Executive Summary
The proper analysis of both micro and macro environmental factors of a business is important since it keeps any particular organization ahead of its competitors and also ensures that operations are stable. The environmental analysis provides the business framework upon which the organization leverages for its strategic plan. It is important that companies keep in touch with various environmental changes that take place so as to improve the sustainability of their operations. The hospitality industry is among the sectors that face frequent changes in the environmental factors thereby triggering the need for global companies such as Hilton Hotels and Resorts to accurately analyze such factors and understand their impacts of its operations. Hilton has over the years managed to expand its business to other segments and successfully maintained sustainable profits in such segments due to its ability to take into consideration various macro and micro environmental forces. The report, therefore, discusses significant macro and micro environmental factors affecting Hilton Hotel & Resorts and provides a recommendation on how the company can improve its operations.
Introduction
The environmental analysis provides the business framework upon which the organization relies for its strategic plans. With the frequent changes in the hospitality industry and the fact that there are new entrants willing to invest considerable amounts of financial resources to compete with others, it is important that Hilton considers having an accurate analysis of its environmental factors and how they affect business operations. The report, therefore, provides in-depth analysis of both macro and micro environmental factors and provides recommendations on how to best react to that factors.
Hilton Hotels and Resorts is a global brand with over 4500 hotels in more than 100 nations which makes it among the largest competitors in the hospitality industry. Founded in 1919, the company has grown and expanded beyond borders where its branches include Conrad Hotels and Resorts, Embassy Suites, Hilton Garden Inn, Waldorf Astoria Hotels and Resorts amongst others. Among the products and services offered include; Food and beverages, guest rooms and property operations with the target market being high-end consumers who are in a position to pay for superior products and services. The vision of Hilton Worldwide is ‘To fill the earth with the light and warmth of hospitality through exceptional experience at every hotel, for every guest and every time’. The mission is ‘To be the most hospitable company in the world by creating heartfelt experiences for guests, meaningful opportunities for team members, high value for owners and a positive impact on the communities’.
Description of internal and external factors affecting Hilton Hotels and Resorts
Macro environmental factors include uncontrollable factors that have an influence on the decision making the process of Hilton Hotels & Resorts and interfere with performance and business strategies designed to improve competitive advantage. The micro factors include Demographics, economics, social and cultural aspects, technological trends and legal, political factors. Demographics is concerned with changes in the general population such that Hilton has to identify how household patterns and issues of diversity affect its operations. Social-cultural factors include changes in the needs and expectations of different cultures such that Hilton is forced to cope with the demands of consumers in the segments it penetrates. Economically, issues such as recession and changes in the banking rates limit investment hence forcing Hilton to cope with the changes and consider alternative ways of avoiding break down in functional operations. Technological innovations put pressure on Hilton Hotels and Resorts since failure to be early adopter would lead to loss of competitive position to firms such as Intercontinental Hotels. Politically, changes in regimes, business regulations and political instability in some nation interfere with Hilton’s operations hence the need for the organization to consider more stable environments to operate in. Competition in the hospitality industry is stiff hence the need for Hilton Hotels and Resorts to caution itself earlier through superior goods and services.
Microenvironmental factors, on the other hand, are those that could be changed or controlled by an organization including suppliers and consumer relationships, intermediaries, employees and the media. Hilton Hotels and Resorts need to maintain a good relationship with suppliers and consumers to enhance sustainability. The media and the public are also critical in the way they influence organization’s reputation hence the need to share information in ways that show effective corporate social responsibility. Employees are important assets at Hilton hence the need to keep them motivated through various initiatives such as training and promotions. Intermediaries including consultants and brokers are also important components of business microenvironment and play critical roles in moving the organization towards achieving its goals and objectives.
Significant external factors affecting Hilton’s operations
Demographics
Demographics keep on evolving such that many customers have a variety of reasons when they choose to engage Hilton as their preferred Hotel & Resort. Baby boomers population is rising such that it is imperative for Hilton to consider taking advantage of the increasing younger consumers who form the group that likes traveling and have a higher lifestyle. There is also demographic changes regarding the increasing percentage of the aging population having the desire to travel hence the demand for hotel and resort products and services among the group is also expected to rise. The ability of Hilton Hotels & Resorts to understand the needs of the identified segments and come up with value adding business strategies is therefore among the ways the organization could increase its market share and be able to penetrate markets where demographic changes have a positive impact on business sustainability.
Future competition
The future competition also has a major impact on Hilton’s long terms success and sustainability in the industry. The changing global trends and the fact that competitors such as Intercontinental Hotels are not only branded but strive to provide a range of products and services is an inspiration for Hilton to come up with innovative ideas on how to provide travel and recreational solutions to millions of consumers across the globe. The future competition also makes it imperative for Hilton Hotels to adhere to various industry and federal regulations related to the safety of consumers regarding the food offered and the emergency facilities in the hotels.
Significant internal forces affecting Hilton’s operations
Intermediaries
There is an increasing number of intermediaries in the hotel and hospitality industry which means that Hilton has to move ahead of its competitors in developing strategic partnerships with intermediaries. Relationships with intermediaries are important for Hilton’s since it is through such partnerships that the company understands the industry trends and how to best fulfill needs and expectations of consumers. Hilton depends on intermediaries such as venue finders, travel agencies and distribution partners who play major role in improving the visibility of Hilton. Furthermore, intermediaries play a major role in arranging for meetings, conferences, and exhibitions where Hilton could show consumers its products and services and enhance the visibility of a global scale.
Employees
Employees are important competent of the internal factors of Hilton such that they have to be motivated to commit themselves to the organization’s aspiration. Failure to consider employees as the most valuable assets is among the reasons that lead to customer dissatisfaction with the services provided hence affecting financial performance and competitive position of the firm. Hilton has to move ahead of its competitors in managing talents and training its staff to improve guests’ experience. Hilton requires competent employees who interact with guests in the most appealing manner, and that teamwork prevails across the organization. To stay close to consumers, therefore, employees need to be well compensated with a clear chain of communication and utilizing workers energy in the most effective way.
Conclusion and recommendations
Hilton Worldwide has made significant steps in promoting brand visibility through its corporate social responsibility products and its ability to offer superior and unique products and services. The company has managed to cope with both micro and macro environmental forces that affect its operations hence the reasons why it has managed to expand rapidly into other segments across the globe.
Recommendations for keeping up to date with external environmental changes include the need for Hilton to identify reliable sources of information on the industry trends. Among the best sources are trade shows and conferences where Hilton Hotels and Resorts will have the opportunity to learn about what competitors are doing, new products in the market and industry trends in terms of regulations. Trade shows and conferences are also the best way of building networking opportunities such that it is possible for Hilton to identify segments that could promote its growth and sustainability. It is through credible information that Hilton will understand demographic changes and the impact of future competition hence design interventions in line with the expected changes.
Recommendation for monitoring internal forces include the need for Hilton to consider developing long-term strategic relationships with intermediaries and employees as a way of triggering proactive manner with which they respond to business goals. Strategic partnerships with intermediaries such as travel agencies involve the need for Hilton to help them grow by sharing business ideas on how to expand markets. With employees, Hilton needs to find ways to attract and retain competent employees who are able to impact on customers’ loyalty through their closeness with clients. It is important for Hilton to consider motivating its workforce through training and development programs, offering promotions, sharing profits and giving them appropriate compensation.
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