Importance of Strategic Management for an Organization Free-Sample

Question: Discuss about the Strategic Mangement. Answer: Introduction: In the given assignments a comparison is drawn in between Hilton hotel group and a newly formed hotel Happy Holiday. In the gives section, different strategic management techniques are applied to these two hospitality organisations. It has been seen that Hilton hotel group is a well known hotel chain who are quite successful in their field whereas Happy Holyday is just a newly started venture which is not yet successful. Strategic management Strategic management is an ongoing process of scrutinising, supervising, strategizing techniques which are essential for the growth of an organisation. It is actually a systematic path which ensures the smooth functionality of an organisation. There are a number of strategic management tools and technology that helps to gauge the strategic management aspects of an organisation. Those tools are SWOT, PESTLE, Porters five forces analysis, BCG matrix and Ansoffs matrix. With the help of those techniques; the comparative analysis between Hilton hotel and Happy Holiday inn are drawn. Furthermore, it is also investigated what make the Hilton hotel successful and what is going wrong with Happy Holiday (Hill et al. 2014, p.78). SWOT Analysis of hospitality sector: SWOT Analysis of hospitality sector i.Strength: fast return on investment high level of technical innovation leading to customer satisfaction employee retention brand value brand reputation ii.Weakness: Economic turmoil Volatility in market situation Supply chain management issues Conflicts among employees and higher authority iii.Opportunity: Improved technology and digitalization New prospects like hosting different corporate such as business conference and non-corporate such as wedding as well as birthday parties iv.Threats: BREXIT High level of competition Legal obligations Increased amount of taxation Political turmoil in operating country Comparative analysis between Hilton hotel and Happy Holiday: The SWOT analysis of the hospitality sector is an internal-external analysis that tries to identify the common strength, weakness, opportunity and threats for the gross industry. There are situations which are common for the entire hotel industry operating in the contemporary era. However, it is up to the company how the use this information and make use of strength and opportunity to combat weakness and threats (Slack, 2015, p.89). It has been seen Hilton hotel chain is effectively using the technical advantages in expanding their business. Furthermore, they also employ technology and digitalization techniques to address employee grievance in order to avoid big conflicts whereas Happy Holiday is unable to make full use of technology and thus they left behind in the competition (Ethiraj et al. 2016, p.81). PESTLE Analysis of hospitality sector: PESTLE Analysis of hospitality sector i. Political Factor Usage of euro throughout the European Union country Threats of terrorists attack also affects the flow of traveller in few of the specific country BREXIT also makes investor to withheld their share in the fear of insolvency ii. Economic Factor Recession Inflation Disposable income iii. Social Factor: Changes in lifestyle Changes in population demographics Competitive prices for similar destination Language barrier iv. Technological Factor New invention and technological improvements affects the customers preference Launch of both android as well as apple app for better accessibility of the service Easy availability of information over the internet v. Legal Factor Employment law Health and safety legislation Consumers law vi. Environmental Factor: Ecological reservation Climate changes Extinction of species Natural disaster Comparative analysis between Hilton hotel and Happy Holiday: PESTLE analysis is a micro environmental analysis which provides an overall idea about the market in which the contextual organisations are operating. Being a multinational organisation Hilton is widely affected by the global political factor. Though the factors are same but the impacts are low for Happy Holiday (Steinbach et al. 2016, p.88). However, in spite of the mayhem in the global politics, Hilton is able to secure their revenue because of their strategic planning which is not seen in the case of Happy Holiday inn. Moreover, there are also some advantages that are identified from the PESTLE analysis. Because of the huge establishments and high retention capacity, it is possible for the Hilton group to consider many things such as exploring new venture where the political situation is stable (Jurevicius, 2013, p.2013). Comply with the legislation and paying the actual amount of tax is also easily achieved by Hilton Hotel. However, the same is difficult for Happy Holidays as the retention capacity is smaller (David and David, 2015, p.34). Porters Five Force Analysis: Porters Five Force Analysis: i.Rivalry among the Competitors (High) Saturated market leads to high competition ii.Bargaining Power of Customers: (High) As the Competitive rivalry is high thus the bargaining power of the customer is also high due to high availability of other alternatives iii.Bargaining Power of Suppliers: Low for established organisation like Hilton but high for smaller organisation like Happy Holidays iv.Threats of Substitute Products: (High) as the competition is high thus the treats to be substitution is also high v.Threats of New Entrants: (Low) due to the high cost of establishment threats of the new entry is low. Comparative analysis between Hilton hotel and Happy Holiday: The primary problem behind the not so impressive performance of Happy Holiday is their lack of understanding themselves, being an established hospitality sector; Hilton is quite systematic in their operation which brings them the competitive advantages. Though the situation is same for the happy holiday but the lack of insight and also the knowledge that able a company to gain competitive advantage make them lose the battle of competition (Yuan, 2013, p.5). BCG Matrix Analysis: BCG Matrix Stars: a. Earning: High and stable, budding b. Cash flow: neutral c. Strategy: Empower for growth Cash Cows: a. Earning: High and stable b. Cash flow: High and stable c. Strategy: Empowered Dogs: a. Earning: Low and unstable b. Cash flow: negative to neutral c. Strategy: Divest Question marks: a. Earning: low and unstable but growing b. Cash flow: negative c. Strategy: have potential to be grown into the cash cow, however, there also a risk to end up as the dog. Comparative analysis between Hilton hotel and Happy Holiday: The BCG matrix analysis reveals that the Hilton Hotel is the Cash cow in the industry with high and stable earnings and cash flow. They are also capable of backing up other small organisation. Bearing the loss and facing adverse situation is much easier for the company. However, Happy Holiday comes under question mark category; the regular cash flow is negative with low and unstable earning. There are two possibilities in this situation. As the organisation is growing thus the cash flow is negative. If the company is able to utilise all the strategic management tools and employ appropriate insight it can grow into the cash cow or else it will lose the battle and end up as dog category (Bull et al. 2016, p.99). Ansoff Matrix Analysis: Ansoff Matrix Present New Present Market Penetration Product Development New Market Development Diversification Comparative analysis between Hilton hotel and Happy Holiday: Ansoff is a vital administration tool used to link the organisation with the major course and choices. The abstractness of this specific system lies on the organisations that have a growth target or scrupulous tactic to entering in novel markets or launch new items or both (He, 2015, p.11). In the given case scenario, Hilton is the organisation who can easily plan their market penetration on the basis of their huge financial resource. However, for the Happy Holiday inn, it is not possible as they lack financial resources. On the contrary, they can use the power of innovation and mould their service in such a way which could attract the target customer. Instead of concentrating what is in their hand, the happy holiday is kept on adding new hotels in their chain with an expectation to gain profit (Comino and Ferretti, 2016, p.1104). As establishing new hotel needs lots of financial resources they hardly make a profit in their business. The strategy for Hilton hotel is different they al ready make a profit in a certain country. However, the politically unstable environment affects their profit. This is the reason they plan to explore new markets where the political situation is stable (Johansson, 2017, p.78). Leadership strategy: Leadership is another important aspect of strategic management. The nature of a team is depending on the nature of their leader. An efficient leader has the power to make a losing enterprise run, whereas problem in leadership also can cause downfall to the enterprise. In the case of the Hilton hotel, the leadership quality of organisation makes them enhance their productivity. In order to employ correct leadership, it is important for an organisation to know the nature of their work force. There are many types of leadership strategy namely, autocratic, democratic, charismatic, laissez-faire and others (Rachet, 2014, p.67). Each type of leadership is suitable for different nature of the workforce. It has been noticed that in order to lead a diverse group of large people autocratic leadership is effective whereas in the case of leading intellectual, highly motivated skilled labour; laissez faire leadership is effective (Mkude and Wimmer, 2015, p.14). In the case of the Hilton hotel whe re they have their operational unit in almost every continent, choice of leadership strategy is crucial. They need to manage a vast group of people with diverse needs. With even a small mistake in their leadership strategy conflicts may arise which is detrimental to the company. On the other hand, in the case of the Happy Holiday, the number of the employees, as well as the operational unit, is less, thus their leadership strategy must differ from that of the Hilton hotel (Grnig and Khn, 2015, p.89). However, it has been noticed that there lies a problem in the leadership strategy. The leader of the Happy Holiday inn fails to identify the needs of their employee. The leaders of Happy Holiday inn also fails to convey the organisational goal to their subordinates hence the effectiveness of the strategic management is somehow compromised (Balasopoulou et al. 2016, p.9). Financial comparison: Year Revenue (million pounds) Revenue (million pounds) Net income (million pounds) Net income (million pounds) Net profit margin (NPM) Net profit margin (NPM) Hilton Happy Holiday Hilton Happy Holiday Hilton Happy Holiday 2010 8,086 78 128 1.6 1.58 0.6 2011 8,783 80 253 1.8 2.88 0.61 2012 9,276 82 352 1.85 3.79 0.68 2013 9,735 81 415 1.82 4.26 0.7 2014 10,132 82.5 512 1.9 5.16 0.71 After comparison the financial figure, it is evident that the Hilton hotel is successfully run their organisation whereas for Happy Holiday the situation is quite tight. Thought, the happy holiday is slowing gaining their profit but that is not up to the mark. The reason behind this financial shortcoming lies within the companys strategic management decision makings. In order to gain competitive advantage, the organisation must employ various final management techniques as for example, financial audits. It also has been seen in spite of the recession and other financial problem, Hilton hotel is able to secure revenue each year. The reason behind their success also depends on the appropriate strategic management decisions taken by the company. Conclusion: After evaluating the case for both the Hilton hotel group and Happy Holiday Inn, it can be concluded that proper strategic management is crucial for the success of an organisation. Leaders of the organisation can propose rules but the implementation of the rules depends upon the strategic management techniques. It is a well-accepted fact that the Hilton hotel is a multinational group; however, it is also an undeniable fact that the strategic management of the concerned international hotel chain make them achieve their goal. 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