Analysis of Fairlawn Hotels - Case Study Example

? Strategic Marketing Table of Contents Question 3 PESTEL Analysis of Fairdawn Hotels 3 Porter’s Five Force Analysis 6 Question 2 8 References 11 Question 1 PESTEL Analysis of Fairdawn Hotels India provides a huge potential for tourism because India is home to the oldest cultures of the world and has a vibrant economy which allows it to be have visitors from across the globe. Fairdawn Hotels also aims to capitalize on this front with rise in tourism sector. In 2011 foreign tourist arrivals were 6.31 million, a growth of 9.2% over 2010. During 2012 the figure grew at 5.4% over 2011 figure. Political Factors In India the political scenario is stable. It is a democratic country which ensures that the tourism industry enjoys stability and hence the hotel industry will also get benefitted. India has a specific ministry called tourism ministry which formulates strategies to enhance the tourism sector in India. Indian government charges huge amount of taxes from the luxury hotels which will have a huge impact as political scenario changes. The hotel industry in India gets good incentives and the respective state governments also supports development of such hotels and their growth. Though the terrorist attacks on Taj Hotels and Oberoi hotel have led to drop in foreign travellers, Indian government is taking steps to allay such fears (Kachwala and Mukherjee, 2009, p. 158). Economic Factors India is one of the fastest growing economies of the world with the GDP growing almost 4 to 5 % where the rest of the world economies are slowing down. Hence many business meetings and conferences are held in India and the hotel industry tries to capitalize on that. It is seen that many foreign tourist travellers are now willing to spend money to get their value for it. As economy of India is increasing at a good pace, it signifies investments in infrastructure, construction of new avenues for tourist, increase in promotional expenditure, beautification of the cities and towns etc. These give a boost to the hotel industry. With high growth in GDP and a sound financial system, the hotel industry has grabbed the chance of enhancing their profitability (Anand, 1976, p. 43). Socio-Cultural India being a diverse nation has diverse languages, traditions, cultures, cuisines; making it an ideal destination for cultural tourism. India has more 22 languages recognized by constitution and 1600 dialects. Hence cultural tourism in India will rise and so will the growth of the hotel industry. According to Indian culture they always treat guest as God. In Sanskrit there is a popular Shloka “ATHITHI DEVO BAHVAH”. It gestures the love for their guest that exist in India. Foreigners love this concept and are pleased with the love they get in travelling to India. This also enhances the Hotel Industry (Briggs, 2001, p. 49). Technological In today’s globalised world Information technology plays a critical role in tourism planning and implementation. There are web based platform like makemytrip.com, yatra.com in India which provides tourist booking hotels online. Most of the luxury hotels are now Wi-Fi enabled. More technology means less manpower and chance of lesser complaints. This shows enhancement of the Hotel Industry In India transportation system is not as per the international standard. For any nation to be successful in tourism industry it must be equipped with efficient transportation system which is capable of carrying large volumes of people in a cost efficient way. India is lagging behind in this front. If this improves a foreigner can easily find such luxury hotels and travel there comfortably (Kannan, 2005, p. 39). Environmental In India the environmental forces supports the Hotel Industry in India. Environmental forces like growth of GDP, Political stability in India supports the Hotel industry in India. Legal Indian Legal system is very strong and it doesn’t support any flouting of rules like keeping emergency services ready, keeping the appropriate records of the foreign visitors, paying of appropriate taxes etc. Such Strong Legal system is beneficial to the Hotel Industry. Porter’s Five Force Analysis Porter’s five force model is an important strategic marketing tool that helps an organization to identify the potential market or industry opportunities. The organizations within an industry can identify potential competitive advantages through the implementation of Porter’s five force analysis in order to develop significant corporate and business strategies. This Porter’s five force analysis will help the Fairdawn hotel to identify potential business opportunities in the competitive Indian hotel industry. Buyer’s Bargaining Power It is clear from the case study that The Fairdawn hotel is trying to target a different customer segment in order to meet business objectives and corporate goals. Mainly the organization is targeting the business traveller customers segment to become one of the most profitable organizations within the industry. Recent economic slowdown can affect the industry as it increased the bargaining power of the customers. The business executives or the business owners from the international countries also prefer high quality in low price due to global economic recession (Lovelock, 2010, p.631). However, the organization is trying to target a niche market segment. Most importantly it is important for the organization to reduce business operation cost in order to implement competitive pricing strategy as the competition within the industry at a rapid pace. Economic pricing with effective customer service can help the organization to reduce the threat of high bargaining power of the customers. According to the above mentioned facts, it can be stated that the bargaining power is high. Supplier’s Bargaining Power Fairdawn hotel is planning to incorporate different amenities in order to meet market demand and ensure customer satisfaction. The availability of the suppliers for specific amenities, elements, services and instruments that the hotel chain is planning to offer for the guests and clients is quite low. Therefore, it is very much difficulty for the organization to strongly negotiate with the suppliers (Sheela, 2002, p.21). Looking into these aspects, it can be stated that the supplier’s bargaining power is high. Threat of New Entrants Threat of new entrants in low for the Fairdawn hotel as the newly developed organizations has to face several legal entry barriers. In addition to this several political issues at initial stage can make it difficult for the new comers to grab the market share and customer base of existing potential organizations. Threat of Substitutes Threat of substitute is high as the number of motels, resorts and premium guest house is increasing. Degree of Industry Rivalry Rivalry among the organizations within the hotel industry is increasing significantly. Several leading organizations trying to provide differentiated services and target each and every customer segment. Therefore, it can be stated that the competition is high in this industry (Kannan, 2005, p.39). Question 2 Recently the CEO of the Fairdawn hotel is trying to expand the business operations of the hotel chain in emerging international market. The CEO is thinking about the adoption and implementation of joint venture and acquisition model in terms of business expansion in the global market place. Acquisition is an important corporate in which an organization buys most of the target ownership stakes of a different organization in order to get control over the target organization (Cartwright and Cooper, 2012, p.34). It is an important business expansion strategy that is implemented by the leading and profitable organizations in order to achieve growth in both domestic and international business market. Acquisition is considered as the takeover or the purchase of one business entity by another business entity (Sherman, 2010, p.66). On the other hand, joint venture can be defined as a commercial business enterprise undertaken collaboratively by two or more than two parties or business entities that otherwise preserves their distinct identities respectively (Schlossberg, 2008, p.12). It is true that Fairdawn hotel has achieved significant growth rate in the Indian market. It can be justified if the organization is planning to expand its business practices in global market place. However, it is important for the organization to adopt and implement appropriate growth strategy in order to expand business operations in global market place (Hawk, 2004, p.93). Acquisition or joint venture are tow effective business expansion model that can help the hotel chain to maintain its effective performance in the international market place. It will be effective for the Fairdawn hotel if the hotel chain adopt choose joint venture mode of entry process. There are several advantages of this joint venture process. First of all, the organization can have the access to additional financial resources and the assets of different organization. It is highly important to find effective source of finance and human resource before starting a new development project in the international market place. This business expansion toll will help the organization to share the economic risks and opportunities with the co-venture firms. These aspects can help the firm during the economic slowdown (Wood and Brotherton, 2008, p.72). It is important for an organization to conduct effective market research activities before entering in a new market. In addition to this, it is highly essential for an organization to identify each and every socio-cultural aspects of a country (Wolf, 2000, p.95). Hotel industry is considered as the service providing industry. Therefore, it is important for each and every organization to ensure high customer service and healthy workplace environment. It is highly important for the Fairdawn Hotel to know about workplace culture, culture of people, and market demand in the foreign country. A joint venture agreement can help the Fairdawn hotel chain in global market place to develop business strategies, corporate goals, and business objectives through the guidance and co-cooperativeness of the co-venture. Managing workforce in international market is quite critical matter to handle. Knowledge about the work culture, business tradition, and corporate culture and customer preferences of the co-venture can help the Fairdawn hotel to achieve significant success from initial business operation period in international countries (Lockyer, 2013, p.469). Huge financial resource is required in order to develop a hotel chain in international market. Financial support and access to the additional assets can help the Fairdawn hotel chain to minimize the level of difficulty in the international market place. In addition to this, several leading organizations can get encouraged to support the Fairdawn hotel financially (Damle, 2011, p.72). Global hotel industry is becoming highly competitive as several potential organizations are trying to implement new business strategies in the foreign market place. Fairdawn Hotel chain tries to target the business travellers who used to travel in different countries for the purpose of business growth. This strategy can help the organization to make profit even in recession period. The organization is trying to offer differentiated amenities and services for the guests with big capacity of rooms. Joint venture mode of entry can help the organization to expand business operations successfully (Debbage and Loannides, 2004, p.129). References Anand, M.M., 1976. Tourism and Hotel Industry in India: A Study in Management. New Delhi: Prentice-Hall of India. Briggs, S., 2001. Successful Tourism Marketing: A Practical Handbook. London: Kogan Page Publishers. Cartwright, S., and Cooper, C., 2012. Managing Mergers Acquisitions and Strategic Alliances. London: Sage. Damle, J., 2011. Pune: Tradition to market. New jersey: Pearson. Debbage, K., and Loanniodes, D., 2004. The Economic geography of the Tourist Industry. New Delhi: IGI. Hawk, B., 2004. Mergers and Acquisitions and Joint Ventures. London: Jurish Publishing Inc. Kachwala, T.T. and Mukherjee, P.N., 2009. Operations Management and Productivity Techniques. New Delhi: PHI Learning Pvt. Ltd. Kannan, S., 2005. Hotel Industry In India. New Delhi: Deep and Deep Publications. Kannan, S., 2005. Hotel Industry in India. New Delhi: New Age International. Lockyer, T., 2013. Global cases on Hospitality Industry. London: Routledge. Lovelock, M., 2010. Service marketing. New Jersey: Pearson. Schlossberg, R., 2008. Mergers and Acquitions. London: Kogan page. Sheela, A., 2002. Economics of Hotel management. New Delhi: Deep and Deep Publications. Sherman, A., 2010. Mergers and Acquisitions from A to Z. London: Routledge. Wolf, R., 2000. Effective International Joint Venture management. New York: Springer. Wood, R., and Brotherton, B., 2008. The Sage handbook of Hospitality Management. London: Sage. Read More