Strategic International Hotel Management - Essay Example

Strategic and Planning Management Strategic International Hotel Management Executive Summary Business especially in the modern globalized world is a complete challenge. There are intensified challenges which businesses face at the time of starting up the business. No matter in which place, region or market the business starts the challenge is already there in the form of market competition or rivalry. In this situation, this study is going to provide a strategic business plan. The plan is to assist an international hotel business in order to acquire acquiring resources of providing international services. The task is to come up with a deliberate business plan and marketing plan along with the long term marketing strategy to place the new hotel property in a highly competitive position. Introduction For new businesses, theorists have proposed various strategic business models. These models include analytical models and models for promoting an organizational system. It depends on the mission, nature, and goals of organizations that which of the models are effective and can be best applied. The models that are discussed frequently in the literature are SWOT and PESTLE, which are used for the business environment analysis (Kachru, 2009). Similarly, the literature also highlights extrinsic analytical models such as Porter’s Five Forces model, which identifies the competition, challenges, regulations and patterns of the new market. Keeping all such models in consideration, this study is going to develop an organizational business plan (Kachru, 2009). The models projected are to be applied in the business perspective to bring effective results for organization and its core services. The theme of the organization is a hotel providing hospitality, tourism, and food services. This is to construct a bridge a relationship between marketing principles, models, and effective organizational plan and system. Literature Overview According to the business literature, when a new business intends to emerge it starts off with deep, critical and intensive planning. Planning is vibrantly important whether it is strategic planning or corporate business planning they are important for a new business (Verardo, 1997). According to David Bangs, business plans have a significant relationship with the starting up of the business (Bangs, 2002). Plans affect starting decisions and decisions bring actions which eventually give foundation to the new business. The same implies to a new hotel business if it wants to get started it has to start with decisive planning stage (Dubrin, 2008, p. 122). As per the theorists’ perspective the starting planning phase is all about sharing ideas, concepts , and thoughts on the business organization. These ideas are shared by the governing bodies such as board of directors, executive members, managers, investors, and most of the times stake holders. After collaboration of ideas, the new business plan originates and merges with the corporate vision before initiation. Vision and mission are two important aspects of organizational planning (Bangs, 2002). Just as the literature highlights, the famous Steve Jobs revolutionized his technological firm Apple based on the evolutionary vision and mission which he secured at every stage of his organization. So corporate strategic planning is the first stage of organizational setup (Powell, 1999). An organization cannot be founded unless it is having a long term corporate purpose, plan, objective or mission for piling up. An example of a starting up organization mission can be taken from WoolWorth whose mission is “to provide the best product in the best price and with the best service”. This is what amplifies the corporate purpose as it gives the straight plan and route to accelerate new brand or organization (Dubrin, 2008). In view of the literature, a mission and a purpose will be there for the new hotel property business. It will be based on the idea that without the mission the business cannot prolong or even started off (Rutherford, 2010). After establishing the corporate purpose, mission and vision the next big thing for a new business is to recognize the place and the market in which the business has to settle (Burrow, 2011). Without knowing the target market audience, market status, situation and its customer dimensions the business cannot proceed or even access its position. Hence as per the modern literature, analyzing the market is important; it is the core stage of the planning phase without which the plans can never be executed (Aaker, 2010). Different marketing specialists have proposed different analytical models. The marketing specialists such as Philip Kotler and Aaker have proposed marketing SWOT model and marketing Pestle model for analyzing marketing environment (Kotler, 2009). The models elaborate the contemporary position of the market in which the new business is stepping in. Similarly, Porter’s five forces model is to analyze the new rivalry status which is important to analyze before meeting the new market competition (Kew & Stredwick, 2005). Once the market is analyzed and the environment of the business is studied, the next strategic thing for a business is to understand the market segments. As per Doyle’s assessment, market segmentation is a tool-an instrument of a business to evolve especially when the business has to allocate itself in a competitive market environment (Ferrell & Hartline, 2010). Understanding the market segments will give an effective business strategy and a long term direction to the new business fabrication. This requires an assessment of the market with respect to consumer division. Dividing customers with respect to their preferences, choices, perceptions and needs can identify the new market segments for the hotel business property. This is essential to all business whether a small business SME or a large multinational Corporation is operating, it requires market segmentation to understand the target market (Ferrell & Hartline, 2010). For our international hotel business, initially target market will be divided into segments. This will give the direction, the breach to access our new customer needs and wants (Enz, 2009). Analysis Business Planning and Situational Analysis Company Background The company AB enterprise is an international hospitality service provider. It offers all kinds of hotel services including room dispatch, restaurant services, tourism and food services respectively (Dubrin, 2008). The organization operates in globalized way and has established a recognized name in the hospitality sector. Recently the company acquiring a development manager aims to allocate a new hotel property. This is because the boards of directors are planning an international business expansion, which will eventually take place by the expertise of the hired manager (Dubrin, 2008). I being the developing manager is to assist in the planning, strategy and marketing phases of the new business expansion. My task is to select new market region for the hotel property, establish the new hotel in the right effective and deliberate manner (Rutherford, 2010). Here is where my task begins: Corporate Mission and Vision “The company incorporates the vision that the new hotel in the new market place is going to allocate the best hotel practices in town. With the fountain of hospitality our hospitality service will drain the true hospitality experience for our new customers. With the fabrication of tourism, restaurant and food service, the company aims to occupy a place in the hearts of new customers. This is what our elegant approach is about as this is what will lead us as a trademark hospitality provider in the new market segment.” Business Goals for the New Market In the mission to establish the place in the new market segment, here are the respective primary and secondary goals of the new hotel business: To acquire and allocate the best hotel services in the region To establish a new market position in the next six months period To get a suitable place as a hotel property in the region with the idea to approach customers in the deliberate manner To determine customer response for our newly introduced hospitality services To establish customer satisfaction, trust, loyalty and respect Market Selection and Analysis The city of Ho Chi Minh Vietnam is the selected region for the new hotel property. The city holds the history as it was the capital of the earlier French colony of Cochin-china which later became the independent city of South Vietnam (Nhan, 2011). Being the largest city of Vietnam with the most beautiful architecture and heritage, it is in the most popular cities of the world for tourism and travelling. Being an international tourism city, it brings tremendous opportunities for hotel settlers in the region. Hotels which are old and indeed new hold the chance of inviting new international visitors in Ho Chi Minch Vietnam. Just with the boom of the tourism industry the chances of growth and expansion of the hotel industry are precisely there in the region (Anthony, 2011). PESTLE Analysis Political The socialist republic of Vietnam is a single party owned State. The central power is in the hands of the Communist party who has authority on politics, trade, constitution and the system of the entire country (Nhan, 2011). As per data monitor projections 2007, some land seizures were there in the country which raised conflicts with other international States and countries (Nhan, 2011). This escalated chances of political unrest which was a threat for new businesses in the region. But today the conditions are not the same as the major dispute of East Sea Vietnam has been resolved by the Government of the country. This has brought peace in the region and also the country is progressing with political and business stability (Anthony, 2011). Economical In the big picture, the Vietnam economy is at its emerging Stage. According to the World Bank report 2011, there are frequent amount of inflows more specifically the inflows of the foreign direct investment (Kachru, 2009). Meanwhile there are some challenges which the country has shown like depreciating currency, shortage of international reserves, slight inflation and corruption but still there are retrospective chances to bring new businesses in the region. Apart from all, the Government has shown much interest in developing the infrastructure of the country as the new projects are in developing airports, highways and tourist places. This is all what brings the charm for AB Enterprise new hotel property (Rncos, 2012). Social As per the year 2011 studies, Vietnam population accounts to 85.84 million in which the male gender population is 40 percent and female is 45 percent respectively (Bangs, 2002). The majority of the population is on education which means that consumers for businesses- hotel businesses will have a wise sense of assessment. Qualifying or disqualifying hotel deals and offers will be an easy task for Ho Chi Minh customers (Rutherford, 2010). Technological According to modern research, Vietnam is a country advancing with technology and modification (Nhan, 2011). The government as per the socio-economic development policy 2011-2020 is marching up with the technological move and innovation. The trends and practices of technology have been determined in each segment of the business. No matter which business including hotel, tourism, health or education, they are all evolving through the concepts of industrialization and modernization within the country (Anthony, 2011). Legal The country of Vietnam holds precise regulations for the new businesses in the region. Businesses specifically the hotels are obligated to register their property which is a deliberate legalized process (Nhan, 2011). According to World Bank’s report 2011, registering a hotel property in Vietnam requires eight to nine procedures. These are essential for a new hotel to get fully legalized and operational in any part of the country (Nhan, 2011). Environmental Vietnam and more specifically the city of Ho Chi Minh holds a pleasant environment atmosphere for hotel business. The temperature of the city falls between 21 to 28 degree Celsius which shows that it is the city of nature and high hospitality (Nhan, 2011). Moreover, the country itself holds diversified ecological and hydrological status. With sights of lowlands and beautiful mountains each city of Vietnam is a natural attraction point for the travelers. Hence, the ecological status of Ho Chi Minh City allows more hotel and hospitality businesses to get establish in the region. This is the attraction which can be a calling point for to our new hotel property (Anthony, 2011). Porters Five Forces Analysis As per the emerging trend of hospitality in Vietnam, suppliers which are real estate companies, furnishing companies or industrial consultants in the start will be easily available in the region. Hence, the suppliers’ power is respectively low in the region (Kotler, 2009). With the emerging status of the hotel industry, the country holds the threats of new entrants and substitution which unfortunately increases the power of buyers in the region (Rncos, 2012). The hospitality customers in Vietnam have many choices on hospitality services hence for which they can easily switch to other hotel service if dissatisfied with any particular one. Hence, the potential for any new hotel in the region lies in the quality and satisfaction of customers (Enz, 2009). Similarly, with the emerging market status and the evolving trend of hospitality there is hyper competition in the Vietnam hotel market segment. This is what will encourage our hotel to move with hospitality core competencies in the region (Rncos, 2012). SWOT Analysis Strengths The company owns a great international place in the hospitality management. The Vietnam hotel being a franchise of AB enterprises will imply all the old valuable trends of the company (Nhan, 2011). It will follow the same competitive management principles, offering the best sequence of hospitality, restaurant, food and tourism services in the region. Special services such as Spas, wedding hosting, cruise ship service and gaming activities which have been part of the culture of AB enterprise will come out as strengths in the Ho Chi Minh Hotel Franchise (Kachru, 2009). Weaknesses Being a new Franchise in Vietnam can require time to revive the old trends and practices. Hotel management will be a challenge in the first six months period as the customs of the AB enterprise hotel will be required to equate with traditions of Vietnam hospitality (Aaker, 2010). Opportunities Chances of good reception are there with special hospitality care services like wedding hosting or cruise ship service respectively. Ho Chi Minh holds viable opportunities of growth and expansion if the new hotel has preserved its name, recognition and trust respectively (Aaker, 2010). Threats With the emerging market scenario, there are threats of new rivalries competing on the same hospitality grounds. With the high buying power there is probable threat of substitution. For this hotel will need to have differentiation in the services as it is one thing which will overcome the rivalry status of the market (Aaker, 2010). Branding / Target Markets/ Marketing Branding Strategy An effective branding strategy in hotel services is always a combination of the economy and luxury. This is what we are going to imply in the Ho Chi Minh franchise (Aaker, 2010). This is to bring brand promise and delivery to the customers and to develop trust in our hospitality services. For particular luxury travelers special luxury amenities will be provided with the combination of resort, spa and luxury food service (Aaker, 2010). Similarly, for price focused visitors medium priced accommodations will be offered. Our special low cost service “Fairfield, Courtyard and Town Place Suites” will be offered to low price travelers. By merging all offers together an effective and deliberate branding strategy will be there for the new hotel. The strategy is effectively applicable and can be modified with respect to the response of the customers (Aaker, 2010). Brand Categorization For our new Vietnam Franchise, staying in the middle is a better option. This means that the hotel will not fall in the extreme luxury category “five star” nor in the extreme economy category “three star”, but it will fall in the category of “four star” (Aaker, 2010). With the situational analysis setting a new franchise hotel in the four star category is a wise option. Being a four star hotel, it will have the facilities of both luxury “swimming pool, spa, gymnasium, resort” along with facilitation of economy “middle level food and accommodation”. This is to fulfill and address both types of customers “actual need customers and demanded need customers” (Aaker, 2010). Target Markets There are three major target markets chosen for the Ho Chi Minh franchise. The first target market is the high luxury class customers who will be offered with special luxury amenities including gourmet food and luxury accommodation (Gelder & Woodcock, 2003). The second target market is the medium class which will be attracted with our physical hospitality service, spas and gymnasium. The third most important category will be the low priced customer who will be served with basic food and accommodation service. By addressing all the three target markets, a combination will be set in the Ho Chi Minh hotel building. In all of this the focus will be to build the response of the customers. Once the response is there the chance of establishing customer loyalty will inevitably be there (Dubrin, 2008). Marketing and Promotion For marketing and promotion which is going to be the next most important stage, some primary and supplementary marketing tools will be required (Kachru, 2009). The primary tools of promotion will be the hotel’s franchise web portal, associated tourism portals, trade fairs and workshops, and most importantly the organized family trips. In the secondary tools the marketing team should use billboards, pamphlets, brochures, and media banners to bring the promotion. In the hospitality sector, service is the most significant factor. It is one factor which can improve the value and image of the brand. Hence, in the new hotel franchise the focus should be on the service because if the service is better it will become the promotion weapon for our new hotel in the region (Gelder & Woodcock, 2003). Moreover, the differentiated service offers will bring further promotion of the hotel. This may include differentiation of food items, differentiation of basic accommodation service, and differentiation of supplementary hospitality service to bring excessive promotion (RSI, 2007). Apart from all, the focus should be on the quality aspect because if the hotel preserves quality in each service it will reduce the burden of additional marketing or campaigning. Once quality is there, the hotel is definitely not dependent on excessive or expensive marketing campaigns (Burrow, 2011). Conclusion and Recommendations In view of the literature and with practical assessment of the theory, it can be concluded that marketing and business principles are decisively important for a new business. How the business starts and what are its fundamentals all is understood by analyzing the literature. There is a significant relationship between business models and business establishment. Without such models, principles and theories it is not possible that an effective business gets started. Based on the analysis made, here are the following recommendations on business and business establishment: Business models are constructive for a new business. The models such as SWOT, Pestle or Porters Five Forces are effective analyzing tools. When a new business starts up no matter of which scale, small or large it requires such effective business models to assess the market situation. These models analyze each segment of the market like market economy, environment or competition and also customer trends which assist in placing the new business prospectively. Hence, all such models are recommended to new businesses whether they are small SMEs or large corporations, they should avail the benefit of such essential models. The literature and so as the analysis of the study indicates a three stage process of establishing a new business. The first stage is the planning phase, the second is of analysis and the third the execution phase. This three stage process for placing a new business is recommended to all businesses. The process starts from effective planning (development of ideas, corporate purpose, vision and mission) next to analysis (market analysis) and finally execution (market segmentation, targeting, positioning and placement). All these three stages are recommended to the new businesses as they are significantly discussed and justified both in the literature and in the practical assessment. List of References Aaker, D., 2010. Strategic Market Management: Global Perspectives. New Jersey: John Wiley & Sons. Anthony, S. J., 2011. Pestle Report on Vietname, Spain: Alberto Hurtado Center. Bangs, D., 2002. Business Planning Guide. Fort Lauderdale: Kaplan Publishing. Burrow, J., 2011. Marketing. Mason: Cengage Learning. Dubrin, A., 2008. Essentials of Management. Mason: Cengage Learning. Enz, C., 2009. Hospitality Strategic Management: Concepts and Cases. New Jersey: John Wiley & Sons. Ferrell, O. & Hartline, M., 2010. Marketing Strategy. Mason: Cengage Learning. Gelder, D. & Woodcock, P., 2003. Marketing & Promotional Strategy. Gloucestershire: Nelson Thornes Ltd. Kachru, U., 2009. Strategic Management: Concepts and Cases. New Delhi: Excel Books India. Kew, J. & Stredwick, J., 2005. Business Environment: Managing in a Strategic Context. London: CIPD Publishing. Kew, J. & Stredwick, J., 2005. Business Environment: Managing in a Strategic Context. London: CIPD Publishing. Kotler, P., 2009. Marketing management. New Delhi: Pearson Education India. Nhan, T., 2011. Vietname In-depth Pestle Insights, New York: Datamonitor. Powell, J., 1999. Business Planning and Progress of Small Firms, Washington: US Department of Commerce. Rncos, 2012. Vietnam Tourism Industry Forecast. [Online] Available at: [Accessed 8 March 2013]. RSI, 2007. Hotel Marketing and Promotion. [Online] Available at: [Accessed 9 March 2013]. Rutherford, D., 2010. Hotel Management and Operations. New Jersey: John Wiley & Sons. Verardo, D., 1997. Managing the Strategic Planning Process. Alexandria: American Society for Training and Development. Read More