Strategic Analysis Portfolio
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TABLE OF CONTENTS OVERVIEW OF STRATEGIC ANALYSIS..................................................................................... 1 BACKGROUND OF INTERCONTINENTAL HOTEL GROUP, UK............................................ 3 BACKGROUND OF MARRIOTT, UK........................................................................................... 3 COMPARING AND CONTRASTING STRATEGIC CHOICES.................................................... 4 Ansoff matrix...................................................................................................................... 5 Decisions taken by firm which results into failure..................................................... 8 Blue Ocean strategy.......................................................................................................... 9 Porter Generic Strategy................................................................................................. 10 Branding............................................................................................................................. 11 Product and market decisions.......................................................................................12 Strategic choices support firms in meeting vision, objectives and mission........13 Decision made by business that affects products, markets and structure......... 14 CONCLUSION............................................................................................................................. 15 REFERENCES............................................................................................................................... 16
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OVERVIEW OF STRATEGIC ANALYSIS Strategic analysis can be defined as a process of carrying out research on the business environment in which firm operates. Such type of analysis helps business to formulate strategy so that organizational goals can be attained in an effective manner (Hensmans, Johnson and Yip, 2013). However, it is essential for entrepreneur to understand business environment in which they are operating and develop interaction with its environment so that efficiency and effectiveness of business can be enhanced in order to achieve desired goals. In the present portfolio analysis, two organizations have been chosen that are operating in the same industry. Intercontinental Hotel Group and Marriott hotel have been undertaken which are prominent hotels of UK and recently through carrying out research, it has been assessed that Marriott is facing issues in losing market share because of implementing ineffective strategies (Hill, Jones and Schilling, 2014).
Hence, IHG implements effectual strategies that help them to develop their brand image in the market and make good product and service decisions in order to attract consumers towards the firm. Also, different strategic tools have been undertaken such as Ansoff’s matrix, Porter generic strategies etc. All such strategic tools helps in identifying the key strategic issues faced by companies in international market and also affects the development of overall industry (Kim and Mauborgne, 2013). However, comparing and contrasting the strategic choices made by firm in order to attain desired results. Also, it can be stated that strategic choices assist companies in meeting their vision, mission and objectives.
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BACKGROUND OF INTERCONTINENTAL HOTEL GROUP, UK Intercontinental Hotels Group Plc is a British multinational chain of hotels and it owns 4800 hotels across 100 countries. Its headquartered is situated in Denham, UK. Business possesses around 710000 rooms and thus, includes varied hotel brands operating under it such as Crowne Plaza, Holiday Inn and Hotel Indigo etc. Company operates in worldwide market and thus later it joined forces in the privatization of Army Lodging program in order to render best quality services and experiences to soldiers as well as their families. Such type of program provides effective hospitality services to US Army (Elbanna, 2010). Therefore, it is essential for hotel to maintain its service and product quality along with overcoming issues in order to gain consumer satisfaction. For this, effective strategic choices have been made by firm such as Ansoff’s matrix and Porters Generic Strategies in order to identify the reason of firm's success.
BACKGROUND OF MARRIOTT, UK Marriott International, UK is an American diversified hospitality company that helps in managing and franchising a broad portfolio of hotels that involves varied facilities such as lodging etc. Company owns more than 4087 hotels across 80 countries and it possesses more than 697000 rooms. However, due to tough competition in the marketplace, business faces issues such as decreasing market share and thus, it is essential for firm to enhance its product and service quality in order to attain desired results (Ghezzi, 2013). Management of firm implements different strategic choices such as Ansoff’s and Porter Generic strategies so that problems faced by firm could be identified and thus, it includes effective strategies to overcome those issues and perform better than its rivals.
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COMPARING AND CONTRASTING STRATEGIC CHOICES Ansoff’s matrix BASIS
Meaning
IHG
Marriott
Market
It helps business to Thus, here marketers of firm While, Marriott always
penetration
grow
by
using attract
new
existing offerings in providing the
current
customers
them
by tries to attract existing
additional customers and providing
market schemes and benefits so that them different offerings
(Haley, 2006).
competitive
edge
can
be to satisfy their needs.
attained. Business sells existing Also,
they
develop
products to current as well as different products and new customers in order to services
within
the
enhance brand image in the existing
market
to
market (López, 2005).
attract high class people (Griffin
and
Pustay,
2005). Product
It
focuses
development
delivering
new
on It
helps
IHG
in
enhancing On
the
other
hand,
or product range and providing management of Marriott
modified products or unique services to consumers so does not aim on adopting services
within
the that
market
share
of
the product
existing market (Hill company can be enhanced. For strategic and Jain, 2007).
instance: firm
provides
development option
as
it
high provides similar products
class services or customized and services to every services
as
per the
guest’s consumers
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(Johnson,
requirements
so
image
be
can
that
brand Lenartowicz and Apud,
developed 2006).
(Ghemawat, 2003). Market
It assists business to IHG launches new program of Here, Marriott does not
development
expand its products providing quality products and aim to focus on new into
new
(Kehoe
market services to US Army officials as market
and
or
Perri, well as their families. Such product
2002).
expand
line.
If,
scheme of firm states that attracts
its it
existing
business develops its market by consumer
group
and
expanding its product range in tries to retain them for the new market (Kennerley and long term in business Neely, 2003).
Diversification By
(Leung and et. al., 2005).
adopting It is a risk strategy therefore, On
diversification,
the
business does not adopt it and Marriott
business tries to grow thus,
focuses
mainly
International
transportation
new the consumers (Morrison, 2002). facilities to the guests. It
products into the new
involves
market
related
Laeven
hand,
on adopts such strategy and
its market share by providing hospitality services to provides offering
other
(Klapper, and
Rajan,
2004).
different and
diversification offering
unrelated so
new
that
product
line helps in attracting new
customers
(Wild,
Wild and Han, 2014).
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It can be evaluated from the above analysis that implementing Ansoff matrix helps in analyzing the strategic choices made by business in order to achieve competitive edge over its rivals. For instance: Marriott management fails in making crucial decisions regarding market development and only focuses upon the current market or existing customers. Thus, such strategic option results into the failure of business and leads to decline in market share. On the other hand, IHG hotel undertakes market development tactic and provides best quality services to its new segment of clients i.e. US Army officials and their families which helps in increasing the market share of firm and impacts upon the profitability of business in the market (Mama and Kruger, 2012).
Furthermore, hospitality firms are required to employ effective quality products and services so that best decisions can be made in regard to service delivery and consumer satisfaction. For instance, Marriott faces issues in enhancing consumer base and profitability because still it focuses upon the existing product range and client base i.e. high class people. The marketing team of business develops different strategies in order to attract and retain existing customers but does not focus upon new clients to increase the market share. Thus, it faces issues and such decision impacts upon the company's performance in market. Hence, it is significant for business to undertake best strategies so that it does not influence the business activities and expand its operations in worldwide market (Kourdi, 2010).
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Decisions taken by firm which results into failure Thus, it has been assessed that the decision taken by Marriott International to not expand its market segments and focus upon existing customers proves to be a failure in terms of gaining market share. While, Intercontinental Hotel Group focuses upon the decision to extend its market segment by providing additional services to army officers and their families that results into enhancing the market share and profitability. It also assists business to increase the brand image of firm in market and give tough competition to rivals and achieve successful outcomes. Therefore, it can be assessed that business is required to focus upon strategic planning and make appropriate decisions in regard to support the companies and develop their mission, vision and objectives so that set goals can be achieved (Stonehouse and Houston, 2013). In addition to this, if firms are not able to make effective decisions regarding expanding the market segment or developing the product line affects the economy of country as well as profitability of company. Therefore, it is suitable for hospitality firm to undertake effectual decisions in regard to enhance the consumer base and offer them best quality products and services in regard to achieve satisfaction (Nickols, 2012).
Blue Ocean strategy Furthermore, it can be assessed that after considering the decisions taken by businesses such as IHG undertakes decision to expand the market share led them into Blue Ocean because for this they do not have to fight with the rivals to overcome the market. Here, they achieve success with the help of their effective strategy implementation and thus goals can be attained. However, such strategic moves helps firm to create a leap in value for company, its customers and employees while unlocking new demand and also making the competition irrelevant (Kim and Mauborgne, 2013). While, it is essential for
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Marriott to undertake red ocean strategy and thus try to outperform their competitors in order to grab a greater share of existing demand. However, as the market space gets crowded, prospects for profits and growth reduces. For instance, implementing varied strategies makes the companies to raise cut throat competition and turns the ocean bloody red. Thus, as per Ansoff matrix, IHG is doing much better than the Marriott hotel and expands its market share by focusing upon the needs and wants of target consumers (Ghezzi, 2013).
Porter Generic Strategy By adopting such strategy, it stated that the proposed strategy helps in developing a framework in order to contrast between differentiation and cost leadership. However, it is also considered as a much more market focused tool as it proposed business strategies in order to perceive value by consumers and price to customer rather than cost to firm. There are four strategies of Porter Generic Strategies such as differentiation, cost leadership, focuses
cost
leadership
and
focus
differentiation
(Interbrand,
2014).
However,
differentiation strategy states that uniqueness available in the products and services that helps in providing value to consumers and allows business to charge premium prices. For instance, IHG is a luxurious hotel and targets upper middle class travelers and thus it undertakes differentiation strategy. Business also charges premium prices for its products and services delivered to consumers. On the other hand, Marriott undertakes the cost leadership strategy and thus sells its products at the average industry prices in order to attract more number of business travelers and earn higher profits margins as compared to rivals. Such strategy helps them to enhance market share and attain competitive advantage so that desired goals can be achieved (Lรณpez, 2005).
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The proposed strategy for IHG helps them to gain core competencies and provide best advantage of firm as well as consumers. Also, business efficiently creates additional sustainable competitive advantage that helps them to achieve desired goals. Moreover, it is significant for business to develop strategic analysis so that best results in the form of high market share and profits can be achieved. However, it helps IHG and Marriott to expand its business operations and provide best products and services to consumers (Hill and Jain, 2007). IHG adopts differentiation strategy and thus provide unique quality products and services to customers that attract them to consume the same and enhance the sales and profitability of firm in market. While, Marriott adopts cost leadership strategy that assists them to stand out of crowd and provide best suitable prices in regard to retain consumers for long term and achieve desired goals. Hence, it is crucial for hospitality firms to adopt unique strategy so that desired outcomes can be attained.
Branding However, it is essential for businesses to pay proper attention on its branding which can be done through adopting effectual marketing strategies such as online promotion, email marketing, and mouth publicity. For instance, IHG adopts online marketing and provides advancements on different social media sites to attract high class consumers who regularly travel. However, such strategy is effective in order to enhance customer base and sales in market. On the other hand, Marriott adopts effective marketing tactic such as mouth publicity as well e-mail or message marketing in which it sends messages to prospect clients and provide them detailed regarding the booking offers and available discounts (Ghemawat, 2003). Thus, undertaking such type of marketing strategy helps firm to achieve desired outcomes.
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Product and market decisions Furthermore, it is another crucial strategy that helps business to take effectual product and market decisions in regard to enhance sales and profitability. However, it is essential for business to analyze the target segment and then undertake effective product and market decisions so that best results can be attained. Fr instance, IHG adopts decision regarding targeting army officials and their families and provides them best quality products and services in order to satisfy their needs. Therefore, it is essential for firm to obtain crucial decision regarding developing the product line and market related decisions so that set goals can be achieved (Johnson, Lenartowicz and Apud, 2006). On the other hand, Marriott International focuses upon existing market base i.e. upper middle class consumers so that product and market related decisions can be made effectively and efficiently.
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Strategic choices support firms in meeting vision, objectives and mission However, adopting best strategic choices helps in supporting the firm in order to meet their vision, mission and objectives. Thus, it is essential for hospitality organization to choose best strategic choices that is suitable in order to imply the same and achieve competitive advantage over rivals. Developing strategic decisions helps firm to meet the vision, mission and objectives. For instance, IHG mission is to provide best quality services to its guests and it can be attained through implementing strategic decisions such as Porter Generic and Ansoff’s matrix to attain results (Kennerley and Neely, 2003). Thus, implications of identified choices help in achieving competitive advantage within firm and enhance their market share and profits. Moreover, implementing effective market strategies helps business to overcome strategic issues faced by industries at global level and thus develop the market in order to achieve desired results.
Decision made by business that affects products, markets and structure Here, it can be assessed that the decisions made by firm highly affects the products, market and structure of enterprise. Therefore, it is essential for organization to make crucial decision and develop best products, services and market to achieve results. For instance, if firm focuses on such factors it helps them to enhance the competitive advantage. While, if they are not able to undertake such options it disrupts the competitive edge gained by firm and rivals become the options for customers. It is essential for IHG develops its market segment for Army officials and their families thus, they need to focus upon that they should not leave the existing consumers and affects the operations of firm in market (Griffin and Pustay, 2005).
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CONCLUSION It can be concluded from the study that strategic analysis helps firm to carry out effective research and thus analyze the business environment in which the firm operates. Further, it led firm to formulate business strategy so that best decisions can be made in order to achieve organizational goals. Further, comparing two hospitality firms such as IHG and Marriott International assists that former adopts market development and product development strategy in order to enhance the consumer base and achieve high profits. While, Marriott focuses upon existing products as well as target consumers so that they lack in gaining competitive advantage over rivals.
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REFERENCES Books and Journals ●
Elbanna, S., 2010. Strategic planning in the United Arab Emirates. International Journal of Commerce and Management. 20(1). pp.26–40.
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Ghemawat, P., 2003. Semiglobalization and international business strategy. Journal of International Business Studies. 34(2). pp.138-152.
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Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision. 51(7). pp.1326–1358.
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Griffin, R. W. and Pustay, M. W., 2005. International business: A managerial perspective. Pearson Prentice Hall.
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Haley, T. G., 2006. The logic of Chinese business strategy: East versus West: part II. Journal of Business Strategy. 27(2). pp.43–53.
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Hensmans, M., Johnson, G. and Yip, G., 2013. Strategic Transformation: Changing While Winning. Palgrave Macmillan Publication.
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Hill, C. W. and Jain, A. K., 2007. International business: Competing in the global marketplace. NY: McGraw-Hill/Irwin.
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Hill, C., Jones, G. and Schilling, M., 2014. Strategic Management: Theory: An Integrated Approach. Cengage Learning.
Online ●
Interbrand, 2014. [Online]. Available http://bestglobalbrands.com/2014/ranking/#?listFormat=ls>.
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Nickols, F., 2012. Strategy. [Online]. <http://www.nickols.us/strategy_definitions.pdf>.
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