This report briefs the user about the porter’s 5 forces model of high end hotel industry and it also depict about the strategies which would help the comapny to make better decisions about the comapny. This report has been preformed over the High End Hotel Industry of UK. Firstly the power of buyers and the threat of the substitute products have been analyzed and further, the BCG matrix has been analyzed of the comapny. The analysis over the power of the buyer depict that the level of the buyers are quite high and the comapny is required to make some new strategies to make a control over these factors and further the level of the substitute products are bit lower.
Industry overview:
HIGH END HOTEL INDUSTRY of UK is quite competitive. Mainly, it includes the luxurious hotel chains which could be managed by various companies from the decades. The reports over the HIGH END HOTEL INDUSTRY of Uk depict that various changes have taken place into the industry nowdays due to international hotel chains and the external environamwnt of the industry. The hospitality and leisure industry of UK has been enhanced rapidly in terms of market share and the profitability condition of the industry. This HIGH END HOTEL INDUSTRY has strong presence in the UK market. Mainly, this industry has around 1.1 contribution in the total GDP of the country. This industry has expanded its market very rapidly with various new services and the technology. Currently the share of the industry in terms of market base is currently high.
According to a report, the market share and the profitability of the industry is continuously enhancing. The industry is performing its operations very smoothly in the market of UK. The mission and vision of the industry depict that the industry wants to enter various services and enhance their market share. The corporate social responsibilities of the industry are also competitive (Dallas, 2011). This industry uses various new technology and advancement services to attract more customers. And the loyal customers list of the industry is also very high.
Porter’s five forces model is a study which is conducted to analyze the external market and environment of the industry. Porter’s 5 forces model has been studied over the high end hotel industry of UK to analyze the power of buyers and threat of substitute. The analysis over the power of buyers and threat of substitute is as follows:
Power of the buyer is one of the stages of analyzing the external environment of the industry. Power of the buyers could be relatively strong when there are various other hotels and competitors in the market. Mainly, the power of buyers depend over the location as few places have only one hotel or few hotels whereas at some places, various hotels are there even in the same lane (Cravens and Piercy, 2006). It directly depict that if numerous hotels are there in the same area or within a tourist hotspot, the power of the buyers would be greater as the customers would be able to compare the prices, services etc offered by the comapny and at the same time, the prices, promotions and advertisement also affect the power of the buyers.
Power of the buyers is basically relayed to the price changes. Basically, the prices are the main commodity which is noticed by the customers before availing any services or the products. If the prices are continuously raising than also the hotel industry must try to reduce the level of the prices as much as possible. For this, the industry could find many ways such as cheaper services or cheaper suppliers. Now days, it has become very easier for the customers to go online and analyze the best hotel through clamouring the prices, services and the locality of the hotels. Customers need not to go the agents, middle man to analyze that which hotel offers the best services (Dean & Yunus, 2001).
Basically, it is not easy for a hotel company to save itself from the power of the buyers and their bargaining level. For reducing the level of the power of customers, HIGH END HOTEL INDUSTRY of UK could take the help of various strategies and policies. So that the customer level of the industry could be enhanced and the comapny get successful to manage the market share and the profits in the market. Other firm chains may offer various services into lesser prices but the comapny must use some strategies to reduce the level of the power of the customers.
The tourists are the main customers of the hospitality industry. Tourist could take the help of various communication channels in order to analyze the level of the hotel as well as the prices and services of the high end hotel industry and Fairmont hotel of UK. As various hotels are already available in the market of UK with competitive services and the price, the power of the customers has been enhanced. Mainly this power of the buyers has been enhanced due to various websites which assist them to find the best of the hotels. These websites enhance their bargaining power (Walker, Mullins, Boyd and Larreche, 2005).
These procedures shifts the power of the customer to the end users of the services and the products as it has been found through the study of porter that these freedom and the power of buyers directly affect the cost of the comapny, it enhances the cost of shifting the buyer interest. So that a customer’s loyalty towards a single firm is the main thing as if the customer get attached and loyal with one firm that he or she do mouth publicity for the comapny and enhances the market base of the company (Lecalle, 2017).
Threat from the substitute is one of the stages of analyzing the external environment of the industry. Threat from the substitute could be relatively strong when there are various other options available in the market for the customers of the hotel. Mainly, Threat from the substitute depend over the various other options which are available in the market which could be use by the customers to stay, have food and enjoy the luxurious services. It directly depict that if numerous other options are there in the same area or within a tourist hotspot, the Threat from the substitute would be greater as the customers would be able to analyze the other options which would be offered to the them in the lower prices and at the same time, it would affect the prices of the comapny as well as the services of the comapny (Quester et al, 2007).
Threat from the substitute is basically relayed to the charged prices. Basically, the prices are the main commodity which is noticed by the companies before choosing any services or the products from the suppliers. If the prices are continuously rising than the hotel industry must try to reduce the level of the prices as much as possible so that the threat from the substitute could be lower (O’Neill and Mattila, 2010). For this, the HIGH END HOTEL INDUSTRY of UK could find many ways such as enhancing the level of the services in lesser prices. Now days, it has become very easier for the customers to analyze the different substitute through the various online websites and the agents available in the market. Customers are just required to analyze the prices of the substitute products through various online sources and choose the best place to stay and avail the hospitality services (Zeithaml, Bitner and Gremler, 2006).
Basically, it is not easy for a company or an individual to start the business off hospitality as the investment amount is bit higher and the investors are required to check the feasibility of various levels. So it has been analyzed that the threat from the substitute products of the HIGH END HOTEL INDUSTRY of UK is little lower but still the industry is required to manage the strategies and policies to save itself from any substitute product. Other firm chains may come into the market with a great customer base and a new and high market campaign or high formulated internet approach (Pride, 2008).
Basically, the customers of the hotels look for the luxurious stay services and 3meals in a day. HIGH END HOTEL INDUSTRY of UK could take the help of various technology and the advancement products to satisfy the needs and demands of the customers in order to analyze the level of the substitute products as well as the prices of the substitute products which are offered to the customers (Gaughan, 2010). Comapny is required to offer some unique services and the products so that the customers do not think about switching (Jain and Haley, 2009). Mainly this substitute threat level has been enhanced due to various hotel chains which could come into the market of UK at any time to reduce the level of market share of the company.
These procedures shifts the threat of the substitute products to the companies of the hospitality industry as it has been found through the study of porter that these freedom and the threat from the substitute products directly affect the cost of the comapny, it enhances the cost of shifting the buyer interest (Fulin, 2011). So that a customer’s loyalty towards a single firm is the main thing as if the customer get attached and loyal with one firm that he or she do mouth publicity for the comapny and enhances the market base of the comapny. And through thus the level of the threat of substitute products of HIGH END HOTEL INDUSTRY would be lesser.
Strategic business models are the analysis study of the comapny to emphasize of planning on the basis of various strategies for starting and developing the new operations and the activities of the comapny. It is required for every hospitality industry to analyze and prepare the strong strategic business unit to save itself from various level of the risk (Kaufamnn, 2009).
BCG matrix is an analysis matrix which has been created by Boston consulting group to analyze the strategic position of the company’s brand portfolio and the potential of the comapny. It classifies the portfolio of the business into 4 sub categories to analyze the industry attractiveness. The BCG matrix study has been performed over the HIGH END HOTEL INDUSTRY to analyze the strategic position of the company.
(Barney, 2011)
|
Question marks · Low market share · High market growth (Industry is still not aware about the opportunities and their uses; industry is required to enhance the investment.) |
Stars · High market growth · High market share (Doing very well and have great opportunities.) |
|
DOGS: · Low market growth · Low market shares (Industry is weak in the market share and it’s difficult for the industry to make the profits.) |
Cash Cows: · Low market growth · High market share (Industry is doing very well in the market and the industry has limited opportunities.) |
(Atasu, Sarvary and Van Wassenhove, 2008)
Through this analysis, it has been found that the stars of the industry are the advancement services and the technology of the industry. The cash cows of the HIGH END HOTEL INDUSTRY of UK are the places and the location where the hotels are operating its business, the DOGS products of the industry is its food products and the question mark has been put over the policies and global market opportunities (Elmuti & Kathawala, 2001).
Through this analysis, it has been found that the industry is just required to make some changes into the strategies and policies to become more competitive and meet the targets of the comapny.
Conclusion:
According to this study over the high end hotel industry, the power of the buyer depict that the level of the buyers are quite high and the comapny is required to make some new strategies to make a control over these factors so that the comapny would be able to meet the mission and vision of the comapny. Further the level of the substitute products are bit lower in the local market but comapny is required to have some threat with the global companies especially the hotel chains.
Lastly, it has been analyzed that the BCG matrix over the industry depict that the strategic position of the industry is very strong and the industry is just required to make some changes into the policies and the strategic part of the industry.
References:
Atasu, A., Sarvary, M. and Van Wassenhove, L.N., 2008. Remanufacturing as a marketing strategy. Management science, 54(10), pp.1731-1746.
Barney, J. 1991. ‘Firm Resources and Sustained Competitive Advantage’. Journal of Management, vol. 17, no. 1, p. 99.
Cravens, D.W. and Piercy, N., 2006. Strategic marketing (Vol. 7). New York: McGraw-Hill.
Dallas, H,. 2011. “Strategic Management; competitiveness and globalization”. Strategic management, Asia-Pacific 4th ed, pp 434-440.
Dean, E. & Yunus, K. 2001. ”An overview of strategic alliances”. Management Decision, Vol. 39 Iss 3 pp. 205 – 218.
Elmuti, D. & Kathawala, Y. 2001. “An overview of strategic alliances”. Management Decision, vol. 39, no. 3, pp. 205-217.
Fulin, S. 2011. Preface by SHANG Fulin, Corporate Governance of Listed Companies in China, 9-10.
Gaughan, PA. 2010. Mergers, Acquisitions, and Corporate Restructurings, John Wiley & Sons.
Jain, S.C. and Haley, G.T., 2009. Marketing planning and strategy. Cincinnati South-Western Publishing Company 1985..
O’Neill, J.W. and Mattila, A.S., 2010. Hotel brand strategy. Cornell hospitality quarterly, 51(1), pp.27-34.
Pride, W., 2008. Marketing. Cengage Learning.
Quester, P., Neal, C., Pettigrew, S., Grimmer, M.R., Davis, T. and Hawkins, D., 2007. Consumer behaviour: Implications for marketing strategy. McGraw-Hill.
Walker, O.C., Mullins, J.W., Boyd, H.W. and Larreche, J.L., 2005. Marketing strategy. McGraw-Hill Education.
Zeithaml, V.A., Bitner, M.J. and Gremler, D.D., 2006. Services marketing: Integrating customer focus across the firm.
Jain, S,C, and Haley, G,T. 2009. Marketing planning and strategy, Cincinnati South-Western Publishing Company 1985.
Kaufmann, H. 2009. Customer-Centric Marketing Strategies: Tools for Building Organizational Performance: Tools for Building Organizational Performance, United States: IGI Global.
Lacalle, D, 2017. Credit?rating agencies, Life in the Financial Markets: How they really work and why they matter to you, pp,95-98.
Mcleish, B. 2010. Successful Marketing Strategies for Nonprofit Organizations: Winning in the Age of the Elusive Donor, New York: John Wiley & Sons.
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