Discuss about the Business Strategy for Strategic Analysis.
Strategic analysis is the use of various tools to evaluate the opportunities and challenges that are faced by the organization. The aim of this report is to provide an understanding of the critical thinking and application of the various internal and external concepts on the Raffles hotels in Singapore. The report prepares a strategic analysis for the tourist spot of Singapore. Raffles hotel is selected as a tourist spot of the Singapore. It has been served as a landmark of Singapore for over a century. The report describes PESTLE analysis, SWOT analysis and strategic options of the Raffles hotel as a tourist spot in Singapore. At the end, the report provides useful recommendation and conclusion based on the strategic analysis of tourist place of Singapore.
Over the past few years, Singapore has shown extraordinary economic growth. Therefore, today it contains as a high -income economy. The pestle is an external tool to study the macro-environmental factor that is an acronym for the political, economical, social, environmental, technological and legal. Pestle analysis of Raffles hotel as tourist spots can be described as below-
Political factor- Political risk in Singapore is low. Therefore, political and economic consultancy states that tourism sector of Singapore enjoy the lowest political risk. It can be said that Singapore is a democratic country (Cadle et al., 2010). Moreover, Singapore has a most stable and corruption free government in the all Asian countries that help the Raffles hotel to make itself as famous tourist spots of Singapore.
Economical factor- The Singapore economy is developing at a very fast pace so that it is known as vibrant free- market economy. Per capita income of Singapore people is high so they are able to visit different tourist place with the help of their high income. As the government of Singapore is corruption free, therefore, it supports the business environment of the Raffles hotel of Singapore for the effective growth (Mennen, 2011). Raffles hotel also makes free trade agreements with China and Taiwan that make the wider business market and increase the tourist to visit this hotel. One of the main attraction points of Raffles hotels is its strategic geographic location that attracts the visitors.
Social factor – Singapore is a country that has a very vibrant cosmopolitan culture and a very strong education system. Hence, these social factors are very supportive to the tourist spots as well as Raffles hotel in the Singapore. Moreover, it is considered a very safe city that attracts the tourist to visit the tourist place of Singapore.
Technological factor- One main reason behind the change in the lifestyle and quality of life in the Singapore is the technological advancement. The internet plays an important role in the growth of tourism sector in Singapore. Since, it increases the level of communication and connectivity that will reduce the time and cost (Osterwalder and Pigneur, 2013). Singapore has a world-class IT support and infrastructure that is well connected with the different part of the world such as- airline and hotels.
Legal factor – The growth of tourism sector of Singapore depends on market favorable legislations, transparent and regulations. Since some legal and regulatory and business setting is required to support the economic growth and industry development of the Raffles hotel. In addition to this, there is some legal and technical infrastructure and laws that will secure the e-commerce i.e. electronic transaction act, evidence act, tax issues and import-export procedure of Singapore (Gander, 2017).
Environmental factor – Singapore is a remarkable country in the context of the tourism sector. It is a house of motivated and talented people. In addition to this, water drainage act and water pollution control help to control the quality of water. On the other hand, the ministry of environment and anti-pollution unit work to maintain the quality of air and another factor that it are directly and indirectly related to the environment (Grant and Jordan, 2015). Therefore, Singapore is known as the best tourism place as fresh environment attract more and more tourist to visit the various places in Singapore.
Raffles Hotel Singapore began its operations as a privately-owned beach house made in 1830s. The hotel is well-known for its services as these satisfy the needs and wants of tourists who come from different parts of the world. Since, the hotel plays an important role in the tourism and hospitality industry of Singapore; it becomes necessary to conduct SWOT analysis of the hotel in order to know its strengths, weaknesses, opportunities, and threats.
The success and the Brand name of Raffles Hotel in Singapore are the major its major strengths. The staff personnel of the organization are experienced, skilled, and customer-oriented, which provide best quality services to the customers. Next, important advantage is that the hotel offers wide range of food, and beverage at reasonable rates (Hargreaves, 2015). Also, the hotel has a number of well-decorated and furnished rooms to attract more customers to visit the hotel. Apart from room services, and food, the hotel also offers spa services, conference halls, and disco. Furthermore, the credit worthiness of the hotel is high, which enables it to borrow fund from bank in order to perform operations successfully.
One of the major weaknesses of Raffles hotel is that it incurs higher cost on its operations, which affects its overall profits generated. Also, the quality of food is not as much satisfactory as expected by the customers. Another weakness of the hotel is the lack of technological and regular training to the employees which make them uncomfortable while dealing with unpredicted changes and hurdles (Henderson, 2015). There is also a high rate of employee turnover in the hotel, which is due to low satisfaction level among employees. Cultural differences also add to the weaknesses of the organization as these create a significant communication problem between the management and employees.
Since tourism sector is expanding day-by-day, Raffles hotel Singapore has a great opportunity to expand its business in new and emerging markets at global level. Recent researches have also shown that today’s modern customers have increased their spending in tourism and hospitality services. It creates a good opportunity to fully utilize its potential in attracting new customers via unique services and experience (Salvioni, 2016). Moreover, the hotel can have its online presence through website to provide the facility of online hotel booking for enhancing customer base and loyalty.
Along with opportunities, Raffles hotel also finds a number of threats which can negatively affect is position and sustainability in tourism industry of Singapore. One of the main threats is the intense competition from other tourist spots of Singapore, which offer same facilities at lower rates (Bruni et al., 2017). The major competitor of Raffles is The Hotel De L’Europe, which is several years older than Raffles. Moreover, economic recession also create a significant threat for the hotel, as it can reduce the organization’s revenues. Change in technology is another factor that creates threat for the organization if the manpower is not given proper training on how to use new techniques.
There are various strategic options available to tourism organizations for gaining competitive advantage over rivalries or to achieve other objectives. After the analysis of internal and external environment in which Raffles operates, it becomes necessary for the management to search the strategic options available to the company (Carlisle et al., 2016). The evaluation of options is based on the needed resources, the degree of control over future strategies, and the efficiency by which a change in position can be obtained. Following are some relevant strategic options for the company:
Today, the strategy of cost leadership is of great significance in tourism sector. Raffles hotel can decrease its operational costs in order to generate higher profits on investment. For making the cost leadership strategy to work effectively, it is important for the company to make its services recognized at global level so as to increase the sale volume (Henderson, 2016). Moreover, the services should be standardised to lower the prices and get access to a large market.
Another strategic option is differentiation which the hotel can adopt. The hotel can practice this strategy by adding some unique such features to its services, which are hard to substitute by rivalries. Differentiation includes branding, best quality, and hotel location. Further, the cost differentiation should not exceed the cost which the premium customers are ready to spend (Chang, 2016). However, this strategic option does not challenge the market leader directly, but it minimizes the possibilities of harmful competitive responses like reducing prices. The hotel can also invest in specialized distributional channels which are most relevant to the company’s market segment (Purwomarwanto, and Ramachandran, 2015). Another option that the company can exercise is that the hotel can have a website that represents hotels’ distinctive attributes in order to give customers an insight into the purpose and missions of the hotel. Offering various ways to customers for booking rooms, and tables, and joint venturing with domestic attractions, tours, and restaurants of Singapore can also help the company in achieving strategic goals.
Raffles Hotel should focus more on effective as well as high capacity utilization by using good demand forecasting in the revenue management system, enhancing capacity conventionally, or pricing insistently. Since the fixed cost indicates a large percentage of overall costs structure, the company should also focus on managing variable costs and maintain high occupancy rate during the peak seasons for increasing sales volume. It will be beneficial for the company in competing in an effective manner with those competitors who posses similar size and ability but lesser occupancy. Moreover, during good as well as bad times, the management needs to focus more on revenue management in order to maintain the level of profit (Ajagunna, and Crick, 2014). It can be carried out easily by determining when to increase and decrease the price of services based on occupancy rate. If the demand for hotel seems to be difficult to increase, it can indulge in dynamic pricing strategies for sound inventory management.
From the above discussion, it can be recommended that Raffles hotel should perform a situation analysis, competitor’s analysis and self-evaluation of both internal as well as the external environment to measure the effectiveness of the organizational strategy. The company should set the objective and concurrent with the strategies by which the organization will able to craft vision and mission, corporate objectives that will suggest the strategic plan to achieve the objective and reduce the problems that have been faced by Singapore tourism sector.
In addition to this, the company should develop a strategy to reduce the cost of the operation that will affect the overall profitability of the company. It is recommended that company should reduce the turnover rate to increase the satisfaction level of the employee. Raffles hotel is an attraction point of the Singapore. Therefore, the company should make the strategy to reduce the negative effect on position and sustainability in the tourism sector. The company should maintain their modern customer that will help to increase the spending on the tourism and hospitality service.
Conclusion
From the above discussion, it can be concluded that Singapore is a remarkable country and it was provided great business opportunities with the help of strategic analysis. It can be said that Singapore tourist was a useful element in the country’s growth. The strategic analysis and success of the business in both domestic as well as international market were highly benefited by the flexible government policies of Singapore. In addition to this, it is concluded that the tourism sector is expanding day by day so that it will provide various opportunities to Raffles hotel to expand the business in new emerging markets. The Pestle analysis is used as a environmental scanning component of the strategic management in the tourism sector. It is identified that strategic analysis has been provided a clear view to the organization for their objectives, goals, and techniques to achieve the target.
References
Ajagunna, I. and Crick, A.P., (2014) ‘Managing interactions in the tourism industry–a strategic tool for success: Perspectives on Jamaica tourism industry’, Worldwide Hospitality and Tourism Themes, 6(2), pp.179-190.
Bruni, A., Cassia, F. and Magno, F., (2017) ‘Marketing performance measurement in hotels, travel agencies and tour operators: a study of current practices’, Current Issues in Tourism, 20(4), pp.339-345.
Cadle, J., Paul, D., and Turner, P. (2010) Business Analysis Techniques: 72 Essential Tools for Success. UK: BCS, The Chartered Institute.
Carlisle, S., Johansen, A. and Kunc, M., (2016) ‘Strategic foresight for (coastal) urban tourism market complexity: The case of Bournemouth’, Tourism Management, 54, pp.81-95.
Chang, T.C., (2016) ‘Tourism Unbounded: Mobilities and Border Crossings in Singapore’, Asian Journal of Tourism Research, 1(1), pp.99-124.
Gander, J. (2017) Strategic Analysis: A Creative and Cultural Industries Perspective. UK: Routledge.
Grant, R.M. and Jordan, J.J. (2015) Foundations of Strategy. USA: John Wiley & Sons.
Hargreaves, C.A., (2015) ‘Analysis of hotel guest satisfaction ratings and reviews: an application in Singapore’, American Journal of Marketing Research, 1(4), pp.208-214.
Henderson, J.C., (2015) ‘Destination development and transformation: 50 years of tourism after independence in Singapore’, International Journal of Tourism Cities, 1(4), pp.269-281.
Henderson, J.C., (2016) ‘Halal food, certification and halal tourism: Insights from Malaysia and Singapore’, Tourism Management Perspectives, 19, pp.160-164.
Mennen, M. (2011) Strategic Analysis of the BBC. Germany: GRIN Verlag.
Osterwalder, A., and Pigneur, Y. (2013) Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. USA: John Wiley & Sons.
Purwomarwanto, Y.L. and Ramachandran, J., (2015) ‘ of tourism sector with regard to the global crisis-a comparative study between Indonesia, Malaysia and Singapore’, The Journal of Developing Areas, 49(4), pp.325-339.
Salvioni, D.M., (2016) ‘Hotel Chains and the Sharing Economy in Global Tourism’, Symphonya, (1), p.31.
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