Answer To: Microsoft Word - HOS802 A3 - Group Report.docx Page 1 of 5 Subject Title Hospitality Management...
Soumi answered on May 27 2021
Running Head: STRATEGIC BUSINESS PLAN FOR HOTEL MANANG 1
STRATEGIC BUSINESS PLAN FOR HOTEL MANANG 13
HOSPITALITY MANAGEMENT SIMULATIONS
STRATEGIC BUSINESS PLAN FOR HOTEL MANANG
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Subject code: MG802
Table of Contents
Introduction 3
Background 3
Scope 3
Strategic Management Plan of Hotel Manang 3
Overall strategy 3
Porter’s five forces model 4
Greiner growth model 5
Marketing 5
4P’s of marketing mix 6
Dagmar model 6
Operations 7
Value chain analysis model 7
Key performance indicator model (KPIM) 8
Financial 8
Types of funding 8
Zero-based budgeting model 8
Comparing financial performance of previous year 9
Conclusion and recommendation 11
Summary 11
Recommendation 11
References 12
Executive summary
The following assignment provides the strategic business plan for the hotel Manang. It consists of background of the hotel progress and scope of the areas where increment is need to be done so that hotel can remain on the top position. This plan covered four main areas where changes need to be implemented. These areas include overall strategy, marketing, operation and financials. The existing conditions of theses areas are analysed using theories to develop the strategy suitable for the Hotel Manang. This report concluded with the outcomes of the analysis and recommendation is provided about the necessary changes which needs to be implemented to increase the profit of the organisation.
Introduction
Background
In area of hospitality, rate of competition is higher than other fields. Hospitality business is a fastest growing business where business organisations regularly developed innovative tactics to attract the consumers and get upper hand of the competition. Surviving the competition from already established hospitality organisations and newly established business with fresh ideas is a rigorous task. Implementation of new ideas impacts the organisation at all front. It can take the business to new height; it cannot show any significance impact after its installation or the ideas can completely backfire, which take the organisation into loss.
The organisation chosen is Hotel Manang, which implemented software simulation program in its organisation. The period of simulation program has come to end, which pushes organisation to evaluate the impact of the program on the business. The organisation also wanted to improve the position of the organisation without the simulation program. Thus, critical evaluation is needs to be done to make necessary amendments. The following report is an evaluation of Hotel Manang using software simulation program and to develop the strategic management plan based on the evaluation to improve the position of hotel Manang in the three years following the end of simulation period.
Scope
This aim will be covered by analysing the four main functional areas of organisation, which directly influence the business. These areas include overall strategy of organisation, marketing, operation, and finance. The report will use the necessary theoretical model, based on which strategy can be developed to improve the position of the organisation in the market.
Strategic Management Plan of Hotel Manang
Overall strategy
As suggested by Gattorna (2017), overall strategy of the organisation can be defined as the sum of actions taken by organisation to achieve the long term-goal. As per the case study, Hotel Manang when implemented the software simulation program, its total revenue was $3,271,730, departmental expense was $1,527,660, total undistributed expenses was $ 1,215,591, income before fixed charges was $528,479, fixed charges was $363,982, and net operating income was $164,497. Four years after the simulation program was installed, there has been significant amount of the growth can be seen. Increase in expenses and revenue generation and net operating income has been increased.
The current revenue turnover of the hotel is $16,235,625, and net operating income is $7,001,621. When compared to third year, approximately 7% of growth can be seen in organisation. The third year has seen the higher revenue generation in comparison to the current four years. As per the data, Hotel Manang needs to reduce its year departmental expenses and undistributed expenses to improve the position of the organisation. The cash flow of the hotel Manang is moderate and its competition status is better comparatively. Thus, work needs to be done on total expenses so that company can cover its build up loans and can make moderate profit meanwhile. Porter five forces and Greiner growth model can help in developing strong overall strategy for organisation to improve its position in the market at all front.
Porter’s five forces model
As suggested by Mathooko and Ogutu (2015), Porter’s five forces model is an analytical tool, which uses five forces of business organisation to identify the level of competition for the organisation and extent of profitability. The five forces of the model are threat of new entry, bargaining power of buyers, bargaining power of suppliers, organisational rivalry, and threat of substitutes. These forces help in identifying the structure of the organisation and level of competition faced by the organisation. As per the case study, hotel Manang is at the top in comparison to other hotels. The level of competition and rivalry will be higher for them.
As suggested by Zhao, Zuo, Wu, Yan and Zillante (2016), all five factors are dependent on each other for the success of the organisation. For example, the strong competitive forces reduce the profitability of the organisation. An organisation with low barriers to enter but have many substitutes and high competition, although there is many buyers and suppliers, reap low profit. In threats of new entrants, easiness, or difficulty in entering the specific market or organisation. If there are few barriers for the organisation then it can easily survive the market and reap high profits. If new entrants rise, then competition rise and profits fall by margin. Threats of new entrants are high when existing companies failed to retaliate. There is lack of governmental regulations and customer loyalty towards organisation is low.
As noted by Takata (2016), in bargaining power of suppliers, impacts of bargaining of supplier is checked. Strong bargaining helps the organisation to sell low quality product at high rates. Suppliers get the power of bargaining when substitute of raw materials are limited. There are low number suppliers in comparison to buyers, demand of the product is higher than supply. In bargaining power of buyers, impact of strong bargaining of buyers on organisation is checked. Buyers always have power to bargain low prices for high quality products.
When there are large number of strong bargaining buyers, organisation tends to have low profit. Buyers show strong power of bargaining when number of buyers are higher than number of suppliers. When many substitutes of products are available in the market, then buyer get the upper hand on suppliers. In threat of substitutes, impact of alternatives of the product in checked. When high quality substitute of product at low price is available, then buyer prefers substitute instead of original product. Large number of substitutes of product is not good for organisation.
As suggested by Paradowska (2019), in industrial rivalry, extent of competition level is checked and impact of rivalry on profit of the organisation in analysed. It has been seen that healthy rivalry is good for business, but when rivalry get under the influence of ego and negative thoughts then it became intense and resulted in poor outcomes. When number of competitors are high and industry show slow growth, then there is intense industrial rivalry.
Figure 1: Porter’s Five Forces...