Introduction


The paper intends to discuss about empire hotel and some of its facilities. The paper intends to understand the political, economic, social, technological and legal environment of the hotel. The paper intends to discuss the five forces that affect the hotel. Moreover the paper intends to discuss about the significant competitive strategy, reduction of labor cost and the competencies of the hotel.


 


Empire Hotel of Brunei


The small, independent Islamic state of Brunei Darussalam is located on the island of Borneo between the Malaysian states of Sabah and Sarawak. Bordering the South China Sea to the north, this tiny state of only 5,765 square kilometers, is of interest to social planners and demographers for at least two reasons. First, the country is amongst the ten richest in the world by virtue of its oil and investment revenues: the onshore and offshore oil fields around Seria contribute massively to a per capita GNP which, in 1996, stood at ,400. That wealth has created important economic and social benefits for the citizen population no income taxes or national insurance charges, coupled with free healthcare and education, characterize the state (Phillips, 2000). Brunei has a goal of strengthening its Tourism sector. One member of the tourism sector that helps Brunei is Hotels. Hotels are vital components of urban tourism products and make important contributions to both national and local economies. The importance of hotels to urban areas cannot, however, be seen simply in terms of employment and revenue generation. As the base for the bulk of overnight visitors to a city, hotels exert considerable influence over the competitiveness and nature of urban tourist products (Debbage & Ioannides, 1998).Hotels play a pivotal role in attempts to regenerate urban cores, as cities attempt to reverse the ravages of deindustrialization and restructure their economic base. Hotels often form a vital part of the cultural, capital-driven complexes that are so important in transforming existing built environments-altering traditional economic roles, and enabling cities to forge distinctive images (Debbage & Ioannides, 1998). One hotel in Brunei is Empire Hotel and Country club. The Empire Hotel and Country club is located in Brunei’s coastline thus making it as the only Hotel located in the beach.  Such hotel is surrounded by a very peaceful and serene ambiance. The Empire Hotel and Country club employs around 800 people. The hotel staff is managed by highly experienced people.   Empire Hotel and country club has acquired various kinds of awards and it has various credentials. The awards and credentials of this hotel prove it uniqueness and its dedication to providing high quality of service and quality.  Empire Hotel’s structure and design was the product of the hard work of around 300 craftsman, designers and technicians.   Empire Hotel’s structure and design intends to show the culture of Brunei. The facilities used by Empire Hotel came from well known suppliers and designers.  Empire hotel has 2 – 3 bedroom villas that are fully furnished with comfortable beds and breakfast packages. Empire hotel has various kinds of rooms that fit a client’s need and capacities. The rooms are Superior, Ocean, Deluxe and Deluxe E-Club rooms. Empire hotel provides a transport service that will take clients from the airport to the hotel and back to the airport.


 


PESTLE analysis of the Hotel


Political


Empire Hotel and Country club is aware of the political situation of Brunei and this hotel has made sure that it has a reasonable position with regards to political issues. Empire Hotel and Country club is continuously prepared for any problems concerning the political sector. Any political noise is irrelevant to the company. Unless the political environment will change rules that relate to their operations, Empire Hotel and Country club prefers to stay away from such subject. The political climate in Brunei is stable. There are lesser oppositions to the sultanate of the country. Most people venerate the government. This shows that Empire Hotel would not face any politically related problem over the next few years. The political environment has allowed the liberation of the market, liberation of the market paved the way for improvement of services. The laws of Brunei have not been a hindrance to the growth of Empire Hotel. It has provided the much needed help in making sure that the hotel will achieve its goals. Brunei’s goal of improving the tourism industry can translate to additional profits for Empire hotel and country club. It also means increased global popularity for Empire hotel.


 


Economic


Empire Hotel and Country club can be said to be economically stable for the past years. Its economic stature is doing well that’s why they continue to try to improve their products to give the best to their clients. Empire Hotel and country club has acquired good profits due to their effective service and the ambiance of the Hotel. It is not only the internal economic situation of the company should be taken note of but also the economy of Brunei. The economic forces can dictate the actions of Empire Hotel and Country club, if the economy is doing well then Empire Hotel and Country club can offer new services but if the economy is in a worse state then Empire Hotel and Country club have to reduce unnecessary expenditures and un important actions.  Brunei has a stable economy. Its GDP is 3.2% in 2003.  Brunei’s main source of income is the sale of oil and petroleum products. Brunei’s plans for the future include introducing a better labor force, reduction of unemployment, better performance for the banking and tourism sectors, and continuous widening of its economic base. The economy of Brunei and the Asian Region as a whole has given opportunities to hotel businesses. The status of the economy has paved the way for Empire Hotel to prosper in Brunei and help in proving that Brunei and the Asian Region is one the premier region that houses tourism industry.


 


Social


The socio cultural force serves as the conscience to Empire Hotel and Country club. This force ensures that Empire Hotel and Country club will not do things they know can ruin Empire Hotel’s reputation with the society. This force ensures that the company will consider first its environment before making any decisions. Empire Hotel has made sure that they adhere to the traditions and culture of the people in Brunei. The structure of the hotel shows its adherence to the Islamic beliefs of Brunei. Empire Hotel and Country club makes sure that the services they offer will be accepted by the general public. Empire Hotel and Country club does not authorize the delivery of some services they know will cause outbursts or complains from different groups in the society. Empire hotel makes sure that they do not violate any Islamic belief. They make sure that all personnel know and fully understand the culture of Brunei and its citizens. Empire Hotel and Country club also engages in social activities that tend to develop a better relationship between them, the clients and the society they are operating in.


 


Technological


Empire Hotel and Country club offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Empire Hotel and Country club uses highly reservation systems. People can just go and log on to the internet, find Empire Hotel’s website and then reserve for a room online. Empire Hotel and Country club also makes use of the best kind of security systems to rooms, hallways and other vital places. The hotel has cameras in the hallways for vital parts of the hotel. It also has advanced locking system for rooms. The security crew of the hotel is well trained for all types of situations.  Since technology rapidly changes. Empire Hotel and Country club sure they are updated to what is happening and they can adjust to these changes.  If other companies use new technologies to provide services, Empire Hotel and Country club has the technology capable of competing with such technologies.  The technological forces dictate the trends in the hospitality industry, these forces is the one that determine what should be used to provide a service. Empire Hotel and Country club relies on its kind of service and the products created by the technological forces; the products of these forces are the ones that can give The Empire Hotel and Country club advantage over their rivals and success in the hospitality industry.


 


Legal


            Empire Hotel and Country club makes sure that it follows the different laws of a country they engage transaction in.  The company doesn’t want to risk their client’s welfare and company image by breaking local and international laws. Empire Hotel and Country club makes sure that they follow the laws of Brunei for hotel operations. Empire Hotel and Country club makes sure that it follows ethical standards set by international hotel organizations. The Empire Hotel and Country club makes sure that the transactions they engage in will have a legal basis and will be sanctioned by local or international legal organizations. Empire Hotel and Country club makes sure that they know the laws of a country before opening any branch there.


 


Global


Hotels are popular global business because of its profitability. Most people would want to enter hotel businesses because they can provide service and earn at the same time. There are various hotels in the world each has its own specialty and expertise. Hotels in the world cater to different types of clients and tourists. It adjusts to the different types of tourist in a certain country. It also adjusts to the culture of a country.


 


Demographic


 Different regions in the country has different financial capabilities, through the demography the company can know which region can afford the products, how many products will be delivered on one region, how many can afford the products and how many will buy the product without discounts. Most tourists prefer hotels rather than inns because of the excellent service they provide.


 


Porter’s five forces


Potential Entrants


            Empire Hotel and Country club has been around for a quite some time and the company is not greatly affected by the new entrants. The influence of potential entrants to the company is weak.  Any new entrant will have difficulty in gaining clients not unless they can provide innovative strategies that can thwart Empire Hotel and Country club from its position and get the company’s clients. The services offered by Empire Hotel and Country club are unique and has been well tested. If any new entrant wants to compete with Empire Hotel’s standard of service they need to have a huge investment to create services that have a much better caliber as the services of Empire Hotel and Country club. Any new entrants would also need to make use of better strategies that will give them an instant brand identity.


Competitive rivalry


            Competitive rivalry has a low influence on Empire Hotel and Country club. There are few hotel competitors in Brunei, and they have not achieved the quality of service Empire Hotel and Country club offers.  The competitors cannot give much problem to the company since it already acquired a good percentage of the local and international hotel clients. Compared to Brunei Hotel, Empire hotel has much better facilities and is more popular. Brunei Hotel is not a threat to the success of Empire Hotel.  But due to the plan of Brunei to improve its tourism sector Empire Hotel and Country club should be prepared for the onset of new hotels and tourism businesses.


 


Substitutes


Substitutes give high influence to Empire Hotel and Country club since substitutes can make a company lose the clients it has. The substitutes can be in the form of motels, hostels, inns, resorts, apartelle and other kinds of business in the tourism industry. These kinds of businesses are continuously growing and continuously changing strategies. Empire Hotel and Country club makes sure that the substitutes won’t give them much problem. They do this by proving that the service they offer and the technologies they use to provide the service are the best quality and are better than substitutes or any other company.  Empire Hotel and Country club makes sure that their five star rating is a testament of the kind of service they provide and it shows that their service is incomparable to substitute businesses.


Bargaining power of buyers


 The bargaining power of buyers highly influences Empire Hotel and Country club. As much as possible the company maintains reasonable prices for their services. They also have promos that intend to make the clients have second thoughts on having reservation at other hotels.  When the clients try to dictate lower prices Empire Hotel and Country club tries to know whether it is reasonable. Empire Hotel and Country club sees to it that a big part of decisions on prices will be based on suggestions of the clients. But if Empire Hotel gathers data that prove their prices are appropriate they try to explain to the clients why no change in prices would be made. For Empire Hotel and Country club the bargaining power of its buyer is gradually increasing as Brunei is moving into improvements in the tourism industry.


 


Bargaining power of sellers


The bargaining power of sellers highly influences Empire Hotel and Country club. The bargaining power of sellers is high because the quality of materials used in the delivery of service would be equal to the quality of products created by the sellers.  Empire Hotel and Country club makes sure that the price being asked for a material has the same value as the same materials’ quality. This will ensure that budgets will not be wasted.  Empire Hotel and Country club has to be aware of its partnership with its services partners and suppliers. Empire Hotel and Country club has to make sure that every part of the agreement with the partners will be followed.


 


Significant competitive strategy 


Competitive strategy is an area of primary concern to managers, depending critically on a subtle understanding of industries and competitors. Competitive strategy is the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs. Competitive strategy aims to establish profitable and sustainable position against the forces that determine industry competition. Strategy literature has tried to differentiate between two sources of competitive strategy competitive advantage and competitive positioning Mudambi & Ricketts, 1998). A firm experiences competitive advantage in terms of its core competencies. A firm’s competitive positioning, on the other hand, raises the need for important strategy choices beyond the core competencies of a single corporation. Such an overall strategy then combines the internal competencies of each company as core competencies of the entire competitive system. Competitive positioning strategy interacts with internationalization strategy in the formulation of an overall strategy Fundamental to every firm’s mission and competitive strategy is its value strategy. Generically, a value strategy is the pattern of decisions and actions that constitute the firm’s overall approach toward providing realizable net value to customers (Mudambi & Ricketts, 1998).


 


 A value strategy inherently involves all parts of a firm’s functional and organizational strategies that provide value realized by customers or require sacrifices by customers. All firms have a value strategy, but few have completely conceptualized and clearly articulated value as the basis for competing. In fact, many firms are more competitor-oriented than customer-oriented. As a result, many managers are more familiar with their firm’s competitive strategy than its strategy for improving customer value (Brewer & Rugman, 2001). Some inadvertently compromise net customer value either by producing products/services perceived to be of low quality or by requiring excessively high sacrifices of customers. Ironically, the most competitive firms are the customer- oriented, not the competitor-oriented firms. Since many customers now count time rather than dollar cost as their most precious asset, a high-quality strategy provides little competitive advantage unless it is paired with low cost. Similarly, low-cost/price strategies may also fail if they are not complemented with quality perceived to be of sufficient value. The synergistic combination of low cost and differentiation that may come with a value-based strategy is a direct result of managing critical systems that contribute to value (Brewer & Rugman, 2001). The significant competitive strategy for Empire hotel is its differentiation strategy. This company offers unique services to different kinds of people.  It was able to use differentiation strategy to expand and reach more clients. The differentiation strategy helped Empire hotel grow in Brunei. Empire hotel made sure that it has unique services; this helped in attracting more than one group of clients. As more groups of clients were reached by Empire Hotel, it expanded and subsequently reached its current state.  A competitive strategy for Empire hotel is its integration into newer technologies. The integration to newer technologies like the internet helped the hotel reach more clients and it helped in adjusting to the environment.


 


Reduction of labor cost


The only condition which contains the elements of stability and permanent satisfaction is that in which both employer and employees are doing as well or better than their competitors are likely to do, and this in nine cases out of ten means high wages and low labor cost, and both parties should be equally anxious for these conditions to prevail. With them the employer can hold his own with his competitors at all times and secure sufficient work to keep his men busy even in dull times (Taylor & Thompson, 2003). Without them both parties may do well enough in busy times, but both parties are likely to suffer when work becomes scarce. The possibility of coupling high wages with a low labor cost rests mainly upon the enormous difference between the amount of work which a first-class man can do under favorable circumstances and the work which is actually done by the average man. The ordinary system of management, owing to the lack of exact information and precise methods, can only approximate to the desired standard of high wages accompanied by low labor cost and then only slowly, with marked irregularity in results, with continued opposition, and, in many cases, with danger from strikes (Taylor & Thompson, 2003).


 


Modern management proceed slowly at first, but with directness and precision, step by step, and, after the first few object lessons, almost without opposition on the part of the men, to high wages and low labor cost; and as is of great importance; it assigns wages to the men which are uniformly fair. They are not demoralized, and their sense of justice offended by receiving wages which are sometimes too low and at other times entirely too high. Downsizing involves such measures as layoffs, early retirements, buyouts, or attrition designed to reduce labor cost. For most Firms, labor cost constitutes the largest proportion of total cost of operation. Total labor cost is made up of the wage bill and non-wage costs known as quasi-fixed labor costs including such costs as recruitment and training costs, employee benefits, payroll taxes, and worker-compensation premiums (Ezeala-Harrison, 1999). Therefore, the firm’s most effective way of cutting the level of its operational costs would be to reduce the size of its labor force or the restructuring measure known as downsizing. Reengineering involves such measures as directing investments in new technologies, changing the labor-capital ratio, retraining workers, or reassigning workers and personnel to alternative job approaches and procedures. These actions are aimed at cost reduction and productivity improvement. Like downsizing, reengineering tends also to result in the reduction of the number of workers employed. Certain job skills and occupations might no longer be needed as reengineering occurs, and workers are displaced as the firm reassigns job tasks and implements new technologies that are usually capital-intensive (Ezeala-Harrison, 1999).


 


Just as labor productivity is sometimes used as an index of competitiveness, so is unit labor cost of output also used as an index of competitiveness. Labor cost means the compensation cost of the labor input used in production. Compensation cost encompasses all expenses incurred on workers including wages, the firm’s portion of employment or unemployment insurance contributions, retirement and pension benefits to workers, accident insurance, and all other aspects of such payroll taxes (Cappelli, 1999). The total compensation cost per unit of output gives the unit labor cost of production. International comparisons of unit labor costs are then used as the indicator of relative international competitiveness of countries. Management investment in employee-commitment-enhancing HR activities, such as employee involvement, information sharing, or job security would be expected to have a very low return and could be considered counterproductive from the standpoint of labor cost minimization. An inducement HR system typically offers employees the opportunity to earn relatively high compensation. This strong monetary incentive, as well as peer pressure, reduces the need for intense supervision, creating a lean organization that also helps to reduce costs. While incentive compensation and lean staffing provide the engine that drives down labor costs, this system also requires that employees buy into the production goals set by management and believe that their efforts to improve performance will be fairly rewarded and will not result in job loss (Cappelli, 1999). To reduce labor costs Empire hotel would need to downsize its labor force. Downsizing means that the hotel would remove employees who have positions that can be considered as the same with another position. Another way to reduce labor cost is to reduce the pay received by all employees. Empire Hotel needs to make sure that no one would be exempted from salary reduction. Moreover Empire Hotel can initiate rescheduling so that employees would have reduced days of work. This would prevent any downsizing and salary reduction.


 


Competencies of Empire Hotel


Core Competencies


The core competencies of Empire Hotel include its personnel who provide a unique and incomparable service. The personnel make sure that an excellent service is given by the hotel. The personnel exhibit the hotel’s goals and ideas on customer service. Another core competency for Empire Hotel is the use of the best kind of technologies to provide service.  The technologies used by the hotel showcase their desire to show that there is only one Empire hotel and no new or old hotel or any substitute can be compared with it. The corporate competencies focus on maintaining a good relationship with the environment.  The core competencies assist the hotel in its daily operations and its daily delivery of service. It also provides Empire Hotel the capability to create new trends in the market.  The competencies are given extra attention by Empire Hotel since the competencies can do various things for the hotel.  In the instance of one of the competencies experiences some problem Empire Hotel and Country club has to create solutions or it will experience more problems that may hamper the operations of the company.


 


Distinct Competencies


Empire Hotel’s distinct competencies include its ability to provide services with high value amidst high costs.  The company makes sure that the prices of services would be equal to the value of services given. Empire Hotel’s distinct competency is embedded on its efficiency of service. The hotel makes sure that employees would provide efficient kind of service.


 


Conclusion


.The Empire Hotel and Country club is located in Brunei’s coastline thus making it as the only Hotel located in the beach.  Such hotel is surrounded by a very peaceful and serene ambiance. Empire Hotel and country club has acquired various kinds of awards and it has various credentials. The awards and credentials of this hotel prove it uniqueness and its dedication to providing high quality of service and quality.  The significant competitive strategy for Empire hotel is its differentiation strategy. This company offers unique services to different kinds of people.  It was able to use differentiation strategy to expand and reach more tourists and clients. The differentiation strategy helped Empire hotel grow and prosper in Brunei. Empire hotel made sure that it has unique services; this helped in attracting more than one group of clients and tourists. As more groups of clients were reached by Empire Hotel, it expanded and subsequently reached its current state as the dominant hotel in Brunei.  A competitive strategy for Empire hotel is its integration into newer technologies. The integration to newer technologies like the internet helped the hotel reach more clients and it helped in adjusting to the environment. To reduce labor costs Empire hotel would need to downsize its labor force. Downsizing means that the hotel would remove employees who have positions that can be considered as the same with another position. Another way to reduce labor cost is to reduce the pay received by all employees. Empire Hotel needs to make sure that no one would be exempted from salary reduction. Moreover Empire Hotel can initiate rescheduling so that employees would have reduced days of work. This would prevent any downsizing and salary reduction.


 


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