Introduction
The service hospitality sector is mostly fragmented in many small units where location and the spatial distribution of accommodation are important factors determining the degree of competition (Sinclair & Stabler, 1997). The hospitality/ accommodation industry is one of the most successful industries in the global economy. The accommodation sector can be a source of a profitable business. This industry has business that includes hotels, casinos, tourism and food services. This paper will concentrate on the hotel business. The competition on the hotel industry is based on the desire of each hotel owners and managers to provide the best service to clients (Hall & Tucker, 2004). Countries rely on the hospitality industry and the business within it to assist in the countries goal to have a good economy. The competition on the hotel industry is based on the desire of each hotel owners and managers to provide the best service to clients. Hotel chains have a long history of operating beyond national borders. Some of them started international operations more than a hundred years ago. Certain hotel chains are extremely global. Others are not (Aharoni & Nachum, 2000). Hotels provide paid lodging on a short or long term basis. It provides accommodations to various kinds of clients who may be are tourists, business people or people who want to experience the hotel service. Hotels are ranked depending on their capability and the kind of service they provide. Hotels help countries to improve its image to the tourists that visit the state. This paper will focus on Hotel SO Christchurch. The paper will conduct a strategic external analysis for the opening of a Hotel SO Christchurch in Auckland city.
Main body
Background of the hotel and vision/mission
Global economic restructuring and development are the most pertinent factors in the study of globalization. Economic globalization is reflected in footloose capital and the growth of less nationally regulated industrial, banking and commercial sectors, a process that is also clearly represented in the global tourism industry’s principal economic sectors with mergers and buyouts between international airlines and hotels (Mowforth & Munt, 2003). Hotel SO Christchurch prides itself on its innovativeness and prestige. It is on the verge of reaching newer markets and eventually reaches global market standards. The hotel’s philosophy is focused on the notion that unique designs, groundbreaking technology and effective/efficient service should be available to everyone at a great price. Each room in the hotel has features appropriate to diverse clients. The room features free wireless broadband, flat screen entertainment system, and controllable mood lighting. The company has teams that hire people from diverse industries that include property development, hotel management, marketing and advertising. The hotel’s mission and vision includes:
The general environment
New Zealand has, for a long time, promoted itself as a tourist destination which offers open spaces, a clean environment and unique, fresh and green scenery. There is validity in these promotional images used by the New Zealand Tourism Board. The Department of Conservation (DoC) is intimately involved with tourism in New Zealand wherein many photographs used by the New Zealand Tourism Board in promotional literature show scenery from the conservation estate (Faulkner, Laws & Moscardo, 1998). New Zealand’s tourism industry is very aware of the problems caused by tourism. It is far too soon to argue that tourist businesses in New Zealand promote forms of tourism that are economically, socially and environmentally sustainable, but undeniably there is an increased awareness of these issues. Like other places around the world, New Zealand is subject to concerns and debate about tourism and its impacts (Hall & Richards, 2000).
The tourism industry serves as one of New Zealand’s export earner. It brings about millions of finances from various tourists that come to the country every year. The tourism industry of New Zealand makes use of the country’s natural resources to attract people who have various purposes and thoughts of leisure in coming to their country. Although tourism is primarily a good thing, there are some organizations that worry for the effect of tourism to their natural resources (Sheller & Urry, 2004). They frequently see to it that the tourists will be educated on how important it is for them to conserve the natural resources they use. The different groups also help the tourist to develop a concern for the environment. From its early beginnings with explorers and mountaineers, and some package tours, New Zealand tourist entered the modern era with the arrival of jet engine aircraft in the late 1950s and the subsequent breaking of distance barriers to major markets. Growth in international tourist demand has averaged 9 per cent over much of the past two decades, ahead of both Pacific regional and world tourism trends. Australians, Japanese, North Americans and United Kingdom residents comprise about 60 per cent of all arrivals; one-half of these originate from Australia. There is strong contemporary growth from emerging Asian economies (Jafari, 2000).The New Zealand tourism board is the main agency responsible for tourism in the country and its policies. The tourism policy of New Zealand makes sure that although they use their natural resources they still find ways to protect it for future generations. The tourism policy of New Zealand provides appropriate and acceptable tourist facilities. The tourism policy of New Zealand ensures that although they promote their culture and heritage it will still be treated with appropriate respect and reverence. One area in New Zealand is Auckland City. It is the most populated city in the country. Together with neighboring cities they form the Greater Auckland area. The term Auckland may refer to the local authority alone, to the whole metropolitan area, or even to the broader region. The city boasts of breathtaking scenery, beautiful beaches, invigorating walks, idyllic holiday islands, outstanding food and wine, great shopping and exciting nightlife. These attractions help the city attract tourists coming from other parts of New Zealand.
Macro environment analysis
PEST
Political
Hotel SO Christchurch made sure that they were aware of the political situation of every country they have operated in and the company has made sure that it has a reasonable position with regards to political issues Hotel SO Christchurch 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, Hotel SO Christchurch prefers to stay away from such subject. The political environment has allowed the liberation of the market, liberation of the market paved the way for improvement of services. The laws of Auckland City will not be a hindrance to the growth of the company. It will provide the much needed help in making sure that the company will achieve its goals. The laws of Auckland City will give guidance to the organization so that the company can achieve its goals without major issues from the government.
Economic
Hotel SO Christchurch can be said to be economically stable for the past years. Its economic stature is doing well that’s why they try to improve their products to give the best to their clients. It is not only the internal economic situation of the company should be taken note of but also the economy of the country. Hotel SO Christchurch checks first the economic status of the country they are operating in before making decisions if they will have a branch in that area and since Auckland City has been doing well economically then there is no reason for Hotel SO Christchurch to abort entering that market. The economic forces can dictate the actions of Hotel SO Christchurch, if the economy is doing well then Hotel SO Christchurch can offer new services but if the economy is in a worse state then Hotel SO Christchurch have to reduce unnecessary expenditures and un important actions. The economy of New Zealand and Auckland City has given opportunities to hotel businesses. The status of the economy has paved the way for various hospitality and hotel businesses to prosper in the region and help in proving that New Zealand and Auckland City is one the premier region that houses the industry.
Social
The socio cultural force serves as the conscience to Hotel SO Christchurch. This force ensures that Hotel SO Christchurch will not do things they know can ruin Hotel SO Christchurch’s reputation with the society. This force ensures that both companies will consider first its environment before making any decisions. Hotel SO Christchurch makes sure that the services they offer will be accepted by the public. Hotel SO Christchurch does not authorize the delivery of some services they know will cause outbursts or complains from different groups in the society Hotel SO Christchurch also engages in social activities that tend to develop a better relationship between them, the clients and the society they are operating in.
Technological
Hotel SO Christchurch offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Hotel SO Christchurch makes use of highly advanced register systems. It also makes use of better security systems to rooms, hallways and other vital places. Since technology rapidly changes. Hotel SO Christchurch makes sure they are updated to what is happening and they can adjust to these changes. If other companies use new technologies to provide services, Hotel SO Christchurch 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. Hotel SO Christchurch relies on the products created by the technological forces; the products of these forces are the ones that can give Hotel SO Christchurch advantage over their rivals and success in their field. It provides the company the means to serve the clients in the best way possible,
Porter’s five forces
Potential Entrants
Hotel SO Christchurch 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 Hotel SO Christchurch from its position and get the company’s clients. The services offered by Hotel SO Christchurch is unique in terms of appearance if any new entrant want to compete with Hotel SO Christchurch’s standard of service they need to have a huge investment to create services that have the same caliber as the services of Hotel SO Christchurch. They 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 Hotel SO Christchurch. The company has lower concerns on its competitors since there are limited competitors in their industry. The competitors cannot give much problem to the company since it already acquired a good percentage of the buying public. But due to the plan to enter a new market, competitive rivalry is becoming a concern to the company. Hotel SO Christchurch needs to make sure that it makes cautious decisions in Auckland’s market.
Substitutes
Substitutes give high influence to Hotel SO Christchurch and its different branches since substitutes can make a company lose the clients it has. The substitutes can be in the form of online or actual stores. This kind of business is continuously growing and continuously changing strategies. Substitutes come in the form of motels and hostels. Hotel SO Christchurch 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.
Bargaining power of buyers
. The bargaining power of buyers highly influences the hospitality industry and Hotel SO Christchurch. It shows how the industry tries to create good relationships with clients. 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 purchasing products from other companies. When the clients try to dictate lower prices Hotel SO Christchurch tries to know whether it is reasonable. Hotel SO Christchurch sees to it that a big part of decisions on prices will be based on suggestions of the clients. For Hotel SO Christchurch the bargaining power of its buyer is gradually increasing as they are more and more similar types of products and services available in the market.
Bargaining power of sellers
The bargaining power of sellers highly influences Hotel SO Christchurch. The company makes sure that their suppliers have high bargaining power through helping them show their importance in the industry. Hotel SO Christchurch 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. Hotel SO Christchurch has to be aware of its partnership with its services partners. Hotel SO Christchurch has to make sure that every part of the agreement with the partners will be followed. Any adverse changes or violations in the partnership agreement will incur a certain amount of risk to Hotel SO Christchurch.
Competitive analysis
Taking the time to look critically at and understand competitive advertising and positioning strategies has been among the most effective ways to leverage means-end research into an effective communications strategy that builds on strength, stresses defensible points of distinction, and reframes the consumer decision-making process in a way that creates competitive advantage. Segmentation divides a heterogeneous marketplace into smaller and more manageable homogenous components. These smaller market segments can be targeted with more personally relevant positioning strategies that have greater appeal to individuals within the group (Reynolds & Olson, 2001). Today’s winning companies have been among the first to accentuate their distinctiveness by adopting customer-based marketing and positioning strategies. Such strategies help managers deal with their growing uncertainty regarding how to position a product and develop an action plan that will retain and cultivate established customers, and in some cases, attract whole new market segments (Paley, 2006).There are many probable competitors for Hotel SO Christchurch in the Auckland market, they include the Quadrant; Rendezvous Hotel Auckland; The Langham, Auckland; The Westin Auckland; Castle Spencer; Hyatt Regency Auckland and many others. To achieve the goals of entering the Auckland City market, Hotel SO Christchurch should strengthen its competitive advantage of being able to offer affordable prices for their services and room rates. The company should see if their prices can compete with the prices by competitors in the Auckland City market.
Opportunities and Threats of the external environment
Opportunities
An opportunity for Hotel SO Christchurch is to find out more ways to give a distinctive look and features to the hotel. By doing this the company will have competitive advantage over other firms. It will attract clients who have various tastes. This will help the company have unique identity in the new market amidst their competitors. An opportunity for the company is to improve the features of the website they currently have. By doing this it can attract more markets and it will help them attract tourists that will come to Auckland.
Threats
The main threat to the Hotel SO Christchurch is the competitors. The competitors like The Langham, Auckland and The Westin Auckland try various tactics to make it difficult for Hotel SO Christchurch to enter the Auckland markets. The threat to the company includes the laws in the country they want to operate in. There are some laws in Auckland City that differs from other parts of New Zealand this will force Hotel SO Christchurch to change some of their strategies. Another threat to the company is the tariffs and taxes that the company has in the Auckland market, each countries has its own rate of taxes and tariff that creates additional expenses for the company. Lastly a threat to the company is the culture of some clients in the Auckland market. Some people may not be used to the new culture that will be brought by Hotel SO Christchurch and its expansion into newer markets.
Market Entry Strategy
Entry market strategies depend on the situation in the internal and external environment. The entry market strategies adjust on the kind of situation in the environment. In the company’s goal of entry into the new market it needs to make use of selection criteria for control, commitment and resources. The selection criteria include: The suppliers of the resources should be reputable; the place of selling should be in an acceptable and marketable location; the price of any competitors can be countered by the company’s prices; the personnel available should have proper training; the perspective personnel should have an idea about the company and the things they do. When the company already has selection criteria it then needs to do research before it can enter the market. The research can help the company gather information it needs. The information needed includes the buying behavior of the clients, the economic situation in the industry, the laws on entry of a foreign business, how Hotel SO Christchurch’s services would succeed and the rules of competition in that market. This information will be useful in assisting the company in its entry in the new market. The entry strategy for Hotel SO Christchurch will be focusing on making sure that through the internet advertisements, fliers, banners and TV commercials the people will know of the newly built hotel. The internet advertisements, fliers, banners and TV commercials will be used to inform the residents and non residents of Auckland city that Hotel SO Christchurch has opened a new branch In Auckland. The internet advertisements, fliers, banners and TV commercials will contain information about the services offered by the hotel.
Conclusion
Hotel SO Christchurch prides itself on its innovativeness and prestige. It is on the verge of reaching newer markets and eventually reaches global market standards. The hotel’s philosophy is focused on the notion that unique designs, groundbreaking technology and effective/efficient service should be available to everyone at a great price. The entry into the Auckland market will be a success if the company will make us of the strategies it has in its original market. Hotel SO Christchurch should make sure that it will use the strategies it had when it attained its competitive position in the original market. The competitive position in the original market can be used as a basis on how Hotel SO Christchurch will grow and develop in the Auckland market.
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