The assessment report has been highly effective to select most necessary steps for expanding in the international market. The report has evaluated current market environment of the Goring Hotel. It has also identified the potential market, which would be beneficial for the business venture. The report has also concentrated on evaluating the selected market for selecting necessary strategies and assessing associated risks.
2.0 Situation analysis:
Macro environment analysis of Goring Hotel by PESTLE analysis:
Political: The change in the politics immensely affects any global business venture. In this context, the major political drivers for the business success in North American market are mentioned below:
- Freedom of press will help Goring hotel to promote its business features in global market
- The business friendly government structure will assist the business entry in a significant manner
- The stable and peaceful political environment helps the organization to make an outstanding growth in international market.
The trade policy of North America is diverse and complex, which often needs interference of administration and legislative goals.
Economic: The economic growth has been noted to be greatest contributor of the international business success. The major economic drivers identified in North America are mentioned below:
- The interest rate of the targeted global market need to be business efficient
- The taxes for business need to be low in comparison with other countries
- The per capita income need to be high for attaining service of Goring hotel
The constant growth in the economy will be able to provide greater business opportunity (Maggon and Chaudhry 2015).
Social: The social standard and lifestyle plays a significant role in the success of business. The major social pointers in North American market are
- Health of the average population need to be high
- The standard lifestyle need to be high and thereby Goring hotel would not face difficulty to acquire necessary customers
- The diverse nature of societal structure of the target market help to promote the business opportunity
The educational infrastructure need to be most satisfactory so that Goring hotel would not face any difficulty to attain necessary staffs (Gorehotel 2017).
Technological: In the contemporary days, the technology advancement has immensely influenced the business operation and attainment of competitive advantage. The major technological drivers are discussed below:
- The technology has made the business operation automated in global amrket, which will help Goring Hotel to gain desired competitive advantage
- The advanced technology would help the organization to provide greater customers service.
Goring Hotel would also be able to undertake elevated security measures with advanced technology
Environmental: Global market is also quite concerned about the environmental degradation. Therefore, Goring hotel must focus on following factors:
- Goring Hotel must use renewable energy source for its consumptions
- Goring hotel must focus on reducing the energy consumption
- The organization need to reduce the water usage
The organization must initiate sustainable waste management system (Köseogluet al. 2016).
Legal: In order to expand in the global market, Goring Hotel needs to focus on several legal factors. The major legal factors are mentioned below:
- The consumer law must be complied by the Goring Hotel so that it can fulfil their commitment to the consumers
- The company would have to follow the employment law to the line(For PESTLE Analysis, refer to Appendix 1).
Michael Porter five forces
Threat from Substitute: Hotels like The Park Hyatt Sidney and The Nuntucket Hotel & Resort are major threat to the Goring offering lower prices with at par ratings from visitors. However, the fragmented nature of global market makes it difficult for sustainable entry.
Power of Suppliers: There is a lot of dependence on raw material suppliers and the slightest of price change from their end can affect the hotel at a significant rate. Furthermore, the threat from various aggregators in the business is another aspect to ponder upon (Osarenkhoeet al. 2014).
Power of Customers: The customer has always been sitting at the higher end with plenty of alternatives with competitive prices and thus exerts a lot of pressure on the pricing structure of the hotel thus shrinking profit margins.
Threat from New Entrants: The Hotel sector is one of the most lucrative sectors when it comes to investing and when there’s a giant plot of land involved with a handful of investment sharks, a luxurious hotel is always on the cards. However, the fragmented nature of global market makes it difficult for sustainable entry and thereby makes the threat weak.
Threat from Substitutes: Hotels like The Park Hyatt Sidney and The Nuntucket Hotel & Resort are major threats to the Goring when it comes to class and price. There are many hotel settings providing similar service to the customers (For Porter’s Five Forces Analysis, refer to Appendix 2).
Value Chain Analysis:
According to the value chain analysis of Goring hotel, the organization would focus on establishing effective strategic planning, finance, accounting as well as general management. The human resource management of the hotel would focus on recruiting of professional and experienced staffs, training of the recruited staffs as well as development of their skills and abilities. The organization would also procure necessary supplies for the customer service. The major activities of value chain would be research, service production, service provision and marketing (For Value Chain Analysis, refer to Appendix 3).
Resource Based View Analysis:
The resource based view analysis has identified that the tangible analysis are the financial and physical resources. The financial resources include cash securities and burrowing capacity. At the same time, physical resources include building, machineries, and equipment. The intangible resources of Goring hotel can be classified in three parts, which are technology, reputation and culture. The technological resources include trade secrets, copyrights and patents. The brand image and relationship with the client has been considered as reputation resource. The rich organizational culture of Goring hotel is considered as culture resources. The human resources would include experienced and professional staffs. These resources would be most capable to fabricate the organizational capabilities. The capabilities would construct the strategies for attaining competitive advantage (For Resource Based View Analysis, refer to Appendix 4).
The Goring hotel would take an entry in the North American Market. As the organization would make a fresh business venture, it is unsure whether the business would be successful or not. Therefore, it can be understood from the BCG Growth Matrix analysis that the organization falls in Question Mark (For BCG Matrix Analysis, refer to Appendix 5).
3.0 Summary of Key Issues
Based on external and internal analysis present the Swot:
The strengths and weaknesses should relate to the internal factors Goring Hotel. The strength of the company is that the hotel has come to deliver some of the finest personal service in the world. World-class guest experience is the major attraction of the hotel. The hotel has 69 unique rooms (Gorehotel 2017). Every room is uniquely decorated and furnished. On the other hand, major weakness of the hotel is lesser digital platform activity and minimum brand awareness (Jung et al. 2013).
Opportunities and threats should relate to the External factors i.e. the sector (e.g. the economic situation, spending power of potential customer, social trends, technological changes that might affect the Hotel) (For SWOT Analysis, refer to Appendix 6).
4.0 Market selection process
According to the 12c’s framework analysis, it has been identified that the North America market would be most attractive for the business venture. It has been identified that although the North America is quite big, highly concentrated have a greater numbers of retailers. Citizen’s higher capacity to pay coupled with currency strength has increased the attraction of North America in a significant fashion. High communication and policy facilitated the new business venture to attain success in North America (For 12c’s Framework Analysis, Refer to appendix 7).
The GE matrix has been able to measure the strength of the Goring Hotel. As the market attractiveness of The Goring is higher along with the business unit strength, the GE Matrix indicates the growth of The Goring. North America and Australia will have a higher rate of Industry attractiveness and unit strength in comparison with Latin America. Therefore, it can be observed from both analyses that North America would be most beneficial for the organization to expand (For GE Matrix analysis, Refer to appendix 8).
5.0 Recommended Markets and Market Entry Strategies:
The company has mainly targeted the high-end market of London. It is considered as the hidden gem or the most favourite place for the visitors, who are seeking the out that quintessentially English luxury hotel in the centre of London (Gorehotel 2017). The hotel is located one in Belgravia, which us one of the most elegant and exclusive areas of the central London. The hotel is appropriately placed for spectacular sights. The walls of Buckingham Palace, Mayfair and Sloane Street and the Knightsbridge make it a fashionable stay for the high end customers of England.
Bharwani and Mathews (2012) stated that the hotel is known for its high quality of personal service. For its luxurious rooms and high quality of services, the hotel is known as “Baby Grand.” George VI and Her Majesty and personalised service are the two major reasons behind its high end market selection. It is the closest hotel to the Buckingham Palace. During the coronation of George VI and Her Majesty, The Queen observed that this hotel was filled with royalty from all over the world, who are attending these occasions. For its high quality of service, Goring had been awarded with royal warrant (only hotel awarded with royal warrant) (Gorehotel 2017).
Now the hotel is trying to develop a successful strategy for internationalisation. The first choice of the company is to expand its market in North America. Due to its high quality of service and luxurious facilities, the hotel will mainly target high-end customers in North American market. However, in order to become successful in the international market. They have to make some necessary amendments. For example, they hotel has to increase its online presence and increase its brand promotion.
There are two major market entry strategies that the hotel is going use in international markets. They are such as direct exporting and franchising. Abrate et al. (2012) stated that direct exporting is the method used by an organization to sell its products using its own resources. The Goring hotel already has an established brand name in UK. The agents and distributors have already become the face of the company. Hence, the hotel intends to keep its core image in international market and use the same agents and distributors that it uses in UK.
Abdullah and Haan (2012) mentioned that franchising is another market entry strategy used in North America, for rapid market expansion. Ayehet al. (2012) stated that, this market entry strategy works well for companies that have repeatable business model that can be easily transferred into different markets like restaurants and hotels. This market entry strategy is appropriate for internalisation as the hotel has unique and strong brand recognition in London. It will also help the hotel to create its own future competition within its franchise.
The major barriers that the hotel might has to face in international market are such as capital requirement, laws and regulations related with Foreign direct Investment, Cultural barriers, corruption and bribery. While entering the North America market, the company might have to face legal and cultural barriers (Line and Runyan 2012).
6.0 Marketing Strategies:
There is table given below to provide recommendation to the Gore hotel for segmentation, targeting and positioning strategy required to be used during internationalisation.
In North America, the company will try to gain customers from metropolitan cities like New York, San Francisco and Los Angeles (Geographic). Customers who are accustomed to live high-end lifestyle and have specific requirement about services will come to Goring hotel (psychographic.)
The company prefers to provide high quality of personalise services, luxurious rooms and intimate atmosphere (Gorehotel 2017). Hence, the cost will be high. For this reason, the company should only target high-end customers. It includes high end business professionals, high class tourists and high class married couples. The hotel will mainly target to attract customers during different occasions like Christmas, for upscale meetings and married couples for honeymoon.
Development of attractive packages for different occasions like Christmas, organising high-end business meetings and developing package for honeymoon purpose will help the hotel to get sustainable position in the high-end international market. In addition, the company has to improve its online promotion strategy. The company has to use Facebook and Twitter to develop strong relationship with customers all over the world. In addition, they can expand their service like by adding skincare and spa facilities. It will help the company to meet all the desires of the targeted high end customers.
7.0 Marketing Mix:
The Marketing mix is one of the most crucial tools for identifying the scope and opportunities for any business venture. These particular frameworks shape the organizational focus regarding the respective market. It also formulated necessary strategies to be successful in all of the areas of business. The 7P’s marketing mix is focused on seven distinct business areas, which are Product, Place, Promotion, Price, People, Physical Evidence and Process (For 7Ps Promotion Mix, Refer to Appendix 10).
7.1 Methods to increase cost effectiveness of sales promotion (LO2):
There are three major ways in which in which the cost effectiveness of the sales promotion can be increased (Wang et al. 2012). It is applicable for the Gore Hotel as well. They are such as:
Assessing what is required to achieve through sales promotion
Line et al. (2012) stated that, promotion strategies work effectively, when customers are confused about their purchasing decisions. Before developing any promotion strategy, thehotel needs to set its objective and market share that it desires to achieve through its promotion. the company will able to allocate necessary fund for promotion by knowing the bottom line impact of the promotion strategy. Provide necessary staff time and energy to develop a strong promotion that can increase sales figure within a specific time period.
Providing effort on target customers only
As the hotel is quality of service and luxuries for high end customers, the sales promotion strategy should only be developed for high end customers. The marketers of the company needs to understand that, middle and lower-middle class customers cannot afford their service. Hence, promotion strategy must only focus on service, behaviours, facilities and luxuries prided by the hotel for high end customers rather than price of rooms.
Development of incentive strategies
The company needs to develop appropriate incentive strategy to retain loyal customers and to attract new customers (Callarisaet al. 2012). The company needs to develop special and unique packages for different segments of customers like businesspersons and honeymoon couples. The hotel needs to organise large events such as promotional events, organise special occasion celebration with famous people to increase its publicity among reach people.
7.2 Issue that can affect the overall strategy:
Change of market trends and regulations is the biggest issue that affect the overall market strategy of the company. Crouch and Housden (2012) stated that staying top of any industry is most significant for any company. However, if a company is unable to assess and identify the current market trends, the bottom line of an organization may be at risk. The Goring hotel is known for its high quality of personalised service in Central London. It has mainly targeted high-end customers for this reason. Now the hotel is trying to enter the international market.
It will start with other metropolitan cities of North America. However, the company needs to conduct proper research before developing any marketing strategy and enter into the market. The company needs to develop brand awareness. Otherwise, high end customers will not select Goring hotel over its competitors like JW Marriot. The company needs to develop schedule to review its competitors to uncover any new pricing strategies, new products and services or shifts in their marketing messages. They need to look for trends in technology like increase use of social media, which can affect the overall marketing strategy for the hotel.
7.3 Promotional Strategy and marketing mix for the proposed market
Ghoseet al. (2012) stated that 7Ps marketing mix strategy is the most effective way to increase sales figure of an organization. While the company is going to open its branches in different cities of North America, it will use 7Ps marketing mix strategy. Here is table given below:
- Top class chefs from all over the world will develop high quality and hygienic foods and beverages
- Banqueting rooms
- Executive lounge
- Special room for honeymoon couples
- Recreational facilities
- Conference facilities
- Parking facilities
- Room heating services
- Spa and wellness service
Place and distribution
- Metropolitan cities like Edinburgh, Glasgow and Manchester
- Hill stations
Two types of distribution system will be used:
- Global distribution system (GDS)
- Online pay per click (Facebook ads and Google ads)
- Sales through hotel sales team
- Online Travel Agents
- Independent Travel agents
- Online Travel portals
- Event Planners
- T V Commercials
- Celebrity endorsements
- Development of Facebook page
- Development of Twitter channel
- Redesigning the hotel website
- Organising events to promote the new branches developing in other cities of UK
- Developing franchise T-Shirt with hotel logo to increase brand awareness among people
The price of the service provided by the hotel is going to be on the higher side, as it is only targeting high-end customers.
The Goring hotel must hire most professionals and experienced staffs for the new branches in North America. The experiences of the staffs would be most crucial for attaining most necessary customer satisfaction, which in turn will help to elevate brand image as well as overall business.
The Goring Hotel needs to establish highly attractive building for the hotel settings. The hotel settings need to be decorated in such a manner that the customers would be highly attracted toward the hotel settings.
The Goring hotel would provide most luxurious service to the customers, which would ensure greater customer experience.
7.4 Risk assessment of the implementation of the promotional strategy:
There are some major risks related with this promotional strategy. They are such as:
Unnecessary investment on promotion
The company is planning to invest huge amount of money on promotion and advertisement. It includes Television advertisements, event organization and celebrity endorsements. It will almost cost 10 million pound for the organization, which is a significant amount of money. However, if these advertisement strategies are unable to send right message to the targeted customers (high end), this huge amount of money and effort will go to vain.
Change of market trends and regulations
Change of market trends and regulations is the biggest issue that affect the overall market strategy of the company. Lee et al. (2015) stated that staying top of any industry is most significant for any company. However, if a company is unable to assess and identify the current market trends, the bottom line of an organization may be at risk. There is significant change in the technology trend of tourism industry can be found. The Goring hotel needs to increase its online presence, otherwise it will not be able to become successful in international market.
Inappropriate selection of market segment
The company has mainly selected high-end market due to high quality of personalise service. The management team has decided to maintain high price of service while entering the international market. However, fail to do so will reduce the brand image and overall sales figure of the company. High-end customers of other cities of North America, might not prefer to stay at Goring hotel while they have options like JW Marriot.
The assessment has been able to evaluate the current practice of Goring Hotel. In addition, it has evaluated the opportunities and threats to expand in the international market. Moreover, the report has identified most suitable market for the expansion. In addition, it has been able to evaluate the North American market and possible risks associated to the business. Hence, the report has been able to most detailed insight in the future expansion of Goring Hotel.
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