Introduction To Strategic Thinking
Strategic thinking is one of the crucial tasks top management of an organization has to carry out. It enables management to gain insight into a number of key industry aspects in order to achieve competitiveness within industry. This leads to a change required by changing trends in market which have to be considered and acted upon positively to keep with pace (Hitt, 2008).
his report considers case study of The Hoxton Hotel which is situated in Shoreditch, London, United Kingdom. It explains how company must consider a number of aspects to go for expansion strategies. Some of aspects are macro and micro environmental influences in terms of analyzing environment, resources and competencies etc. It also explains and chooses among various strategic options available to company.
Current Strategic Position of the Hoxton Hotel
Government intervention can affect Hoxton hotel through tax policy, environment law, trade restrictions, political stability and tariffs. When there is political stability, it will boost business of hotel and when intervention from government is strict then it can affect operations of Hoxton hotel (Rodiek, 2008).
When there is crisis in economy, it affects operations of business in terms of sales and revenue. This will also affect Hoxton hotel’s business by reducing its overall sales in one nation where crisis is found. On the other hand, when economy of a nation is recovering, it can be beneficial for hotel.
The Hoxton brand is quite well known among both local and international visitors and it is also known that the UK is called as one of burning destinations among tourists and shopping lovers. There is a broad range of social influences affecting Hoxton hotel which also involves emerging trends in lifestyles of consumers, demographic variables, decision making role models as well as growth rate of population (Hoskisson, 2007).
One of significant social factors for Hoxton hotel is the increasing number of youthful consumers from developing nations like China, Brazil, India and Indonesia visiting UK which can majorly impact hotel industry. When there are more youth customers from Brazil looking for contemporary hotel services, it will boost sale of Hoxton hotel.
An overall technological infrastructure development with respect to industry of catering can have a huge influence on performance of Hoxton hotel. Issues associated with utilization of energy and its costs and prospect for introducing innovation within industry can be understood as significant factors of technology (Pizam, 2010).
Moreover, bookings of hotel have become easier and more sophisticated than before. It can be done effectively and simply using internet. A number of social media sites like Twitter, Facebook and other websites like Trip Advisor are helpful for both customers and hotels (Hoskisson, 2007).
Hoxton within hotel industry significantly controls emissions of carbon and support monitoring negative implications to the global warming issues. No matter it has increased operational costs of firm to some extent, it still supports environment to a very good extent (Harrison, 2005).
Legal influences are significant external impact modes on performance of Hoxton and they involve any modification in jurisdiction of the UK that impact industry of catering in a number of ways. When catering department is not doing well, it will give less revenue from that part, which may reduce overall finance of company. This can lead to less financial resources impacting some major investment decisions of company for expansion (Ford, 2011).
Moreover, there are various restriction rules with visa in the UK and this can restrict many global visitors to visit and stay at the hotel. This can again impact overall business of Hoxton.
Key Industry trends and overall competitive rivalry level
There are a number of key industry trends which must be considered by Hoxton hotel and they are related with giving more emphasis on lobbying of hotel and to make it pleasant for visitors from all aspects. It should also consider increasing surcharges as a norm to include sufficient of amenities and luggage storage in the hotel. Electronic check-in is another trend to be offered to niche customers that prefer it and this can prove as a sound front desk feature to be included (Wood and Brotherton, 2008).
Trends with eating have experienced slow but sustained growth. Hotels are now offering casual dining which involves flexible menus, value-for-money food and extended opening hours. This has been followed by improving of services, offering of modern dishes while remaining price competitive. With poultry prices coming down by 7 percent in 2013, chicken restaurant concepts are on boom and are making good amount of money. There is a craft beer trend with many hotel operators because of growth in sector by 79% in 2013. But hot beverages have also done well lately by customers opting for merging of food and drink including hot beverages which are used often nowadays as matches to meals in place of alcohol (Bateman, 2009).
In case of sleep and lodging, extended-stay model has come up along with the presence of corporate business driven by market. Big firms like Marriott, Accor and IHG are adopting this model to enhance their individual services to customers and also to improve their experiences in hospitality.
Level of rivalry competition should also be considered by Hoxton hotel because it is capable of driving away its important customers to competitors’ businesses. Apex hotels, The Bloomsbury hotel, St. Ermin’s are some of the examples of competitors present for Hoxton. Company needs to consider the way they operate in industry and accordingly adopt competitive strategies to counter their business operations. Also firm should confirm to threat of new entrants which can be a lot much because of lucrative market and increase in customers (Ford, 2000). It can be a major threat to business operations as well as revenues of firm. Available substitutes can also pose as competition to company in terms of lodging cum restaurants and bars etc and they can significantly reduce profitability of firm.
All resources of a company practically fall into any one of the four types: Physical, Financial, Human or intellectual. Resources of Hoxton Hotel are explained as under:
Physical Resources – Physical resources of Hoxton hotel are buildings it owns and all vehicles it owns for customers’ conveyance and all equipments and machines used to provide services to guests and visitors. It is known that those resources that is new and in good condition is considered more practical and useful to firm. The Hoxton Hotel has a wide variety with 208 rooms along with a Grill Restaurant, a destination bar, etc to offer to the guests. Thus needs and expectations of the clients can be met easily and these cover significant amount of customers’ lodging and hospitality needs (Khosrowpour, 2000).
Human Resources – Human resources are known to be skills, knowledge as well as adaptability of staff members at Hoxton hotel. Company’s most valuable resources are often those employees who work with their most potential and contribute efficiently to success of operations. There are 450 employees in London and it is believed that every employee in organization plays a significant role in customer satisfaction and thus, it is highly seen that each individual considers their own contribution to organizational efficiency and success (Proctor, 2009).
Intellectual Capital – These are also called as immeasurable or intangible resources of Hoxton Hotel. This can be information obtained from brands, databases of customers, relationships with a number of business partners and systems of business. All of these often encompass great value which is significantly seen when business is purchased in terms of goodwill marked as price-tag of company (Proctor, 2009). Firm also identifies a number of ways to protect intangible information and one of these ways is ensuring that staff members are involved in confidentiality agreements to guard any knowledge leaks to competitors’ firms.
Some of the core competencies of Hoxton Hotel are discussed as under:
Problem Solving – Hoxton hotel is known to face challenges efficiently through a very good bunch of problem solving skills present in its leaders. They often think critically, make innovation and promote creative thinking and this is how company is called as contemporary hotel which facilitates customers with everything that is required and demanded in present era (Altinay, 2014).
Management and Administration – Company uses effective financial management through hiring of competent accountants and other functions which holds high levels of organization and responsibility including sticking to ethics of business. This aids company in operating effectively in industry.
Interpersonal Relationships – Hoxton hotel also holds strong interpersonal relationships of employees with management throughout its organizational structure and this is confirmed through having all staff members motivated which automatically boosts efficiency of hotel operations. Firm has adopted an employee-centered approach to increase competence and morale of employees and to promote sound relationships and working conditions in organization (Hassanien and Dale, 2012).
Marketing Strategy – Marketing strategy is also one of the major core competencies of Hoxton hotel which enables firm in making customers aware of what it has to offer which is unique and differentiated from competitors. It acquires sound base of target audiences to which all its marketing strategies are based and directed efficiently. This aids in effective brand awareness of company in market (Doherty, 2010).
The Ansoff Growth matrix is a form of tool for marketing planning that will aid Hoxton Hotel in identifying its service and market growth strategy. This will suggest that company should attempt to grow depending on whether it brings new or existing services in new or existing markets. The output from this will be a series of suggested growth strategies setting the course for firm for its business strategy. Firm can either go for market penetration, product development, market development or diversification in either new or existing market. Looking at the resource audit and core competencies of Hoxton hotel, it can be suggested that it should opt for market development in the European Union (Qi, 2000). The contemporary style it supports can significantly encourage and reflect French culture and thus, it should expand its business operations in France with the same kind of services and layouts of properties it already acquires. Market development is an option for Hoxton hotel which is:
Feasible: because France is a member country of European Union and it will not pose any much threat to Hoxton hotel being a company based in UK to expand its business operations within the EU. As far as financial constraints are concerned, it is still feasible as one of core competencies of company also involves financial stability and strength. Thus, market development in a country like France seems feasible for Hoxton hotel and this can be considered as a profitable deal because of not having to invest much in legal clearances from government and from a number of more legal bodies operating in EU (Mattila, 2012). This will also be beneficial for a number of stakeholders involved with hotel in France as they will have their linkage with an international company and thereby to boost their business operations.
Suitable: because of the fact that France is a developed countries and that it encompasses majority of population with sufficient amount of disposable income. Also tourists visiting the country are considered majorly as higher income class tourists because of the strong economic condition of nation and higher standard of living. Hoxton can significantly offer its existing premium services within guests and travelers in country and thereby earn considerable amount of revenue in both short and long run (Lafuente, 2013). Disposable income of people living in country will also support the prices of services offered by Hoxton and this can be understood by the statistical image shown as under:
Acceptable: as it has been stated earlier, Hoxton hotel is a type of hotel which can encourage and reflect contemporary blend of cultures involving French culture and this is the factor which will drive customers in France to accept services from hotel. In this way, company also passes the element of acceptability while having acceptance from current trends prevailing in cosmopolitan cities in France like Paris, Marseille etc. Growing population in these cities and growing level of education in its people will definitely make it profitable for company to have market development in nation (Law, 2010).
Method of Development
Keeping in mind one of the contemporary trends in developmental methods being used by a number of firms for their international operations, Franchising will be the best option for development method to be used by Hoxton Hotel in France. Company can have a number of benefits by using this growth strategy such as lower investment of capital, rapid expansion, market dominance, profitability, and availability of better skilled managers and employees. Further, it can make use of sound buying power in France which will also be followed by sound recognition of brand identity in nation. Company can also share a number of expenditure with franchisee and can have a number of more streams of revenue in foreign country. This will certainly aid firm in developing new markets and expand its business operations (Sanghi, n.d). Despite having all these advantages of franchising, there are certain issues with it which must be considered significantly by firm in order to have comprehensive look over global challenges while taking on market development. These issues are discussed as under:
Service Quality – It is very crucial for company to ensure that the same quality and standard with services are provided at all locations and because of operating in a number of locations, it becomes difficult to maintain quality because of difference in resources and skills as and competencies of employees at different locations (Hawthorne, 2007).
Scale of Operations – It is crucial for company to achieve same or better scale in different market where it is operating because there is a significant difference in perception and attitude of consumers. This significantly affects brand recognition of company in markets (Altinay, 2014).
Control on Operations – There is also a lack of control on operations despite having so many legal limitations on part of franchisee. This makes it difficult for franchisor to manage the system and thus, there can be a number of conflicts and mismanagement in the business (Doherty, 2010).
The above issues must be understood and evaluated by Hoxton hotel in order to avoid them appropriately and to take more number of advantages from franchise system as the growth strategy for market development in France.
The report has critically explained strategic position of Hoxton Hotel in hotel and hospitality industry which has to face a number of challenges to decide onto and implement the most profitable growth strategy. This must be done while keeping in mind all significant key trends in industry as well as core competencies and major resources of organization. As suggested that company should go for Franchise system as a growth strategy with market development in a country like France, it should consider major aspects as well as factors that can affect major decisions and business operations in global markets.
- Ford, R., 2011. Managing Quality Service In Hospitality: How Organizations Achieve Excellence In The Guest Experience. Cengage Learning.
- Harrison, S. J., 2005. Hospitality strategic management: concepts and cases. John Wiley & Sons.
- Hitt, M., 2008. Strategic Management: Competitiveness and Globalization, Concepts. 8th ed. Cengage Learning.
- Hoskisson, R., 2007. Competing for Advantage. 2nd ed. Cengage Learning.
- Khosrowpour, M., 2000. Challenges of Information Technology Management in the 21st Century. Idea Group Inc (IGI).
- Pizam, A., 2010. International Encyclopedia of Hospitality Management. Butterworth-Heinemann.