MGT 790

STRATEGIC MANAGEMENT

For Dr Za’faran Hassan

By:

SWOT ANALYSIS ON SHANGRI-LA HOTELS

Juhanna Bt Abdul Aziz 2010890522

Junaidah Bt Amir 2010867722

Mimi Sadina Bt Abu Samah 2010840986

31st 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

Gro

wth

Ind

ust

ry

Low

op

erat

ion

co

st

Tou

rism

bo

ost

by

inte

rnat

ion

al e

ven

ts

Easy

tra

vel d

ue

to lo

w a

ir

fare

s

Esta

blis

hed

co

mp

etit

ors

Poac

hin

g o

f em

plo

yee

s

Un

fore

seen

cir

cum

stan

ce

(nat

ura

l dis

aste

r,

epid

emic

)

+ -

Strength 1) World recognition 5 0 5 3 -2 0 0 13 -2 2) Strong presence 5 3 4 3 -1 -1 0 15 -2

3) Distincitve product differentiation 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 G

row

th In

du

stry

Low

op

erat

ion

co

st

Tou

rism

bo

ost

by

inte

rnat

ion

al e

ven

ts

Easy

tra

vel d

ue

to lo

w a

ir f

ares

Esta

blis

hed

co

mp

etit

ors

Poac

hin

g o

f em

plo

yee

s

Un

fore

seen

cir

cum

stan

ce (

nat

ura

l d

isas

ter,

ep

idem

ic)

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 employees.

2) Enhance and diversified the hotel attributes to attract consumers globally by using various kind of technology channel such as internet facilities.

3) Embark into halal friendly market to attract the lucrative potential tourist from the Middle East.

Table 3: Suitability of Strategic Options for Shangri-La Hotel

OPPORTUNITIES THREATS STRENGTHS WEAKNESSES Aggregate

score

Strategic Options

Gro

wth

Ind

ust

ry

Low

op

erat

ion

co

st

Tou

rism

bo

ost

by

inte

rnat

ion

al e

ven

ts

Easy

tra

vel d

ue

to lo

w a

ir f

ares

Esta

blis

hed

co

mp

etit

ors

Poac

hin

g o

f em

plo

yee

s

Un

fore

seen

cir

cum

stan

ce (

nat

ura

l d

isas

ter,

ep

idem

ic)

Wo

rld

rec

ogn

itio

n

Stro

ng

pre

sen

ce

Dis

tin

citv

e p

rod

uct

dif

fere

nti

atio

n

Skill

ed &

tra

ined

em

plo

yee

s

Fin

anci

al s

tab

ility

Cro

ss c

ult

ura

l ad

apta

bili

ty

Emp

loye

es

relu

ctan

ce o

n m

akin

g d

ecis

ion

Hig

h c

ost

in e

mp

loye

e t

rain

ing

Man

ager

s re

luct

ance

in d

ele

gati

ng

job

s

+ -

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

OPPORTUNITIES THREATS STRENGTHS WEAKNESSES Aggregate

score

Strategic Options

Gro

wth

Ind

ust

ry

Low

op

erat

ion

co

st

Tou

rism

bo

ost

by

inte

rnat

ion

al e

ven

ts

Easy

tra

vel d

ue

to lo

w a

ir f

ares

Esta

blis

hed

co

mp

etit

ors

Poac

hin

g o

f em

plo

yee

s

Un

fore

seen

cir

cum

stan

ce (

nat

ura

l d

isas

ter,

ep

idem

ic)

Wo

rld

rec

ogn

itio

n

Stro

ng

pre

sen

ce

Dis

tin

citv

e p

rod

uct

dif

fere

nti

atio

n

Skill

ed &

tra

ined

em

plo

yee

s

Fin

anci

al s

tab

ility

Cro

ss c

ult

ura

l ad

apta

bili

ty

Emp

loye

es r

elu

ctan

ce o

n m

akin

g d

ecis

ion

Hig

h c

ost

in e

mp

loye

e t

rain

ing

Man

ager

s re

luct

ance

in d

ele

gati

ng

job

s

+ -

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.

2) 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.

THE END