In this report, strategic management analysis has been done to evaluate the potential positive and negative factors of the selected country. This report is divided into following parts with a view to assessing the potential outcomes of the particular country which could be used by Dalata Hotel Company to expand its business. In the starting of this report, general external environment assessment has been done. After that, competitive environment of the particular selected country will be taken into consideration. Dalata has the international business chain and offers several tours and travel packages to clients.
Canada’s economy is highly dominated by the service sector which approximately contributes around 70% of the total GDP of the country. The major contributors to these sectors are financial sectors, tour and travel industry and education sector. In addition to this, energy sector also provides 10% of the world oil reserve in the Canadian economy. However, in order to assess the viability of Canada for the tours and travel business, management of Dalata needs to assess all the macro factors of the business.
Political factor
The political pressure in Canada is quite low. As per the views of the political and economic risk consultancy, it is reflected that Canada enjoys the lowest political risk in the continent. The political factor of Canada is more stable which resulted in peace and independent business functions of other organization. However, the government of Canada put high tariffs and traits on the entrepreneur who wants to start up their new business in its economy. However, Dalata Hotel could set up its business in Canada by entering into joint ventures and strategic alliance with the existing business units of Canada. It will be easy for the Dalata Hotel to tap the Canadian Tours and travel industry.
Economic factors
The economics of Canada is vibrant free- market economy. It is developing at a very fast pace. The GDP per capital of Canada is 42,157.93 USD (2016) which is 15% higher as compared to last five year data. The national income is also 1.58 lakh crores which reflect high purchasing power parity of clients in the market. Dalata Hotel has high potential in the Canadian market to increase high turnover. Nonetheless, as compared to other countries, people in Canada are more inclined towards the high quality of services and tour packages. Therefore, Dalata Hotel needs to come up with the advanced and high-quality tour packages in the market to attract clients in Canada. There are some constraints of Canada which could be faced by Dalata Hotel such as labor shortage, rising labor cost, the decline in productivity and tough legal compliance program. The Canadian International Figures that were recorded in 2015 reflects that there was more than 13% decline of the people traveling abroad from Canada due to non-effective tour packages.
Social factors
It is analyzed that socially, Canada is like any other North American countries. It follows sophisticated life standards and economic policies and work policies are designed with a view to allowing people to live their life. The social value, perception, belief, and culture of people in Canada are more open and they are more inclined towards trying new things. If Dalata hotel wants to grab the Canadian market then it will have to come with the customized tours and travel packages in the market to attract clients. However, Dalata Hotel could set its tours and travel packages high as people up there are less concerned about the price and cost of the tours packages. In Canada, People are more concerned about the safety security. Therefore, Dalata needs to focus on development of tours packages which are high in security and safety.
Technological factor
The main reason behind the superior lifestyle of the people in Canada is based on the advancement of technologies in the country. With the adoption of 4G networks and development of technologies, communication and connectivity among the people have tremendously increased. The IT infrastructure in Canada is praiseworthy. It is evaluated that if Dalata Hotel wants to tap the Canadian market then it will first have to use online cyber computing system to promote its tours and travel packages. Most of the people in Canada are active on the social media and other apps which could be used by Dalata Hotel to promote its tours and travel packages. The Canadian government is also promoting organizations which are indulged in using advanced technologies in their business functioning.
Legal factors
The government of Canada has the view that growth of the tours and travel industry depends upon the transparent and favorable legislation. It has issued certain legal, regulatory and business setting compliance programs to support the tours and travel industry development and economic growth. The legal compliance of Canada is stable and promotes organizations to follow liberal policies and program. There are several legal laws which need to be complied by the organization running the business in Canada such as Tours and travel law, property law, patent act and corporation laws and regulations.
Environmental factors
The environment of Canada is more positive and pollution free which offer the more positive environment for the organization to set up new business. It is evaluated that with the positive environmental factors, it would be easy for the Dalata Hotel to start up new busienss in Canada. However, in spite of easy availability of the resources and raw material, Dalata Hotel has to invest high amount of investment for arranging employees in business (Baños-Caballero, García-Teruel, and Martínez-Solano, 2014).
After analyzing all the details and positive and negative factors of Canada, it is inferred that Dalata Hotel should consider all the legal factors before entering into that particular country. Dalata Hotel needs to establish a proper corporate governance program before starting up new business in Canada. Nonetheless, it also has to prepare customized tours and travel packages to attract more clients. Dalata Hotel should focus on using the Price Skimming strategy but at the same time, the quality of the tours and travel packages should be high (Grant, 2016).
This research analyses the tours and travel industry in Canada by using the Michel Porter’s five forces model (Mak, 2015).
Bargaining power of buyers- It describes the market of output. In the tours and travel industry, customers are more inclined toward the high quality of the tour packages which are customized as per their needs and demand. It is analyzed that if data hotel does not provide a high quality of tours and travel packages to the people in Canada then it may destruct its business in the very short span of time. In addition to this, tours and travel industry in Canada has several tours and travel operations such as Carnival, Marriott, Taj, and TUI. The junior and senior class trip market in Canada is highly dominated by the services offered by TUI group. If Dalata Hotel wants to establish its business in Canada then it will first have to scale up its services as per the tour packages offered by TUI. It could be inferred that power of Buyer is quite high in Canada.
Bargaining power of Suppliers- It is observed that in tours and travel industry, suppliers would be those who would provide the services to Dalata Hotel such as Jump street tours services, guides and Breakaway tours and travel service providers. In Canada, availability of the human resources is very low. Therefore, it has to outsource its several services to other existing business organization. It may require the high amount of cost of capital to establish the strategic alliance with these competitors. Therefore, it could be inferred that power of suppliers in Canada is quite high (McKercher, Mak, and Wong, 2014).
The threat of substitute’s product
It is evaluated that industry profitability of Canada is quite high. The threat of substitutes of Tours and travel packages would be affected by the other substitute products in the market. In Canada, there are several small amusement parks which are attracting potential clients and allowing them to choose these small park visits. These may be the high threat for the Dalata Hotel to sustain its business in Canada (Garibaldi, et al. 2017).
The rivalry among competitors
There are several rivals in Canada market which have gained potential market share such as TUI group, Taj and Marriott Hotel group. These all groups are offering the customized high quality of tours and travel services to attract more clients. If Dalata Hotel Group wants to give tough completion to these tours and travel business group then it will first have to match the quality scale to these groups offering. The rivalry among competitors would be high (Sung, et al. 2016).
The threat of new entrants
The threat of new entrants in the tours and travel business in Canada is very low. It will require the high amount of fixed capital investment which will be hard for the new entrants to invest in the particular span of time. Nonetheless, new entrants would also have to invest the big amount to establish the strategic alliance with other rivals in the market to set up tours and travel business. Therefore, it could be inferred that threat of new entrants in Canada tours and travel market would be low (Bellur, et al. 2015).
The internal analysis is implemented to evaluate the basis and specific resources of Dalata Hotel group. The resources audit is the process of going through everything and evaluating the available resources company has to run the business. There are several resources which Dalata Hotel has in its business (Becker, 2016).
Physical resources
Dalata Hotel has more than 40 hotels around the globe. It has established proper communication channel which connects all of its units around the globe. In addition to this, more than 4000 employees are having expert’s quality to provide best tours and travel services to its clients. Some of the employees could be promoted to Canada branch to offer quality services in the Canadian market (Smith, 2014).
Financial resources
The total turnover of Dalata hotel is €225.7m which increased by 158% since last two years in 2017. It is evaluated that company has the strong financial position which may allow it to set up new tours and travel units in Canada Market.
Human resources
The management of the Dalata is highly professional and endeavor towards molding all the employees to render the best quality of services to its clients. The management of Dalata establishes complete nexus with the organization development with the employee’s growth. The main aim of the company is to encourage, explore and collaborate with the employees in the business process system.
The main specific resources which Dalata hotel has is related to its intangible assets such as reputation, length of services, intellectual property. It is analyzed by assessing the past data that company has been performing well in the market whenever it taps the new market through its intangible assets. These resources assist the company to tap the new market and win the trust of clients through its brand image and quality services (Chen, et al. 2016).
The core competency of Dalata Hotel is based on the quality of the tours and travel services in the market. It has been following product differentiation strategy to develop a core competency in the market. It is observed that Company has a strong brand image and also providing a high quality of tours and travel services around the globe at very low cost. The combination which Dalata Hotel group has set up in its packages is incredible and attracts more clients in the market. However, it is hard for others to copy this strategy due to their several restrictions. The business chain of Dalata Hotel is associated with the cyber computing system which increases the communication channel in all of its units (White, Sondh and Fried, 2015). The core competency of the Dalata increased when he bought Cork hotel for €10.2m. It resulted to its core competency in becoming the third biggest in the city centre with 165 bedrooms.
In order to assess the competitive strategy of Dalata in context with Canada, Bowman’s Strategy Clock model is used. This model is used to explore the options for the strategic position i.e. how tours and travel packages and services offered by Dalata would be positioned to establish a most competitive position in the market.
Source-https://www.google.co.in/search?q=Bowman%E2%80%99s+Strategy+Clock+of+dalata&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwihscaz2ovaAhVKK48KHZdsAuQQsAQIJw&biw=1366&bih=588#imgrc=uWOy7ap7tFMUpM:
Low price and Low value added (Position-1)
Dalata needs to keep its tours and travel price as low as it could so another rival could undercut its offering in Canada market. It will add low value to clients in short term.
Low price (Position-2)
It is related to developing cost leadership strategy in Canada Market to grab potential clients.
Hybrid (Position-3)
Dalata Hotel could also follow cost leadership and product differentiation strategy to win the Canada Tours and travel market.
Differentiation (Position-4)
This strategy will be followed by Dalata to offer high quality of services and add value to clients through its unique tours and travel packages (Sovani, and Jayawardena, 2017).
Focused differentiation (Position-5)
It is related to following the price skimming strategy to keep the tours and travel packages price high and offer the perceived value to customers for their better satisfaction.
Risky high margins (Position-6)
This strategy will not be followed by Dalata in the starting. However, if the risky high margin is followed by Dalata then it will increase the overall return on capital employed in determined approach.
Monopoly pricing (Position-7)
The monopoly pricing strategy will be negative for the business. If Dalata would follow monopoly strategy then it will be negative for the business and will put the negative impact on its brand image in the market (Vogel, 2016).
Loss of market share (Position-9)
This position of Dalata Hotel would be considered as a disaster in a competitive market. In this strategy, Dalata Hotel would offer a product with the high and at the same time will give less perceived value to clients in the market.
After analyzing the strategy clock, it could be inferred that Dalata needs to follow only position-1 to 5 to win over the Canada market. However, rest of the position will showcase that Dalata Hotel would be highly uncompetitive position (Williams, and Best, 2014).
Conclusion
After analyzing all the details and influencing factors of Canada, it could be inferred that Canada is the most suitable place for the Dalata to expand its business. However, the human resources would be comparatively high but due to the high inclination of clients toward the best quality of tours and travel packages, Dalata could easily win over the market. In addition to this, stable legal compliance and governance programs will promote organizations to expand its business in this region. Now, in the end, it could be inferred that Dalata should expand its business in Canada market by following two strategies named cost leadership and product differentiation strategy (Wong and Li, 2015).
References
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