The external and the internal factors play a major role in affecting the overall functioning of the organizations. Companies should be able to predict future changes accordingly and bring up new modifications in their business model to overcome these challenges. There are several competitors operating in the industry so it is very important for them to bring up new changes and have a competitive edge in the market (Chang, Ku & Chen, 2019). This will not only help them to attract new customers but also make sure that they are able to retain their loyal customer base too. Some of the most common frameworks used by the companies include the SWOT, PESTLE, and Porter’s five forces model. This helps the companies in acknowledging their strengths and weaknesses and utilizing them for grabbing opportunities. Lastly, the companies get detailed information about the latest market trends and strategies their business model accordingly to overcome these challenges.
The SWOT analysis helps the company in identifying its strengths and weaknesses which ultimately helps the company to tackle the opportunities and threats in the near future. The strengths and opportunities of Hilton hotels are as follows:
There are certain political implications introduced by the government in Australia. Hilton hotels should be fulfilling those obligations for smoothly functioning in the markets of Australia. These include payment of taxes, fiscal policies, and trade tariffs.
Australia has been the 14th largest economy in the world. The pandemic had a relatively lesser effect in Australia in the year 2020. As per the statistics, it is expected that the GDP will grow by 3.1% by the year 2022 (Christodoulou & Cullinane, 2019). Thus, the chances of growth of Hilton hotels in relatively higher in the near future and should focus more on retaining their loyal customers.
The standard of living of individuals in Australia is relatively higher in terms of wealth, education, and quality of life. The life expectancy of men is around 80 years while it is around 84 years for women (Racz et al., 2018). The individuals have a preference to lead a sophisticated life and hang out with their loved ones. Thus, it is a great opportunity for Hilton hotels to expand their business in a highly emerging Australian better market.
Australia has been one of the most technologically advanced countries in the world. The country has been found with huge growth with the adoption of the new technology. The individuals are also familiar with the new technologies trending in the market (Capobianco et al., 2021). It would be better for Hilton hotels to invest more into digital platforms for providing the customers with a better experience. Thus, the adoption of the latest technology will enhance Hilton Hotels’ growth in the future.
The Australian Government has formulated some of the laws such as fair trading law, competition law, and consumer laws. Hilton hotels should comply with all these formalities for having a smooth operational experience in the markets of Australia. The company should fulfill the Fair Work Act 2009 that focuses on employment in the country (Nandonde, 2019). On the other hand, private laws describe the rules and regulations handling the personal information of the customers.
This is the last element under the PESTLE model which focuses on the betterment of the environment in which the companies are operating. Australia has been well known for three beauty of nature with stunning beaches, mountains, and forests. Hilton hotels should focus on engaging in waste management activities that will enhance the external environment (Saudi et al., 2021). Lastly, the company should focus on implementing some of the innovative Corporate Social Responsibility practices for the overall growth of the external environment.
The rivalry among the premium hotels is huge due to the alternative brands operating in the market. Hilton hotels face huge competition from Marriott, Sheraton, Hyatt Regency, Westin, Radisson Blu, and other premium segment hotels in the market. Thus, Hilton hotels had to completely bring new innovations in their service quality according to the needs and wants of the customer (Bruijl, 2018). This is how the company is able to handle the pressure in the market and mark its dominance in the hotel industry of Australia.
The bargaining power of the suppliers of Hilton is comparatively low. Hilton purchases their products from more than 4000 suppliers globally which automatically decreases the bargaining power of the suppliers (Irfan et al., 2019). This is because of the lack of uniqueness of the products and services that are being offered by Hilton hotels. Even also the order volume of the Hilton suppliers is paramount and thus there are no chances of supplier switching costs in the majority of the cases. Thus, the suppliers have less or no bargaining power from Hilton hotels.
The threat of substitutes in the hotel industry is not significant. In the case of Hilton hotels, the direct substitutes include individuals staying in friends’ or relatives’ homes or rather renting some apartments for a short period of time. Even also the arrangements of these are very time consuming and the customers have to face several complexities in doing this. Hilton hotels are also installed with the latest technology that provides video conferencing facilities to the customers.
The threat of new entrants is very low in the hotel industry. This is because the capital expenditure related to it is very high which almost makes it difficult the entry of the new hotels and compete with these premium hotels. So Hilton hotels are less affected through the entry of new hotels in the industry. On the other hand, economies of scale are fairly difficult to achieve in this industry. This helps those companies to have a cost advantage that is operating with large capacities (Uçmak & Arslan, 2012). This ultimately results in increasing the cost of production for the new hotels in the industry.
Hilton belongs to one of the premium hotels in the service industry. So, the buyers have few firms to choose and thus they do not have any proper control over the prices. Thus the bargaining power of the buyers is very low in the case of the hotel industry which results from product differentiation and few organizations being available to the buyers.
Conclusion
Thus it can be concluded from the above analysis that it is very much important for the companies to address the changes in the external environment and bring modifications according to it. This will help them to gain more market share and ultimately help them to survive in the long run. So the factors of the internal and external environment play a major role in fulfilling the requirements of the market.
References
Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). SWOT analysis applications: An integrative literature review. Journal of Global Business Insights, 6(1), 55-73. https://www.doi.org/10.5038/2640-6489.6.1.1148
Bruijl, G. H. T. (2018). The relevance of Porter’s five forces in today’s innovative and changing business environment. Available at SSRN 3192207.Available at SSRN: https://ssrn.com/abstract=3192207 or https://dx.doi.org/10.2139/ssrn.3192207
Capobianco, N., Basile, V., Loia, F., & Vona, R. (2021). Toward a Sustainable Decommissioning of Offshore Platforms in the Oil and Gas Industry: A PESTLE Analysis. Sustainability, 13(11), 6266. https://doi.org/10.3390/su13116266
Chang, Y. C., Ku, C. H., & Chen, C. H. (2019). Social media analytics: Extracting and visualizing Hilton hotel ratings and reviews from TripAdvisor. International Journal of Information Management, 48, 263-279. https://doi.org/10.1016/j.ijinfomgt.2017.11.001
Christodoulou, A., & Cullinane, K. (2019). Identifying the main opportunities and challenges from the implementation of a port energy management system: A SWOT/PESTLE analysis. Sustainability, 11(21), 6046. https://doi.org/10.3390/su11216046
Irfan, M., Zhao, Z. Y., Ahmad, M., Batool, K., Jan, A., & Mukeshimana, M. C. (2019). Competitive assessment of Indian wind power industry: A five forces model. Journal of Renewable and Sustainable Energy, 11(6), 063301. https://doi.org/10.1063/1.5116237
Ma, R. (2021). Human resource management in multinational companies——from the perspective of Hilton Hotels. In E3S Web of Conferences (Vol. 235, p. 02058). EDP Sciences. https://doi.org/10.1051/e3sconf/202123502058
Nandonde, F. A. (2019). A PESTLE analysis of international retailing in the East African Community. Global Business and Organizational Excellence, 38(4), 54-61. https://doi.org/10.1002/joe.21935
Racz, L., Fozer, D., Nagy, T., Toth, A. J., Haaz, E., Tarjani, J. A., … & Mizsey, P. (2018). Extensive comparison of biodiesel production alternatives with life cycle, PESTLE and multi-criteria decision analyses. Clean Technologies and Environmental Policy, 20(9), 2013-2024. https://doi.org/10.1007/s10098-018-1527-1
Saudi, M. M., Ahmad, A., Liki, M. N. M. M., & Husainiamer, M. A. (2021, December). Risk Management Using PESTLE: External Factors Trigger COVID-19 Transmission. In 2021 International Conference on Intelligent Cybernetics Technology & Applications (ICICyTA) (pp. 34-39). IEEE. 10.1109/ICICyTA53712.2021.9689153
Uçmak, F., & Arslan, C. (2012). The impact of competition conditions on new market entrants in Istanbul hotel industry: an analyse by using five forces of competitive position model of M. Porter. Procedia-Social and Behavioral Sciences, 58, 1037-1046. https://doi.org/10.1016/j.sbspro.2012.09.1084
Vlados, C. (2019). On a correlative and evolutionary SWOT analysis. Journal of Strategy and Management.
https://doi.org/10.1108/JSMA-02-2019-0026
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