Mandarin Oriental Group case study - - Assignment Example

In such context, the researcher will use these strategic tools conjointly to identify three key external environmental factors that will shape strategic direction of the luxury hotel and hospitality industry. External Factor 1 (Uncertain economic condition) this external factor is being identified by using PEST and opportunities/Threats matrix. Operating cost for hotels has increased due to ongoing ill effect of previous economic recession, oil price fluctuation, sovereign debt crisis and inflationary pressure (Campiranon, 2010).

As a result, profit margin for luxury hotel and hospitality industry is decreasing and lack of availability of financial revenue is negatively affecting industry growth. In context to Mandarin Oriental Hotel Group (MOHG), volatile economic condition of macro environment can decrease their profit margin and revenue earning opportunity in future. External Factor 2 (Decline of theme based Hotels) - this external factor is being identified by using Boston Matrix and Product life cycle. With rise of modern life style and globalisation, demand for theme based hotels is decreasing and customers want all the facilities under one roof (Szulanski, 2009).

As a result, theme based hotels have become less profitable and the industry is observing rapid divestment by theme based hotels in order to avoid further financial loss. In context to MOHG, declining sales of theme based hotels might cause saturation and obsolete certain segment of product portfolio. As a result, business growth of company will get negatively affected. External Factor 3 (Hypercompetitive Environment) - this external factor is being identified by using Porter 5 forces. Presence of many international and large domestic players has increased level of competition within the industry.

Similarity in product portfolio, small target market and high customer churn rate