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Introduction To Strategic Thinking
Business needs a strategy that will ensure success of company in future. Strategic thinking is a process of identifying, imagining and understanding possible environment of organization. It helps management to position the company effectively in the external environment. The report aims to analyze micro and macro environment of leading UK hotel named Hoxton hotels. It also describes how the business can use its resources efficiently in order to enhance the competitive positioning.
External Analysis Of Hoxton Hotel, Shoreditch
The Hoxton hotel is one of London’s leading, independent and boutique hotel situated at a place lesser than 1 mile from London’s Liverpool Street. The hotel is design oriented that has 208 designed rooms which are operated by Soho House Group and offer contemporary accommodation.
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Macro environment analysis
The political environment of country affects the business of Hoxton hotel. The regulations over the country by the political parties decide the success of business. Business has to face ups and downs according to political environment as rules and regulations created by politicians decide cost of running a business and the way it can market products and services. The hotel business had to take permission from government to operate the business. The hotel construction site, availability of policies forces to ensure security in cities, investment incentives, education priorities, budget conditions and plans; these all cases are influenced by the political environment.
The economic environment impacts business. The factors which influence the operations of Hoxton business are size gross domestic product, per capita income of individuals, inflation rate, , interest rates change, Foreign trade deficit or surplus, employment opportunities , rates of saving and investment.
Changing life styles & living standards of people are the major causes of cultural change around the world. Customers prefer low cost products/services with highest standard of value for money. There are many factors which influence social culture of Hoxton hotel such as extensive geographic coverage of the hotel network, online reservation systems, variable room rates, security, service quality standards, discount and promotion offer and pre customer feedback. The business has to focuse on customer satisfaction and keeping restorative business strategy with changing social values and customer preferences.
Technological changes in the service operations influence the business. The use of latest technology helps business to maintain smooth functioning across the region. As Hoxton is an independent boutique hotel is has to focus on comfort of customers and centralized supply chain management systems. The online reservation service of business is available and online system to maintain database of customers helps to promote new product in order to attract the customers.
The natural environment in which business operates affects the business operations. Now a day’s customers are more concerned for the organizations which care about the environment and adopt business operations which help in reducing pollution and proper waste disposals. The Corporate Social Responsibility (CSR) is one of the major core competencies of Hoxton hotels as they are making significant contributions towards the betterment of society. So environment and social responsibility are considered as major factors to attract potential customers as well as to retain existing ones.
The rules and regulation created by the legal bodies have an impact on business. Business has to follow the industry operation laws. Increment in minimum wage rate could increase operating cost of budget. Hoxton has maintained high standard and has developed a Responsible Sourcing Policy in order to avoid the legal issues ( Barnard, 2012).
Threats of new entrance: The threat of new entrance is very low for Hotel Hoxton because it may need large capital, initial investment and build up image of the hotel against the existing brand. The customer likes to visit a hotel which is well known so it is difficult for new entrants to join the market and snatch the customer loyalty. It can become competitive advantage for Hoxton business and give the opportunity to operate and survive in London’s hotel business (Kotler, Bowen and Makens, 2003).
Bargaining Power of Suppliers: The suppliers for the hotel are developers, interior designing companies, marketing companies and industry consultants. In the industry, where hotel operates huge manpower is needed to run business and provide services to consumer, so hotel staff members are main suppliers. The hotel provides attractive monthly income and bonus scheme. Besides, business has high bargaining power from suppliers. Employees can easily switch to other option. So for Hoxton, bargaining power of supplies is very high ( Barnard, 2012).
Competitive Rivalry: Hilton is operating in service industry. It is very difficult to gain customer delight. If customers are not happy with the service they can switch to other company. The company has many competitors such as Sunway, Marriott, Hilton and few other international hotels. All of them have been dominating the company’s market for a long time. This had made the competitive rivalry high for Hoxton and also had increased the intensity of competition between firms. The Rivalry of Hoxton with some local brands is weak, because they do not compete aggressively ( Barnard, 2012).
Threat of Substitute: The hotel is independent boutique focused on design and service quality. Standardization in services is not possible in the business of hotel so competitors cannot copy the services of Hoxton. The customers are loyal with organization because they are getting the best quality service . Overall, the threat of substitute product is low for Hoxton (Larson and Hansen 2005).
Internal Analysis Of Hoxton Hotel, Shoreditch
The hotel is located at a distance of five minutes from Old Street Station and provides guests with a convenient accommodation in London. Besides this, express check-in and check-out feature with 24 hour reception and meeting rooms are provided to its customers. The high-speed internet as well as wireless internet on site facility is available at hotel. In addition to this, free Wi-Fi is available throughout the premises and complimentary light snacks bags are delivered to rooms. The location attracts more customers as London city centre is only 10 minutes far from hotel premises and it also includes Barbican Centre and Moorgate which is centres of attraction of London city. The free printing and faxing and complimentary phone services to make calls to UK, USA, Australia, and most of Europe are also provided by the hotel. Modern rooms at the Hoxton Hotel featured with rain shower attract the customers. The rooms include different services such as flat-screen TVs with pay-per-view movies, Roberts DAB radios, tea & coffee making facilities, mineral water and free newspaper.
The Hoxton Grill restaurant which is the part of Hoxton hotel is designed in style of classic American grills and is referred as the heart of Shoreditch, East London. With comfortable sitting area, bar, lounge and outdoor space, customers can have relaxed atmosphere. It is also one of the most popular late night venues in Shoreditch. Private hire facilities are also available with two private dining rooms and DJ equipments in the lounge. It serves American-styled grill food, and has a bar, lounge and outdoor space. While having the accommodation facilities, guests can enjoy a beverage at the hotel's trendy bar. The hotel's comfortable restaurant is open for breakfast and lunch as the customers can have their meals at their convenient time. Company’s premises have a lot of space for meeting and events where 250 guests can have interaction at a single time. Monthly eclectic programs are held in the Hox gallery where local artists and the urbans perform their skills. The hotel tries to create paradise for travellers, natives and for local customers. The employees working in the organization are important resources of firm as these are sources through which company delivers services to its customers.
In Hotel industry customer wants quality services at lower prices. Company has intense domestic rivalry which leads to product improvement and cost reduction in order to compete with competitive firms. The organization is able to compete in market. The company has skilled employees and unique technological expertise in its services that are shown as its core competences. The business has developed its strategies in order to reduce operational costs, increase organizational effectiveness, improve customer retention, innovate faster, increase market share and identify new opportunities ahead of competitors. In order to develop core competences, company is focusing on customer services. The customer survey is also in the favor of company as now customers are interested to have more services from its staff. The management provides proper training to its employees (Bose, 2008).
The Competitive advantage for Hoxton hotel comes from continuous improvement, innovation and change. The core competences of Hoxton are its commercial furnishings. The lobby, the conference and business room are well decorated which attract the customers. Hoxton has got success in its existing market. Now companies can operate in new markets for that is has to create new knowledge (Trehan, 2005).
The Ansoff’s Matrix is a tool of determining the organization’s product and market growth. It has four alternatives of marketing strategies; Market penetration, product development, market development and diversification.
- Market Penetration: In the strategy company can promote its existing services in current market.
- Product development: In this growth tactic business can introduce new product into existing services.
- Market development: In the market expansion approach, company can offer its existing products and services to new markets.
- Diversification: This strategy focuses to introduce new products to new markets at the same time.
The Hoxton hotel can use market development strategy as it will help the business to capture more market share and customer group. The hotel has been voted as the best hotel by Guardian newspaper for three years. Now the hotel can focus at local market of UK as well as the market outside country and can develop product and services according to their needs. The strategy is suggested because it has been seen that company has developed its market in domestic country. The resources which the company has are skilled employees and standard services. The management team of Ennismore is also willing to invest €100 million towards expansion of business. So the company has sufficient funds to invest on R&D activities. Market analysis of company also shows the opportunities of growth. To expand business internationally management has to conduct the market research to understand the needs and wants of customers. The business has also designed new "designer" bedrooms and guest feedback can be taken in order to determine which style is best for any future expansion (Hayes and Ninemeier, 2009).
The company has to offer existing services at reasonable rates to capture market share as in new market it will compete to new rivals. Low prices will help it to attract customer. The aim of boutique hotel is to attract customers through design and location of premises, so management has to spend capital to furnish new building (Graetz, 2000). The company is offering American-styled grill food in its menu but menu can be changed as per the target market’s taste and preference. This will lead to development. The company is going globally so advancement in products, services, and standards will help companies’ knowledge and capabilities for selling in other markets of the world. Besides this company has to take care of share holder’s interest who can be its employees, various customers, government or investors. The employees can be satisfied through providing them opportunities of personal growth. The staff members can be transferred to different units to have practical business exposure. Hoxton hotel also has to follow the rules and regulation of country or geographical area in which it is going to operate. While adopting product and market differentiation strategy, organization has to focus towards hotel’s products, services , competition, market demand and customer segmentation (Tansley, Newell, and Williams, 2001).
In the market development strategy, company has to sell its existing product and services in the new market. The market research gives indication to company that the existing markets have been fully exploited and now business needs to venture into new market. The company can operate in new geographical areas with distribution channels and different pricing policies. It the company wants to go international, it has to bear huge cost of expansion. Hoxton hotel has different ways of market development such as organic growth, franchising and joint ventures. The business can set its new branches in different markets. For this he can adopt franchise method but with that this, it will have to face lots of issues regarding market development. The company will lose its independency and will get bind to operate businesses according to the procedures and restrictions set as per the franchisee agreement. The system will also restrict the business operation which includes products or services which can be offered, pricing and geographic territory. It also includes risk of franchisor’s ability to manage the business. If the franchisor performs poorly, the business of hotel will get harmed (Yan and Luo, 2001). The quality of services can be varying because it is very difficult to provide standardization in services. To maintain the quality of services in hotel, employees have to be well trained. If company exercises franchisee’s option, the big issue which will occur is quality staff. The control over the activities is very important and in this case, hotel will have less control over the business operations (Lane, 2007).
The above report explains the concept of strategic thinking. The business should analyse the external and internal environment while addressing the change in existing business to take strategic decisions. The macro and competitive analysis of Hoxton hotel, Shoreditch has been done in order to evaluate sustainability, acceptability and feasibility of existing strategic option. The organization can adopt the market development strategy to expand the business.
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