Strategic Strengths and Weaknesses of Madarin Oriental Hotel Group Organisation In Relation To VRIN Analysis - Essay Example

MOHG3Table of Contents Introduction 2 VRIN Model Analysis 2 Strategic Strengths and Weaknesses of Madarin Oriental Hotel Group Organisation In Relation To VRIN Analysis 4 Conclusion 8 References 9 Introduction Mandarin Oriental Hotel Group (MOHG) is a management and hotel investment group comprising resorts, luxurious hotels and dwellings in and around high profile locations globally. There are about 45 hotels in 28 countries coming under this Group. In addition, there are also 14 residences which are interlinked with the property of the Group. As of the year 2011, the estimated value of properties and assets of the Group was around US$2.7 billion. The Group, integrated in Bermuda, has its headquarters in Hong Kong. The mission of the Group lies in facilitating customers through the services provided to them. The Group is dedicated towards delivering excellent services through involvement of employees in the process of development of the hotel organisation. The Group emphasises on creating a congenial climate for the employees to facilitate them to perform their activities in an orderly manner. The Group is responsible in focusing their routine works through group activities, inculcating a strong believe amid one another along with contributing towards ensuring effective productivity which would enable the Group to gain reputed success in the competitive market (Mandarin Oriental Hotel Group, 2011). VRIN Model Analysis The VRIN Model Analysis is the framework which is adopted on the basis of Resource-based View (RBV). RBV emphasises on theories related to determining competitive advantages of an organisation as well as formulating a connection between internal features and competitive advantages of an organisation. The VRIN framework comprises four elements such as valuable, rare, imperfectly imitable along with non-substitutable. These are the resources which are comprehensively used by an organisation in ascertaining their position in a competitive scenario (Talaja, 2012). In this regard, it can be observed that ’valuable’ stands for resources that are used by an organisation for designing strategies which would enable it to develop its effectiveness and efficiency. In this context, it can be stated that the valuable resources are to be taken into account for implementation of strategies in the organisational culture as well in the environment where the organisation eventually functions. Similarly, rare signifies uniqueness. Contextually, it can be stated that resources are required to be unique enough for enabling an organisation to gain greater competitive advantages as compared to the competitors in the market. In reference to the competitors, it can also be stated the competitors generally do not maintain a particular strategy to compete in the market for its sustainability. Thus, it does provide a vivid picture regarding whether or not the valuable and rare resources possessed by an organisation are strong enough to maintain its sustainability in the competitive market. The success of the organisation lies in exploiting the valuable resources effectively in order to sustain competitiveness in the global context (O'Fallon & Rutherford, 2010). Inimitable implies the resources which cannot be simply replicated by the competitors in the market. An organisation and the employees should have the capabilities of preserving the resources so that the competitors are unable to replicate them, which would cause serious harm to the reputation of the organisation. Non-substitutable signifies that the services and the goods supplied by the organisation are exclusive and no other organisation can match up to the offered value or quality. An organisation is required to be aware of the situation and look for keeping their competitive position intact by supplying quality products to customers for ensuring its sustainability (Mitchell, 2010). Strategic Strengths and Weaknesses of Madarin Oriental Hotel Group Organisation In Relation To VRIN Analysis From the concept demarcated in the VRIN analysis, it can be said that in general MOHG requires exploring new avenues in its operational strategies as well as strengthening its prevailing strategies to maintain its valuable position amid its customers. It also needs to develop certain valuable resources which ought to be rare in order to maintain its competitive advantage. Proper utilisation of valuable resources can significantly enable the company to select and implement exclusive strategies to leverage opportunities as well as neutralise threats. It can be revealed that strengths of MOHG lie in its provided services and affluent facilities which the Group provides to the customers coming from both national as well as international context. Uniqueness in terms of location of the hotels of the Group is a crucial determinant of its strength. For instance, a hotel of the Group is situated in the region of Marina Centre that is close by to Marina Square Shopping Centre. The employees of the Group are committed to provide every possible facility to the customers in terms of fooding and lodging. The valuable resources which the Group conceives are the services and commitments which the employees provide to its customers through serving superior quality of foods and accommodation facilities. The employees also focus on supplying quality products to the customers’ at best possible manner and at cheaper rates from its competitors. The Group is ingrained with corporate social responsibilities which can be taken as a valuable resource. Moreover, the Group also possesses sustainable growth through minimising consumption of natural resources (Mandarin Oriental Hotel Group, 2013). The key objectives of the Group are to strengthen the performance in a competitive manner in every national and international market. Being identified as the finest hotel group in luxury category in the world and consequently accomplishing an effective financial performance are amid the other major objectives of the Group which in turn facilitate it to leverage significant strengths. The other strengths of the Group lay in the performances and dedications depicted by the management group and employees through their services. The VRIN model reflects to determine the factors that in turn can generate competitive advantages. In this regard, the Group is successfully maintaining its position in terms of upholding competitiveness. The Group has benefited due to its expansion in the financial aspect in the services industry. The occupancy rate of the hotels had increased considerably to 64% in 2010, as compared to 49% in 2009. The revenues earned by the Group from food and beverages segment had enhanced to a significant level by 20% in 2010. As stated earlier that the Group consists of 45 hotels in 28 countries, it would also provide an opportunity for it to generate more revenues by operating in diverse locations as well. The strengths also lie in enabling quality facilities to customers so that their level of comfort is maintained. The Group is also facilitating customers by providing services through new opening of restaurants in potential markets of developed economies which has enabled to create opportunities for the Group in terms of further development. It would also ensure their sustainability in the national and overseas markets. Branding of various products can also be identified as an important strength for the Group. The strengths of the Group also can be identified in terms of its reputation which in recent years has increased by a significant level. This is because renowned celebrities are endorsing the brand which has also enabled it to remain sustainable (Mandarin Oriental, 2010). The weaknesses of the Group in this context can be identified as during the year 2009, the occupancy level of the hotels was severely affected due to political interventions and pressures. Thus, the decreased rate of occupancy can be identified as one of the significant weaknesses (Keswick, 2009). This is owing to the fact that similar kind of scenario can reoccur again, against which, the company needs to prepare contingency plans so that such scenarios are dealt with efficiently. The decrease in demand due to economic crisis in 2008 can be taken into consideration as a significant weakness. Moreover, the communication and coordination among the employees and management often get distracted which results in miscommunication in a few of the restaurants, which could be regarded as a weakness. In this regard, another significant factor can be mentioned which is that the tourism market has also been affected due to global economic crisis, thus moderately affecting the Group. The other weaknesses can be identified as the Group provides all the relative facilities but does not provide casinos in all of its hotels, while other hotels in luxurious category do possess such facility. Furthermore, there are high variable costs in the department of food and beverages, which can be significant factor for reducing earned profits. This can also create problems in maintaining the sustainability of the Group in the competitive market (Grieve, 2010). Conclusion From the above observation, it can be comprehended that MOHG, is one of the world’s finest luxurious hotels operating in different global locations. The Group facilitates customers through various services regarding its brands, locations as well as other facilities relating to food and accommodation. There are weaknesses which are identified to be at times hindering the operations of the Group such as political interventions as well as decrease in demands of occupancy rate due to global economic crisis. However, with the unique resources such as dedicated workforce and management team, quality facilities and effective brand endorsement the Group can maintain its position amid the top ranked organisations in the industry. References Grieve, G. 2010. Mandarin Oriental, Las Vegas: Building a Unique Brand in a Unique City. Weaknesses. [Online] Available at: http://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1651&context=thesesdissertations [Accessed March 07, 2013]. Keswick, S., 2009. Mandarin Oriental International Limited. Weaknesses. [Online]. Available at: http://photos.mandarinoriental.com/is/content/MandarinOriental/corporate-09HY-report [Accessed March 07, 2013]. Mandarin Oriental Hotel Group, 2011. Sustainability Report. About Mandarin Oriental Hotel Group. [Online] Available at: http://files.mandarinoriental.com/sustainability/files/inc/50014369.pdf [Accessed March 07, 2013]. Mitchell, W., 2010. Strategic Analysis Primer. Key Capabilities. [Online] Available at: https://faculty.fuqua.duke.edu/~willm/bio/TeachingMaterials/0Readings/StrategicAnalysis/StrategicAnalysisPrimer_Mitchell.pdf [Accessed March 07, 2013]. Mandarin Oriental Hotel Group, 2013. Corporate Responsibility. Our Commitment to Sustainability. [Online] Available at: http://www.mandarinoriental.com/corporate-responsibility/sustainability/ [Accessed March 07, 2013]. Mandarin Oriental, 2010. Key Strategic Objectives. Strengthen Our Competitive Position. [Online] Available at: http://photos.mandarinoriental.com/is/content/MandarinOriental/corporate-10halfYearly-P [Accessed March 07, 2013]. O'Fallon, M. J. & Rutherford, D. G., 2010. Hotel Management and Operations. John Wiley & Sons. Talaja, A., 2012. Testing VRIN Framework: Resource Value and rareness As Sources of Competitive Advantage and above Average Performance. Management, Vol. 17, 2012, 2, pp. 51-64. Read More