Dynamic Capabilities Model And Strategies For Banyan Tree Hotels And Resorts

Impact of Dynamic Capabilities Model on Banyan Tree Hotels and Resorts

Questions:

1.Your first major task is to provide a comprehensive yet concise written analysis of how Banyan can make use of OR develop its Dynamic Capabilitiesgiven the industry-based considerations (both in Thailand and India) in taking advantage of the business opportunities in the hospitality-hotel industry in India.

2.Draw on our relevant topics to explain the advantages and disadvantages of your recommended strategy as a way of Banyan’s strategic efforts to manage differences in its global or international markets such as India.

Lin & Wu, (2014) stated in their research that dynamic capabilities model deals with three different aspects of transforming, seizing and sensing. According to this research dynamic capabilities have an impact over the performances and of this research model.  This model is used in case of Banyan Tree Hotels and Resorts in order to showcase the capability in the hotel industry.

Figure 1: Dynamic Capabilities model

(Source: Author made)

Banyan Tree Hotels and Resorts is one of the leading companies in the hotel industry. The Thai hospitality sector has churned 42.5 billion USD in 2015. It is an 18 percent increase from the previous year. The hospitality sector received about 29.9 million tourists in the country in the year 2015. It is also one of the busiest aviation industries in the continent.  It provides facilities of training to its employees and has supported the environmental cause by good waste management, environmental goods management and protection of the trees. The employees are provided with dormitories and basic accommodation facilities for the employees.

The macro level factors are social developments, technological departments, economic developments, environmental departments and political developments.

Politically Thailand has been encouraging tourism for quite some time now. The establishment of Banyan Tree Maldives Marine Laboratory is one such example. It has employed many drivers from the local community to better the economic situation in the country (Euromonitor International, 2016).

The company established The green Imperative Fund by donating 2 USD for every room which has been booked to help several poor communities and environmental causes (Wirtz, & Wirtz, 2011).

There are primarily two kinds of training programs in the organisation. Firstly, it is given to the common employees. This training is based on primary aspects of hotel services according to the discipline of the company whereas the the second type of training is conducted in teh spa academy for the employees who work in spa (Wirtz, & Wirtz, 2011).

Banyan Tree Hotels and Resorts: Strategies for Growth and Expansion

The company utilises technology to minimise the ill-effects on the environment. It has adopted strategies to minimise deforestation and soil erosion. The toxic cosmetics and toiletries like shampoos, soaps, bath foam, hair conditioners and others are replaced with the non toxic and reusable celadon or ceramic (Wirtz, & Wirtz, 2011). The waste water is also properly recycled in order to re-use it.

The Banyan Tree Hotels and Resorts consist of 25 hotels and resorts, 65 retail galleries and 68 spas. It also owns two golf courses. It has registered its presence in 55 different locations and 23 different countries (Wirtz, & Wirtz, 2011). This information is enough to understand the grandeur of Banyan. The head quarters of the brand is situated in Thailand. The organisation moved up in the category of luxury hotels in 2008.

Banyan Tree has a company policy to train every employee about the necessities in a five star hotel according to his role. It trains employees with various services, which every employee requires to learn in order to sustain in the profession for long. They are provided with good living conditions and air conditioned buses for travelling from one place to another. The medical facilities, child care facilities, canteens and others are provided with goods like refrigerators, telephones, televisions, bathrooms and others which are useful for the labours (Wirtz, & Wirtz, 2011).

The company has been training employees to recruit in its spa. The company has also taken several steps to do better in the environmental sectors. The organisation uses most of the local products in order to make a positive contribution to the local economy. Banyan Tree has been instrumental in including the local community in its working force. It has instrumentally utilised the local craftsmen, workers and culture in its business (Wirtz, & Wirtz, 2011).

Managerial practices

On the other hand in order to support its growing demand of Spa business, it has successfully established a Spa Academy in order to help the recruitment process later (Wirtz, & Wirtz, 2011). It will be able to recruit its own students in the spas of China and Dubai later. 

Firm level factors

Infrastructure wise, Thailand is one of the best in the business of tourism. Thailand has the best airports in the country. Thailand has the busiest airports in Asia. The company possesses thousands of employees working in 25 hotels, 65 spas and 68 retail galleries (Wirtz, & Wirtz, 2011). It has won several awards because of its great performance in providing service to the people.  

Porter's Generic Strategies for Banyan Tree Hotels and Resorts

Internal incentives

The internal incentives are provided through accommodation facilities, food and other luxuries like television and refrigerators by the company (Wirtz, & Wirtz, 2011)

Entrepreneurial actions

Opportunity and recognition:  As Banyan Hotel and Resorts has expanded their business in last few years. They have the ability to enter new markets as their success rate is better than many of their competitors.

Skill and capabilities: The organisation has always tried to maintain discipline among its employees. It has trained its employees according to the requirements of the industry (Wirtz, & Wirtz, 2011). The products and services vary according to the customer the organisation is dealing with. This showcases the discipline of their work force which can perform well in any country or economy.

Developing and innovative activity: To maintain the quality of its villas and hotels it has adopted self sufficient environmental practices in terms of water management, not using bi-degradable products and training students for a better spa experience of the customers (Wirtz, & Wirtz, 2011). The services like beauty treatment, music and traditional Thai food for the customers (USDA, 2016).

Threat of new entry

Banyan Tree Hotels and Industries have established itself as a luxury hotel chain in Thailand (Wirtz, & Wirtz, 2011). The growth rate of the tourism business in Thailand is about 8 percent which allows them to experiment and grow in the market.

Supplier power

It uses local materials from traders to utilise it in business as mentioned in the dynamic capabilities (Wirtz, & Wirtz, 2011). It also employs more local people in order to help the local economy of a region. Skilled and developed employees make its supply power strong.

Threat of substitution

The organisation has been offering authentic Thai cuisine and hospitality to the employees (Wirtz, & Wirtz, 2011). And that is what it differs from Hilton and other luxury hotels.  Hence, its substitution by a competitor is difficult. Hence, its threat of submission is low.

Buyer power

The buyer power is very high in the Hotel industry of Thailand (USDA, 2016). The customer satisfaction plays a huge role in the business of the hotel industry.

Competitive rivalry

Banyan Trees Hotels and Resorts have been instrumental in portraying their unique local image in the market in order to neglect the the possibilities of rivalry (Wirtz, & Wirtz, 2011). Hence, the possibility of competitive rivalry is very low.       

Figure 1: Porter’s generic strategies

Recommendations for Banyan Tree Hotels and Resorts

(Source: Tansey, Spillane & Meng, 2014)

Porter’s generic strategies are very useful for making strategies prior to enter into a new market. It is divided in four quadrants as depicted above in the picture. However, different strategies are suitable and feasible to the different requirements and with the different firm. For example, some companies may offer cheaper prices to attain a higher penetration into the market. This might help the concerned organization provided if there is a demand for such strategy. Walmart for example use cost leadership approach to attract its customers (Stankevi?i?t?, Grunda & Bartkus, 2012). It is feasible as well with the target customers. They do a big business with the help of “everyday low prices”. However, this is not feasible to have the same strategy with some who want best quality and pricing is no bar for such people if it delivers on quality.

For the Banyan Tree Hotel, it is important that they use cost leadership approach for entering into the Indian market. The Sociocultural lifestyle of the people living in India have soft corner for price sensitivities (Pereira & Malik, 2013). This is also undeniable that the tourism and hospitality sector in India would not alone shared by the local people; this would rather be shared by many foreigners who are getting maximized with their likeness for this part of world. However, recommendations are suggested because local people have high inclination to a reduced cost and good in quality format. Additionally, the tourist sector is more supported with the fall of local public from different parts of the country. Offering a cost reliable opportunity in such context would be a better idea for the Banyan Tree Company. This would rather serve the purpose of local public. This strategy is suggested by keeping in mind the early few times of business operations of the Banyan Tree in India. The strategy is also suggested because cheaper prices of hotel rooms are one of the most selling points in the hotels industry in India (Sanjeev, Gupta & Bandyopadhyay, 2012).

The strategy suggested above has some advantages and disadvantages as well. However, it was recommended as an entry mode strategy, so that, the company could get a firm hold on the local people.

The strategy suggested for the Banyan Tree would help the company in capitalizing the interest of mass population who belong to middle class families and prefer rooms in such hotels that offers the cheapest prices. This strategy would attract those couples who are newly married and belong to some middle class families. They would find this comparatively easier to stay in the offered services. The recommended strategy would help the Banyan Tree Company earn big because this would meet the requirements of mass population in the local country. This would also popularise the company in India.

The recommended strategy has some expected disadvantages, which is considerable for its potentiality. Offering cheaper hotel room prices mean that the company would need to compromise on its quality part, which is not compatible with the foreign visitors. Foreign visitors have their tendency to go for luxury hotels, which are well served with some big names such as ITC Hotels, Oberoi Hotels etc (Vardharajan & Rajan, 2013). Additionally, the numbers of foreign visitors are getting increased with the passage of time (INDIAN HOTEL INDUSTRY, 2011).

The recommended strategy would not allow the Banyan Tree Company in occupying a vast area in the hotel industry in India. The company rather have to think on the identified weakness of the recommended strategy once they are tenured in the country. A vast customer base could only be acquired if the services have differentiating nature such as it satisfies the needs of both the middle class and high-class people.

References

Devang, A., Kruse, C., Parker, A., & Siren, P. (2017). The Next Wave of Business Models in Asia. MIT Sloan Management Review, 58(2), 35.

Euromonitor International, (2016). Passport: Lodging in Thailand,Retrieved from https:euromonitor.com/Thailand on 2 June 2017.

INDIAN HOTEL INDUSTRY. (2011). [ebook] New Delhi, p.4. Available at: https://www.indialawoffices.com/ilo_pdf/691469785066.pdf [Accessed 7 Aug. 2017].

Lin, Y., & Wu, L. Y. (2014). Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of business research, 67(3), 407-413.

Pereira, V., & Malik, A. (2013). East is East?: understanding aspects of Indian culture (s) within organisations: a special issue of Culture and Organization Volume 21, issue 5 (2015). Culture and Organization, 19(5), 453-456.

Sanjeev, G. M., Gupta, K., & Bandyopadhyay, R. (2012). Financial challenges in the Indian hospitality industry. Worldwide Hospitality and Tourism Themes, 4(2), 163-173.

Stankevi?i?t?, E., Grunda, R., & Bartkus, E. V. (2012). Pursuing a cost leadership strategy and business sustainability objectives: Walmart case study. Economics and Management, 17(3), 1200-1206.

Tansey, P., Spillane, J. P., & Meng, X. (2014). Linking response strategies adopted by construction firms during the 2007 economic recession to Porter’s generic strategies. Construction Management and Economics, 32(7-8), 705-724.

USDA, (2016). Thailand: Food Service - Hotel Restaurant Institutional. USDA Foreign Agricultural Service, Gain Report, USDA: Bangkok.

Vardharajan, K., & Rajan, Y. (2013). Hotels in India: trends and opportunities. Indian Management, 52(4), 20-41.

Wirtz, J., & Wirtz, J. (2011). The Banyan Tree: branding the intangible. Emerald Emerging Markets Case Studies, 1(1), 1-12.