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STRATEGIC MANAGEMENT

MGT 790

For Dr Za’faran Hassan

STRATEGIC MANAGEMENT MGT 790 For Dr Za’faran Hassan SWOT ANALYSIS ON SHANGRI-LA HOTELS By: Juhanna Bt

SWOT ANALYSIS ON

SHANGRI-LA HOTELS

Dr Za’faran Hassan SWOT ANALYSIS ON SHANGRI-LA HOTELS By: Juhanna Bt Abdul Aziz 2010890522 Mimi Sadina

By:

Za’faran Hassan SWOT ANALYSIS ON SHANGRI-LA HOTELS By: Juhanna Bt Abdul Aziz 2010890522 Mimi Sadina Bt

Juhanna Bt Abdul Aziz

2010890522

ON SHANGRI-LA HOTELS By: Juhanna Bt Abdul Aziz 2010890522 Mimi Sadina Bt Abu Samah Junaidah Bt

Mimi Sadina Bt Abu Samah

Juhanna Bt Abdul Aziz 2010890522 Mimi Sadina Bt Abu Samah Junaidah Bt Amir 2010840986 2010867722 31

Junaidah Bt Amir

2010840986 2010867722

31 st March 2012

STRENGTH

World class recognition in terms of world’s finest hotel

management

Strong presence in hotel industry in many countries such as Asia region, Australia, UAE, North America and

Europe

Provides distinctive Asian standard hospitality and service as a competitive advantage

Skilled and properly trained employees

Financially stable

Ability to adapt to the unique country cultural custom.

WEAKNESSES

Employees hesitation on using authority of decision making

High cost on employees training to overcome

cultural barrier to become internationally

recognized hospitality services.

Managers hesitation to delegate jobs to

subordinates

OPPORTUNITIES

Growing hotel industry in Asian region especially in China

Lower operation cost in Asia country due to

low labor cost

Expected growth in tourism industry due to international events (economic exhibition)

Emergence of low cost airlines that allows

people to travel easily

THREATS

Incoming global players into the same market such as (Ritz, Marriot, Hilton Hotel) competing in market share

Poaching of trained Shangri-La hotels

employees by competitors

Unforeseen circumstance such as natural

disaster and epidemic.

Table 1: Impact analysis for Shangri-La Hotels

   

OPPORTUNITIES

   

THREATS

 

Environmental Change

Growth Industry

Low operation cost

Tourism boost by international events

Easy travel due to low air fares

Established competitors

Poaching of employees

Unforeseen circumstance (natural disaster, epidemic)

+

-

Strength 1) World recognition 2) Strong presence 3) Distincitve product differentiation

5

0

5

3

-2

0

0

13

-2

5

3

4

3

-1

-1

0

15

-2

5

0

5

4

-2

0

0

14

-2

4) Skilled & trained employees

5

5

4

0

-4

-5

-4

14

-13

5) Financial stability

3

3

3

3

-2

-2

-3

12

-7

6) Cross cultural adaptability

5

0

5

3

0

-2

0

13

-2

Weakness 1) Employees reluctance on making decision

-2

0

-2

0

-3

1

-2

1

-9

2) High cost in employee training

-1

-2

-1

0

-3

-4

-2

0

-13

3) Managers reluctance in

delegating jobs

-2

0

-1

0

-3

-4

-2

0

-12

Environment impact scores

28

11

26

16

0

1

0

 

-5

-2

-4

0

-20

-18

-13

Result of impact analysis

Based on the analysis, the following environmental impact can be regarded as

positive impact to Shangri-La Hotels business due to their impacts:-

1)

Growing hotel industry in Asian region especially in China -> 28 points.

2)

Expected growth in tourism industry due to international events such as

economic conference & sports occasion -> 26 points

3)

Emergence of low cost airlines industry and travel availability. Lower travelling expenses allow many people to travel. -> 16 points

4) Lower operation cost in Asian countries due to lower labor wages

compared to Europe. This factor enables the hotel to enjoy higher profit

margin. -> 11 points

Result of impact analysis

The following environmental changes can be regarded as threat to Shangri-La

business operations:-

1) Establishment of competitors into the current market. -> 20 points 2) Poaching of Shangri-La’s trained employees by competitors. Shangri-La

hotels have invested a large amount of fund to train their staff, but the

competitors’ offer which are normally higher than their current pay will encourage the staff to accept the offer-> 18 points 3) Unforeseen circumstance such as natural disaster or epidemic (eg. SARS, H1N1). This factor will negatively influence tourist rate to the area and hotels, which will impact the sales of the hotels.

Competitor analysis

List of competitors:-

1)

Regent Hotel

2)

Ritz-Carlton Hotel

3)

Hyatt Hotel

4)

Sheraton Hotel

Table 2: Competitor analysis for Shangri-La Hotels

   

OPPORTUNITIES

   

THREATS

 

COMPETITORS

Growth Industry

Low operation cost

Tourism boost by international events

Easy travel due to low air fares

Established competitors

Poaching of employees

Unforeseen circumstance (natural disaster, epidemic)

Overall Impact

Regent Hotel

5

5

5

5

-3

2

-2

17

Ritsz-Carlton Hotel

5

5

5

5

-3

2

-2

17

Hyatt Hotel

5

5

5

5

-3

2

-2

17

Sheraton Hotel

5

5

5

5

-3

2

-2

17

Result of competitor analysis

This analysis suggests that with the overall impact of score of 17 points, all

the competitors are in a very strong position to take advantage of the

changing environment.

The environmental changes such as the growing hotel industry, low operation

cost, tourism boost by international events and easy access through cheap

travel contribute to strong positive impact to the competitors.

Creating Strategy Options

1) To avoid staff poaching by other competitors, the hotel is recommended

to bond the employees, improve compensations and benefits to the

2)

3)

employees. Enhance and diversified the hotel attributes to attract consumers globally by using various kind of technology channel such as internet facilities. Embark into halal friendly market to attract the lucrative potential tourist from the Middle East.

internet facilities. Embark into halal friendly market to attract the lucrative potential tourist from the Middle

Table 3: Suitability of Strategic Options for

Shangri-La Hotel

         

Aggregate

OPPORTUNITIES

THREATS

   

STRENGTHS

 

WEAKNESSES

score

Strategic Options

Growth Industry

Low operation cost

Tourism boost by international events

Easy travel due to low air fares

Established competitors

Poaching of employees

Unforeseen circumstance (natural

disaster, epidemic)

World recognition

Strong presence

Distincitve product differentiation

Skilled & trained employees

Financial stability

Cross cultural adaptability

Employees reluctance on making decision

High cost in employee training

Managers reluctance in delegating jobs

+

-

Enchance and diversify promotional method

3

1

 

2 2

-2

-2

-1

3

3

3

3

3

3

-2

-2

-2

29

-11

Halal friendly hotel concept

3

3

3 3

 

0

-2

-1

3

3

3

3

3

3

-2

-3

-2

30

-10

Employees bonding/ loyalty program

1

1

 

1 1

2

3

-1

3

3

1

3

3

3

0

0

0

25

-1

Table 4: Suitability of Strategic analysis for

Shangri-La Hotels- weighted analysis

         

Aggregate

OPPORTUNITIES

THREATS

   

STRENGTHS

 

WEAKNESSES

score

Strategic Options

Growth Industry

Low operation cost

Tourism boost by international events

Easy travel due to low air fares

Established competitors

Poaching of employees

Unforeseen circumstance (natural

disaster, epidemic)

World recognition

Strong presence

Distincitve product differentiation

Skilled & trained employees

Financial stability

Cross cultural adaptability

Employees reluctance on making

decision

High cost in employee training

Managers reluctance in delegating jobs

+

-

 

x 3

   

x 3

x 2

     

x 2

       

x 2

       

Enchance and diversify promotional method

9

1

2

6

-4

-2

-1

3

6

3

3

3

3

-4

-2

-2

42

-15

Halal friendly hotel concept

9

3

3

9

0

-2

-1

3

6

3

3

3

3

-4

-3

-2

45

-12

Employees bonding/ loyalty program

3

1

1

3

4

3

-1

3

6

1

3

3

3

0

0

0

34

-1

Sensitivity Analysis

1) Based on the suitability analysis, the options for the hotel to strategize to

focus on halal-friendly hotel contributes the highest positive aggregate

score which is +ve 30. This indicates that favorable impact to the overall business by considering all the strength, weakness and external environment factors.

The strategy to gain employees loyalty through attractive compensation and benefits will retain the employees who play essential roles in hotel management services. The high cost in training is returned through the bonding of the employees.

2)

THE END