Hotel External Environment and Internal Environment Analysis

Introduction

In legal terms ‘Law’ is defined as, “a rule of conduct or action prescribed or formally recognized as binding or enforced by a controlling authority: as a : a command or provision enacted by a legislature”.

Basically it is a set of regulation and regulations of conduct, which are practiced in general. These rules and regulations are bound by legislature.

In this assignment I will be discussing law in context with Consideration and Contract.

Question 1:

Marketing emphasises on meeting the needs of the consumers and providing them with value, and benefits, while at the same time handling the organisation in an efficient and profitable manner.

Marketing is a process that involves constant adaptation and implementation of the varying consumer trends, and demands. While at the same time having a competitive advantage over the competitors, and while at the same time ensuring that the satisfaction of these needs result in a healthy turnover for the organisation.

Objective of the coursework:

The objective of this assignment is to analyse the Manor House Country Club Hotel’s (MHCCH) external environment and internal environment. I shall use PESTEL Analysis, Industry Analysis and MHCCH’s Opportunity and Threat analysis to draw out the company’s external environment and Core competencies, Value chain, Ansoff Matrix, strength and weakness of MHCCH will be applied to illustrate the internal environment.

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Overview of the Hotel:

In 1992, Manor House Country Club Hotel was established as a family owned business by the Jenkins Family, in Singapore. The MHCCH spans over 3 acres of prestigious reclaimed land, and is operating currently as a single hotel. The Hotel provides various varieties of Luxurious accommodations, and serves tourists from around the World. The hotel also serves its customers with various types of cuisines, from its modernised Restaurant; the hotel also has Bistro that is licensed to sell alcoholic drinks. For corporate meetings and conferences to be held in the hotel, the hotel has adequate premises and facilities. And other miscellaneous services provided by the hotel include a Beauty Salon. In short it can be said that the MHCCH stands up to the luxurious benchmark that it projects.

Analysis of the Micro Environment: (Internal)

The Micro/internal factors are the forces inside the hotel that can affect the performance of the hotel, thus through the micro environment analysis, we search for and devise a strategy to overcome those shortcomings that might hinder the progress of the hotel.

SW (Strength and Weakness) Analysis:

(S)trengths:

• The MHCCH is located at a prime and favourable location, which is easily accessible.
• The MHCCH successfully depicts its Luxury position in the tourism and hospitality industry, thus differentiating it from the competition.
• It is licensed to serve alcoholic drinks in the hotel, thus widening its consumer base, and scope for profitability.
• Additional accommodation was added by MHCCH in 2002, so now it can house more customers, hence an increase in productivity.
• The Market value of MHCCH is eight times more than its actual value, which is the sign of a profitable and stable business.

(W)eaknesses:

• There has been a consecutive decline in the number of corporate clients for the Hotel in the past years, while the number of trade conferences held in the country has gone up by 30%.
• Over pricing of the room rates above the average price level for similar rooms in other competitive hotels may lead to a decline in the number of customers.
• As for the current situation the MHCCH lacks direction in terms of a strategic plan for expansion, and its target consumers, those are essential for the development of the MHCCH.

Recommendations:

• MHCCH can provide better meeting/conferencing facilities to its corporate clients to up the number of corporate bookings. Also it can reconsider its pricing policies and provide trade discounts to its clients.
• The accommodation/room tariffs to be priced at a market competitive rate, and not at exorbitant prices, which might set the customers off.
• A strategic marketing and action plan to be set by the MHCCH while keeping its prime priorities in focus.

Conclusion:

The shortcomings of the MHCCH are not of a major nature, they can be rectified by adopting simple corrective actions, like a strategic plan. It is quite natural for any organisations to face hurdles in its developmental phase.

Core competencies: (Micro Analysis)

Core competencies are what makes an organisation different from others, in most cases its’ direct competition. The MHCCH can develop its core competency on the basis of its luxury position in the market. It must aim at providing quality services to its customers at competitive prices. This also increases its foothold in the competitive market. As it is in the core culture of an organisation, to satisfy its customers and providing them the value for their money, that is what constitutes the basic differences among the various organisations.

Value chain: (Micro Analysis)

The basic motive of the value chain is to provide the customers with a certain level of value that surpass the cost of the activities and ultimately it appears in a profit margin. The value chain of MHCCH is presented below:

Quality Service: The hotel management has to ensure that the customers are provided with high quality services that are worth the price that a customer is paying. So that the customer is satisfied.

Satisfaction of customer needs: The second step is to meet the specific needs and demands of the customers as per their tastes and preferences, as the service industry tends to be very personal, tailor-made arrangements have to be made to meet the customer needs.

Trained and Efficient staff: Every customer expects to be treated in the most hospitable and best manner possible, thus MHCCH should be certain that the staffs is well-trained and efficient when it comes to dealing with the customers.

Marketing and Brand building: In this stage, MHCCH is looking for potential buyers to sell the services it offers and to do this they do advertising, pricing etc. And build a reputable image in the market, which is also a crucial factor to Customer satisfaction.

There are some aiding factors to the points discussed above which cannot be fulfilled without the help of these:

1). Infrastructure:

The aesthetic appeal of the hotel is a crucial factor of the quality it signifies in its service, thus the infrastructure should be as enticing and attractive as the services provided within the MHCCH.

2). Specialisation:

To satisfy the specific customer demands, the hotel has to keep in mind that meeting those demands is crucial and difficult at the same time, thus specialisation in fulfilling the customer needs is an essential supporting factor.

3). Human Resource Management:

The staff must be recruited and accordingly trained to deal with its customers, as the employees of MHCCH reflect the image of the hotel itself. Thus HRM is a bare necessity in the strategic planning process.

4). Marketing Research:

With proper analytical tools and a better understanding of the market, the task of marketing becomes much easier for MHCCH, leaving a long lasting impression in the customer’s mind.

Macro analysis: (External)

By scanning the macro the environment, the company can devise a better strategy towards overcoming the identified threats and to utilize the available opportunities.

OT: (Opportunities and Threats)

(O)pportunities:

• Tapping the benefits of the high growth of tourism industry in Singapore.
• High demand of varying cuisines/lifestyles.
• Scope of expansion in conference/family travel groups.
• Expand the MHCCH brand by investing in external property, through borrowing/re-investing profit.

(T)hreats:

Highly competitive hotel industry, competitive pricing, similar services, etc. If proper steps to maintain and expand MHCCH are not taken, then this could be a potential threat to the hotel.

Lack of Differentiation is another factor that serves as a threat to MHCCH as there are various segments i.e. budget youth hostels, five star hotels, backpacker lodges, etc. MHCCH should hold on to a particular segment and differentiate itself from others on its basis.

Increasing Bureaucracy and the various new rules and regulations imposed by the government can cause hindrances in the expansion plans of MHCCH, e.g. licenses and permits required to carry out some activities in the Hotel.

Pestel Analysis

PESTEL represents Political, Economic, Social, Technical, Environment and Legislative factors which are external in nature. The current and future change of six key areas can affect the MHCCH’s business. The PESTEL analysis explores the broad environment in which the MHCCH is operating.

Political Factor: These contain the rules and regulations implemented on the Hotel by the Government. The Singapore government is inclined on increasing its popularity as a tourist destination, thus a beneficial factor for MHCCH.

Economic Factors: Singapore is among some of the fastest growing eastern economies, thus the GDP and the public spending is on a constant rise, so is the purchasing power of the citizens of Singapore and the Tourists. Again it’s in favour of MHCCH.

Social Factors: The Cultural and social aspects of a country are highly important to the business, the current trend of the growing demand for new styles of food and drink is a sign of the change in the social factor.

Technological Factors: Technology is directly linked to modernisation, the hotel has to keep up to date with the latest technological changes in the business environment, for e.g. Wireless internet, Computer bay, HDTV’s, etc. This improves the quality and quantity of the stay of the customers.

Environmental Factors: Drastic changes are occurring in the global environment nowadays; also environmental awareness is becoming more common by the day. Environment friendly applications need to be adopted by MHCCH to balance its responsibility towards the environment.

Legal Factors: The MHCCH must abide by the legislation operating in their geographical territory (Asian Legislation). This affects their business hugely. It may serve in or against their favour, depending on the legislation.

Part B

The Manor House Country Club Hotel can expand its business in within the next two years by following these strategies/theories.

Ansoff Matrix:

The Ansoff Matrix is useful in deciding the company’s product and market growth strategy. The Ansoff Matrix in reference to MHCCH is:

Market Penetration: MHCCH is building a stronger market position by providing similar luxury services as the other hotels in the same market.

Market Development: MHCCH is investing in its site to develop its unused land into small leisure centres. These investments are aimed at developing a stronger position of the hotel in the market.

Product Development: The main focus of MHCCH is on developing its service package by improving the infrastructure and attracting more customers. By investing in the hotel, the services they offer can be developed

Diversification: This involves MHCCH entering a business that is not currently a part of their agenda, which at the moment it is not doing, but they can consider diversification into the alternatives in future, as it leads to added income and goodwill.

Porter’s Grid

Porter’s Grid is also well known as Porter’s Five Force analysis. These were developed by Michael E. Porter. The competitive environment of the MHCCH is explored in depth through the Porter’s analysis below:

1). Bargaining power of the Supplier:

The supply in this industry is largely based on FMCGs (Fast Moving Consumer Goods) which is quite flexible considering the fact that the Hotel buys its supplies in bulk quantities. Thus the ready availability of the goods by the suppliers and the perennial demand of the goods limit the bargaining power of the suppliers.

2). Bargaining power of Buyers:

There are many alternatives to choose from for the customers of MHCCH as there are rooms of varying levels of luxury and prices, ranging from basic single-bed room to ultra luxury Suite packages. There are other hotels offering similar rooms to them at competitive prices, thus buyers do have their share of bargaining power in this case.

3). Threat of new entrants:

The hotel industry in Singapore is facing tough competition not only from the entry of locally based hotels but also giant multinational hotel chains, the new entrants might turn up as a threat for the company.

4). Threat of Substitutes:

MHCCH basically provides accommodation oriented services to its customers, while there are a large number of substitutes available for them, to obtain similar services. The main differentiating factor here is pricing, and the difference in the quality of the services. There exists a strong threat of substitutes, but with a well planned pricing policy, this threat may be avoided.

5). Rivalry among competitors:

Rivalry among competitors is fairly high for MHCCH as the rivals offer the same services/products, and they operate in the same market and environment. While at the same time there are new competitors entering the market. And also the buyers have the power to buy the services/products at lower prices.

Conclusion

As of now MHCCH is operating as successful enterprise, which through proper strategic planning can be developed into a much more flourishing business, and a highly successful hotel.

But for Manor House Country Club Hotel to successfully expand its business in the next two years, it is advisable for them to adopt the Market/Product development strategy, as it provides them with an opportunity to utilise their available resources in an optimum manner, while at the same time continuing the routine functioning of business.