Premium Essay

Porter's Model Global Hotel Industry

In:

Submitted By etu123
Words 282
Pages 2
Porter's Model Global Hotel Industry

Global Hotel Industry
I. Porter’s Five Forces analysis
Threat of rivalry is high because:
• The most part of the market is controlled by few companies with the same or similar strategy, size and capacity. Big companies around the world such as Hilton Hotels, Four Seasons, etc. have absorbed the little companies and few have remained. (For ex. Multibrand Strategy has been adopted by most of the companies, and this has strengthen the companies who were already strong and weakened the weak ones, at the point that some of them had to exit the market)
• Customers don’t have a really defined preference, so as soon as one hotel stops satisfying their needs or another company offers them a better service or product they’ll switch.
• Companies have to invest in R&D in order to satisfy customer’s needs and to create loyalty.
• The high rivalry in the market has caused an overrated expansion on the capacity and strength of the leaders.
Supplier Power is low because:
• There are different categories of suppliers of products and services in the hotel market supply market so they are segmented and don’t have much power by themselves.
• However they have a strong and good relationship with the hotels (ex. Ritz Carlton alliance with Bulgari) and this helps the Hotels to gain Competitive Advantage. But as suppliers have greater benefits with the hotels than by themselves, they stay with them and are loyal. Hotels may find the way to keep having CA without agreements with luxury suppliers but is better for the luxury suppliers to stay with the hotels as their product is being promoted.
• They cannot threat the hotel with Forward Vertical

Similar Documents

Premium Essay

Porter's Model Global Hotel Industry

...Global Hotel Industry I. Porter’s Five Forces analysis Threat of rivalry is high because: • The most part of the market is controlled by few companies with the same or similar strategy, size and capacity. Big companies around the world such as Hilton Hotels, Four Seasons, etc. have absorbed the little companies and few have remained. (For ex. Multibrand Strategy has been adopted by most of the companies, and this has strengthen the companies who were already strong and weakened the weak ones, at the point that some of them had to exit the market) • Customers don’t have a really defined preference, so as soon as one hotel stops satisfying their needs or another company offers them a better service or product they’ll switch. • Companies have to invest in R&D in order to satisfy customer’s needs and to create loyalty. • The high rivalry in the market has caused an overrated expansion on the capacity and strength of the leaders. Supplier Power is low because: • There are different categories of suppliers of products and services in the hotel market supply market so they are segmented and don’t have much power by themselves. • However they have a strong and good relationship with the hotels (ex. Ritz Carlton alliance with Bulgari) and this helps the Hotels to gain Competitive Advantage. But as suppliers have greater benefits with the hotels than by themselves, they stay with them and are loyal. Hotels may find the way to keep having CA without agreements with luxury suppliers...

Words: 2694 - Pages: 11

Premium Essay

Hotel Stargtegy

...Economic, Social, Technological, Environmental and Legal) Analysis is a tool which is widely used by business managers for analysis of these critical factors. It is very helpful for development of strategic decision making. The Premier Inn’s PESTLE Analysis below critically evaluates and identifies different strategic in a competitive and dynamic environment. Political Positive and pragmatic collaboration with UK Government has brought Hospitality Industry into key success area of economic development in UK. Hospitality is the UK’s fifth largest industry, directly employing more than 2.4 m people and contributing over £34bn in gross tax revenues. As the generator of eight per cent of total employment, the industry is ahead of the financial services, transport and communications, and constructions sectors. Prime Minister David Cameron has recognised that tourism is one of five ‘big-ticket’ industries of the future and one that the government ‘should get behind’ especially as for every 0.5% increase in the UK’s share of the global tourism can add £2.7b to the economy and create 50,000 jobs. He set down two objectives for UK tourism: to recapture a position within the top five tourism destinations in the world measured in terms of inbound revenue (we have slipped to seventh place in recent years); and secondly, to increase to 50 per cent (from 36 per cent currently) the proportion of UK residents’ domestic...

Words: 2436 - Pages: 10

Premium Essay

Hotel Business Plan

...MARKETING PLAN (For 2011 – 2012) THE IMAGERY HOTEL, XYZ CITY, INDIA The presented sales and marketing plan has been worked upon while covering the theoretical knowledge gained during the duration of module. The sales and marketing plan covers only the rooms division strategy due to word count limitation (Revenue aspects such as Food & Beverage outlets, other revenue etc are not being discussed). Glossary at the end of appendices features the key industry specific terms used in the plan. Executive summary The Imagery hotel is an established luxury hotel located in the XYZ city of India. The hotel is part of a renowned chain of hotel. The hotel has been an industry leader in the city since its inception in 1991. The hotel follows the objectives that are consistent with the company’s goals and mission statement. In the year 2011, The Imagery Hotel is targeted to contribute sales revenue of INR 165 Million against a projection of INR 140 Million. The Imagery Hotel, has to further maintain its market leadership in the city by achieving the highest RevPAR Premium. The marketing plan addresses following major attributes: • Growing need to increase the high rated businesses • Increasing the market share • Segment wise in depth analysis to gain competitor’s business • Channel wise in depth analysis to gain competitor’s business • Laying down the processes to ensure the customer is satisfied Introduction The Imagery hotel located in XYZ city offers breathtaking views...

Words: 4101 - Pages: 17

Premium Essay

Hotels

...Back to Hotel Strategic Management 101: An examination of hotels’ implementation of Porter’s generic strategy in China Yin-Hsi Lo, Assistant Professor of Hospitality Management, Southern Taiwan University, Taiwan ABSTRACT The market-position view (MPV) of the firm in Porter’s generic strategy hypothesizes that the exploitation of differentiation and cost-leadership can create competitive advantage for a firm, which then has a better chance of outperforming other firms in a homogeneous industry. However, this notion has not been tested in the Chinese hotel industry. In response to this gap, this study empirically examines the relationships between the generic strategies of differentiation and cost leadership and hotels’ organizational performance. The results suggest that differentiation is the only significant generic strategy that influences customer satisfaction in the Chinese hotel industry. These findings have important academic and practitioner implications, which are then discussed. Keywords: Competitive Strategy, Customer Satisfaction, Hotel Performance, Market Positioning INTRODUCTION There has been a great deal of discussion in the literature about the impressive hotel development in China in the past 20 years (Derbaix & Pham, 1998; Devonport, Biscomb, & Lane, 2008; Echtner & Ritchie, 1993; Fakeye & Crompton, 1991; C Fornell, 1992; Foxall & Goldsmith, 1994; Pine, 2002; Yu & Gu, 2005). Specifically, many interesting issues have become the favorite topics...

Words: 8594 - Pages: 35

Premium Essay

Oyo Market

...OYO ROOMS: INTERNATIONAL EXPANSION MARKET ANALYSIS Hotel brands – a very competitive environment: Internationally, competing on price alone can be a downward spiral, especially when the perception of quality is diminished when a non-staple product is commoditized. In premium markets elements like service, exclusivity, and security come into play. Facilities like pool complexes, spas, gyms, golf and other recreational activities can become expected amenities. Hotel management companies focus managers and budgets to cash flow, profitability targets, and occupation cost demands. However, the industry is changing rapidly, with substitute business models coming up. A Marketline Industry profile of April 2014, described “A new substitute in the form of private rentals, widely available through on line services such as Airbnb and Flipkey is a potential threat to the hospitality industry.” Chains such as Airbnb are described as being an emerging threat to the hotel industry. Airbnb has accomplished more growth than the top 10 global hotel companies have been able to grow in 20 to 240 years. The growth accomplished by Airbnb and OVRP’s regarding numbers of listings and revenue is unprecedented. Airbnb has become one of the world’s most valuable startups within only 6 years. OYO, through its international expansion plans, aims to replicate Airbnb’s success in foreign markets. Porter’s five forces analysis: The hotel industry is a group of like companies providing products and...

Words: 656 - Pages: 3

Premium Essay

Technology in Hospitality Industry

...Table of Contents: Introduction….………………………………………………………………………………..p. 3 Five Forces Model in Hospitality Industry…………………………………………………..p. 4 Top three companies in Hospitality Industry (Hotels)………..…………………………….p. 5 Marriott International, Inc. Comparative Strategy, Value Chains..……………………....p. 7 Differentiation Strategy of Marriott International, Inc……………………….…………...p. 7 Cost Leadership Strategy of Marriott International, Inc…………………………………..p. 8 Value Chains of Marriott International, Inc………………………………………………p. 8 Primary Activities…………………...……………………………………………….p. 8 Supporting Activities………………………………………………………………...p. 9 Business processes………………………………………………………………….p. 10 Conclusion………………………………………………………………………………….…p. 11 References……………………………………..………………………………………………p.11 “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”. (Bill Gates) Introduction. In the today’s world of competitive markets, information technology has a huge impact on the success of the companies. “The role of IT is constantly evolving and has changed significantly from the days when the IT organization was often referred to as “data processing.” Today, in many industries, IT enables some businesses to differentiate themselves from their competitors. Those companies...

Words: 4798 - Pages: 20

Premium Essay

Competitive Adantage

...Internal Business Arrangements Student Name Institutional Affiliation 6. This part focuses on the internal arrangements within the individual businesses you have Investigated — how they organize their businesses to implement their business strategies. Use Porter’s Value Chain Analysis Model to analyze organizations in the industry. The aim here is to explain how different businesses organize their processes to achieve their organizational objectives. You should choose to concentrate on at least two contrasting Organizations in your segment to illustrate competitive responses. Justify your choice. As this question requires some knowledge of internal processes, you may find it difficult to Obtain specific information. Use whatever information is available to you to address this Question as best you can. Porter’s value chain analysis is a model that has been developed by Michael Porter to assist in determination of an organizations competitive advantage. The completion as regards to porter’s model is purely based on the primary and secondary activities (Nicovich, Dibrell, & Davis, 2007). Porter talks of activities that are value added. A deeper search of what Porter really meant to convey is that a product or a service has value addition if it goes through these activities that have been set out. In fact, in accordance to Porter, the activities are different and they perform different roles. Henceforth, the activities are divided into to functional classes; primary...

Words: 2685 - Pages: 11

Premium Essay

Five Forces

...What affect has and what is the future of airline industry To begin with the purpose of the particular essay will intend to give an explanation about the Porter's five forces. However the discourse will focus on the sixth force and what affect has. The first part of the discussion will be analysed and supported by arguments about the meaning of Porter's five forces. Nevertheless examples for the five forces will mentioned in order to support and take thesis in the particular analysis. However examples about the sixth force will be mentioned in order to give the reader a satisfactory explanation and to make clear the effect that have in airline industry. Afterwards the essay will analyse the future of the airline industry. Finally a conclusion gives the reader a summarizing about the aspects discussed on the analysis. The Airline Industry has changed the people’s life. In addition it has drop the travel time and decrease the distances making possible to visit lands that cannot be imagined in the past. Michael Porter had created a model showing the influence on industry by five forces. This model help the managers to understand better the strategic forces that appear on industry and how they affect profitability. Five forces analyzing five key areas namely competitive rivalry, the threat of substitutes, the threat of entry, the power of buyers and the power of suppliers. Furthermore Porter referred to these forces as the micro-environment, to contrast it with the more general...

Words: 2673 - Pages: 11

Premium Essay

Competitive Advantage

...Essential Learning Outcomes in BUSN601 - Global Management Perspective JC American Military University Reflection Essay: A Summary of Essential Learning Outcomes in BUSN601 - Global Management Perspective There were a number of learning outcomes for BUSN601: Global Management Perspective. The topics for this course included: * developing Porter’s Five-Forces Model in a global strategy; * assessment and integration of business functions in an organization; * formulation of essential components of the strategic management process; * assessment of target markets and forecasting of the components of the marketing mix; * assessment of the importance of market research in developing a global initiative * Integrate e-business applications into your overall global initiative. * Appraise how employment law constrains choices for the organization * Relate how regulatory law affects an organization's decisions * Identify and incorporate the key elements of contracts. * Assess the influence of different cultural perspectives on global business operations. * Argue the influence of regional trading organizations on business opportunities and constraints In the following I discuss in summary perspective the key takeaways from this course as well as learning objectives I did not meet. Integrate Porter's Five-Forces Model into developing a solid global strategy. Porter’s five forces model of competitive analysis allows business managers...

Words: 4179 - Pages: 17

Premium Essay

Air Asia

...The Development and History of AIRASIA AIRASIA is one among the top International brand in the low cost Airline Industry. Airasia brand came into existence in 1993, it was a joint public-private sector enterprise, however in 2001 current CEO Mr. Tony Fernandes purchased it and It was under him the Airasia brand got global recognition and unimaginable growth which started right from 2002 and continues till date, AirAsia started moving up the ladder under Tony's leadership from 2002 onwards by launching new routes from its main hub the capital of Malaysia till then the national carrier of Malaysia ruled the sky in and around Malaysia. In 2007, Airasia announced the birth of Airasia X the long haul budget flights, the first AirAsia X flight was from Kuala lumpur International airport to Gold coast in Australia thus began the journey from south east Asia to capturing routes in major cities around the world. In 2007, Virgin Airline chief had 20% stake in AirAsia X and had announced code sharing between Virgin Blue and AirAsia in and around Australian subcontinent. Profile of AirAsia: AIRASIA, is Asia's largest and one among the top 10 international brand in the low cost segment having physical base in three countries; Malaysia, Thailand and Indonesia. AirAsia has four subsidiaries: AirAsia, Indonesia AirAsia, ThaiAirAsia and VeitJet Airasia. The company has a strength of around 3000 staffs and It flies to around 65 destinations worldwide using the 97 aircrafts and another...

Words: 2285 - Pages: 10

Premium Essay

Strategic Advantage and Information Technology

...Economy 3.1 Strategic Advantage and Information Technology 3.2 Porter’s Competitive Forces Model and Strategies 3.3 Porter’s Value Chain Model 3.4 Interorganizational Strategic Information Systems 3.5 A Framework for Global Competition 3.6 Strategic Information Systems: Examples and Analysis 3.7 Implementing and Sustaining SIS Minicases: (1) Cisco Systems/ (2) Aeronautica Civil 89 LEARNING OBJECTIVES 3 After studying this chapter, you will be able to: Describe strategic information systems (SISs) and explain their advantages. Describe Porter’s competitive forces model and how information technology helps companies improve their competitive positions. Describe 12 strategies companies can use to achieve competitive advantage in their industry. Describe Porter’s value chain model and its relationship to information technology. Describe how linking information systems across organizations helps companies achieve competitive advantage. Describe global competition and global business drivers. Describe representative SISs and the advantage they provide to organizations. Discuss the challenges associated with sustaining competitive advantage. ROSENBLUTH INTERNATIONAL: COMPETING IN THE DIGITAL ECONOMY PROBLEM ➥ THEInternational (rosenbluth.com) is a major global player in the extremely Rosenbluth competitive travel agent industry. Rosenbluth’s mission is “to be the quality leader in the development and distribution of global travel services and information.” The digital revolution has...

Words: 18939 - Pages: 76

Premium Essay

Strategic Analysis on City Development Limited, Singapore

...Analysis of External General and Industry Environment……………………………………………. 3 Porter’s Five Forces…………………………………………………………………………………………………….3 PESTEL Analysis……………………………………………………………………………………..……………………4 External Factor Analysis Summary (EFAS)…………………………………………………………….…....5 3. Internal Analysis of the Company………………………………………………………….……………………6 Internal Factor Analysis Summary (IFAS)………………………………………………….…………………8 4. Assessment of Company Performance………………………………………………..………………………9 Financial Ratio Analysis………………………………………………………………………………………………..9 5. Recommendation of Strategies…………………………………………………………………………………15 TOWS Matrix………………………………………………………………………………………………………………15 Recommended Strategies…………………………………………………………………………………………..16 Discommended Strategies………………………………………………………………………………………….17 6. Implementation of the Recommended Strategies……………………………………………….……19 7. Models used for Company Analysis…………………………………………………..…………………..…21 8. References……………………………………………………………………………………………………………....23 9. Appendix………………………………………………………………………………………………………………….24 Executive Summary This report has been executed with an objective of exploring and examining the strategic options ahead of City Developments Limited (CDL), an international property conglomerate firm. The report focuses on the analysis of both the internal environment within the company and the external environment of the industry. To analyze the external environment of the company, I have used Porter’s five forces model and the PESTEL analysis,...

Words: 5173 - Pages: 21

Premium Essay

North American Hotel and Motel Industry Analysis

...Hotels and Motels Industry 2012 Table of Contents SAIA Analysis Summary.................................................................................................................. PART 1: STEP Analysis.......................................................................................... Social and Demographic Analysis...................................................................... Traditional Definition................................................................................. Factors and Influence................................................................................. Example: social and demographical effects in Las Vegas……………... Conclusion.................................................................................................... Technological Analysis........................................................................................ Wireless Internet Service............................................................................ Online Reservations and Customer Reviews............................................ Airline Package Deals................................................................................. Future Hotel Advancements....................................................................... Conclusion.................................................................................................... Economic Analysis.................

Words: 5755 - Pages: 24

Premium Essay

Tasks

...International Journal of Arts and Commerce Vol. 2 No. 11 December, 2013 EFFECTS OF STRATEGIC MANAGEMENT DRIVERS ON ORGANIZATIONAL PERFORMANCE: A SURVEY OF THE HOTEL INDUSTRY IN KENYAN COAST Uzel Jean Mzera Mutindi 1 PhD Candidate at JKUAT, MSA CBD, Kenya. Contact: jeanmzera@yahoo.com Prof. G.S. Namusonge, PhD 2 Full Professor, EPD JKUAT, Kenya. Contact: gsnamusonge@yahoo.co.uk Dr. J. Obwogi, PhD 3 Technical University of Mombasa, Kenya. Contact: Josephobwogi@yahoo.com ABSTRACT This study seeks to examine the effects of Strategic Management drivers on the performance of classified hotels in Kenyan Coast. The specific objectives are the effects of: customer relationship management strategy, strategic planning, competitive positioning, information communication Technology and organizational learning on the performance of the hotel industry in Kenyan Coast. The study seeks to determine the conceptualized Strategic Management Drivers’ influence on the performance of hotels in Kenyan Coast. The study will adopt a mixed research design which will be both quantitative and qualitative. The target population of the study will be 180 managers of classified hotels in Kenya’s Coast. The sampling technique to be used will be stratified random sampling. Secondary and primary data will be collected using a self administered questionnaire. The questionnaire will be piloted in order to check for validity and reliability. Questionnaires will be administered through...

Words: 11117 - Pages: 45

Premium Essay

Strategic Management

...geographies and how much to invest in each business so as to maximise its long-run profitability? First, after giving the mission and vision of the company, we discuss the internal and external environment with relevant models. Secondly, the design formulation of the business portfolio strategy to answer our question and thirdly, we give a conclusion. This approach will help the corporate parent to use its core competencies in an effective and efficient manner to help its multi-domestic strategy to earn above-average returns. WHITBREAD ENVIRONMENT ANALYSIS 1. INTRODUCTION Established in 1742, Whitbread is one of the UK’s oldest and well-respected companies. The story really begins in August 1720 with the birth of Samuel Whitbread, who began his brewing apprenticeship in 1736, then founded his first brewery six years later. In 2001, Whitbread become the company it is today. They sold their breweries and left the pub and bar business, refocusing on the growth areas of hotels and restaurants. Their reinvention as the UK's leading hospitality business naturally coincided with the ending of this country’s brewing and pub-owning tradition, started by Samuel Whitbread over 250 years earlier. Now Whitbread is the UK’s biggest hospitality company, it has got the UK’s no. 1 hotel brand, Premier Inn and the no.1 coffee shop brand, Costa. Also very proud of their much-loved restaurants, Brewers Fayre, Beefeater...

Words: 4355 - Pages: 18