Factors Affect the Business Environment of Aber Gardens - Assignment Example

 Table of Contents 1) 2 2a) 5 2b) 6 2c) 8 3) 9 References 11 1) The number of suppliers is moderate with a considerable amount of real estate businesses within a given area of operations. The availability of substitutes is high, as a large number of designers and employees. The switching costs are high, as hotels carry high rate of bargaining power and can easily switch between different suppliers. Furthermore, a threat of forward integration by the suppliers is high in nature, as the suppliers are unlikely to do forward integration in the hotel industry. There is high risk associated with backward integration, as the hotels are able to backward integrate the subsidiary real estate companies and would possess their own training departments (Lo, 2012). Bargaining power of the buyers or customers is also considered as an important factor affecting the operations of the hotel. The customers of Aber Gardens include the Leisure and Business travelers along with guests and customers in need of organizational space settings to conducts events and conferences. The number of customers is high during peak season and at this time; the customers are identified to have high bargaining power. The availability of substitutes is medium to low in nature, as there are very few alternative to Aber Gardens available for the customers (Cheng, 2013). In case of premium segment, the hotel operates in a number of subsidiaries at different locations. Product differentiation is high, as services offered are differentiated from the services provided by competitors. In this respect, the hotel with differentiated products and brand value is able to retain premium customers. Customers exhibit low switching costs and high requirement of capital for making investment in staff development and infrastructural facilities. Respectively, barriers to entry are low for other hotels operating in the area (Dälken, 2014). Threat of substitutes is medium, as competitors that include Kimps Hotel Group and Turnover hotels are engaged with similar services that include room service, leisure accommodation and corporate guestrooms. The switching costs are low and the value of substitutes is low, as there are chances of high informal accommodation during peak season (Amrollahi & Akhgar, 2013; Bardis, 2012). Finally, an important factor that can affect the business environment of Aber Gardens is the ‘Degree of rivalry’. The number of competitors is less as Aber Gardens falls in a premium segment, but the attractiveness is high, as Aber Gardens attracts customers based on discounts and quality services. Differentiation is considerably high in nature, as Aber Gardens brand image introduces premium pricing (Majumdar & Bhattacharya, 2014). Additionally, PEST analysis has been .conducted with the aim of ascertaining the external environment. Political factors are identified to be affecting the operations of the hotel (Gupta, 2013). In this regard, local government bodies are affecting the strategic moves taken by the hotel. Although the government of UK has enabled spending on capital expenses, but it negatively contributed to the hotel’s brand image. Furthermore, the UK government is recognized to be providing assistance to the hotel industry for their development as well as growth (Ongori & et. al., 2013). The UK economy is identified to be stabilized and developing steadily. In this context, as Aber Gardens is a premium luxury hotel, its economic stability depends on the customers and their discretionary incomes. Additionally, Aber Gardens is affected during the low and closed seasons, which reduces its occupancy margin. The events and conferences are seasonal and may not provide adequate economic support to Aber Gardens. Furthermore, as the hotel is based on elite customers who have high bargaining powers, it may have to face a loss of potential customer in case of unsatisfied guests. In this context, the economic condition of the UK is identified to be an important factor assisting the hotel to conduct in an effective manner (Todorov, 2013). Social environment is also considered as a vital factor for the growth as well as development of the hotel. Golf and gym amenities have become an essential part of people’s lifestyle. The customers show preference for high valued services without considering the price. In this respect, the customers are recognized to be attracted towards competitors in case they provide higher quality service. In order to remain at a competitive position, Aber Gardens focuses on providing necessary benefits to the customers that include money back guarantee, quality room service and comfortable zones. Aber Gardens adopts socio-cultural dimensions with the intention of ensuring that products as well as services are offered on the basis of their requirements (Koumparoulis, 2013). In the UK, innovation is adopted in an effective way. In this context, the hotel is affected by the level of technology implemented. The availability of advanced IT products and qualified supply chain management structure affects Aber Gardens. Technology further plays an important role, as it enables customers to select hotels based on technology provided. Subsequently, innovation .has assisted the company is conducting services successfully (Enz, 2011). Aber Gardens devises a number of strategies to ensure success. Aber Gardens monitors bookings through the BAR pricing. The hotel introduces short duration sales that have limited offers on bookings for example a sale of 2 days. The hotel invests in programs that allow customers to have premium room services at a discounted price. Furthermore, in order to attract new customers, the hotel provides special offers at the booking counters. The hotel targets customers by attracting online reservation schemes. Value added offers and reduction in room rates during low season attracts customers, which aids in generating desired profits (Kolios & Read, 2013). 2a) Amana can use a variety of pricing strategies to attract customers. One of the important strategy is premium pricing, which Aber Gardens can successfully implement to attract customers. This can be done by implementing a high price on the product that delivers high value and is unique to the hotel. There is existence of a substantial level of competition and Aber Gardens can use premium pricing in room services for improving revenue margin (Pride & et. al., 2013). Amana can also use penetration-pricing strategy to attract customers. Initially, the prices for room booking will be lower, but after enhancing market share, Aber Gardens can increase the price. This will aid in delivering high quality services at low price to the customers (Williams, 2010). 2b) As described above, the company can use various strategies to attract customers. One of the major pricing method, Aber Gardens can utilize is the ‘penetration pricing’ strategy, where the company can imply low prices for attracting customers. As Aber Gardens has a brand name, penetration strategy will be an effective option for enhancing customer base. The major advantages of penetration strategy are that it helps in attracting a large number of customers and make them use the elite services at low prices. Furthermore, penetration strategy can be useful in enhancing Aber Gardens’ market share to a considerable extent. Furthermore, this pricing strategy helps in encouraging ‘word-of-mouth’ communication and helps in focusing on reducing costs. Penetration pricing may act as a barrier to entry for competitors. However, Aber Gardens may face certain disadvantages for employing penetration strategy. The lower pricing at the initial stage can create a perception in the mind of customers that the price will remain low. As a result, Aber Gardens may face problems in increasing the prices. Furthermore, penetration pricing attracts customers and disregards loyal customers. Thus, penetration pricing can result in increased rivalry, as competitors can be unwilling to pay high prices for similar products and/or services (Pride & Ferrell, 2012). Another major pricing strategy that Aber Gardens can utilize is the ‘premium pricing’ strategy, where the company can charge high for unique services. This will attract elite customers who are willing to spend on quality services. When unique service becomes common, the company will lower the prices that will help in enhancing market share. Premium pricing can aid in improving brand image of the hotel, which may improve revenue of the same. This will help the company to meet its indirect and overhead costs. Apart from these advantages, premium pricing has certain disadvantages related to the cost of branding. Another disadvantage is increased competition, as competitors of Aber Gardens may provide similar services at lower rates. Furthermore, if Aber Gardens plans to implement premium pricing, then it would have to focus on the sales of its revenue-generating segment, i.e. rooms that will limit the volume of sales and revenues. As the company will charge higher, the sales can deteriorate, which may further results in high overhead costs (Bortoluzzo & et. al., 2011; Khanna & et. al., 2011). To increase revenues by targeting more than 90% occupancy rates in weak season, Amana can use certain methods. Amana must ascertain unique marketing strategies such as benefit services during low season. Amana can further employ internet for reservation amenities and promote the hotel through advertisements. Furthermore, Amana can redesign and reorganize the rooms in a way for ensuring that the customers feel a home-like environment (IDeaS, 2014). Additionally, Amana can increase the revenues by persuading its customers to spend more by upgrading mechanism at a discounted price. In addition, Amana can have a direct contact with the guests, so that they feel comfortable. Amana may offer the customers with an opportunity of in-room holiday facility during holidays. The personal touch will be helpful in marketing the services. Amana can further provide required training to front line staffs, which may attract customers through point-of-sale benefits. Apart from focusing on customer satisfaction, Amana needs to perform auditing and host events and public conferences successfully. Amana can further build relations with nearby business such as amusement parks and restaurants that will aid in attracting customers as well. Amana can publish newsletters and reward his staff members for open communication and feedback on suggestions (Aziz & et. al., 2011). 2c) Revenues 25 Double Bed Rooms = £ 500 20 twin rooms = £ 400 30 Studios= £300 1 Queen Anne Suite= £ 900 1 Kennedy Suite= £800 Total number of rooms and suites =77 Hence, as per the data of peak season, 77 * 95% during 240 days = 73 rooms, divided into, Double Bedrooms = 25, Twin Rooms = 20 and Studios = 28 In peak season, Revenues from Double bedrooms = 25*500*240= £30, 00,000. Revenues from Twin Bedrooms = 20*500*240= £24, 00,000. Revenues from Studios = 28*500*240= £33, 60,000. 3) The stakeholders of Aber Gardens comprises customers, corporate clients, staff members, the local government bodies, the estate manager, anti-hunt brigade, conference attendees, golf club members, Financial Director, CEO and hotel manager. Customers have varying interests on the business proceedings. They are the actual source of revenue for the business. Guests at Aber Gardens are highly concerned about the quality issues and they may search for alternate options in case they face dissatisfaction. The customers in ‘Rust’ are concerned with quality standards, while customers at ‘Carvey’, ‘Blue Room’ and ‘Whole’ are more conscious about the prices and want optimum return for their investments. As it can be derived from the given quarterly data, there are a high number of customers during July to September. Hence, employees may target their period to introduce promotions (Marriott International, Inc., 2012). Local government bodies also play an important role in Aber Gardens’ business growth. The land that Aber Gardens needs to purchase is claimed by another organization that wants to construct a racing track. Aber Gardens can only get hold of this land premise if it is able to take permission from the local governmental planning body. Furthermore, the UK Government has facilitated businesses in conducting services with better growth prospects. Owing to which it permits rivals to expand themselves and compete with Aber Gardens (Regal Resources, 2014; Goodwin & et. al., 2013). The estate manager wants the land to be used for hunting during peak as well as low seasons that will attract upper class segment customers and would act as a recreational activity. The anti-hunt brigade is keen to stop the hunting practices performed by the companies and stop killing of animals for leisure (Ravetz, 2013). The conference attendees receive discounted bookings during accommodations for dining and block booking. Additionally, conference provides higher revenues to the organization, as it allows Aber Gardens to have flexibility and set attractive pricing schemes (Glass & et. al., 2013; Clifton, 2012). The members of the golf club are concerned about the location of golf clubs, membership fees and technological advancements in golf accessories. They have free access to the gym facilities (InterContinental Hotels Group, 2013). The CEO encourages open communication among the staff members and emphasis the importance of customer satisfaction and quality issues. He is highly concerned about the shareholders (Boella & Goss-Turner, 2013; Marriott & Brown, 2013). The Financial Director of the company wants the money to be placed in banks that would allow future returns, which would assist in increased profitability (Harris & Mongiello, 2012). 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