Expansion Strategies For Dalata Hotel Group In India - PESTLE Analysis Essay.

Question:

Discuss About The Exploration Expansion Associated Strategies?

Dalata Hotel Group is an organization which operates in the hotel industry and has many hotels in the United Kingdom and Ireland. Dalata Hotel Group was founded in the year 2007 by Pat McCann. The hotels that are operated by the Dalata Group include the ones which are a part of the Clayton Hotels and Maldron Hotels brands. Dalata is considered to be one of the greatest hotel operators with a portfolio of around 38 hotels and they successfully operations their own hotel brands and those of their partners (Dalata Hotel Group PLC. 2018).

This report will be based on the expansion plans for the Dalata Group of hotels in another country so that the group can increase its revenue and profitability. The analysis will be further based on the internal and the external environment of the company and the strategies that are applicable in the operations in another country where it will have its operations.

As discussed in the above table of the PESTLE analysis of India, the improvement of economics activity in India will be able to create a welcoming environment for the expansion of Dalata Group of Hotels. The service sector of the country has also shown huge growth after the reforms had been made in the economic system. Employment options in India have also increased in the recent times in India due to the huge increase in number of industries. The fast rise in the population of the country has further increased the consuming power of the Indian citizens. The rapid rise of the service sector in India will be a key factor related to the expansion of Dalata Group of Hotels in the country. The welcoming political environment of India will also help Dalata Group to set up their business in the country (García-Almeida and Yu 2015).

The changes that have occurred in the social environment and trends in India will be a major reason related to the success of this business in the country The legal system of the country is also quite well-developed which will help in the expansion of the group without complex legal procedures. The government of India is also quite welcoming for the new business organizations. The Indian government system is open to foreign investments and the good foreign relations of the country will help in the easy expansion of the Dalata Group. The highly developed technological environment of the country will help the Dalata Group in the formation of an advanced business setup (Gibbs, MacDonald and MacKay 2015).

The development that has occurred in the preferences of the society in India due to the improved level of technologies will help in the expansion of the Dalata Group. However, the country is facing problems related to the environment and global warming. Dalata Group will therefore need to develop a business model which should be sustainable in nature. The operations of the company should not affect the environment in a negative manner which can further increase the environmental problems. The development of a sustainable business environment will help in the long-term growth and will also increase the revenues and the profitability of the company (Hutzschenreuter, Kleindienst and Lange 2014). It can therefore be said that the Dalata Group can successfully set up their business in India due to the various positive factors, however the environmental issues need to be taken care by the organization.

PESTLE Analysis of India

The five forces that have proposed by Michael Porter for the internal analysis of an organization are,

• Threats related to the new entrants.
• Bargaining power of the suppliers.
• Bargaining power of the buyers.
• Threats related to the substitute products.
• Rivalry in the market.

Dalata Group will be analysed based in these forces as proposed by Porter so that the company can be able to manage the changes in the competitive business environment (Jani and Han 2014).

Threats related to the new entrants (Medium) – The industry where the company belongs to is an innovative area and the entry of new players adds to the innovation. This can further put pressure and they need to lower the pricing related strategies, reduce the costs and provide new value propositions. The Dalata Group can improve the services and products that they offer to the consumers and increase their revenues in the process.

Bargaining power related to the suppliers (Medium) – The organizations operating in the travel and leisure industry source their materials from many different suppliers. The suppliers who hold a dominant position in the market can create issue for the company and decrease their margins. The negotiating power that is used by the powerful suppliers in the service industry can increase the bargaining power of these suppliers. The company needs to build an effective supply chain which contains multiple suppliers so that the power of the suppliers can be reduced (Jiang, Holburn and Beamish 2016).

Bargaining power related to the buyers (High) – The consumers of the service industry are quite demanding in nature and they desire the best offers for the lowest process. The huge number of options for the consumers in this industry will put pressure on the Dalata Group. The small base of customers of the organization can lead to increase in the bargaining power of the buyers or consumers. This can be reduced by creating a large customer base for the company. The Dalata Group can also create innovative product designs so that they can attract more customers towards the company.

Threats related to substitutes of the services or products (Medium) – The threat that is posed towards the company related to the substitutes that are present in the market are faced much more by the organizations in this sector. The company needs to be much oriented towards the service that they provide to the consumers rather than the products offered. The Dalata Group needs to understand the needs of the consumers so that they can provide the best of services and create a competitive edge (Lynch and Jin 2016).

Rivalry with the competitors (Medium) – The high degree of rivalry in the services industry puts pressure on the company to reduce the prices of the various services offered and the profitability of the organization as a whole. Dalata Group can reduce the competition given by the rivals by creative a sustainable edge for the company. The group can also plan for collaborations with the competitors in the market so that the levels of rivalry can be reduced.

The complete picture of the ways by which the competitive forces in the market affect the profitability of Dalata Group is depicted with the help of the Porter’s Five Forces Analysis of the company (Monaghan, Tippmann and Reuber 2017).

Analysis of the Economic and Social Factors in India

Physical resources - The management team of the Dalata Group is exceptionally strong and the skilled and experienced executives of the team are able to manage the current business team in an effective manner.

Intellectual resources - The Dalata Group has been able to gain the position of the topmost operator in the hotel industry of Ireland.

Reputational resources - The company has its properties in the prime locations of the country and this has helped them in earning prime customers. The Dalata Group has huge potential for expansion in the other countries which has helped them in increasing their revenues and profitability (Ostapenko and Ginevi?ius 2017).

Financial resources - The huge capital base of the Dalata Group helps in the expansion of the hotels of the Group to various other locations of the world.

The major strategy of the hotel has been to grow its business with a mixture of different types assets including leased and owned. The Group has been working on this strategy and has been able to acquire around 21 hotels. The hotel group has become the largest in UK and Ireland and they have plans to acquire 13 more hotels of the Clayton Group. The Dalata Group has a different team of management for the purpose of the managing of hotel assets. This team is named as the Dalata Management Services (Yu, Byun and Lee 2014). They mainly manage the various divisions of the company including, finance, operations, sales and marketing, revenue management, purchasing, human resources, IT. This helps the company in managing the various departments in an easy manner and thereby this acts as the major core competency of the Group (Papadopoulos, Gulanowski and Plante 2018).

Bowman’s strategy clock is a tool or model that can be used to explore the options related to the strategic positioning of the services or products of the company in the market. The major purpose of the strategic clock is to depict that the business has a variety of options of positioning its service or product based on two dimensions including, perceived value and price.

Position 1 – low price and low value – The Dalata Group cannot take this position in the Indian market as they need to live up to the reputation that they have built in the market.

Position 2 – Low price – The Dalata Group does not need to take this position in the market as the Indian economy will accept the prices that they offer in the other countries (Porter and Heppelmann 2014).

Position 3 – Hybrid – The Dalata Group cannot take this position as they cannot compromise on the quality of the services that they offer to the consumers. The lack of quality in their services can affect the reputation of the company in a negative manner.

Position 4 – Differentiation – The Dalata Group may take this position in the Indian market and differentiate their services by providing introductory offers and discounts to the customers.

Position 5 – Focussed Differentiation – This position is the best for the Dalata Group in the Indian market as they need to serve the niche market by providing high values to the customers. The perception of the customers regarding the high value of the services will help them in succeeding in this position (Reardon, Coe and Miller 2015).

Discussion on how India's Political and Legal System can Aid in the Expansion

Position 6 – Increased Price and Standard Product – This position cannot be taken by the Dalata Group as the increase price of the standard products can lead to a loss of customers and loss of reputation of the company.

Position 7 – High Price – Low Value – This position is not applicable for the Dalata Group or any other company as providing low value to the consumers for high price will lead to issues in the profitability.

Position 8 – Low Value – Standard Price – Providing low value to the consumers is not an option for the Dalata Group. Hence, this position is also not applicable for increasing the revenues and the profitability of the company in the industry (Yoder, Visich and Rustambekov 2016).

• The Indian market is suitable for the expansion of the Dalata Group as the developing economy of the country will be a great market area for the company.
• The foreign relations developed by India and suitability for foreign investment will lead to the success of the expansion plans of Dalata Group.
• The Group needs to improve its services and improvise them according to the needs of the Indian consumers.

Conclusion

The report can be concluded by stating that the Dalata Group of Hotels can expand their operations in India as the political and economic conditions of the country is suitable for the operations of the organization. However, keeping in mind the environmental problems faced by the country in the recent times, the Dalata Group has to create a sustainable business model which will not affect the environment in an adverse manner. The Dalata Group can however use its brand name to promote its business activities in India. The reputation of the Group in the service sector will help them in creating a competitive position in the market easily. The highly welcoming Indian market will act as an advantage for the Dalata Group and the expansion plans of the company. The internal analysis of the Dalata Group has also depicted that the company is able to build a competitive edge in all the areas where it operates and the huge capital investment of the Group helps them in receiving this position.

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