton is able to emphasize the valuation of business of Sheraton. In addition, the organisation has available resources to successfully explore the business and get more success in Zurich.
Degree of competitive advantage
As per the above discussion, in order to maintain the sales percentage in the competitive market of Zurich, Sheraton relies upon the vibrant loyalty program. For instance, the organisation has started three loyalty programs such as Starwood Preferred Guest, Ritz Carlton Rewards and Marriott Rewards. As a result, a wide range of target customers have shown their interest to be connected with the organisation rather than the other luxurious hotel chain in Zurich. On the other hand, strong brand image across the global market helps Sheraton to make the business successful in the market of Zurich.
Morris et al., (2018) mentioned that for increasing the customer satisfaction level more, the organisation aims at improving the services of the organisation more. For instance, the organisation relies more on direct booking process over the online travel agencies for avoiding any technological glitch or on any complications.It proves that stronger operational efficiency of Sheraton leads the organisation to successfully run its business in the Zurich market.
Conclusion
In the conclusion, it can be drawn that being a strong global luxurious hotel chain, Sheraton would get opportunity to successfully run the business in the market of Canton, Zurich. Though the competition in the monopolistically competitive hospitality industry of Zurich is high, nonetheless, the organisation is capable to attract a wide range of customers over the competitors with the help of its customer loyalty strategy as well as with the other competitive advantage in the business. As a result, it can be mentioned that Sheraton has opportunity in the target market to get success in the business after the business expansion.
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