Management
In order to ensure successful conduction of business, organizational skills and effective planning is required. Further, analysis of competitors, understanding risks, and staying focused.
The selected business is business of guest house. Rooms are provided to customers so that they can stay there to take rest. They are also facilitated with food including breakfast, lunch, and dinner. They can have their food at their door step or they can come to VIP lounge that is made in order to facilitate customers in a better manner.
Organizational Chart
Industry of Business
The business of guest house is included in the hotel industry.
Porter Five Forces Model of Industry
Threat of New Entrants
The threat of new entrants is low, because the hotel industry is capital intensive, and huge investment is required.
Bargaining Power of Suppliers
The bargaining power of suppliers is low because of differential advantage or uniqueness, and low supply power. The suppliers of hotel industry are, however, fragmented for decreasing bargaining power in order to attract customers.
Bargaining Power of Buyers
The bargaining power of buyers is low, because the number of buyers is low, and losing one customer is not effective to make a difference.
Threat of Substitution
The threat of substitution is moderate because customers can find rooms that are available at reasonable prices in the hotels. Further, the switching cost is low, and also cheap alternatives are available to the customers.
The above conditions are indicating that it is a good industry to get into because competition is low, and it will be easy to attract customers by offering them reasonable and affordable prices. Our business of guest house can help in earning revenue and achieve profitability by doing business in an effective manner.
Direct competitors
Direct competitors of our business will be hotels and guest house in the nearby areas that are providing rooms to customers.
Indirect competition
Indirect competition will be from the property dealers, who provide information regarding availability of small houses at affordable prices.
Competitive Advantage and Sustainable Competitive Advantage
Competitive advantage of our guest room is in terms of differentiation and cost. Rooms will be made available to customers at reasonable price. Further, provision of clean rooms, breakfast, lunch, and dinner will help in achieving sustainable competitive advantage. The business will be focused on customer value creation as well as on ensuring high performance by utilizing resources and allocating them in the best possible manner.
Situational Analysis
The situational analysis can be conducted with the help of SWOT (Strengths, Weaknesses, Opportunities, and Threats).
Strengths
The strengths of our business can be described in terms of strategy, skills, style, staff, shared values, brand strengths, and reputation. Differentiation strategy will be adopted for the guest house business, and flat decentralized structure will be ensured. However, it will be tried to hire people having diverse skills, and can ensure effective management. Friendly, participative, and strong culture will be made certain, motivated, skilled, and well trained team or staff will be ensured in order to promote values associated with the brand. The values will be made clear and will be properly communicated to every individual associated with the business. In order to ensure brand strength, brand values will be provided to the customers, which will help in the creation of brand loyalty. Attempts will be made for promoting strong reputation of brand in the local market, all of which will be strength of our business. Moreover, great location will also provide strength to our business.
Weaknesses
The differentiation strategy should be communicated clearly in the local market; otherwise company will not achieve growth. Effective systems have to be introduced, and communication should be improved. Staff turnover can exert its influence on operations of business, and orientation and training will be required for new staff. Renovation of rooms in a timely manner should be ensured so that customers feel satisfied. The company has to provide access to facilities such as internet for running business in a smooth manner.
Opportunities
Provision of luxury environment to the customers, Wi-Fi facility, creating awareness about rooms in the market, repetition of business on the basis of personal service as well as quality in the small place, are all opportunities that our business can avail.
Threats
There is threat from new entrant, as global and a competitive brand can enter in the market in order to facilitate customers with the similar product. Competitors and substitutes such as fully furnished apartments at lower rate will be threat for our business. Economic ups and downs such as recession will exert its impact on the business, and serve as a threat for business. Changes in rules and regulations for running a business will also be a threat for the business, because ensuring compliance with new rules and regulations is not an easy task for businesses.
Competition with Direct Competitors
We will compete with direct competitors by focusing on the cost and provision of more facilities and comfortable stay to the customers. More comfort and facilities will be given to the customers at lower price. The price will be kept low in the beginning for attracting customers, and creating awareness in them about the business. Satisfied customers will convey the information regarding rooms to their friends and family which will help in making significant improvement in profitability of the business. Keeping the price low will be effective enough to compete with direct competitors in a successful manner.
Positioning Strategy
Quality or price positioning will be ensured, because this strategy will help in claiming best value. This approach is effective because it will allow the business to position the brand in accordance with the quality and cost. Optimal price will be offered to customers in accordance with the facilities that are available in rooms. Low price will be offered to the customers, so that they are attracted, and get benefit from the facilities that are provided to them. With the help of this strategy best value can be claimed against price. This strategy will also help the business in differentiating its image by establishing value proposition as well as planned character of the product. It will help the company to differentiate its products from that of competitors.
