Module Code
Background
Business Situational Context
Hilton London Bankside is one of the Hilton hotels and resorts that offer hospitality services in the UK. It is accessible from London Bridge and equipped with state of the art facilities to increase its competitive advantage. The resort operates in a highly competitive environment which consists of other Hilton hotels. Nevertheless, product differentiation helps the hotel to compete favorably and maintain high profits. The goal of Hilton London Bankside is combating the high demand for rooms and offering its clients a comfortable stay. It offers complimentary services including fitness facilities and team building opportunities. Strand (1996, p. 87) states that Hilton hotels in Europe were started with the goal of meeting the demand for rooms by business people and tourist, mainly after the launch of jet planes in the late ‘50s. Thus, Hilton London Bankside aims at pursuing this objective. It is notable that Hilton London Bankside is occasionally affected by political and macroeconomic factors.
Importance of Analyzing the Organizational Case Strategy and Competitive Environment
Evaluating the organizational case strategy helps to define the business context and feasible plan for future viability. On the other hand, examining the competitive environment establishes the position of an organization in the market and strength of the competitors. According to Kraja and Osmani (2015, p. 120), companies need to understand the competitive environment and create strategies that develop sustained competitive advantage. Business management can utilize the analysis to identify strengths, weaknesses, opportunities and threats that might impact operations either positively or negatively. Hence, a business can change its structure, operations, services and products to ensure profitability and future sustainability.
Background to the Strategic Communication Plan
A communication plan is necessary to inform the employees and customers of proposed strategy. The communication will involve an interaction of executive and staff to create consensus on the implementation of the concentrated growth strategy. The management will rely on the head of departments to deliver the finer details and oversee the implementation of the strategy by the employees. Meetings, notes, and emails will be used as the primary methods of internal communication. Further, the hotel management will communicate through its website to inform the public and potential customers of the planned changes. Advertisement material will also be placed on different platforms to inform the public of the implemented changes.
The purpose of this report is to suggest and analyze concentrated growth strategy for Hilton Hotel Bankside. Also, the report aims at offering strategic process for implementing this strategy and managing change. It will achieve the purpose by applying various strategic management theories and principles.
The first part of the essay presents the chosen organizational business strategy for Hilton London Bankside. It explores the concepts of concentrated growth strategy and how to implement it. Additionally, the report examines the internal and external environment of the hotel to offers its opportunities, threats, strengths, and weaknesses. In the second part, the report analyzes the implications and justification of implementing the presented strategy. This section also explores how to manage changes in an organization. The supplementary focus of the second part is the relation of the strategy with the hotel's mission and goals, congruent of the strategy, and application of strategic management theories in the analysis of the strategy. Finally, the paper will present a summary of the report and why business managers should select the presented strategy.
Presentation of Main Ideas
The chosen strategy
The chosen organizational business strategy is a concentrated growth strategy. A concentrated growth strategy entails concentrating on increasing market share in an existing market. In markets where there is a constant growth in demand, concentrated growth strategy seems to be low risk. The basic formula of concentrated strategy is focusing on increasing the utilization of a particular product by the existing clients, pulling competitor’s customers or making new clients. Pearce and Harvey (1990, p. 61) note that concentrated strategy is whereby a company channels its resource to the profitable expansion of a single product, in a given market, with a certain technology.
The chosen strategy must be assed to ensure that it is in line with the corporate objectives of the firm. The assessment of the strategy may involve various levels of analysis depending on the business model of the organization. The situational level analysis of the strategy involves the critical examination of the operating environment including the analysis of external and internal stakeholders. Additionally, the analysis of the chosen strategy must consider the establishment of strategic direction of the firm, its mission statement, and the organizational objectives. Strategy formulation or selection involves setting up of new practices and structures. Therefore, the financial resource capability of the firm must also be taken into account. When the strategy is carefully chosen, the implementation process begins, which involves setting up of the organization’s processes as well as the development of competitive advantage.
Hilton London Bankside has the potential of dominating the entire Bankside locality by adopting a concentrated growth strategy. Empirical evidence proves that the largest factors on market success are those traits of companies that implement a concentrated growth strategy (Cooper, 1979). The factors include the capacity to determine market requirements, understating of the consumer behavior, client price sensitivity and efficiency of promotion. This hotel and resort can concentrate on expanding the existing products including guest services, foods and recreation services instead of venturing into new products. Also, Hilton London Bankside can strive to dominate the Bankside region rather than attracting customers from new areas. In this instance, the hotel will enjoy several strategic capabilities including marketing capabilities, efficiencies of scale, cost reduction abilities and service differentiation.
The process of forming and implementing the concentration strategy at Hilton London Bankside should involve midlevel managers and department heads. These parties understand the hotel operation, customer needs and can identify areas of improvement. The inclusion of various stakeholders in the development and implementation of business strategy ensures that all stakeholders are committed to ensuring the success of the strategy in promoting business growth. One study found that involving midlevel managers in the formation of strategies is linked to improved organizational performance (Wooldridge and Floyd, 1990, p. 231). Most importantly, managers have the required skills to apply various theories such as the system theory in the implementation of the strategy to ensure that the strategy promotes the utilization of the available organizational resources to significantly support its performance. Thus, these managers and head of departments are essential in formulating the concentrated growth strategy.
Various steps can be adopted to implement this strategy. First, the hotel should adopt a pure concentrated growth. This approach entails product and service improvement, increasing promotion, expanding channels and adjusting the pricing. The second step in this process is the market extension. Hilton London Bankside can focus on expanding its products and services to the existing customers in the same region. The expansion of services and products should involve the introduction of new services that will contribute to market growth by attracting new customers (Peng, Zhao,. and Mattila, 2015 p 144). Promotion strategies can help the hotel and resort to attract the current clients from the competitors. The organization should also ensure that its leadership is well informed of the strategy adopted and resources that have been put in place for its implementation since leaders are responsible for resource mobilization to facilitate the realization of business objectives. Lastly, Hilton London Bankside can focus on product extension. This approach requires a business to modify its existing products to make them more appealing to the existing and new clients.
A. The organization’s external competitive environment
Opportunities
Hilton London Bankside has various opportunities that match the proposed concentrated growth strategy. The emergence of diet and fitness related conditions such as obesity presents an opportunity for the hotel to modify its products and services. The hotel can improve its fitness facilities and adjust its menu to capture this opportunity. Another opportunity for Hilton London Bankside is the demand for budget hotels. Ideally, budget hotels are becoming a vital sector of the hospitality industry (Peng, Zhao, and Mattila, 2015, p. 139). Adjustment of the pricing strategies can help the hotel to meet the increasing demand for the budget hotels. The advancement in technology is also an opportunity for Hilton London Bankside to implement the concentrated growth strategy. The use of the modern technology on Hilton London Bankslide will enable it to move a step ahead of its competitors by ensuring that it diversifies its products to meet the changing customers’ needs. Additionally, the modern technology will allow the organization to adopt effective pricing strategies that improve its competitive advantage and increase its market share. Product and service development can be disclosed to customers through the hotel’s website. Additionally, the management can enhance the booking and reservation experience through the online platform. The firm can make use of various available online platforms to carry out its marketing as well as collecting important information relating to the market through customer feedback. Market information is instrumental to improving market operations and customer service.
Threats
The primary threat of Hilton London Bankside is the decline in economic growth. The growth of an economy is accompanied by increased consumer spending that promotes the growth of entrepreneurship. Therefore, declining economic growth constitutes a significant threat to the implementation of the new strategy. The UK might experience uncertain economic growth prompted by the Brexit. Begg and Mushovel (2016), argue that the Brexit has effects on jobs and the public finance. These effects might decrease the demand for luxury hotels due to loss of income by potential customers.
According to Portes and Forte (2016), the Brexit referendum led to the loss of employment for some citizens. Thus, economic uncertainty prompted by Brexit presents a critical threat to Hilton London Bankside. Terrorism and political instability also present a threat to the hotel as it strives to implement the concentrated growth strategy. For instance, in 2016, there were several terrorist attacks around the world which affected the hospitality industry adversely. The growing competition due to emergence of new firms that are growing rapidly threatens the success of the concentrated growth strategy. Competitors are constantly adopting similar strategies due to availability of information to ensure that they surpass their counterparts in terms of the benefits derived from the strategy (Cooper, 1979). This constrains the ability of Hilton London Bankside to benefit optimally from the concentrated growth strategy.
B. The organization’s internal operating environment
Strengths
Hilton London Bankside is strategically located which makes it attractive to tourist and other people who visit London. Additionally, the hotel is equipped with high-end facilities and state of the art furnishing. This furnishing helps the hotel to compete favorably in the market and even retain loyal customers. Further, Hilton London Bankside offers complementary services such as team building opportunities, WiFi, fitness facilities to enhance its competitive advantage. Good reputation around the Bankside region is a strength of Hilton hotel. It is notable that most customers have appreciable services in other Hilton hotels which can attract customers to the Bankside outlet. Client retention schemes and service customization make the hotel outstanding in the hospitality sector. The great reputation of Hilton London Bankside enables it to build high customer loyalty which is vital to its ability to achieve a sustained market growth as well as the implementation of its pricing strategies. Hilton London Bankside can confidently adjust its business strategies without the fear of losing its market share. The implementation of the concentrated growth strategy will significantly enhance these strengths.
Weaknesses
Hilton London Bankside occupies a large premise making it inflexible. The size might affect its strategy of operating as a budget hotel and expanding services to reach middle-class customers. Evidently, the hotel has numerous guest rooms and customized services that are tailored only for high-end clients. Further, the vulnerability of workers strike is a weakness to Hilton London Bankside. Workers strikes might impact the concentration growth strategy adversely. Ideally, the hotel and resort depend on its employees for product development, extension, and market expansion.
Critical evaluation
Implication and justification on how strategies are implemented
Organizations are structured in multiple different ways based on their goals and targets. It is evident that the structure of a firm will determine the ways in which it functions and performs (Ezigbo, 2012, p. 55). The implementation of strategies in any organization adheres to the established structure whereby responsibilities are allocated to different entities including departments, teams, and individuals. In the process of implementing new strategies, the management plays a central role in mobilizing the staff and stakeholders to adopt the changes. Implementing concentrated growth strategy at Hilton London Bankside should be a combined effort of the management and all employees. The implications of implementing this strategy would be improved financial performance for the hotel in the long term. Besides, executing the concentrated growth strategy would help the hotel and resort to compete favorably in the hospitality sector.
How the changes are managed effectively
Changes can be managed by adopting the five principles proposed by Kaplan and Norton. First, the strategy is translated into operational terms. The management should ensure the strategy is understood by their followers to streamline the execution process. The management strategies should be adjusted to ensure that the business practices used embrace errors rather than fearing it. Additionally, the managerial practices should encourage change and provide a leeway to the realization of the intended goals of the new strategy. The management should create systems that allow employees to interact effectively as this promotes personnel development. Further, employees should be allowed to participate actively in the decision-making of the firm to increase the commitment to the implementation of the desired organizational change. The second principle is aligning the organization to the proposed strategy. A strategy should fit into the organization's operations and goals for smooth implementation. The adopted strategy must be in line with the corporate objectives of the firm for effective realization. Third, the strategy is made a daily endeavor by all employees within an organization. The employees of the firm should have the strategy in mind and work towards achieving it. The fourth principle is making the strategy a continuous process through setting its budget, organization frequent meetings and creating review methods. Lastly, change is managed by mobilizing it through executive leadership (Kaplan and Norton, 2001, p. 41). Hilton London Bankside must ensure its leadership is effective enough to facilitate the intended transformation by the new strategy. The strategy should be broken down to manageable steps, and the leaders should provide the necessary reinforcement to ensure that the new strategy promote its vision and mission statement.
A. How the selected strategies are consistent with purpose and primary objectives of the business
The mission of Hilton Hotels is building its rich heritage and making the hotels the priority of the world’s travelers in the competitive international market. To achieve this vision, the hotels plan to conduct aggressive expansion, improving its resources and offering innovative services and products to diverse customers (Sufi and Lyons, 2003, p. 256). The strategy proposed in this report is concentrated growth which entails product development, product expansion and adopting clear marketing initiatives. Product development and expansion focuses on modifying the existing products to make them attractive to the customers. Further, product development contributes to the uniqueness of Hilton London Bankside’ brands, resulting in significant market growth. Thus, this strategy is consistent with the mission of offering innovative services and products to its clients.
B. How applied strategies are congruent and form a viable business model
A viable business model consists of four critical perspectives including customer value proposition, profit formula, key resources and key methods (Johnson, Christensen, and Kagermann, 2008, p. 58). Thus, a strategy should define the target customer, prospective profit, the required resources and how to implement the change. Congruence contributes to the permanence and reduces the uncertainties that may be associated with a business practice (Burgelman and Doz, 2001). The strategies employed in this report are congruent and constitute a viable business model since they define the customer perspective and strategic processes. Additionally, the strategies will result in profit maximization if implemented and are viable with the existing resources. Moreover, the suggested concentrated growth strategy will significantly contribute to the competitiveness of the firm through product modification to maximize customer benefits (Burgelman and Doz, 2001). Thus, Hilton London Bankside will realize improved performance through these strategies.
C. How I have employed strategic management theories in my report
The report has applied various theories of strategic management in the case of Hilton London Bankside. I have adopted a system perspective in proposing a concentrated growth strategy for the hotel. In proposing this change strategy and strategic processes, I thought of an organization as a system that is composed of departments, individuals, processes, and stakeholders. Further, I considered the human resource of the hotel since employees are the agents of change in an organization. The strategies presented in this report consider competitors and other players in the hospitality industry. Thus, it employs resource dependence theory is evaluating the hotel’s performance and growth strategy.
D. My function as an internal change agent in enhancing business
I have analyzed the hotel’s external and internal environment to identify threats, opportunities, shortcomings, and strengths. The findings of this analysis can be used by the management to implement growth strategies. Besides, the various suggestions given in the report upon the identification of challenges and weakness Hilton London Bankside faces in the implementation of its business model will help to improve the managerial practices and formulation of new strategies. Also, I proposed concentrated growth strategy, a process of enacting it and principles of managing the change. These strategies are viable in improving business performance by attracting more customers and increasing profits. The suggested concentrated growth strategy helps in the modification of products and services, which contributes to firm’s competitive advantage as well as market growth.
Conclusion
In the life cycle of business, changes are evident based on the business operations, location and market forces. Strategic management is required to initiate, implement and manage these changes. The hospitality industry specifically requires strategic changes due to evolution in technology, economy, and politics. These factors affect the hospitality industry directly since they affect people’s income, ability to communicate and share and the willingness to travel to various destinations. Thus, the management of a hotel and resort business should evaluate the market consistently to adopt strategies that promote continuity and boost profitability. Evidently, strategic management is indispensable in the hospitality sector.
This report has proposed concentrated growth strategy for Hilton London Bankside. Concentrated growth strategy involves focusing on the current products, on the existing market and existing customers. In the case of Hilton London Bankside, the hotel should concentrate on modifying its existing services and products. Then the hotel should adopt strategic marketing strategies to communicate the changes to the existing customers. Implementing this strategy requires combined efforts of the management and entire staff. The management can manage the change through communicating it to the employees, aligning the hotel's goals with the change, making it an everyday endeavor, making the change a continual process and mobilizing it through executive leadership.
Organizational managers should adopt the outlined strategies since they present a viable business model. The strategies have incorporated the aspects that the management should consider when selecting strategies to improve business performance. Notably, the proposed plan is cost effective since the organization will not have to hire additional employees or experts. The current employees can improve the business products and market it to potential customers. Also, the managers should select the strategies since they value the client as the most valuable asset to business. Implementing the concentrated growth strategy will result in customer satisfaction and retention with is a primary goal of any firm in the hospitality industry. The strategies also fit in the hospitality sector which is very competitive. Conclusively, the strategies focus on the market structure and how to improve competitive advantage.
References
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