Sustainable Strategy - from Planning to Implementation - Report Example

Sustainable Strategy - from Planning to Implementation Executive Summary This report has highlighted the adopted and implemented sustainable strategyby Merlin Entertainment Plc. the organization has gained huge popularity within the UK as well as global travel and leisure industry. An external and internal environmental analysis has been conducted for the organization. Porter’s value chain firm-level framework has been adopted for the internal environment analysis. On the other hand, PESTLE analysis has been conducted to determine the impact of external environmental factors on the business operation process of Merlin Entertainment Plc. An industry analysis also has been conducted to determine the impact of several competitive factors on the business performance of Merlin Entertainment Plc. Porter’s five forced model has been considered to conduct the industry analysis. SWOT/TOWS Matrix Framework has been developed in this study to determine the organization’s internal strengths, weaknesses and external opportunities, threats. BCG and Ansoff Matrix have been implemented in this study to determine the organization’s current profitability and future growth rate. A SAFS framework has been adopted in this study to evaluate the organization’s adopted strategy. A final conclusion has been developed in this study to summarize the major points of view of the report. Lastly, some recommendation plans have been provided in order to help the management of the Merlin Entertainment Plc. to overcome the current ongoing issues and maintain profitability and market share growth rate in near future. This report has effectively determine whether the organization is sustainable or not through the use of different strategic marketing tools and application of several important theories. Table of Contents Executive Summary 2 Introduction 5 External Environment Analysis 6 PESTLE Analysis 6 Internal Environment Analysis 8 Value Chain Analysis 8 Primary Activities 9 Support Activities 10 Industry Analysis 11 Porter’s Five Force Model 12 SWOT/TOWS Analysis 14 Strategic Direction 15 Ansoff Matrix 15 Market Penetration 16 Market Development 16 Service Development 16 Diversification 16 BCG Matrix 17 Cash-Cow 17 Sleeping Dog 17 Question Mark 18 Star 18 Critical Evaluation of Strategy 18 SAFS Framework 18 Conclusion 19 Recommendations 20 References 21 Introduction Merlin Entertainment Plc. is an England based organization headquartered in Dorset. The organization operates in 23 different countries across the globe. The organization operates with 3 holiday villages, 11 hotels and 105 unique attractions across the globe. The organization mainly focuses on the development of unique theme parks into several short break travel destinations with attractive and comfortable destinations. The organization also provides immersive attraction in these theme parks to take care of the needs of the consumers. The organization actually operates in the global hospitality and tourism industry. In addition to this, the organization also tries to develop and implement unique marketing as well as business strategies in business operation process in order to gain potential competitive advantages over the competitors. Effective implementation of cost-leadership and differentiation strategy is helping the organization to provide cost-effective and unique differentiated services to the consumers. Day-by-day, the global retail industry is becoming competitive as well as saturated. Therefore, it is highly important for the management of Merlin Entertainment Plc. to review and evaluate its implemented strategies and focus on further development. Internal and external environmental analysis has been conducted in the sustainable strategy report to determine the key business operation factors for Merlin Entertainment Plc. strong brand name, extensive global market presence and high quality service offering are the major reasons behind the commercial success of the organization. Internal and external environmental analysis has been conducted in the sustainable strategy report to determine the key business operation factors for Merlin Entertainment Plc. Finally, some recommendations have been provided in this report based on the evaluated issues that are facing by the organizations in the global market places. External Environment Analysis Conduction of external environmental analysis is highly important for an organization as it actually helps an organization to determine the influence of several external environmental factors on the business performance of an organization. PESTLE analytical framework has been implemented in this study to conduct an external environmental analysis for Merlin Entertainment PLC. PESTLE Analysis PESTLE framework can be considered as one of the important strategic analytical tool that helps an organization to evaluate the impact of its different external environmental factors on the business operation process. Political The organization is based in UK. UK is politically stable country. In addition to this, the government of UK is trying to support the growth of travel and leisure industries. Merlin Entertainment Plc. is operating within UK travel and leisure industry. Most importantly, these industries are playing an important role in the positive GDP growth rate of the country (Pickton and Broderick, 2005, p.51). Therefore, it can be stated that the political environment is stable for Merlin Entertainment Plc. Economical Recent Financial crisis and global economic recession affected the economic environment of UK. Low disposable income and limited purchasing power are the major drawbacks of the current economic distress. Now-a-days, people are trying to save more and spend less in order to support their affected purchasing power. Looking into these aspects, it can be stated that the economic environment is not stable for Merlin Entertainment Plc (Okonkwo, 2007, p.15). Social Now-a-days, travel and tourism, and leisure industry is achieving significant growth rate as people in UK love to visit attractive tourist places and themed park with their family in holidays and leisure time. Therefore, it can be stated that social environment in UK is highly favourable for Merlin Entertainment Plc (Moore, 2003, p.72). Technological UK is technologically developed country. Themed parks, attractive leisure spots and unique themed hotels are seeking for advanced technological applications in order to meet the demand and expectation level of the target customers. The organizations within the UK leisure and travel industry can gain huge support of advanced technological functions and applications that enhances effective customer service management process (Milad, 2010, p.192). Therefore, it can be stated that technological environment is favourable for Merlin Entertainment Plc. Legal Government and several legal administrative agencies have developed some strict rules and legislations for the organizations within the travel and tourism industry. Employment issues, long working-hour and lack of sustainable business operation practices are some major legal challenges for the organizations within the industry. Looking into these aspects, it can be stated that legal environment is slightly unfavourable for Merlin Entertainment Plc (Lyons and Coyle, 2007, p.82). Environmental The government of UK has developed some environmental standards for the travel and tourism organizations in order to maintain the sustainability of environment. Pollution, growing global warming and rising carbon emission are the major environmental challenges. Therefore, according to the environmental laws, each and every organization has to follow strict rules and policies to avoid several legal challenges (Lowe, 2005, p.27). Therefore, it can be stated that environmental challenges are slightly higher for Merlin Entertainment. Internal Environment Analysis There are several internal factors that need to be analyzed by the researcher to decide whether the organization is taking responsibility to maintaining sustainability in the business operation practices or not. Porter’s value chain model has been adopted and implemented in this part of the study in order to conduct an effective internal environmental analysis for Merlin Entertainment Plc. Value Chain Analysis A value chain can be considered as a chain that includes several activities, which are operated by a specific organization operating within a particular industry, performs to offer high quality and valuable products and services for the consumers within the operating market. It is an important strategic tool that used in the conduction of internal environmental analysis. Porter’s firm level value chain model consists of two different activities, such as primary activities and support activities. Primary Activities This part will discuss about the primary activities of value chain. Inbound Logistics The service providing team of the organization sources and allocates raw materials from quality raw material suppliers, who can give quality resources in low cost. It is the significance of the inbound logistics of Merlin Entertainment Plc (Kotler and Pfoertsch, 2006, p.65). Operations The management of Merlin Entertainment Plc has developed unique operation team that helps the organization to monitor and evaluate each and every important operational activity in minimum time period with high efficiency. The operational activities include raw material sourcing, resource allocation, leisure service, energy efficiency, labour activities, service outputs and enhancement of customer satisfaction (Kotler and Lee, 2008, p.32). Outbound Logistics Merlin Entertainment Plc already has developed own distribution channel. It is decentralized in nature. This specific channel helps the executives to enhance effective communication approach among each other. In addition to this, this specific logistics approach helps the management of the supply chain team to store and distribute final products quite effectively (Kotler and Keller, 2006, p.78). Marketing and Sales Merlin Entertainment Plc. has developed unique marketing and sales department. In terms of marketing, the organization has its own internal marketing agency that takes care of PR, promotion, innovation, creativity and other types of marketing communication activities. On the other hand, the sales management of the organization considers different selling methods, such as online sales, direct sales, PR sales and third party sales in order to increase business profit and revenue. (Knapp, 2000, p.89) Service Service is the key aspect of any hotel or leisure organization. The service management team of Merlin Entertainment Plc. effectively tries to enhance significant customer service management process as effective customer service management process helps an organization within the industry to gain sustainability. Effective service and differentiated service options are major reasons behind the high brand image of Merlin Entertainment Plc (Merlin Entertainment, 2015, p.1). Support Activities This part will discuss about support activities of value chain. Procurement Merlin Entertainment Plc. generally does acquisition of products and services from external supply chain distribution channel. The organization has an external decentralized distribution channel, which maintains the resource allocation, logistics and distribution activities (Keller, 2008, p.172). Human Resource Management Merlin Entertainment Plc. has an effective human resource management team that monitors, evaluates and conducts all the HRM activities, such as recruitment, hiring, selection, training and compensation management for employees quite effectively (Kapferer, 2008, p.44). Technological Development Merlin Entertainment Plc. operates with hotels, theme parks and different leisure package offerings. The organization effectively depends upon the use of advanced technological applications in each and every service that is provided by the organization. The employees are well trai9ned about the application of installed software as well as hardware (Hoffman and Coste-Maniere, 2011, p.12). It actually helps the organization to increase its core competency. Infrastructure The organization has developed a strong and quality PR team to maintain good relationship with its important stakeholders to maintai9n a strong brand image in global market places. Effective follow-up of clients and significant employee engagement process helps the organization to strengthen its internal infrastructure (Jobber, 2012, p.28). Industry Analysis Merlin Entertainment Plc. is operating within global leisure industry and the organization is based in UK. This specific industry is experiencing several negative as well as positive factors that are listed below. Porter’s Five Forces Model has been implemented in this part of the study in order to conduct an industry analysis for Merlin Entertainment Plc. Porter’s Five Force Model Porter’s Five Force Model can be considered as one of the important strategic marketing tool that will help the researchers to determine the impact of industry competitive factors on the business performance of Merlin Entertainment Plc. Bargaining Power of the Buyers It is true that the demand for high quality, unique and differentiated services is increasing significantly among the consumers in the UK leisure and travel industry. Therefore, several organizations within the industry are trying to provide high quality and differentiated leisure services at reasonable price to their consumers based on the high bargaining power of the consumers (Henry, 2008, p.86). Therefore, it can be stated that the threat of the bargaining power is quite higher for Merlin Entertainment Plc. Bargaining Power of the Suppliers The success of the travel and tourism or leisure organizations highly depends upon the skills and efficiency of the suppliers. UK travel and leisure industry is enriched with efficient suppliers. In addition to this, the suppliers used to compete with each other to get a lump sum tender of hotel and leisure agencies. Strong and intense competition among suppliers allow the organizations within the industry to develop high-quality supply chain network in limited cost. Looking into these aspects, it can be stated that bargaining power of suppliers is minimal for Merlin Entertainment Plc (Hines, 2004, p.18). Threat of Substitutes The Merlin entertainment Plc. is operating with the hotels, theme parks and attractive tourist services for the travellers. Substitutes of these services are resorts, guest house and other safari rides. These substitutes are gaining huge popularity and demand due to growing customer interest and expectations. Therefore, it can be stated that stated that threat of substitutes is higher for Merlin Entertainment Plc (handy, 2006, p.55). Threat of New Entrants Threat of New Entrants is quite low for Merlin Entertainment Plc. as the entry cost for the new organizations is quite high. In addition to this, the consumers in this industry are brand conscious and very much loyal to their brands. High entry cost and several entry legal challenges and policies can make it difficult for the new players to grab the market share of the established organizations initially (Haig, 2011, p.118). Therefore, it can be stated that threat of the new entrants for Merlin Entertainment Plc. is low. Degree of Industry Rivalry The UK leisure and Travel & Tourism industry is highly competitive as well as saturated. In addition to this, the organizations in this industry are continuously trying to adopt and implement new strategies in order to gain potential competitive advantages over their competitors (Frank, 2004, p.42). The organizations are significantly trying to offer high quality and unique differentiated services at competitive price package. Looking into these aspects, it can be stated that the degree of industry rivalry is seriously high for Merlin Entertainment Plc. SWOT/TOWS Analysis SWOT and TOWS Framework are quite similar to each other. These are important strategic marketing tool that helps organization to determine internal strengths weaknesses and external opportunities, threats. Following is the SWOT/TOWS Matrix Framework for Merlin Entertainment Plc. SWOT/TOWS Threats Huge competition. Unfavourable economic environment. Growing pollution and global warming issues. Opportunities Population growth. Technological advancements. Growing demand for sustainable, differentiated and cost-effective services. Weaknesses Too much differentiation. Lack of stakeholder engagement. Insufficient manpower. The organization can focus on both cost-leadership and differentiation strategy to reduce the degree of high industry rivalry. The organization can focus on effective environmental sustainability in business operation processes in order to maintain its high brand image. Economic cost-leadership pricing strategy will help the organization to offer services according to the purchasing power of target customers. The organization needs to strengthen its workforce by recruiting more number of capable employees in order to ensure effective business operation process. The organization needs to focus on stakeholder engagement process in order to enhance effective decision making and strategy development process. The organization should develop strong research and development team before implementing any service differentiation strategy. Strengths Large market share and high brand name. Huge brand loyalty. Strong promotional campaign. Great customer service. The organization has a strong brand name and large market share that can be considered as the major core competency of the organization. The customers are very much loyal to the brand due to its customer-centric strategies. Great customer service has created significant benchmark of the organization within the industry. Effective promotional campaigning and unique advertisements are helping the organization to create huge brand awareness among the target customers. UK is technologically developed. Therefore, the organization needs to use more technologically advanced applications to meet the customer satisfaction level. Demand for sustainable, unique and differentiated services is increasing. Therefore, the organization should try to focus on effective strategy development process. The population in UK is increasing. Therefore, the organization needs to focus on more aggressive strategy implementation process. Strategic Direction This part of the report will analyze the strategic direction of Merlin Entertainment Plc. by using Ansoff and BCG Matrix framework. Ansoff Matrix Ansoff matrix can be considered as an important strategic planning tool that offers a specific framework to the researchers for future growth of organizations. This matrix consists of four different aspects, such as market penetration, market development, product or service development and diversification. It is also known as product-market strategy matrix. Market Penetration The organization effectively provides its range of differentiated services in 23 different countries across the globe. This market differentiation strategy has helped Merlin Entertainment Plc. to increase its market share and popularity in global market places (Cowan, 2005, p.66). Market Development The organization is operating in 23 countries. Slowly and gradually, the organization is trying to expand its market area through global expansion strategy. The organization has significantly established its services in different parts of the globe (Copley, 2007, p.12). Therefore, it can be stated that the organization has succeeded to develop an effective market place for business operation activities. Service Development Merlin Entertainment Plc. has developed wide range of services for its target customers. Most importantly, the organization has differentiated its service portfolio. Theme park, unique attractions, hotels and holiday villages are different kinds of services that are offered by the organization (Churchill, 2009, p.99). In addition to this, the organization also provides different types of package tour services for the visitors to meet the demand of the target customers. Diversification It is true that, travel & tourism and leisure organizations have to maintain diversification in business operation process to gain success. The organization has effectively diversified its business process across the globe into different segments, such as leisure management, package tours, hotels, theme park, unique attractions and significant holiday villages. This specific diversification activity has helped the organization to gain huge popularity among the target customers (Cheverton, 2006, p.61). BCG Matrix BCG matrix is also known as growth-share matrix that helps the researcher to determine the market share growth rate of the products or services that are offered by an organization. This matrix consists of four different phases, such as cash cow, sleeping dog, question mar and star. These four aspects are described below. Cash-Cow Unique attractions, such as package tours, sight-seen, safari ride packages and entertainment shows during visit are considered as cash-cows as these services have high market share but the industry is growing slowly and steadily (Burrow, 2011, p.96). It is important for the management of Merlin Entertainment Plc. to consider these facts in order to gain more profit. Sleeping Dog Holiday villages of Merlin Entertainment Plc can be considered as sleeping dogs due to having low market share and low market growth rate. The demand for resorts and themed guest houses are increasing significantly (Burgemeister, 2003, p.21). Therefore, the holiday villages are losing their market share to resorts and theme guest houses in country-side areas. Question Mark Hotels of Merlin Entertainment Plc. can be considered as question-mark services as these have high growth rate but low market share due to intense market competition. It is important for the management of the organization to change these in concept traditional hotels to create some unique values among customers (Brown, 2009, p.104). Star Theme parks of Merlin Entertainment Plc can be considered as the star products or services due to high market share and growing market demand. Theme parks are highly accepted by the tourists or visitors of different global areas (Barker, 2012, p.27). Critical Evaluation of Strategy This part of the study will critically evaluate the strategy using SAFS Framework. SAFS Framework SAFS Framework stands for suitability, acceptability, feasibility and sustainability that will help to evaluate the strategy adopted by Merlin Entertainment Plc. Suitability The organization has adopted and implemented several differentiation and diversification strategies within the global leisure and travel & tourism industry that suits its nature of business operation practices. Acceptability Adoption and implementation of differentiation strategy has been accepted by the target customers as the industry is growing significantly and demand or popularity of people for these services are is increasing effectively. Feasibility Strong differentiation, aggressive global diversification, unique PR and effective promotional campaigning are quite responsible for the growth of the organization. It is feasible that the organization will maintain its growth rate through the continuation of these activities. Sustainability Effective customer service management process, significant environmental sustainability and development of environment friendly theme parks will help the organization to maintain sustainability in its overall business operation process. Conclusion It is clear from above analysis and evaluation that Merlin Entertainment Plc is one of the leading leisure and tourism organizations in this world. The organization has developed and implemented several unique strategies in business operation processes in order to gain potential competitive advantages over its competitors. Most importantly, the management of the organization has adopted and implement unique business level strategy, such as aggressive differentiation strategy and strong global market expansion strategy that helped the organization to secure high market share. There are some major challenges for the organization too. Recent economic distress has affected the purchasing power of people. Therefore, consumers are trying to limit their purchasing activities. It somehow affected the growth of the each and every organization in leisure and tourism industry. Most importantly, the organizations are providing highly differentiated services. Therefore, it can result losing outcome if the organization does not take any initiative to overcome the issues. In addition to this, high market saturation and market competition are some other challenges for the organization that needs to be considered by the management of the organization. Following recommendation plans will help the management of Merlin Entertainment Plc. to overcome ongoing issues quite effectively. Recommendations First of all, it is highly important for the organization to implement cost-leadership strategy. It will help the organization to reduce its overall business operation cost. This cost reduction strategy will help the organization to offer high quality and differentiated services at economic price level. This strategy will support the affected and low purchasing power of the target customers (Aaker, 2004, p.48). Secondly, the organization should try to strengthen its workforce by hiring more number of skilled and knowledgeable employees. It is true that, use of technological applications can help an organization to increase efficiency in overall business operation process. But, lack of manpower can limit the production and effective customer service management prospects. Therefore, skilled and knowledgeable employees should be hired by the management of the organization (Baker, 2001, p.99). Last but not the least; it is highly important for the management of the organization to ensure effective stakeholder engagement aspect in the decision making process. This aspect will help the organization to develop effective strategies as the stakeholders will propose different types of unique and valuable strategies in board meeting. 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