Hospitality Business Development - Essay Example

Hospitality Business Development Outline Introduction Legal business environment Technological business environment Socio-economic Business environment Political Business micro environment Competitors market sectors Conclusion References Hospitality Business Development Introduction According to Halek (2014), the hotel industry is a very prime sector in the globe that keeps registering growth every year. It comprises of various business-lodging properties that are interrelated such as cruise lines, car rentals firms, restaurants, tour operators, travel agents, among others. The Labor Statistics Bureau in the US projects that by 2015, salary jobs and wages will register a 19% growth in the hotel industry. The multifaceted and dynamic giant industry requires professional, tactical, experienced, skillful and strategic leadership to keep it on course and for the continual smooth performance of its business activities. This research focuses on the impact of strategic business environment on the performance of the hotels and factors that affect business in the hotel industry (Hassanien and Dale, 2010, p. 39). The study focused on the hotel industry, one of the segments that owned by Swire Group Hong Kong. Since the mid 1960s, Swire Group was running chains of hotels that offered its excellent services. The hotel offers quality services to its large clientele by serving healthy cuisine, offering lodging and conference facilities, as well as offering outside catering services. In 2013, the total annual revenue for its classical services was in the excess of 1 billion US dollars for their Taiwan, Hong Kong, USA and China branches in (Kozak and Rimmington, 2006, p. 60). Swire Group is also involved in the logistics and cold storage and is renowned for having the largest refrigerated warehouse in Hong Kong. In both empirical and conceptual studies that involve business strategy, the repercussion of the business environment is a critical contingency factor at the hotel. The performance of any environment is pegged on its strategic position. In strategic management literature, one major concern is the manner in which organizations adapt to the strategic environment. This depicts the way in which companies attempt to fit properly within the business environment where they can operate amidst changes that happen in the corporate strategy (Williamson, 2006). According to Wagen and Goonetilleke (2011), strategic business environment leads to strategic analysis. A strategic analysis looks into the industry deeply as well as the organization’s operations that enable the management make successive decisions. Analysis of an organization should take place when carrying out a strategy to acknowledge the factors that influence the profitability of an organization. Analysis can either be external or internal. Additionally, internal and external analysis can be categorized into micro-environmental and macro-environmental (Wagen and Goonetilleke, 2011, p. 73). Legal Business environment The hotel industry in Hong Kong must consider whether their business activities involve permanent establishments, branches or subsidiaries for the running of their daily activities. All their earnings are subject to Hong Kong’s taxation. However, permanent establishments or branches that are separate legal entities can have a refund of their taxed earnings if they used the parent company’s financial statements. A hotel in Hong Kong which has its headquarters in United Kingdom can only be governed by the English law and the Commercial Trade Industry registers it for it to acquire legal capacity (Halek, 2014). Setting up a hotel in Hong Kong requires articles of association signature, commercial lease contract signature, filing of the mentioned articles at the tax office as well as a published notice containing the main characteristics of the company in some legal publication. Opening a hotel in Hong Kong has nowadays been greatly simplified and is considered faster and efficient than it was before because it is possible to do it online (Halek, 2014, p. 139). The Centre for Business Formalities (CBF) manages the entire process and conveys the appropriate services for the required services to set up the hotel. Technological Business environment According to Wagen and Goonetilleke, (2011, p. 76), technological business environment is considered a dramatic factor that shapes the destiny of business. Technology refers to the manner in which scientific discoveries are transformed into realities. Every old technology is replaced by a new one, and the technological environment keeps on changing thereby creating new opportunities and markets. In any organization, technology is used to create a competitive advantage against competitors. Breakthroughs in technology can result in new industries that can threaten current organizations whose services or products may be considered futile. Again, new technologies may lead to useful inputs in both service and manufacturing industries. This is very critical in the hotel industry ((Wagen and Goonetilleke, 2011, p. 91). Socio-economical Business micro environment Developments in the economy to some large extent depend on enthusiastic and active participation of entrepreneurs who are intelligent in any economic process. Economic development is considered a technological change which emanates from entrepreneurs’ creativity (Williamson, 2006). The role that hotels play in economic activities of countries like Hong Kong that are industrialized is very significant. In addition, hotels provide employment opportunities to millions of people around the world and Swire group is no exception, with a major hotel in Hong Kong that employs over 300 individuals. The hotel industry growth is a dominant feature in the socio-economic development strategy in Hong Kong. Political Business micro environment The political environment in any country has different effects on business, more so to the hotel industry. Both extensive market and business regulation interventions pose great obstacles for both small and large organizations. Large hotels report less substantial obstacles that stem from political graft and corruption, than the smaller institutions (Oslen and Ropera, 1998, p. 114). The political environment has a distinct repercussion on domestic and foreign firms. Swire Group’s hotel in Hong Kong perceives policies on governance as predictable and obstacles as fewer as compared to domestic firms. Implementation of political reforms proves successful in Hong Kong, thereby providing a good business environment for hotels. Competitor's market sectors The hotel industry is a very competitive sectors it is a very prime area in respect to investment. Key players in the hotel industry have injected billions of dollars through the construction of modern hotels to carve out a niche in the potential market and get a share. Likewise, Swire Group has invested by building a hotel in Hong Kong, targeting the middle-income population, majority of who have the purchasing power. However, the hotel experiences competition from other business rivals. Amidst competition hurdles, the hotel continues capitalizing on the weaknesses of its rivals. It provides cuisine and services that are not offered by its rivals. In any business environment, competition is very healthy because it ensures that reasonable prices for various services and goods are charged (Halek, 2014). According to Oslen and Ropera (1998), competitive advantage that is sustainable can rarely be achieved through effectiveness that is operational alone. Majority of renowned management innovations like business process re-engineering, just-in-time, total quality, outsourcing and benchmarking are referred to as operational effectiveness. Operational effectiveness refers to as performance of similar activities with the rivals but doing them better than them. Competitive advantage that is sustainable can only be made possible through performance of similar activities in ways that are different. A hotel with a business strategy that is good should clearly stipulate its intended achievements. Doing exactly the same thing as one’s rival destroys the mutual competition. This is evident with Swire Group’s hotel in the provision of its services (Oslen and Ropera, 1998, p. 170). A strategic hotel environment contributes to customer's influence. When consumers put pressure on firms through influence on the well-being of the firm and buying power, it is considered a great threat. The influence by buyers emanates from price discounts and demands for high-quality services and goods, especially in businesses that offer hospitality services like Swire Group. Buyers can equally influence a company by switching to other products. This happens in the lower end and mid-priced markets like the manufactured soft drinks that Swire Group sells (Olsen and Ropera 1998, p. 134). When buyers group themselves in significant portions within the market, their power is increased. The exact opposite is very true because firms can influence markets whenever there is a small group of buyers. Therefore, buyer groups can be influenced by firms who provide minimum services at levels of moderate quality and charging higher prices. Hassanien and Dale (2010) allege that a strategic hotel environment within the hospitality industry has a great impact on suppliers. Suppliers have a high influence on the companies whenever they charge exorbitant prices for finished goods and raw materials. This is evident at Swire Group when the few available suppliers provide goods that are customized with access to technology, raw materials and other resources that are unique and relevant and which have the potential to generate value. When suppliers have the ability to control the price and quality of raw materials on the basis of their power. It becomes a problem for incumbent firms whose alternative is to switch suppliers or accept them (Hassanien and Dale, 2010, p. 91). In any business environment, managers should devise ways in which their firms compete for sustainable advantages over certain time spans. This means that they should address two very fundamental issues. Firstly, they should seek to know the criteria that are used during competition in order to create an advantage that is competitive within the market place. Managers should identify whether or not a company should develop unique services and products for it to charge prices that are premium prices or as a manufacturer who produces at low-cost or both (Halek, 2014). Secondly, managers are supposed to how they can make available such kind of advantages as opposed to those that are highly temporarily as found within the market place. In conclusion, the strategic business environment has come of age. The various activities in the arena have greatly impacted the performance of operations especially in the hotel industry. It demonstrates the manner in which legal, socio economical, political, technological, and competition factors affect business in the hotel industry and their role in the hotel industry. References Halek, K. (2014, November 6). Hotel News Resource. Retrieved November 10, 2014, from http://www.hotelnewsresource.com/article80628.html Hassanien, A., Dale, C. and Clarke, A. (2010). Hospitality Business Development. London: Routledge. Kozak, M., and Rimmington, M. (2006). International Journal of Contemporary Hospitality Management. Benchmarking: Destination Attractiveness and Small Hospitality Business Performance, 10(5), 184-188. Olsen, M., and Ropera, A. (1998). International Journal of Hospitality Management. Research in Strategic Management in the Hospitality Industry, 17(2), 111-124. Wagen, L., and Goonetilleke, A. (2011). Hospitality Management, Strategy and Operations. New Jersey: Pearson Higher Education AU. Williamson, R. (2006, August 14). Hospitality Business Development. 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