Industry – Hotel, Organisation’s Name – Crowne Plaza Canberra
The hotel comprises of 296 rooms. Crowne Plaza is a part of InterContinental Hotels Group which is therefore one of the leading hotel chains in the world. Crowne Plaza as a brand has more than 400 hotels in more than 65 countries. Crowne Plaza Canberra offers facilities such as an onsite fitness and wellness centre, self-parking, valet-parking, in-room dining, hotel bar that is used for light refreshments, a restaurant where ala-carte, buffet breakfast, lunch and ala-carte dinner is served 7 days a week, 24 hours business centre, complimentary internet.
Market – Business/ Travellers, Free Independent Travellers, Government Delegates, Leisure Travellers, International Visitors, Young Adults
In the last few years it can be seen that Australia has attracted many tourists. A rapid increase in terms of foreign investors seeking for quality assets and similarly on the other hand Chinese investors are therefore looking for long term generational wealth income.
Crowne Plaza’s business environment analysis:
Situation Analysis is a process of assessing the current situation facing the organisation, arriving at a set of assumptions about future, identifying key strategic issues which are likely to confront the organisation. (Reed, Peter, 2014, p. 65). It therefore commences with a review of the external environment in which there are forces that can be described as being remote or macro-environment which comprises of economic, socio-cultural, climate change, technology, and demographical conditions.
Crowne Plaza’ Macro Environment Analysis
Political Economic Social Technological Environment
International Relations, Legislation, Political unrest Inflation, Exchange rates, Fiscal Policy Staff is bilingual (different languages) Hotel needs to be up to date with latest technological changes such as wireless internet, HDTV’S etc. Environmental friendly sustainability programs such as IHG Green Engage, waste consumption, recycling etc.
Emerging Markets, Having the benefits of a significant increase in the tourism/ hospitality industry in Australia.
Employee retention is a threat from brands such as Marriott, Hyatt, Hilton, change in consumer demands could hurt Crowne Plaza and can have negative impact on brand, similar services provided by other hotels
Crowne Plaza’s Micro-Environment Analysis
The forces which comprises of suppliers, clients, staff, market demand and supply are described as near environment. (Reed, Peter, 2014, p. 65).
Location, Biggest and Largest Loyalty Program (IHG Rewards Club), trained and efficient staff, number of rooms 296 Expensive room rates, rooms similar to the other hotels, Poor Interior Designing of the hotel
Crowne Plaza works with different suppliers that at all times meet the hotel requirements and therefore it increases the value of the products and services delivered to the guests. Porter argues that competitive intensity in an industry and hence industry profitability depends on collective effect of five forces. (Reed, Peter, 2014. p. 74). The Five Forces model is a simple but influential tool for the identification where power lies in a certain business situation by using the outside-in perspective (Johnson, Scholes ; Whittington, 2008).
Therefore, Porter’s five-force model: forces driving industry competition (Reed, Peter, 2014, p. 73) has been found useful as it increases the productivity of Crowne Plaza. As this industry is all about being profit oriented, this model helps in determining competition, eventually generates higher earnings for its investors, sets up a foundation for a more detailed research. Hotel Industry is all about competitions and such a model has been designed on the basis of competition. The Porter’s five-force model increases the chances of better co-operation (Downes, 1997). A further benefit according to Grundy (2006) for hotels is that the managers set a higher focus on the external environment in comparison to the traditional ‘SWOT’ analysis. The goal of the Five Forces framework is not only to assess industry profitability and attractiveness but also to comprehend the “underpinnings of competition and the root causes of profitability” (Porter, 2008, p. 29)
1) Potential Entrants – There are many hotel giants that already exists such as Marriott, Hyatt, Accor, etc. If a new hotel chain plans to enter in a competitive market then they have to go through a lot as this industry is all about being up to date with technology. If a new hotel chain can adopt to technology in a unique way to sell its products or services, customers might be impressed with it and might switch. Crowne Plaza handles the threat of new entrants by constantly innovating new products and services for their guests.
2) Power of Buyers – Guests hold the advantage as hotels can’t make money, profits until and unless their facilities are used. If the guests of Crowne Plaza don’t like their services/ products it will be very easy for them to switch brand resulting in losses for the organisation. It is tackled by creating the world’s largest loyalty program IHG rewards club where a guest is valued, acknowledged and recognised.
3) Power of Suppliers – Crowne Plaza have multiple suppliers. Suppliers hold an upper hand in terms of costs being offered to a particular hotel. Competition among hotels such as Marriott and Hilton will influence the suppliers to increase their rates on the products as well as services that are being supplied. Crowne Plaza has therefore build effective supply chains with a variety of suppliers.
4) Competitive Rivalry – Rivalry can be classified as competition between the hotels in order to increase market share. An example can be seen where Accor Hotels have merged with Mantra Hotel Group to obtain competitive advantage. Therefore, Crowne Plaza an InterContinental Hotel Group Brand offer excellent services to all its guests and is therefore competitive enough.
5) Threat of Substitutes – Substitutes are classified as where a particular product/ service meets the wants of the guest’s in different ways. Crowne Plaza tackles the threat of substitutes by being a service oriented brand instead of being product-oriented. Crowne Plaza as a brand goes one step ahead in understanding the needs/ wants of their guests.
The Boston Matrix Model is not useful for such an organisation as it doesn’t include the movements of external competitors which can be used when comparing the two organisations. This model therefore doesn’t guarantee profitability, success. Outcomes based on Cash Flow forecasts are risk related as customers are very particular. An example can be seen where if a competitor provides a product then it is likely that they will respond to it. The assumption that market growth is an adequate indicator of market attractiveness is similarly flawed as there are considered to be other aspects that influence market attractiveness such as the factors identified by Porter in his five-force model. (Reed, Peter, 2014, p. 121). This model also provides limited understanding of comparison between two organisations in terms of investment opportunity. (Reed, Peter, 2014, p. 121). Under this model dogs sometimes as cash cows to other businesses to gain competitive advantage. (Reed, Peter, 2014, p. 119). The use of such a matrix would eventually result in low profits. (Armstrong ; Collopy, 1994).