Strategic management is said to be the procedure through which policies and strategies are converted into actions with the help of programs of development, procedures, and budgets (Shimizu, 2012). It can be further identified as the objective of the company should be recognized to create such plans and policies. Global Strategic management provides a perfect vision for the outcome of globalization in the organization management and therefore it requires that the executives must reply in the similar great intensity to gain benefits that arise with it (Frynas and Mellahi, 2015). This report is being prepared in order to present the organizational strategies of one of the subsidiaries of Intercontinental Hotel Groups i.e. Crowne Plaza and identifying the issues that it faces such as increasing competition.
Crowne Plaza is the subsidiary of InterContinental Hotels Group and is the multinational chain offering complete services luxurious hotels. The hotel has its headquarter in the United Kingdom. The group offers its services to the conventions and meeting markets, and business travelers. Under this brand, there are around 410 hotels worldwide in 52 countries.
The mission of Crowne Plaza is to make a flourishing community to confirm depiction in the owner’s associations and with IHG. Along with this, the company tries to grab the growth and development opportunities and nurture collaborative relationships (IBM, 2018).
The vision of Crowne Plaza is to become a top company in the world. They are concentrated towards their strategic significances to determine the market share and recover margins and set positive industry trends (IHG, 2010).
Crowne Plaza is one of those hotels of InterContinental Hotel Group which only focuses on the luxury and offering comfort to the customers. Today also brand does not compromise in their services and products quality. Whenever the brand Crowne Plaza comes into the thoughts of the customer they start thinking of the luxurious hotel at affordable price. However, they not just target the luxury market but offers luxury amenities to let the customer feel that they are very important for the company (IHG, 2018). Hence, the Crowne Plaza’s positioning in the present environment is as a luxurious services and amenities offering hotel.
VRIO Framework is utilized to access different external and internal competencies and the company’s resources. These factors support a company in attaining different defensible competitive advantages. This theory is based on four factors such as
Valuable- This factor talks about the value of the resources. The resources of the Crowne Plaza helps in adding value to the performance and offer various opportunities. The executives of the hotel can simply enhance the perceived value of the customer with this theory.
Rare- The rare resources of Crowne Plaza are its employees and luxurious amenities which help it in being differentiated from its competitors in the market. With the help of these resources, Crowne Plaza is able to gain competitive advantage.
Costly to Imitate- The resources of the Crowne Plaza is very difficult for its competitors to imitate at low cost. The strategy of Crowne Plaza is to offer luxurious amenities to its customers at an affordable cost which cannot be copied by any other company because it can result in increasing the cost of the offering.
Organized to capture Value- The management of the Crowne Plaza is skilled and responsible to organize the processes operating in the company. They manage all the resources, strategies and policies such that they can offer a range of products and services to the customers.
Crowne Plaza’s value chain analysis recognizes the activities of business that can make competitive advantage and value for the company. The value chain framework splits activities of a business into two types: support and primary activities.
Primary Activities
Inbound Logistics
Crowne Plaza’s inbound logistics signifies an extremely cultured system that confirms smooth processes in 400 hotels in 52 countries all over the world. Crowne Plaza procurement group totals purchasing into national contracts for its numerous brands and allows native providers. Crowne Plaza’s inbound logistics and supply chain management are exclusive in a manner that the business performs directly with the suppliers, and then discusses mark-ups with distributors that manage delivery and warehousing (Stone breaker racing, 2017).
Ownership segment- This segment is involved of 400 hotels with 112,317 rooms that are leased by Crowne Plaza.
Management and franchise segment involves 845 hotels with 2,412 rooms. All these are leased by the group InterContinental Hotel Group. The groups have also licensed its brand to different franchises. The Group has franchised 4,321 hotels with 542,650 (IHG, 2018).
Normally, outbound logistics means the activities essential to provide the completed goods to the consumer. Crowne Plaza outbound logistics is related with the competitive advantages like service delivery of supreme standards, the delivery of conveyance services to consumers going out to the hotel.
Crowne Plaza practices of sales and marketing rely on the application of various components of the marketing communication mix in an integrated manner. IHG Group hires around more than 600 sales professionals from around the globe. The sales team of IHG Groups is allocated with the responsibilities of soliciting bookings from leisure travelers and business travelers, conventions, and travel agencies. In 2017, Crowne Plaza received the overall revenues of approx. 4.3 billion U.S dollars which are a 2% increase from the revenue of 2016 (Statista, 2017).
Service with high quality is the major sources of Crowne plaza’s competitive advantages. Customer service team of Crowne Plaza are fluent in various languages. The customers can avail services through Twitter and social media.
New entrants in the market of America bring innovation to stay, new methods of performing activities and increase pressure on Crowne Plaza through the strategy of decreasing the cost, new customer value proposition, and pricing strategy. Crowne Plaza needs to handle all these challenges and create barriers to defend its competitive edge.
Every hotel or company of this industry purchase their raw material from different suppliers. Suppliers at the dominant place can reduce the profit margin that can be earned by the Crowne Plaza in the market. The suppliers that are powerful utilize their power of negotiation in order to get higher prices from the companies in the field of lodging. The total influence of the higher bargaining power of supplier is that it decreases the profitability of lodging.
Buyers mostly demand maximum benefits. They always want to purchase the best possible products or services accessible by paying least prices as possible. This increases the pressure on the profitability of the Crowne Plaza in long-term. The powerful and smaller base of customers of the company increases the customer’s bargaining power.
The time new product fulfills the similar needs of the customer in a diverse way, the profitability of the industry suffers. For instance services such as Google Drive and Dropbox are said to the substitute to the drives of storage hardware. The substitute product threat is very high if it provides a value proposition which is exclusively different from the current industry offerings.
It the competition between the existing companies in the industry is penetrating then it will result in decreasing the prices of the product and also reduces the industry’s profitability (Fern Fort University, 2018). Crowne Plaza faces huge competition from its competitors such as Marriot International, Hyatt, and Hilton Worldwide.
The United States of America is known as the world’s second-largest democracy. The political climate of the country is stable, though there are some challenges faced recently. The USA promoted the democracy in the whole world. With the advanced infrastructure, technology, and stable political environment it encourages new business ventures and international firms to commence their business in the country in order to increase the GDP.
The United States of America possess the world’s largest economy in relation to nominal GDP. It is the same country from where firms like McDonald’s, Apple, Google, Coca-Cola, Marriot, Facebook, Subway, etc. are creating and leading the world’s social-economic discussions. However, in the USA there is less availability of cheap labor as compared to India, Mexico, and China. Hence it results in affecting the profitability of the business such as Marriot, Crowne Plaza, etc.
The United States of America is known as the world’s third popular country with an overall population of around 326 million. The system of education of the country is excellent same as its health care system. The citizens of the country are very much health conscious and they have a fixed mindset that fast food results in illnesses and obesity (David, 2017).
The United States of America is known as the worldwide leader in technology and science. The country is at the pole position in terms of applying and adapting the technologies in an extensive range of fields. Technologies have altered the methods of various things that are being performed. Various jobs have renovated from the United States of America to other various countries and facilities of manufacturing have been repositioned.
Every USA state possesses their own legal schemes and structures of government. Businesses derived under the governing environment of each state in which they are performing the activities. The country offers equal treatment to the foreigners and nationals.
In the USA there is diverse wildlife, climate, and geography. This diversity captures and attracts millions of tourist to the country which results in increasing the business and income of hospitality industry. However, country deals with world’s toughest conditions of weather.
Asset-Light model of business- The hotel is executing this strategy by accepting most of the business model in the US. Through this, the company is gradually becoming cash generative, asset free business.
Wide Geographical Presence- The IHG Group and Crowne Plaza have its existence in around 100 and 52 countries respectively. The group has total open rooms of around 87% and pipeline rooms of around 89% in major markets such as US, Germany, Greater China, Russia, Middle East, Indonesia, and the UK.
Poor systems of information security- Recently in 2017 the whole group was attacked by a malware virus in which 12 hotels were affected in 1200 locations. On the other side the USA market is advanced in technology if the company will not install advanced technology into the system then it has to face huge losses in this market.
Dropping of market ranking- After the merger of Crowne Plaza’s competitor i.e. Marriott with Starwood, the company was demoted to the 3rd rank worldwide with Hilton at first position and Marriott at the second position (S&P, 2017).
The Crowne Plaza hotel has various opportunities in the USA market such as increasing number of tourist to the locations which help in increasing the customer base, and revenue of the company. The advanced Technological environment of USA offers greater opportunities for the company to upgrade technology into their system. If Crowne Plaza will update its technology then there will be fewer chances of leaking of information or destroy of information due to any virus.
Unprecedented events- Events such as terrorist attack, wars, epidemics, accidents related to travel, civil unrest in the USA market can decrease the international as well as domestic travels.
Besides having a good stake and effective brand positioning in the USA market, Crowne Plaza is dealing with some issues that can become a disadvantage to grow and achieve the organizational goals. In order to overcome those issues, Crowne Plaza can follow some activities such as:
Conclusion
In the conclusion, it can be said that Crowne Plaza is performing extremely well by targeting the business class travelers and offering them luxurious amenities worldwide. The hotel possesses effective brand positioning in the market. In the USA market company is facing huge competition from Marriott International in terms of technology and marketing strategies. The above report has highlighted the environment analysis of host country i.e. USA and issues that it faces in the market and recommendations have been provided that will help in overcoming those issues and challenges.
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