Problems in the Areas of Strategy Implementation - Essay Example

Integrated Case Study – Assignment Table of Contents Introduction 3 Discussion 3 Identified Problems in the Areas of Strategy Implementation 3 Research aims and objectives 5 Situational Description 5 Problem Statement and Plan of Analysis 7 Literature Review 10 Proposed Plan of Analysis 12 Sources of Data 13 Analysis and Findings 14 Internal Analysis of ASHH PLC 14 External Analysis of ASHH PLC 15 Present Market Position 18 Proposed Solution to Problem 19 Effective Recommendations 20 Action Plan for Study Limitation and Scope for Future Research 20 Conclusion 21 References 22 Uggla, H., 2011. Brand Structures: the key to Strategy & Marketing. Important Questions, pp. 1-55. 23 Introduction The provided scenario elaborates about the success and global recognition attained by ‘Heritance Kandalama’ resort situated in Sri Lanka. It also elaborates about the efforts made by ‘Aitken Spence Hotel Holdings PLC (ASHH)’ towards supporting the resort in term of attaining global reputation despite of the harsh situation within Sri Lanka as a result of continued civil conflicts. The strategic target points that were aimed by the ASHH PLC consisted of the ‘ecological’, ‘environmental’ and the ‘social’ development practices that have eventually paved long profitable path for the ‘Heritance Kandalama Resort’. Taking reference from the past experiences, ASHH PLC currently intends to implement its marketing and other associated sustainability theories within the ‘Indian hospitality sector’ so as to improvise its efficiency, survival and profitability factor irrespective of the increasing level of global competition. In keeping with these aspects, the discussion will focus towards evaluating all the sustainability strategies, that ASHH PLC have planned for implementing in the hospitality sector of India. The details regarding these aspects have been provided in the undermined sections. Discussion Identified Problems in the Areas of Strategy Implementation If seen from the economic growth perspective, it can be stated that hospitality industry within India has attained considerable amount of growth in the last few years and thus is currently accounted as an economic factor. As an additive advantage, the Indian government within the past few financial years has also projected high level of flexibility in terms of permitting appreciable amount of foreign investments (Hotel News Now, 2013). However, multiple issues are ought to arise, taking consideration of the fact that the political scenarios within India are quite different in comparison to that of Sri Lanka from where the ASHH PLC belongs. One such issue can be described as the bureaucratic environment that clouds the functionality and growth factor associated with the Indian hotels. This issue often gets linked up and is reflected as a security factor, which in turn distorts the likeness of the international customers who expects hassle free luxury and accommodation. ASHH PLC will have to deal with this issue before they strategize to expand their coverage within the domestic markets of India (Hotel News Now, 2013). The second identified issue that might restrict the functionality and profitability of ASHH PLC is regarding the price centric nature of the Indian customers. From the psychological perspective, it can be stated that Indian customers generally prefer and prioritize those factors that guarantees higher returns at minimal cost. As a result, the heritage hotels development projects undertaken by ASHH PLC will not be an obvious choice for the Indian customers in case the products and service prices are kept within the niche category. This might turn out to be another stamping issue that will bring down the investments made by ASHH PLC into losses. As a result, this aspect needs to be dealt with in a tactical manner taking consideration of the pricing strategies followed by other major market competitors (Hotel News Now, 2013). The third identified issue can be elaborated in terms of level of power consumption and cost factor across different states of India. This aspect might lay a huge impact on the overall development and profit earning percentage of new hospitality projects undertaken by ASHH PLC. Justification to this aspect can be provided depending on the fact that heritage sites in India are segregated within multiple states, which in turn are subjected to different regulations as established by the state government. For instance, the power consumption rate of Maharashtra is much more in comparison to that of the other neighbouring states. This eventually raises the associated cost per unit of power consumption, which further turns out to be a form of major expenditure for the large scale hospitality organisations. ASHH PLC will have to deal with this issue in order to minimise their fixed cost factor and increase their profitability rates (Hotel News Now, 2013). Apart from the above three discussed issues, the forth and the most crucial issue that might hamper the business process of ASHH PLC is regarding the inappropriate and ineffective marketing and advertisement patterns followed in India (Hotel News Now, 2013). Research aims and objectives The above illustrated facts elaborate about the possible issues within the Indian hospitality market that might lay considerable hindrance to the overall initiatives undertaken by the ASHH PLC. Understanding the gravity of the situation, this research document will aim towards understanding the present condition of the Indian and other domestic market. The objective being to identify the possibilities through which the hospitality sector sustainability and the developmental initiatives as undertaken by ASHH PLC could be directed towards success. The research also aim towards evaluating and implementing all the associated marketing and customer behavioural theories depending on which appropriate suggestions can be provided. Situational Description The chosen case study regarding ASHH PLC briefly describes about multiple facts associated with the history of hospitality sector within Sri Lanka, India, Maldives and Oman. It also describes about the positive impact laid down by ASHH PLC in terms of providing the traditional hospitality sector a new outlook along with integrating it with the new concepts of sustainability and environmental development. However, the provided case study does not project the associated issues in a direct and precise manner still a consolidated understanding regarding such issues can be attained by analysing the present state of the Indian and other countries domestic market in an appropriate manner. Taking consideration of these aspects, the possible marketing issues that might emerge has been appropriately linked to the statements as provided in the case study (Geok & Buche, 2008). As per the case, ASHH PLC did not attain much profitability within the domestic market of Sri Lanka due to the continued civil war situations. As a result, it expects huge profitability from the Indian domestic market depending on its massive size and more business opportunity in comparison to that of Sri Lanka or Maldives. From a positive view, the Indian government might also consider this as a profitable business opportunity (Geok & Buche, 2008). However, bureaucracy within the Indian political system as already discussed above might bring down the overall initiative to waste and thus can be categorised as a relevant issue inclined in favour of the case. Conversely, the scenario can be different in case of Maldives. Justification to this statement can be provided depending on the fact that Maldives being a small island heavily relies on the foreign cash inflow specifically from the tourism and hospitality sector. A same kind of scenario can be attained within the ‘Middle East Oman’ due to the huge inflow of foreign tourists every year (Geok & Buche, 2008). Throughout the case, multiple facts have also been addressed that depicts the plans of ASHH PLC to invest into multiple other hospitality chains within Indian market in a manner of joint venture with other hospitality sector design and development PLCs. However, they will also have to adhere to the business licensing system that faces issues by the Indian government to every foreign business body. The entire business licensing procedure takes considerable amount of time and distorts the interest level of multiple foreign investors, thus forming another precise issue aligned with the case. The intensity of these sorts of licensing issues cannot be seen much in case of Maldives and Oman due to their small size and heavy reliance on foreign cash inflow. Concisely, a major portion of the business estimation made by ASHH PLC relies on the shifting of international tourism from their western confinements towards Asia. Despite of such massive opportunities, the presence of inappropriate and undertrained hospitality staff might push the entire initiative into a terrible setback stage. This again recognises considerable level of alignment with the precise issues associated with the case (Geok & Buche, 2008). The case also projected details regarding the allotment of Sri Lankan management and maintenance staffs within the designed heritage hotels in India, Maldives and Oman. Although effective, still it might hurt the sentiments of the local inhabitants. As a result, the overall domestic customer attainment by such heritage hotels will gradually go down thus degrading the profit earning figures. Although consolidated, but these mentioned points describes about the possible issues that might degrade the international business perspective and growth opportunity of ASHH PLC in the international market (Geok & Buche, 2008). Problem Statement and Plan of Analysis Carrying out an effective analysis of the provided case helped in revealing multiple problem statements that finds alignment with the economic factors of the international markets within which ASHH PLC intends to carry out its business. For instance, the low per capita income and high count of the Indian population might force the hotels to lower their products and services pricing rates. In an associated manner, the profit figures that can be generated from the Indian markets will substantially go down irrespective of the large scale investments made by ASHH PLC in hotel infrastructure development. Justification to this aspect has already been provided in the case (The World Bank Group, 2014). Country Gross National Income per Capita (US$) Population in millions Sri Lanka 9,470 20.33 India 1,570 1350 Maldives 9,890 0.4 Oman 52,170 3.6 Table 1: (Gross National Income per Capita and population in millions) (The World Bank Group, 2014) The table provided above projects the revised GNI and the population of those international markets where ASHH PLC has established their business. Clearly it can be determined that with the increase in population, the GNI rate will substantially drop imparting less profit attainment opportunity for this PLC. However, the chance of attaining skilled labour force within a highly populated nation such as India appears to be much more in comparison to that of the other three nations that has substantially lesser amount of population. Multiple relevant economical theories can also be referred to by taking into consideration these aspects. Fig 1: (Relationship between GNI Incomes and Profit Attainment Rate) From the economic perspective, a close observation of this graph will reveal the relationship between two crucial aspects namely disposable income and profit attainment. This relationship can be linked up both with the economic as well as with the marketing perspective. Further elaborations regarding these theoretical aspects have been provided in the literature review section (The World Bank Group, 2014). Literature Review Apart from the economic theories, multiple other marketing theories and concepts might also find alignment with the provided context. One of such concepts is that of sub branding, which can be seen in the provided case of ASHH PLC. This heritage hotel development brand termed its associated sub brands as umbrella brands. Through this sub branding concept, ASHH PLC has segregated their hotel business depending on the customer types. Uggla (2011), in his article has elaborated the sub branding marketing concept in a technical manner. As per the author, parent brands do structure multiple sub brands under so as to diversify their product mix and associatively minimise the market risk as well. An instance, in this context is the Adaaran brand, which is an established sub brand under ASHH PLC (parent brand) (Uggla, 2011). The brand was specifically structured for the Maldives Island, which further caters four more sub brands operating under it, which includes ‘Adaaran Prestige’, the ‘Adaaran Select’, the ‘Adaaran Club’ and the ‘Adaaran Ayurvedha’. Each of these sub brands caters to varied categories of customers having specific requirements. For the deeper understanding of this concept a diagrammatic figure has been provided below and elaborated in alignment to that of the article contents as provided by Uggla (2011). Fig 2: (Sub Branding Concept implied by ASHH PLC) As already stated above, each of the sub brands will be catering a specific segment of customers, thus the profit earning figures of each of these sub brands will also be different. For instance, the sub brands catering the 5star and the 4 star customers will have better profitability in comparison to the other sub brands catering general customers. In addition, another advantageous aspect that might benefit the parent brand is about the lower amount of associated market risk. Justification to this aspect can be provided in a manner that even if one of the sub brands fails to fulfil the customer expectation or attain a better section of the hospitality market, then it might not hamper the overall growth procedure of the parent brand by major extent (Uggla, 2011). In comparison to that of the above discussed aspects, Antonio (2013), in her article discussed much about the market segmentation theories and its necessity for the developmental perspective of ASHH PLC. Taking reference of the statements mentioned in the article along with the provided case, it can be stated that the market segmentation tactics followed by ASHH PLC is completely based on the heritage and sustainability factor. The diagram as provided in the case, further elaborates the segmentation strategies undertaken by this group. Fig 3: CSR Philosophy Source: (Geok & Buche, 2008) Taking reference of this diagram along with the sustainability concept, it can be stated that much emphasis has been provided by the ASHH PLC in terms of utilising bio-degradable forms of raw materials, within their undertaken heritage hotel construction businesses. In a gradual manner, it can also be understood that the sub brands will eventually be targeting majority of the niche customers so as to generate considerable amount of profits against their investments. Major alignment can be found within the sustainability and ecology concepts as undertaken by ASHH and mentioned by Antonio (2013), in the article. Proposed Plan of Analysis In an attempt to analyse the present scenario of ASHH PLC, a detailed elaboration of the provided case have been carried out so as to understand the techniques through which this international brand has implemented its sustainability and ecological strategies. Furthermore, an in-depth analysis has also been conducted for understanding the surrounding marketing environment of ASHH PLC the details regarding which has been provided in the preceding section of this report. The provided financial data in the case study has also been evaluated and tallied with multiple economical concepts with the intention of finding alignment (ICCF, 2013). Various economical data of India, Maldives, Oman and Sri Lanka has also been evaluated with the prime intention of understanding how the increasing population and the limited per capita income might impact the profitability factor of the ASHH along with its umbrella brand+. Evaluations regarding how the location of the hotels might lay positive impact on the surrounding localities have also been made with the intention to understand the CSR orientation of ASHH PLC along with its associated sub brands (ICCF, 2013). Sources of Data For the research methodology, complete focus will be provided upon the secondary data sources such as books, journals, and online web contents. Apart from these resources, the provided case study will also be considered as a crucial resource from which much can be understood regarding the history, present and future initiative of ASHH PLC in terms of proving a new and heritage look to the hospitality sectors within India, Sri Lanka, Maldives and Oman. Further elaborations regarding these aspects have been provided in the undermined sections Analysis and Findings Internal Analysis of ASHH PLC The provided SWOT analysis describes about the internal strengths and weaknesses of ASHH PLC and depending on which suggestive facts will be made regarding the future market scope for this brand. Strengths Weaknesses Strong hold over the hospitality industry of Sri Lanka Adequately funded Possession of multiple hospitality properties Effective brand reputation within the hospitality sector of India, Maldives, Oman and Sri- Lanka Expertise in the areas of developing and implementing sustainability concepts within heritage hotels Emergence of multiple competitor brands in the global market Lack of effective work force in the geographic areas of ongoing business Projection of sluggish nature in the areas of business expansion Requirement of large scale investment Low per capita income within the geographic areas of ongoing business process Opportunities Threats Governmental flexibilities in terms of foreign investment Support to sustainability Strong logistics support Initiative of developing the power generation areas Strong venture partnership with multiple foreign PLCs Improvising economic conditions of the Gulf and the Asian nations Targeting of the niche customer segment Possession of global recognition for being ecologically and environmentally concerned Shifting of tourism focus from west towards Asia and Gulf nations. Unstable nature of economy in Indian hospitality markets Governmental bureaucracy Increasing requirement and preference towards bearable hotel service charges Loss due to unexpected natural calamity SWOT TABLE (Colombo Stock Exchange, 2014) External Analysis of ASHH PLC Porter’s Five Force Model An elaboration regarding this analysis has been provided through a diagram as under (Porter’s five force model for ASHH PLC) Bargaining Power of the Suppliers: This aspect for the provided context has been considered low due to the fact that majority of the raw materials required for accomplishing the hotel construction followed by the decoration procedure gets managed by ASHH PLC itself. In case, if certain technological necessities associated with ecology and sustainability is required then the brand attains it through establishing venture partnership with certain global experts. In addition, the strong brand reputation of ASHH PLC within the global market also provides considerable level of support in terms of attaining the required resource support. Threat within the Same Sector: ASHH PLC despite of being one of the most prioritised brands in the areas of heritage resort construction and decoration still faces the risk of getting considerable level of threat from other major global competitors of the same segment. Taking this aspect into consideration, the threat within the same sector might turn out to be high. The intensity of this risk can be witnessed in major cities where multiple global competitors compete so as to prove their superiority. Threat from New Entrants: This aspect also projects high amount of risk to the survival factor of ASHH PLC. With the increasing level of market competition, multiple small and large scale new entrants are subsequently entering the market space with the assurance of providing better service at much affordable rates. Thus in this context, ASHH PLC will have to strategise regarding how they intend to safeguard their marketing and patent rights from being imitated, which in turn might cause considerable level of financial and market share loss to ASHH PLC. Threat from Substitution: Since, the entire business is about construction and renovation, thus no potential substitution can be found in this context. Thus, the overall substitution threat also drops down gradually. Bargaining Power of the Customers: In this context, , this specific aspect appears to be considerably high due to the fact that customers might easily shift to other existing competitors within the market depending on the pricing of the products and services as strategized by ASHH PLC within their sub brand resorts. The intensity of this case can be specifically witnessed in case of India where majority of the customers are price centric despite of the quality and luxury factors being provided to them. Present Market Position The present market position of ASSH PLC appears quite impressive and profitable. Justification to this statement can be provided depending on the fact that the parent brand appears to have expanded the areas of its business expertise from just being into hotels to logistics, service provision and strategy development. All these expansion procedures appear to have opened multiple profitable dimensions for this brand in the global market. The ecology, environment preservation and sustainability factor being a part of this brand has went a long way in terms of providing multiple global business opportunities for this brand. Over the last few years, this brand appears to have signed multiple joint venture partnership contracts with the global technology partners through which it has diverted significant portion of its attention towards technology implementation, advanced logistics and power enervation projects. This has eventually helped ASHH PLC in attaining appropriate global exposure and recognition as being environmentally efficient (Geok & Buche, 2008). Proposed Solution to Problem Throughout the report, multiple facts have been elaborated regarding the possible marketing and economic issues that might emerge during the business expansion plans undertaken by the ASHH PLC. One of such issues that have been mentioned earlier is about the business licensing system in India. In terms of effective solution, it can be stated that the Indian government although being considerably flexible towards the FDI investments, should evaluate the level of its economic growth that gets hampered as a result of such ineffective and time consuming licensing system. Moreover, it is also suggestible for both the parties to get into some sort of mutual agreements that will ensure appropriate generation and distribution of the business profit (Geok & Buche, 2008). Regarding the issues related to increasing market competition, it is suggestible that ASHH PLC should remain tended towards continuously expanding their business in multiple other nations of the global hospitality market. Currently, the brand has retained its focus on the niche customer segment. However, from the marketing perspective it can be stated that major portion of the population in a price centric nation, belongs to the lower or middle segment. If utilised effectively, this might turn out to be a huge profit generation opportunity for ASHH PLC. Apart from all these solutions, a critical problem still persists regarding the lack of appropriate trained resort management staff. In this context, a general suggestion can be provided wherein ASHH PLC will have to invest considerable level of funding within the staff training programs. These elaborated facts if effectively implemented might turn out to be beneficial in terms of mitigating all the discussed issues (Geok and Buche, 2008). Effective Recommendations The first recommending point, which might prove beneficial for this brand is regarding equal distribution of business focus from the niche customers to other two segments of customers. This tactic will subsequently improvise the profit earning scope for the business. Regarding the second recommending point, it can be stated that ASHH PLC should make business investment in a manner of venture partnership with other business giants belonging from the same sector. In that manner, the risk of loss undertaking associated with project failure will not be accountable upon a single brand, but rather it will get distributed among the partners. Apart from these recommending facts, ASHH should make efforts in terms of expanding their business processes within those nations, which has a stable economic growth and appreciable per capita income. Justification to this can be provided in a manner that with high per capita income, the percentage of disposable income will also increase and thus more customers will project their demand of utilising the services provided by the sub brand hotels of ASSH PLC. Action Plan for Study Limitation and Scope for Future Research In the present scenario, not much can be stated about the possible limitations within the study associated with ASHH PLC due to the fact that the business area covered under the hospitality industry is huge and thus multiple possible research scopes exists through which the quality of service delivered by such hospitality brands can be subsequently increased. Research scope related to possibilities of business expansion within economically rich countries also exists. For such future scope, much evaluation of the external environment associated with nations will have to be analysed. Conclusion By taking consideration of all the above mentioned aspects, it can be stated that the case was significantly helpful in terms of elaborating all the possible patterns through which a hospitality business process such as ASHH PLC can excel and continue with its functionality in the international market. Appropriate evaluation of the provided case also helped in bringing up multiple marketing issues that might emerge and hamper the overall business functionality of such brands. Considerable level about multiple marketing theories and concepts has also been mentioned and aligned in the report content in an appropriate manner. Instance in this context includes the understanding of marketing segmentation and target customer identification, depending on which possible recommendations have been structured. Apart from all these, the negative impact of unstable economy and poor advertisement media on the growth of the hospitality industry has also been illustrated in an effective manner. References Antonio, S. D., 2013. Market Segmentation: Identifying Where Hotel Demand Comes From. Home. [Online] Available at: http://www.hvs.com/article/6583/market-segmentation-identifying-where-hotel-demand-comes/ [Accessed October 9, 2014]. Colombo Stock Exchange, 2014. Aitken Spence Hotel Holdings PLC (AHUN.N0000). Check-In For Growth, pp. 3-34. Geok, W. B., & Buche, I., 2008. Sri Lanka’s Aitken Spence Hotel Holding: Competitive Strategy and Sustainable Tourism. Nanyang Business School, pp. 1-23. Hotel News Now, 2013. 10 Major Hurdles Facing India’s Hotel Sector. Data. [Online] Available at: http://www.hotelnewsnow.com/article/9735/10-major-hurdles-facing-indias-hotel-sector [Accessed October 9, 2014]. ICCF, 2013. The Importance of Sustainability in the Hospitality Industry. About Us. [Online] Available at: http://iccfoundation.us/index.php?option=com_content&view=article&id=408:the-importance-of-sustainability-in-the-hospitality-industry&catid=70:briefings-2012&Itemid=81[Accessed October 9, 2014]. The World Bank Group, 2014. Gross National Income per Capita 2013, Atlas Method and PPP. World Development Indicators Database, pp. 1-4. Uggla, H., 2011. Brand Structures: the key to Strategy & Marketing. Important Questions, pp. 1-55. Read More