Hospitality and Tourism Business Strategies Planning Essay

by aerialp2 (student)

University Degree Business and Administrative studies

Hospitality and Tourism strategies planning assessment

Task 1

Written report 1500 words maximum

Candidates are required to write a 1500 discussion paper that addresses one the following topics;

1) The usefulness of business strategy theory in identifying and evaluating business opportunities and determining business strategies. Note: candidates should compare and contrast a variety of business theories and approaches.

A strategy is simply a long term plan to achieve the certain objective. A business strategy is therefore a business plan designed to achieve business objectives. A strategic plan is detailed marketing planning engaging extensive market research and then developing the marketing mix aimed at customers to delight. In order to create a successful business model and company has to develop the business level strategy, that gives the company a competitive advantage over its rivals and optimize the profit (Jones and Hill, 2009). Every organization has its mission and objectives, and directed by a company’s business strategy developed by managers. Hence business strategy, formulated by Management supports the direction of organizational mission and objectives. Thus, business strategy is long term plan for addressing in competitive business environment to gain the organizational goals and objectives. (Daft et.al. 2010)

However, the source of the business strategy is not yet to be identified because of the complex and dynamic nature of the business environment. Nevertheless, there is no doubt to be called as a new emergence concept of business strategy that effectively launched in a business market. However, different theory and approaches has been proposed to develop business strategy based on market size, market attraction, company’s resources and competition. Different but interrelated business strategy proposed by Campbell et.al (2002) has been taken as multiple approached business strategy development theory in this study and will be discussed in detail below. They are competitive approach based strategy, resource based strategy, and planning approach based strategy.

Resource based view Strategy;

This strategy is developed on the basis of resources and capabilities that the ‘company has equipped with it. Company resources and capabilities are the key asset and building block that determines the company strategies. Competitive advantage derives from the distinctiveness of an organization’s capabilities and resources resulting to better performance and greater profitability. Resource based view strategy is the idea and tactics that the company has its distinct resources and competences (Grant, 2003) and represent that the company consisting the resources that are unique and rare too. This approach tries to discover the uniqueness and distinctiveness of a specific firm and propose means to success which depends upon exploiting the differentiation on activities and product and services other than the main competitors. Hence, the ultimate goal is to identify the core competencies that can provide basis of differentiating firms from competition. This strategy could become failure in the condition of not doing proper assessment of the resources and capabilities and goes wrong. This strategy not only exploits the resources and capabilities but also help addressing and fulfilling and gap of resource and capabilities for future added Grant (2003)

The resources of company could be characterized by the tangible resources such as physical infrastructure such as building, furniture, etc. and financial properties and intangible resources such as technological and intellectual property and human capital. Such recourses and capabilities helps for exploiting the external opportunities in the market. For instance, human capital resources reflect the firm’s talent capability and more even in tourism industry human capital are the key asset that provides the company a goodwill and image of hospitality. Similarly, financial resources which reflect the firm’s borrowing capacity and internal revenue generation will depicts the capacity of present and future investment and resilience. Moreover, non tangible resources like Technology-driven assets and potent intellectual property attempt to satisfy the customers more efficiently and effectively with high level of innovation in process that cannot be imitating by others (Watkins, 1998). Organizations implementing and adopting the resource based view strategy have multiple approaches for developing business strategy. Hence, firm’s internal resources and capabilities are used to provide the direction for formulating the business strategy as it gives support in the unpredictable external environment for its identity. (Zack, 1999)

The Competitive Based strategy:

From the very beginning the concept of competitive approach strategy is extensively and widely used and is based on the generic porter strategies as it was given by porter in 1980. This strategy is attempting for development and to prioritize upon the strategic fit between organization and its environment (Cambell et.al. 2002). This approach suggest that the priority and emphasize is needed to audit the external environment prior to determine to achieve strategically important business position. Three generic strategies such as cost leadership, focus differentiation, and differentiation besides the porter five forces model, a competitive micro environment analysis and value chain provide basics for strategic analyses and development.

The five forces of porters are the bargaining power of suppliers, bargaining power of customers, the threat of new entrants, the threat of substitution, and the degree of competition among rivalry. This model attempts to analyze the external environment and investigates the firm’s ability to achieve performance and also determines the attractiveness of the industry in the current market by looking at the market structure too. An industry is said to be attractive if the one in which the firms can beat and dictates over its suppliers and customers. In addition, attractive is possible when there is low chance of new entrants and substitute products in the given market and industry.

The collective strength of the five forces determines the attractiveness of an industry. An attractive industry is the one in which the firms can dictate terms over its suppliers and customers. In addition, an industry seemed to be favorable with low possibility for new entrants and substitute products in a given market and industry. Hence the business strategy is a matter of choosing an attractive industry and positioning the firm in the chosen industry by pursuing either low cost or differentiation strategies. Competitive strategies are more concerned with doing better than rivals and this can be achieved by selling the product in lower price than the competitors and by differentiating the product from the rivals to being competitive.( The times 100). In addition, porter generic strategies enable company to pursue the growth and expansion of the product and new market and similarly, it attempts company to become globalised for instance, company like Coca cola , Sony and Apple are major multinationals with global operations.( The times 100)

Planning approach based strategy:

Planning based strategy is basically developed on the basics of organizational vision, mission, and aim, that what it wants to achieve within the given time scale. Campbell et.al.(2002) points out, planning approach for the development of business strategy attempts to establish a strategic fit between business environment in which it operates and firm’s strategies. Both long term and short term plan of the company are equally important for developing business strategies and to achieve objective. This plans and policies could enhance company to survive and to operate business smoothly. However, this view has been criticized by many authors as it has got many discrepancies of ignorance of external factor in the strategy development.

The role of ethics in developing strategy for business success

Business ethics are the principles, values, and standards that guide and drive the behavior in the world of business where principles in business ethics are the values that specifies for behavior that are universal and absolute and the values are used to develop norms that are socially enforced like integrity, trust and credibility.

Business ethics are beneficial to any organizations as it develop the employee commitment and trust. Similarly ethics contribute the loyalty to investors and loyalty to customers and ultimate goal is to maximize the profit. Firms and corporations need to view ethical concerns as a part of their foundation and incorporate ethics in their business strategy. For instance, social responsibility is an integral part of the organization’s business strategy.

Business ethics is concerned issue in any business organizations as it ensures the healthy and fair competition without hampering to any stakeholders. These business ethics has led company to develop the business strategy planning to address the expectation of stakeholders in a healthy environment. For example, in a multinational company speaking in a different language other than English becomes unethical as it demoralize employee and ultimately minimize the business performance. Similarly, company need to consider the corporate social responsibility before developing the strategic planning as it has become the primary concerned in the business environment. For instance, any company that operates in local market should give the priority to the local people first. These practices not only develop the company awareness but also the build the trust on the organizations which ultimate increase the sales and revenue.

On the other hand, companies do not forget to put the eco-friendly strategies targeting to the consumers and environment. Environmental impact on operating the business and its direct effect to the consumers are key important basics for developing strategy planning.

Organizations, on the other hand, should responsible for the employee welfare, job design, working conditions, and intellectual property which are internal aspects of CSR determines the strategic planning that directs the business objectives and goals for future with obligating any ethical issues. In addition, external aspects such as environmental issues, product, market and marketing, suppliers, employment, community activity and human rights are taken into considerations for formulating and developing the business strategy. For instance, in hotel and tourism industry strategic planning is that is they are aware with this ethical issue and that’s why they have put separately the place for graduate jobs in order to resolve the unemployment. Similarly, employee need to get bonus, and extra facilities as it comes under the ethical issue and hence all things sort of things drive managers of company to think about the ethical issue in company’s strategic planning. Thus, by integrating the ethics into business strategy gives the answers of the what do we stands for?, what is our purpose and what values do we have ? However, Peter Drucker a senior management consultant argued that the ethics cannot be integrated in strategy by proclamation whereas it can be part of firm’s mission statement, unless it is also a corner stone of organizational culture (Schulman, 2011).

Task 2

Introduction

1.1: Premier Inn, UK:

Premier inn is the biggest and largest budget hotels chain in the UK and Ireland. It was established originally under the name of its travel and brand name in 1987 and has been owned by Whitbread. The company provides 70% of the total earnings of Whitebread (BBC News, 2009). In 2007 premier inn announced a four year UK expansion program with the target of 45000 rooms available by 2010. Similarly on April 2007 whitebeard announce a £E 100 million expansion of its premier inn hotel chain in London over the next there years. (The Times, 2008) More 600 hotels are offering in quality accommodation at cheap hotel prices. Premier Inn remains the UK leader in both hotel number and room terms, however. 3,500 extra rooms are to be added in 2011.

1.2: Corporate and business objective:

The aim is to build the best and large scale hospitality brands in the world by being the most customer focused organization
To increase the hotel market leader by the end of 2014
To open further 22 hotel before Olympics , giving out 7302 in the capital ( Mintel Report, 2011)

2: LITRATURE REVIEW

2.1: Services:

Being the largest and largest budget chain hotel in the UK market, it has offered the many services and facilities targeting to the customers. This hotel has launched first time twitter concierge service that gives out the personal recommendations and advice to the customer, guest ranging from family activities to romantic tips for couples which could help customer satisfied. Similarly, arrival and extensive car parking facilities are available, helps resolves the problem of traffic problem too. Furthermore, availability of payment system up to accept a signature instead of PIN number for guest has become the attraction of this hotel. In addition, all the room available are equipped and designed for disabled persons. All bedrooms have the in suite bathrooms with the beds with wide entry doors for ease of access. The toilets in the bathroom are provided with the grab rails and availability of the wet rooms is the attraction of this hotel. Premier Inn has launched a new concept of self checking done by customers while entering the premier inn premises. This will save the time of the guests as they do not have to be in queues.

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2.2: Low cost model:

Premier Inn has adopted low cost strategy in order to attract more guests and retain them for a long time. Due to the economic downturn the rate of unemployment is continuously increasing. This situation has led people to be more prices sensitive. Hence, customers tend to spend less money on the services and products. Thus the premier Inn has adopted a model which strategically and technically fits with the current spending habits of the customers.

2.3: Target market/ customers:

This hotel is mainly targeting and focusing the travelers who are highly price sensitive and those who ...

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2.2: Low cost model:

2.3: Target market/ customers:

This hotel is mainly targeting and focusing the travelers who are highly price sensitive and those who come from middle class of the society. A recent research has shown that people of Indian, Irish, Canadian and Chinese origin are most of its customers.

2.4: Competitors:

Premier Inn is the main competitor in the UK market. Premier Inn holds 31% of the total market share while Premier Inn holds 41% of the market share. However, attractive service and proper strategies employed by Premier Inn hails it as the major market player.

Task 2

3: STRATEGIC OPTIONS

Strategic options are the development directions available to an organization in terms of product and market coverage taking into account the strategic capabilities of the organization and the expectation of the stake holders. Different theories have been formulated to get directions to proper strategy. For examples, the strategic clock, porter’s generic strategies and Ansoff’s growth matrix are some of the relevant theories.

In the strategy development directions the product and the market are taken into consideration to optimize the best strategic choice. Strategic development direction comprises of:

Product/build
Product development
Market development
Diversification

Taking into consideration the market situation and the premier inn’s capabilities and resources the best strategy can be suggested. The Ansoff’s product growth matrix can be used to identify the best and ideal option available to develop a formidable and fruitful strategy. The various strategic options are discussed below.

3.1: Product/ build:

This strategy is designed to increase the market share of the product and services either by consolidation or market penetration strategy. Since the market share of the Premier Inn consist high compared to other hotels it does not seem to apply the penetration strategy rather it can implement the downsizing and reengineering strategy to achieve sustainable business objective. For instance, due to economic downturn, visitors are showing their reluctance to come and to be served. As a result, human capital available in the hotel becomes unproductive and worthless. This could harm the company from being bankruptcy. So Premier Inn might take an action of firing the less productive and less skill to make balance of their financial and to run the business smoothly. To counterbalance the outcomes of the hiring decision company may conduct the promotional campaign and discount offer in their services and product.

3.2: Product /service Development:

In these strategy options Premier Inn utilize the maximum resources and to optimize the services it offer to customers and guests. For instance, Premium Inn develops the family discount package and customer loyalty schemes in order to increase the sales and revenues within the same resources and capabilities. Hence, using the maximum resources and capabilities available could lead company to develop the new services and product. On the other hand, with acquiring the new capabilities such as new technology could change the pace of attraction of the customers. In Hotel Industry attractive web sign, public relationship management is crucial and significant and that needs the additional human capital and financial resources to achieve this goal. Therefore, using the existing capabilities or new capabilities new product/ services can be developed for the guest.

3.3: Market Development:

Premier Inn can take a expansion and growth strategy by establishing the subsidiaries in new market segments which is key to basics of becoming internalization. Through the serial expansion and multiplication of branch, increase the brand awareness and ultimately enhance the customer loyalty. Premier Inn can establish the new branch nearby the main event site, sea site, and main urban terror ties. Similarly the modification in the services and products in the new place attempts people to make customer loyalty. For example, Premier Inn could emphasize the on the restaurant service where more people can come and eat rather than just staying one night.

3.4: Diversification:

This strategy is designed to diversify in the services and products in the new market and. Diversification process tries to explore the new idea, innovation and research in the market. Diversification process is of three types in which company completely able to produce the different product and services other than the existing services and products called as unrelated diversification. For premier Inn related diversification could be horizontal, horizontal diversification backward with suppliers, horizontal diversification forward with consumers. In horizontal diversification backward, premier inn can negotiate and acquire to travel agency who provides potential customers to the hotel. It can acquire the small and medium scale hotel chain with it’s to reduce the degree of competition and besides that, it, enable to exploit the expertise of the new comers into the hotel that leads the company to become more innovative and creative.

Unrelated diversification can take various modes of business in Premier Inn. However, considering the industry in which premier Inn is operating it is recommended that going for unrelated diversification will technically not be feasible for Premier Inn.

Q No: 3

4. ‘Marketing strategy is a marketing logic by which the business unit expects to achieve its marketing objectives. Marketing strategy consists of making decision on the business’s marketing expenditures, marketing mix, and marketing allocations in relation to expected environmental and competitive conditions’.(Kotler, 1985)

A number of marketing strategy options are available to achieve the strategic objectives. Porter’s generic strategies best answers the strategic options that the premier inn can implement to achieve its strategic objective.

Porter’s three generic strategies

4.1: Porter’s three generic strategies:

Michael porter suggested that for an organization to obtain sustainable competitive advantage over its competitor it should follow one of the following strategies.

Cost leadership
Differentiation
Focus

They are called generic strategies because they can be applied to products or services in all industries, and to organizations of all sizes.

For an organisation to obtain a sustainable competitive advantage Michael Porter suggested that they should follow either one of three generic strategies. These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Strategic scope is a demand-side dimension while Strategic strength is a supply-side dimension.

Cost leadership:

This strategy emphasis on the organisation to be the low cost producer within the industry. It focuses on developing ‘an edge’ that gives the organisation the sale that takes it away from the competitors. The cost leader usually aims at a broad market, so sufficient sales can cover costs. There are two ways of achieving the cost leadership-

Increasing profits by reducing costs
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because of the reduced costs.

To be a cost leader in the market the organization should posses the following capabilities:

Huge financial resources needed to bring new technology that will decrease the production cost.
Efficient supply chain
Cheap materials and/or human resources.

Mass production, mass distribution, economies of scale, technology, product design, learning curve benefit, work force dedicated for low cost production, reduced sales force, less spending on marketing will further help a firm to main a low cost base.

Examples of organization following cost leadership strategy are Wall-mart and IT firms such as Dell and Lenovo.

Benefits of cost leadership strategy:

It makes the same level of profit although charging low price. There will be low level of threat of new entry, where as technology cost is high. It is less affected by powerful buyer and supplier and will also to reduce the price to compete with substitute products.

Limitations of cost leadership:

Here competitors’ may imitate and the organizations following focus strategy can further lower their prices as they concentrate in narrower markets. It may also cause serious harm due to technology advancement from rivals. The price competition with relatively lower price will impact to the customers. Cost reduction on the expense of other vital factors can create an imbalance.

Differentiation strategy:

Some of the organizations compete to be unique rather than to be the best. Thus, this firms have a competitive advantage which allows the company and its products ranges to stand out is crucial for their success. Simply this strategy involves making the products or the services different or attractive from the competitors. It aims on a broad market and follows the perception that the product/service is unique within the industry. This strategy focuses on a segmented market and charge extra for the added differentiating value. The consumers buy the product in order to have an access to its unique knowledge. Successful generic differentiation strategies are a result of:

Extensive research, followed by development and innovation.
The ability to deliver high-quality products or services.
Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings.

Examples includes Apple computer, Mercedes Benz, McDonalds etc.

Benefits of differentiation strategy:

With the differentiation strategy premium pricing generates higher profits. Brand loyalty and customer’s loyalty are the barriers for the competitors and hence the firm is protected from its rivals. Less affected by the powerful buyers and suppliers and strong reputation for innovation and quality.

Limitations of differentiation strategy:

But high extra costs incur in promoting the brand image. Threat of imitations and substitution. Difficult to maintain uniqueness in the long run and changes in customers buying behavior and taste can be critical.

Focus strategy:

Often organisation focuses its effort on one particular segment and becomes well known for providing products/services within the segment. By understanding the dynamics of that market and the unique needs of customers in it, develop uniquely low cost or well-specified products for the market. Focus strategy can be of two types:

Cost focus-emphasising cost minimization within a focussed market while differentiation focus-emphasizing differentiation within a focus market.

Firms following this strategy serve the customers extremely well in their market segments and thus gain a high degree of customer loyalty. This particular reason makes the market unattractive for competitors. This strategy is good for small company however big firms can also follow this strategy. A focus strategy target market segments that are less vulnerable to substitutes or where a competition is weakest to earn above-average return on investment.

The followers of this strategy can either charge a premium price for superior quality product or by offering a low cost to a small and a specialized group of buyers.

An example of firms following the focus strategy includes Ferrari, Family dollars (US retailer), South-western airlines etc.

Benefits of focus strategy:

Simple functional structures as the firm compete by offering a single product in a single geographic market.
Stay close to the customers and responds quickly according to their needs and demands
Maintain a high degree of customer loyalty
Able to complete various primary and support activities in a superior manner.Limitations of focus strategy:

It embraces the drawbacks of both the cost leadership and differentiation strategy.
A competitor may focus on a more narrowly defined market segment and out focus the focuser.
Cost disadvantage relative to a low cost leader
Technological advancement can change the customers’ needs and demands and the niche market can disappear
The focus on cost can be difficult in industries where economies of scale play an important role.

Thus by analysing the strategies available it would to suitable for Premier inn to focus on cost leadership strategy in order to attain market dominance and hence to achieve its strategic objective. This is due to the following reasons:

Offering rooms and services at comparatively low prices than its rival and particularly the luxurious star hotels will certainly attract more and more customers to Premier inn and hence would generate more revenue than its competitors. Although the margin of the profit may be low but the huge increase in business would overcome this drawback and the increase in revenue can enhance the planners in Premier inn to invest or develop new products and services.
Also the threat of new entrants is particularly low as huge amount of investment is required to meet the criteria set out by the industry itself. Nevertheless, the health and hygiene criteria and meeting the basic requirements set out by the government is in general very complicated to achieve and this will certainly discourage new entries.
The bargaining power of the buyers and suppliers is very low in hospitality industry. People do not intend to compromise with the service and its quality with a substantial amount of money. Customers of hospitality and tourism industry are well known for their lavish spending habits. Moreover, the abundance of manpower in keeping the industry moving is also in favour of Premier Inn.
Last but not least, there is a room for Premier Inn to reduce price of its product and service in order to sustain in the market. The chain of its restaurants and lodge provide a suitable and formidable base for Premier Inn to reduce price in one product or services but to charge more on other product or services. For example, charging less for their rooms while increasing the cost of their dishes available in their restaurants.

5: SWOT analysis to analyze the present situation:

SWOT analysis is a type of analysis, which is carried out for internal evaluation to understand the strengths and weaknesses along with possible opportunities and threats. There are lots of strengths with PREMIER INN operating its business in UK market but it cannot ignore its weakness that may cause them to lack behind in supermarket chain market. Hence it is very essential to carried out studies before formulating strategic plan.

Strength: This is the section where PREMIER INN’s abilities are discussed. Now PREMIER INN will be having many managerial and strategic plans from its parent company that could be one of the most powerful strength for this company. Again PREMIER INN is one of the cheapest rated hospitality service provider in UK with all due qualities of products.

Weaknesses: This Company has now join with largest chain market, this also could be the weakness that it may not able to apply its own standard of quality itself. Also always selling the product in low rate will result that this company can be rated a cheap store with poor quality, where as it will not be able to provide the equivalent standard quality as others does like star hotels.

Opportunities: PREMIER INN will have great opportunities of expanding its business out of UK, along with other vendors. The developing technology is again an opportunities to provide better services to its customers.

Threats: Still PREMIER INN is recognized as the one of the cheapest budget hotel in UK, they have different verities of services available but also this marketing policy is started by others, hence they have always threat of competition and substitution of products they provide to the customers. Again while selling cheap product it is more challenging to maintain quality in the product.

6: objectives:

6.1: Business Objectives: It contains big strength as well in hospitality market. Their main aim is profit maximization and they also have to progress in accordance to stakeholder’s welfare. They possess different concern regarding to be market leader at retail grocery.

To maximize stakeholder’s wealth, effective management on investment and effort, cost management, quality production, resource utilization, market reputation and finally successfully overcoming challenges.

6.2: Ethical objectives:

The objectives related to maintaining organisation’s norms and core values are known as ethical objectives. Premier Inn has been working for quality of services, customers demand etc.

Some ethical objectives concerns standard maintaining of organisation by improvising the organisation’s base, fair deal and fairness and maintaining upper level of integrity, honesty and professionalism are some other related behaviours of ethics.

6.3: Cultural social and environmental objectives:

Now its trend to compete by working along with cultural and environmental issues. Premier Inn prefers working green, it respects other environmental issues like low carbon emission with eco friendly conduct, which help them for competing in the market with the different concept. At the other side, cultural values, which are straight, linked to general harmony and public emotions.

7: The factors affecting on strategic plan:

7.1: Internal environment: 7S Model:

The system which is designed by McKinsey workers includes of Tom Peters, Robert Waterman and Richard Pascale is used to find out the internal co-related environment or factors. Here all environment represented by S so called 7S model. To achieve the organisational goal, organisation should integrate these factors effectively.

Seven values which are with ‘S’ initials are the significant shared values of company. It is delivered by organization towards business. Moreover, it is essential to get uniqueness and company identification.

Strategy is the another main aspect to develop the high profit mongering for including the policy upon its business styles and procedures. It is also helpful for integrating other related aspects on developing company’s strategy to act at market.

Organizational behavior which is also called as system is an another aspect. It indicates the perfect communication on both external and internal aspect of company. These are regulations, agreements and procedures.

Style is organization’s management structure to handle business. Top to down approach addresses the capability of leadership in company, that acquire the organization’s potency as well.

Another one important aspect is definitely staff. Also known as human resource, if it is properly managed then it could turn out to be the main weapon for success of the company. Skills. It has concerns at the competitive global market and the strategic direction. These factors, mentioned above, are very closely related to organizational activities, also co-related to the organizational goal.

7.2: External market environment:

Premier Inn always tries optimum use of resources in its all activities. There we found two types of impact on its business – a) external environment and b) internal environment. External environment resides outside the company but has strong impact, mainly of two types – micro and macro.

Macro factors: Premier Inn tries to analyze its various macro factors. To determine the company’s core strategy after determination of organization’s opportunities and threats, its compulsory to analyze these effecting factors.

Economic factors

Specially concerns with inflation, taxation, interest rate and exchange rate like issues. For example, the higher rate of interest may divert the investment as of costing more for borrow. Similarly, export depends upon the strength of foreign currency. Rules of external investors may vary with the countries which can cause the problem on investing. High inflation will lead the workers to demand high wages.

Political factors

It is the one of the main factors and related with the government’s rules and stability of political environment. Some policies like tariffs, labor and trade issues are some of the main. It is Government’s intervention upon the economic activities. Some countries may set very tough regulatory tasks for external investors causing the difficulties for them. In UK, tax is increased by 2.5% (15-17.5) by 2010 which will definitely increase the wage rate and relatively service charges.

Social factor

There we can see radical changes at the pattern and style of social life and it will obviously effect the demand of products and thus affecting the production style for the company. For example, ageing will effect on responsibility of the worker by providing pensions and various allowances to them. Premier Inn is in more touch with society on daily basis, hence there are more effects. Also carry on various types of programs and campaigns.

Technological Factors

The innovation of new technologies creates the new processes and products. Computer games, high definition TV, MP3 players and online gambling are some examples of the markets due to the technological changes. Use of barcode, online booking and some other computer designs are improvements on traditional businesses. Technology can improve quality, minimize cost and definitely lead to the new innovation. So company’s activities are highly influenced by the technological markets.

Environmental factor

Factors including the climate and weather change. Like, temperature change can effect many changes in farming, insurance and tourism industries. Nowadays external factors like global warming and climate changes are being considered significant issue due to the increasing awareness and firms need to think about it. Growing awareness to save the environment has big impact upon many industries like travel and transportation, gas, oil industries etc. The public growing public awareness towards these factors have revealed new challenges and opportunities as well.

Legal factors

This specially defines the regulatory environment where the firms are being operated. Even in UK, firms behavior has been considerably changing in respect to the change of legal factors. The recent changes like age discrimination, disability discrimination, increasing minimum wage etc. Have directly affected firm’s actions. Obviously legal factors will affect any firm’s costs.

8: Role of different functions in Premier Inn:

Marketing: Marketing department has a crucial role on formulation of strategies for a company. in the case of market development and research this has the real approach up to customers and they are the first to know about the changing pattern and demands of market. Hence they are mainly responsible for Planning and forecasting, organizing and coordinating, motivating communicating, empowering. Also they are involved on leadership, control monitoring evaluating etc.

HR: Here HR department is mainly responsible for managing the available resources mainly the labor force. While doing so, they have to carried out several steps like; recruitment, selection and training. They are also responsible for determining HR policies, wage rate. They have to coordinate for the development procedure for leadership development program, motivation and team work etc.

Operation: The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services.

9: The major stakeholders of Premier Inn: There always the types of stakeholder can be divided into two different types a) internal and b) external. :

Internal stakeholders

Owners/Shareholders of the organization
Employees
Senior management team
unions

External stakeholders

Customers
Business partners/suppliers
Local communities
Government
Environmentalist

All the above mentioned groups or for individuals it is very important for understanding their own expectation and how it is differ from others, and how company activities are affecting on those is more considerable matter. Generally stakeholders they have divergent and therefore creates conflicts. Therefore managerial leadership style should intend towards that leads the personal goal take or carry towards the organizational goals. And hence to gain such target, stakeholders must be participated in management strategy formulation procedure. There are some examples regarding the PREMIER INN for the active participation of stakeholders.

10: Communication:

It is very important to carry out communication and this could be of mainly two types, internal and external. There are mainly three types of communication system a) Upward b) Downward and c) Lateral communication.

There are mainly 5 ways improving communication for keeping the better communication tradition within organization.

There is 5Cs technique for the better communication within organisation. There Consider, Consult, Crunch, Communication, and Check.

11: Importance of stake holder:

Shareholders are the real owner of the company needs to run as per their real interest. Hence before formulating any strategy, they should be participated and understand what are their interest. After understanding the shareholders interest in which direction they want to move the organisation and what could be the long and short term objectives, policies could need to formulate as company’s strategic plan.

12: Participation of internal stakeholders: the employees or workers have very great role and direct impact on meeting the setup goal by bank. Hence it is very important to understand what kind of environment, cluster that they are expecting. For example, the product or services are directly served through the staffs to the customers and it is very important the impression towards the customers and measure the quality of the services. Also while the change occur in company, if managerial team could not cope with own employees it is not possible to bring changes in organisation and work with new environment.

13: Participation of external stakeholders: as Sainsbury became one of the major supermarket chain in UK grocery market, it has great impact and influence towards the external environment like, local communities, suppliers, environment, Government etc. Hence when there is the formulation of strategies for the change in management or within the organisational culture it is considerably important to understand their interest and expectation. There could be the great expectation from the general customers, public and government. The user friendly banking system, support in government monetary policy could be other expectation from external stakeholders.

Task 2

Q No: 4

Strategic planning process is the series of step followed by management of the firm to define how the organization will achieve existing and future strategic goals and objectives. This process starts with reviewing the internal resources and capabilities of the firm and existing as well as future market opportunities. Doole and Lowe (2008) suggested three questions are very helpful for business strategy planning. They are:

Where is the company now?
Where does it want to go?
How it will get there?

To address the first question where we stand now, Premier inn must perform a thorough analysis of its resource and capabilities. The mission and vision also should be defined. This guides managers at every phase of strategy development and implementation. To identify the premier inns resource and capabilities, an honest assessment should be performed in every aspect of business. Internal resource and capabilities provides clear indication of firm’s capacity to pursue the company’s mission and objectives (Hill and Jones, 2007). These resources could be the financial, marketing, production and people. In addition to those basic capabilities it also involves the strategic capability and core competencies that are unique from their competitors. Similarly capacity development is another key issue for Premier Inn. Strategic capabilities that are required to carry out the organizational mission and objective should be developed over the period of time.

At the second phase premium inn must perform the situational analysis to answer the question of where does it want to go. The stakeholder’s expectation should also need to be identified to design the product/or service offerings. The situational analysis also provides clear strategic direction for Premier Inn by identifying the external opportunities and threats. Situation analysis attempts to develop an in-depth understanding of each individual market and evaluates its significance (Doole and Lowe 2008). As business environment are becoming more competitive, dynamic and complex, the Premier Inn must be aware about the immediate and future possible impact of those changes taking place in the market. The external environment of firms consists of customers, competitors, suppliers, government. These factors must be examined carefully to identify the external opportunities, which are influential in achieving organizational objectives.

The contingency plan is also necessary for coping with unexpected threats from the market. Doole and Lowe (2008) argued that contingency planning prepares organization by identifying the contingency events, and make organization ready with alternative plans and strategies for avoiding or even exploiting them. Thus, contingency planning is a systematic planning approach to identify what are the available alternatives? If something goes wrong. Market is very dynamic and complex, hence many strategies possibly fail because of changing nature of environment. Thus, organization should be ready to respond those contingencies by following appropriate planning process.

Action plan and budgeting is another aspect for successful execution of business strategy. They are oldest management tools. However, they still have growing implications in many fields. Action plan has three major elements (i) specific tasks undertaken for the execution of strategy (ii) Time horizon and (iii) Budgeting . Time horizon refers to the actual time taken to complete those strategies and budgeting refers to the resource allocation for each activities. Thus, various sequence of steps and activities need to performed should be clearly defined before implementing the strategy. In addition, Budgeting should be specified to get tight control over the resources.

The next step to strategic planning model is formulation and implementation of business strategies to secure the desirable strategic position. Since the Premier Inn is the market leader in budge hotel market of the United Kingdom. It needs to defend its market share continuously from its close competitors like Premier Inn and Ibis hotel. As suggested earlier, the premier inn is pursuing the price leadership strategies, they must work hard to keep the price very low than its competitors. As its closest competitor (Premier Inn) is also following the same strategy, Premier Inn should be aware about the competitor’s pricing moves.

Conclusion:

In conclusion, to meet the organizational objective of growth and profitability, Premier Inn must expand its international footprint. The Premier Inn is highly appreciated budget hotel brand in the UK. Since, the most European countries share some common market characteristics, Premier Inn will also be able to get positive feedback from its European customers. The trade regulations of European Union further supports its market development strategy as there is no political and legal barriers for international movement in EU market. Albeit some changes in its basic offerings are needed to capture the need and expectation of country specific customers, Premier Inn can promote its fundamental low cost theme in international market. To escape out from this concept they are more likely to adopt the principle of JIT (Just In Time) principle. But now the recession effect has been slow down and started to revive. So the adaptation of new strategies by the evaluation of pervious one and monitoring applying one will let this company to spread its restaurant worldwide very fast.

Recommendation:

4. Recommendation of the best strategies option

To achieve the Premier Inn’s aim of rapid growth, Market Development strategy is recommended. Business involvement in multinational operation is not a new concept for hospitality and tourism industry. Many hospitality companies are pioneers in international market development to exploit the attractive investment opportunities abroad. Hotel chains i.e. Hyatt, Intercontinental, Holiday Inn and Hilton are very successful in expanding their international footprint. Enz (2009) argued that Companies with international involvement grow faster and their profits are higher. He also found that firms with no foreign involvement grow at the half, compared with firms having international operations. Hence, Premier Inn must expand outside its UK market to increase market share and revenue.

Premier Inn has an objective of opening 11, 00 new hotels and 100,000 rooms by the year 2025 (Premier Inn Fact Sheet, 2011). Thus, there is a clear need to expand internationally as it’s not possible and attractive to open 11, 00 hotels in UK market. The market development option suggests two possible strategies for Premier Inn. First, by selling the existing product and services to the new customer segment. This strategy suggests that creating a new uses or demand for existing services. Since, most of the Premier Inn target customers are price sensitive visitors from different countries, Premier Inn can now target for sports visitors during 2012 London Olympics. The UK government has forecasted that Olympic Games will contribute to the UK economy at potentially Pound three billion (Premier Inn Fact sheet, 2011). Thus it’s a good opportunities for Premier Inn to increase profit. Thus Premier Inn needs to invest heavily on London by building new hotels and to attract more and more sports visitors. Second strategy for market developments suggest for internationalization. Since, the Premier Inn is a global brand, it is also highly appreciated in the Europe. Market characteristics are similar across the European countries. Thus Premier Inn will enjoy greater market share and profit through rapid European expansion.

Standardization and similarities in market is the major facilitators for pursing market development or internationalization strategy. The present of similar customer needs and expectations in European market creates a great deal of market opportunities for Premier Inn (Johnson et al, 2008).In addition, other European countries holds significant prospects for tourism. Since, the market trends are showing that customers are now cutting down their travel expenditures, Premier Inn could rip the significant market benefits from being the lowest cost budget hotel in European market. Similarly, transferable marketing also promotes the internationalization strategy as Premier Inn can position itself as lowest cost hotels in the global market.

Another justification for pursuing this strategy is economies of scale. Since, the labour cost, operating expenses and real estate cost is very high in United Kingdom. Thus, the foreign countries are an attractive destination for Premier Inn to gain significant cost advantage due to low labour and operating cost. Since,the Premier Inn is operating on the basis of lease model, the real estate policies and low real estate cost in foreign market has direct effect on its profitability as Premier Inn need to open high number of hotels. Premier Inn also can enjoy economies of scale through high volume sales which enables Premier Inn to bargain with its suppliers.

Competitive forces are other key drivers for pursuing market development and internationalization strategies. An international move for Premier Inn is necessary because of fierce competition posed by its market leader Premier Inn. On the other hand, the entry of competitors into the market might create incentive for company to follow the trends in order to maintain same level of competitive parity (Ennew and Waite, 2007). Thus, Premier Inn must respond to the competitor’s globalization effort by expanding internationally.

References:

BBC (2010), Spending Review: In graphics, 22 October 2010[www]Available from

Campbell, D., Stone house, G. & Houston, B. (2002), Business Strategy, 2nd edition Butterworth- Heinemann, USA

Doole, I. & Lowe, R. (2008), International Marketing Strategy, Cengage Learning EMEA, UK

Grant, R.M (2003) Contemporary strategy analysis 5th edition, hienmann butterworth publications, USA

Hill, C. & Jone, G. (2010)Strategic Management Theory: An Integrated Approach, Cengage Learning, USA

date accessed 2 July 2011

Keegan, Warren J, Green, Mark, C (1997), “Principles Of Global Marketing”, Prentice Education Inc, USA

Kotler, P (2001), “A Framework for Marketing Management” Prentice Education Inc, USA

Kotler, P (2003), “Marketing Management”11 th edition, Prentice Education Inc, USA

Power point background

The aim is to build total earnings of Whitebeard (BBC News, 2009). In 2007 premier inn announced a four year UK expansion program with the target of 45000 rooms available by 2010. Similarly on April 2007 whitebeard announce a £E 100 million expansion of its premier inn hotel chain in London over the next there years. (The Times, 2008) More 600 hotels are offering in quality accommodation at cheap hotel prices. Premier Inn remains the UK leader in both hotel number and room terms, however. 3,500 extra rooms are to be added in 2011.

the best and large scale hospitality brands in the world by being the most customer focused organization
To increase the hotel market leader by the end of 2014
To open further 22 hotel before Olympics , giving out 7302 in the capital ( Mintel Report, 2011)

Why cost leadership strategy?

Increasing profits by reducing costs
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because of the reduced costs.

To be a cost leader in the market the organization should posses the following capabilities:

Huge financial resources needed to bring new technology that will decrease the production cost.
Efficient supply chain
Cheap materials and/or human resources.

Examples of organization following cost leadership strategy are Wall-mart and IT firms such as Dell and Lenovo.

Benefits of cost leadership strategy:

Makes the same level of profit although charging low price

Threat of new entry is low as the cost of technology is high

Less affected by powerful buyer and supplier

Room to reduce price to compete with substitute products

Limitations of cost leadership:

Competitors’ may imitate

Organizations following focus strategy can further lower their prices as they concentrate in narrower markets.

Improved technology of the rivals can cause a serious harm.

Relative lower prices can cause a negative impact on the customers

Cost reduction on the expense of other vital factors can create an imbalance.

Why not other strategies?

Premier inn should not go for differentiation or focus strategy because of the following reasons:

Limitations of differentiation strategy:

High extra costs incur in promoting the brand image.
Threat of imitations and substitution
Difficult to maintain uniqueness in the long run
Changes in customers buying behavior and taste can be critical.

Limitations of focus strategy:

It embraces the drawbacks of both the cost leadership and differentiation strategy.
A competitor may focus on a more narrowly defined market segment and out focus the focuser.
Cost disadvantage relative to a low cost leader
Technological advancement can change the customers’ needs and demands and the niche market can disappear
The focus on cost can be difficult in industries where economies of scale play an important role.

Power point background:

The aim is to build total earnings of Whitebread (BBC News, 2009). In 2007 premier inn announced a four year UK expansion program with the target of 45000 rooms available by 2010. Similarly on April 2007 whitebeard announce a £E 100 million expansion of its premier inn hotel chain in London over the next there years. (The Times, 2008) More 600 hotels are offering in quality accommodation at cheap hotel prices. Premier Inn remains the UK leader in both hotel number and room terms, however. 3,500 extra rooms are to be added in 2011.

the best and large scale hospitality brands in the world by being the most customer focused organization
To increase the hotel market leader by the end of 2014
To open further 22 hotel before Olympics , giving out 7302 in the capital ( Mintel Report, 2011)

Why cost leadership strategy?

Increasing profits by reducing costs
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because of the reduced costs.

To be a cost leader in the market the organization should posses the following capabilities:

Huge financial resources needed to bring new technology that will decrease the production cost.
Efficient supply chain
Cheap materials and/or human resources.

Examples of organization following cost leadership strategy are Wall-mart and IT firms such as Dell and Lenovo.

Benefits of cost leadership strategy:

Makes the same level of profit although charging low price

Threat of new entry is low as the cost of technology is high

Less affected by powerful buyer and supplier

Room to reduce price to compete with substitute products

Limitations of cost leadership:

Competitors’ may imitate

Organizations following focus strategy can further lower their prices as they concentrate in narrower markets.

Improved technology of the rivals can cause a serious harm.

Relative lower prices can cause a negative impact on the customers

Cost reduction on the expense of other vital factors can create an imbalance.

Why not other strategies?

Premier inn should not go for differentiation or focus strategy because of the following reasons:

Limitations of differentiation strategy:

High extra costs incur in promoting the brand image.
Threat of imitations and substitution
Difficult to maintain uniqueness in the long run
Changes in customers buying behavior and taste can be critical.

Limitations of focus strategy:

It embraces the drawbacks of both the cost leadership and differentiation strategy.
A competitor may focus on a more narrowly defined market segment and out focus the focuser.
Cost disadvantage relative to a low cost leader
Technological advancement can change the customers’ needs and demands and the niche market can disappear
The focus on cost can be difficult in industries where economies of scale play an important role.

Power point background:

the best and large scale hospitality brands in the world by being the most customer focused organization
To increase the hotel market leader by the end of 2014
To open further 22 hotel before Olympics , giving out 7302 in the capital ( Mintel Report, 2011)

Why cost leadership strategy?

Increasing profits by reducing costs
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because of the reduced costs.

To be a cost leader in the market the organization should posses the following capabilities:

Huge financial resources needed to bring new technology that will decrease the production cost.
Efficient supply chain
Cheap materials and/or human resources.

Examples of organization following cost leadership strategy are Wall-mart and IT firms such as Dell and Lenovo.

Benefits of cost leadership strategy:

Makes the same level of profit although charging low price

Threat of new entry is low as the cost of technology is high

Less affected by powerful buyer and supplier

Room to reduce price to compete with substitute products

Limitations of cost leadership:

Competitors’ may imitate

Organizations following focus strategy can further lower their prices as they concentrate in narrower markets.

Improved technology of the rivals can cause a serious harm.

Relative lower prices can cause a negative impact on the customers

Cost reduction on the expense of other vital factors can create an imbalance.

Why not other strategies?

Premier inn should not go for differentiation or focus strategy because of the following reasons:

Limitations of differentiation strategy:

High extra costs incur in promoting the brand image.
Threat of imitations and substitution
Difficult to maintain uniqueness in the long run
Changes in customers buying behavior and taste can be critical.

Limitations of focus strategy:

It embraces the drawbacks of both the cost leadership and differentiation strategy.
A competitor may focus on a more narrowly defined market segment and out focus the focuser.
Cost disadvantage relative to a low cost leader
Technological advancement can change the customers’ needs and demands and the niche market can disappear
The focus on cost can be difficult in industries where economies of scale play an important role.

Power point background

the best and large scale hospitality brands in the world by being the most customer focused organization
To increase the hotel market leader by the end of 2014
To open further 22 hotel before Olympics , giving out 7302 in the capital ( Mintel Report, 2011)

Why cost leadership strategy?

Increasing profits by reducing costs
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because of the reduced costs.

To be a cost leader in the market the organization should posses the following capabilities:

Huge financial resources needed to bring new technology that will decrease the production cost.
Efficient supply chain
Cheap materials and/or human resources.

Examples of organization following cost leadership strategy are Wall-mart and IT firms such as Dell and Lenovo.

Benefits of cost leadership strategy:

Makes the same level of profit although charging low price

Threat of new entry is low as the cost of technology is high

Less affected by powerful buyer and supplier

Room to reduce price to compete with substitute products

Limitations of cost leadership:

Competitors’ may imitate

Organizations following focus strategy can further lower their prices as they concentrate in narrower markets.

Improved technology of the rivals can cause a serious harm.

Relative lower prices can cause a negative impact on the customers

Cost reduction on the expense of other vital factors can create an imbalance.

Why not other strategies?

Premier inn should not go for differentiation or focus strategy because of the following reasons:

Limitations of differentiation strategy:

High extra costs incur in promoting the brand image. Threat of imitations and substitution. Difficult to maintain uniqueness in the long run and changes in customers buying behavior and taste can be critical.

Limitations of focus strategy:

It embraces the drawbacks of both the cost leadership and differentiation strategy. A competitor may focus on a more narrowly defined market segment and out focus the focuser. Cost disadvantage relative to a low cost leader. Technological advancement can change the customers’ needs and demands and the niche market can disappear. The focus on cost can be difficult in industries where economies of scale play an important role.