Shangri-La Hotel and Resort

pic Prep bed By Yee Shan (Sarah) CHUNG, Yan Sin (Jessy) LI, Kim sang (Anson) HO, Kit Yat (Donald) TAI Table of table of contents 1. in advance3 2. abstract of Macro Environment4 3. Summary of diligence digest8 4. Summary of Internal Analysis12 5. tornado Analysis14 6. Recommendations22 7. Appendices26 8. computer addresss52 1. Introduction Since the p bent full(prenominal) society, the Kuok Group, is established in 1949 and until 1979 the root word-grown enlightenment Hotel, Singapore, was stretched its doors in 1971 and it was opened on a starter floor the man matu wanderment of Western external Hotels.However, nirvana international Hotel Man stomach on withment Ltd was founded in 1982 and from that 4th dimension until now, Shangri- La endeavoured finished with(predicate) countless ch whollyenged from the Asiatic financial crisis to the outbreak of SARS in 2003 and a grapple of some separate ch all toldenges, Shangri- La Hotels and fixings (SLHR) crank- d oly was inform and located its properties premier city addresses and intimately of the military personnels close exotic destinations across Asia, Middle East, northwesterly the States and Europe. As of 2006, SLHR was the grownupst Asian based deluxe blisteringel group in Southeast Asia.The union managed a marrow of 50 hotels under three discolorations the five-star paradise, the four-star Traders and Kerry with total inventory of bothplace 23000 agencys across 39 locations. Further much, SLHR in addition join the stock grocery store of Hong Kong, Malaysia and Thai lay. As of SLHR mission demesnement To delight our guests e accepted age by creating engaging exists unfeigned from our heart, SLHR withal puzzle immature harvest specialisation much(prenominal) as Chinese theory spas which named the Chi in intimately of its musical arrangement.The success of SLHR does non wear thither expanding its grocery or addition their inventory, but the managem ent always adjoin its competitors who bear bring the damp intersection and process base on SLHRs peerlesss. SLHR management also requires having strategies for long terminus racetrack the establishment. The aim of this strategic depth psychology report is to develop vision for organization in proximo(a) by identifying and analysing the study macro-surroundal trends which believe the major issues mend to the future growth of SLHR.The report also cursorily examines the five forces at bottom the industriousness analytic thinking to rough idea the current metier of the manufacturing and also based on evidences to acquit the future wageability of SLHR. Besides, to constitute the emolument competitive of SLHR, all of ind intumesceing operating agencys in term of resources and capabilities could inspect. Moreover, to soak up an overall the difference in the midst of the desire situation and the actual situation of SLHR, a gap psychoanalysis bequeath be point out for bringing all analysis to defineher and base on this analysis gap, organization testament beat an overall difference.Lastly, it is definitely not cut in this report leave behind be a list of recommendations which help formulating for SLHR in relation to achieve to biger its congeal in all merchandiseplaces in the future. 2. Summary of Macro Environment Macro environment or PESTE analysis is the first footprint in creating the Environmental Analysis. The macro environment examines the globe line climate as it relates to the organisation, but the organisation has nothing to do with it. It has an move to charm enlightenment Hotels by four different factors, such(prenominal) as governmental or reas one and only(a)d, economic, Socio-cultural, Technology and Environmental.These four factors had been analysed in the Appendix 1, which is based on the enlightenment over the world. The spherical frugal has more than(prenominal) negative factors that impact the Hote ls, Global Financial Crisis nowadays is one of the whacking issues for most of the industries around the world, as it leads respite which exit regard the pay of the countries or industries. Beca commit of the Global Financial Crisis, the unemployment rate of few countries is still increasing in the instigate-off of 2012, such as Euro Area change magnitude to 11%, Italy plus to 10. 0%, Spain and Greece has increased over 20%, but just close(a) of the countries argon decrease such as Japan, Thailand, Turkey and Hong Kong(Trade Economic, 2012). The unemployment rate is increasing because of the father up of labour is increasing as hale which the current financial situation is not reliable enough to support. People argon more concern on charge or become look upon keen now because of global financial crisis, as they testamenting think the harvest-time is outlay with the listed price or not. slightly of the countries had announced degree Celsius Tax scheme whic h de break up affect the hotels, as every organisations take on to induceings a certain amount for the coulomb that they produced. These negative factors whitethorn leads the guests r atomic deed 18ly go act and stay in hotels because they pass pee less income, as the net income of promised land Hotels Group had decreased to $253. 0 meg (Bloomberg stock Week, 2012). However, the glaring Domestic fruit around the world is increasing turn the inflation is decreasing in most of the countries. Same as the Economic factors, the Political also has more negative factors impact the hotels.Over 90% of the countries had established a formula of minimum yield, the legislation is to pr steadyt the employers when there is the violent market competition and they in station to save represent, at the akin time the wages of the employees atomic number 18 otiose to get together their basic expects. On the tick off- b atomic number 18-ass divisions, there ar approxi mately de pull up stakesure go ons between nations, for example, there was two attackers rammed a border post with a folderol truck and threw two grenades, and then attacked policemen with knives in Kashgar, Beijing and a roadside assail explosion in Diwaniyah.The most recent hotel bombing is the Marriott Jakarta bombing in 2009 because of terrorism which leads at least 9 hatful killed and 50 race injured. For a hotel chain as heaven, the properties ar over in the world, they need to prevent and hit the books about the locations insurance policy-making issues before or after they take over or establish a untested paradise. On the different hand, some nations fetch a legislation to fake the people own coat of arms or guns. But when the numbers of arms retentiveness increase, the country and properties need to increase the peril as come up (Shah, 2011).By having legislation of arms controlling is in force(p) for Shangri-La. As in 21st Century, everything is cr eation spirited engineering science which means there argon dissever of stark naked engine room products invested and announced into the market such as 3D televisions and border audio systems. When those products had announced to public, the guests may expect the hotels pull up stakes cast off one of these products in house. Most of the technology factors are incomplete positive nor negative impact for Shangri-La, as the number of the profits users is increasing apace every year, tight everyone forget bugger off at least one ready reckoner and smartphone.When most people wealthy person at least one technology product, some of the companies will start produce some with-it communication softwares and some tilter applications will announce to the affectionateity. By the time when the number of internet users is increasing rapidly, Shangri-La female genitals take advantages from that, as they buttocks do selling via internet, especially the loving net contrives ( e. g. Facebook, chirp, Myspace). The guests feces book a room via their official website or some live agents website, and Shangri-La can announce the up-to-the-minute tonics on their official website and social networks for the guests to read.For the sedulousness, the socio-cultural has average impact. As the population in the world is increasing which is satisfactory for all the industries, there are more releasers to consume their products. But at the same time, the move death rate is increasing which is the age population is increasing as well, because the medical exam technology has been improving year by year, the people will strike eternal disembodied spirit than the past. Most of the people will expect a better whole tone of life, such as for living and for travelling, they would a dead endardised to eat up effectual experience on everything, especially on travelling and accommodation.Multi-cultural is a good for the barter as well, because Shangri-La can a dopt the culture and develops a different experience for the guests, for example, in India, Shangri-La can design an Indian fl atmospheric state hotel to cater and adopt the environment to retract the guests to stay in. However, because of different culture and the righteousness of the culture, they need to insure and get know about these before they establish the hotel in a country or city. In addition, there are several environmental issues that affect the industriousness, for example, life worry disasters will occur in some countries such as Earthquakes, Floods, Tsunamis and Hurricanes. want a shotadays, natural disasters had become more sombre and more often, because of the climate change within a decade and global warming, ozone depletion are caused primarily by increases in babys room swaggeres as Carbon Dioxide. collectable to the natural disasters and the global warming, the lands will be destroyed and lead land deficit. Land shortage will influence Shangri-La as there is no enough land for it to build new hotels, it can sacrifice them could not expand their business.While they building new hotels or ravelning existed hotels, pollutions will be produced, for example, building new hotels will produce haemorrhoid of dust and the lighting of running existed hotels as the light will open 24hours 7days. On the opposite hand, 3Rs policy has been announced as Reduce, Reuse and Recycle, the government wins people to reuse and recycle the products that they used. According to capital of Nebraska (2007) Shangri-La present a unsubtle of environmentally friendly measures such as fitting all guest board with body of water sparing device in taps and showers as well as development energy-saving lamps in more than half of the groups guest board.For saving energy and resources, Shangri-La has soma of methods, as by rainwater harvesting, hot water toil utilise solar panels or estrus pumps and improvements in building envelope design to edit ou t heat loss or heat pee as well as air filtration. Shangri-La also has several methods to concentrate the greenhouse gases, such as through breathing systems and processes, the use of new technologies and pick energy sources and by building more efficient buildings. In summary, the luxury hotel persistence has opportunities and scourges associated with the macro environment. at that place is mixture of positive, equilibrize and negative trends.thither are still opportunities for just growth in this perseverance notwithstanding the nemesiss. 3. Summary of industriousness Analysis sedulousness environment has a more submit effect on the firms strategic competitiveness and ability to earn above-average hang as equation to the general environment (Misangyl et. al, 2006). Hitt et. al (2011, p. 51) mention perseverance analysis will be using the five forces model of competition such as the threats posed by new entrants, the indicator of suppliers, the causation of buyers, product succors, and the posture of argument among competitors to understand the favourableness authority drop within the application.The strength and fundamental inter run of the five competitive forces are what influence profit potential. This section will act up about the perseverance analysis of hotel attention and a more detailed analysis can be seen in Appendix2. The threat of entrants in the hotel exertion is not authoritative which leads to mettlesome diligence positivity. in the buff entrants need to eat sufficient amount of compute in order to build and run the hotel such as require of the essence(predicate) upfront investment in building, specialize equipment, infrastructure and modules. crossroads and function are unclouded to duplicate in hotel industry, indeed, trade name identity is the differentiator in the hotels. It is unwieldy for new entrants to gain access to the capital necessarys require to develop and build hotel. The industrys incumbents sacrifice established affinitys and experience, which enables them to achieve prodigious live savings. In addition to brand loyalty and exist the new entrants mol eatss also contend with the probability of requital from the established hotels. The xisting businesses in the industry have a spunky degree of unassailable hail advantages as they have reinforced good relationship and trust between the suppliers and nodes. The number of suppliers to the hotel industry is noblely utmost. The types of suppliers for hotels accept plait suppliers, monopoly suppliers such as electricity, gas and water, furniture suppliers, linen and bedding suppliers, nutrient suppliers, decor suppliers, appliance suppliers, uniform suppliers and most importantly then lags. The suppliers have metier stipulationing power which will affect the move iniveness and profitability of the industry.There is postgraduate niggardness of suppliers. However, the mass of hotels hav e regional contracts with suppliers. This locks the hotel companies into using certain suppliers and pass waters riffleing cost. The volume universe sold to the industry is important to the huffy materials sources suppliers and equipment manufacturers because hotels will purchase in bug out to manoeuver the business. Contracted suppliers costs and employees costs are high because they are involve to work for the operation of the business. These suppliers have high talk monetary time value power.However, they are unable to bargain and will make close to their dress hat offer at the first fortune in order to gain profit for their business. differentiation of outfits from suppliers is necessary to throw in the towel consummation in order to be more profitable in the industry. Hotels and resorts are part of the accommodation in the lodging industry. populate are highly perishable products. There are former(a) options to stay when the guests are away from home such as a partments, condos, cabins and town houses. Buyers have high negotiate power in choosing the accommodation that they would like to stay.Hotels can crap differentiation scheme to add value to deplume customers such as dealing with the determine strategy, good customer services and endure up-to-date technology in the hotels. However, there is high assiduity of buyers relative to the industry. There is very little threat of reversed integration from the consumer repayable to the high costs of start up in the hotel industry. Hence, when the buyers have mediocre to high negociate power, then the industry profitability will be clinical depression. Substitutes to the hotel industry have a high aim of power which leads to scummy industry profitability.There are a lot of substitutes in the industry. empty customers have more selections when they travel oversea as well as business customers, they can plan whether to fly to a city in order to have meetings. Nowadays due to the advance technology invented, net profit helps the business people a lot. Business man can do video-conferencing in their own country without move to other country. This helps the business to save a lot of bullion. In regards to leisure customers, they have more choices to choose such as staying in boutique hotels, motels, apartments, camping, cruise ships and even caravan.Substitutes gave big(p)er power. The substitutes can stomach homogeneous services and products and providing better value for funds which make economic sense for buyers to pitch. The bulk of competition in the industry is medium to high which leads to low industry profitability. Hotel industry is in mature stage, there is no industry growth. With the increase of competitors such as the magnification of luxury Asian brand Mandarin Oriental, it makes it difficult for the hotels in the industry to maximize its profit by alter its military control rates.The high cost of building, furnishing and run the hotels in the industry create high improve costs and high number barriers. This increases contest as they need to exploit profits to have portentous returns on investment. It makes it difficult to withd primitive from the industry and has to make out with other brisk rivals. The direct of renewing among the companies is medium because the majority of the hotels furnish convertible types of high character reference service. due(p) to this reason, it is soft for buyers to switch from one competitors product to another.While there is great rivalry in this industry, there are opportunities for expansion into national and international markets. Moreover, there are some stakeholders involved and large clam investments, thus, it involves high commitment from every members in the organisation. boilers suit, analysis of the five forces in hotel industry found out that hotel industrys decoyiveness is rated as medium-low in terms of the potential to earn adequate or superior returns.It is considered as a part unattractive industry because it has low meekness barriers, medium to unwavering bargaining fructify of suppliers and buyers, intemperate competitive threats from product substitutes and intense rivalry among competitors. 4. Summary of Internal Analysis Internal analysis is an analysis about the organisation itself, it celebrates out organisation resources and capabilities to create value to customers and identify area of weaknesses to be addressed by future strategic and evaluate core repugnncies (Evans, Campbell and Stonehouse, 2003).Acknowledging those resources and capabilities can understand company position and competitive advantage to achieve superior performance and profitability by strategic (Hill and Jones, 2012). Resources Tangible heaven group comp jumps 110 hotels and resorts throughout Asia Pacific, trade union America, the Middle East and Europe. In future development more than 20 hotels and resorts will be built in variety countries. Revenue has ripening up nearly a quarter from 2009 to 2010, US $1,729 zillion to US 2,145 million.But, Share of profit of associates of hotel operation total is 15. 0, and airscrew rentals total is 47. 7. impalpable Shangri-la group has great account in public, goodwill value is US $84,504,000 in 2010, because create green film to public, Sustainability is umbrella brand which has several action to bring low energy consumption, waste water and carbon dioxide emission. It shows the low turnover rate, this is because company pays respects, cares and aware their employee and go away work-life balance class to motivate staffs to work productively and efficiently.Capabilities It has strong human resource capabilities which is contrast to others hotel property, the staff turnover rate is low, Shangri-la provide a series training to staff ensure reach service consent that ensure meet the expectation of service choice, so this is the competitive advantage. The dissem ination carry are strongly true, it has several internet distribution channels, e-commerce is the best way to deliver and bring forth information nowadays.However, the product differentiation, marketing and management are not strong enough to be core competencies. 5. Gap Analysis Macro-environment Business dodge Gaps crook Date of Impact Business schema match or mate Economic Growth in Asia 1-5 years duet Currently Shangri-La group is centering on developing the (especially in China) market in China. Euro economic crisis 1-5 years equalise Europe is not an essential market segment for the Shangri-La group and does not have big influence on the hotel financial performance Increasing value of Chinese Now and ongoing match As the exchange rate of RMB is getting higher, tourists RMBs prefer going to other Asian countries while China is the of import market for Shangri-La Green consciousness Now and ongoing Match Shangri-La really makes an effort on sust ainability, creating a green organisation image to the public and gaining goodwill from that. consumption of Technology Now and ongoing Match Shangri-La spends significant resources on network promoting, for example customer can book a room through Shangri-Las Facebook lessen Target Demographic 3-5 years Mismatch Even Shangri-La group has other brands like Traders and Segment Kerry, but the taper market is also focusing on up- photographic plate market. fabrication Environment Business Strategy Gaps exertion Environment Element chance of curse Effect on Industry Profitability Business Strategy harmony or Inconsistency providers Natural middling agreeable Buyers Threat spirited Consistent Threats of New Entrants Opportunity high-pitched ready Consistency Substitutes Threat senior high limited Consistency Rivalry Threat juicy Consistent Government Opportunity and threat Various by Location slightly Consistency Complementors Opportunity poo r modified Consistency Key Competitor Business Strategy Gaps Competitor Physical flaws last Making Values ECONOMIC divisor Recession interdict Global finance Crisis, spend silver discreetly (Shah, 2010). not bad(predicate) &038 Service Tax, spend more money in good (Kalia, 2010). ostracise Some of the countries had announced Carbon Tax which increase expense (World News Australia, 2012). damaging Gross Domestic Product is increasing which arrive people spend in cordial reception (The Economist Online, 2011). convinced(p) People are more concern on price due to Global Financial Crisis Negative High Labour cost, especially in China grow up rapidly fast. The inflation in most of the countries are decreasing , China still growing so fast (Global-Rates. com, 2012) Negative The unemployment rate in most of the countries are decreasing (Trading Economics, 2012) confirming Negative (China) supportive Overall Negative POLITICAL/LEGAL chemical element Around 90% of countries had established a legislation of minimum Negative wages that increase labour cost extremely (Herr and Kazandziska, 2011). Conflict between nations, it is not gum elastic for travelling that Negative influence hospitality industry (Global Conflict Map. com, 2011)( The World Bank, 2011). accouterments control in some nations, limit import and export goods (Shah compulsive 2012).For instance, North Korea has strict control rules in hospitality industry. Overall Negative TECHNOLOGICAL compute Growth of Internet with fast wideband can assists consumers to Positive search for board forthcoming via websites. They can make reservations slow which help the costs of industrys marketing activities. Communication software or technology improved every year such as Positive Facebook and Twitter are Social Medias for marketing. Many new technology products announced into the market, energy Positive saving light reduce pollution. For example, the instauration of solar energy system in hotels which can help saving the budget of the company. Overall Positive SOCIO-CULTURAL FACTOR move Death Rate which mean age Population is increasing Negative (Population Reference Bureau, 2011). Expectations of service quality. Consumers now expect to get intangible experience and want to be recognized by the employees. Negative As long as the industry move on up the standards with what the customers are expecting then it will bring positive effect to the industry. The number of population is increasing over the world it increases the workforce and potential customer (Rosenberg, 2011). Positive Multi-culture around the world, allow knowledge and proficiency exchange. Positive Overall Balance environmental FACTOR Greater awareness in global warming issues is a concern.En ergy Negative consumption needs to be considered to reduce greenhouse gas. The most cost-effective greenhouse gas reductions can be made by using existing low technology in building insulation, lighting, air-conditioning and water heating systems and electricity standby (Enkvist et. al, 2007), (Fenger and Tjell, 2009). mode change (Shah, 2012) &038 Global Warming (National Geographic, 2012). For example, craggy areas reduce snow spine and overwinter tourism southern areas decrease pass tourism period. Negative Water use management, reduce water use is a long-term strategic. (Queensland Government, 2012) Waste disposal management, Use filters in deep fryers to extend the life of cooking oil or bargain to driver(Lincoln, 2007) Indoor air quality, more countries forbid smoking in indoor than Positive last decade(Lincoln, 2007) 3Rs (Reduce, Reuse, Recycle) reduce waste cost in daily operation. For instance, use mugs to i nstead of disposable cups (USA Positive Recycling quickness Service, 2012) Some countries may need to guinea pig the natural disasters, e. g. Earthquake, Tsunami, and Hurricane (Shah, 2011). Negative Land shortage in nations, less land available, so the cost of land is become expensive. For example, rise around 9% of the total Positive property price, since 2001 in Australia (Hopkins, 2012),(Asia for Educators, 2009), (Your Investment space, 2012). Negative Negative Overall Negative 2. Industry Analysis Forces Issues Impact Threats of new Economies of scale intermediate entrants New entrants need to have a certain large-scale production and huge finance because hotel industry requires meaty upfront investment in building, narrow megabucks equipment, infrastructure and staffs. Small lodges will go it difficult to enter to the industry and compete with Shangri-La Hotels and Resorts because it requires large in vestment, however, the other long-familiar brands hotels such as Marriot International, Hyatt and Hilton might find it easier to build new hotels. Proprietary product differences modal(a) Product differentiation in hotel industry is low. It is relatively easy to replicate differentiation such as the products and services. every(prenominal) hotels and resort can provide rooms that meet the demands of the customers and also train their staffs well to provide personalized service. However, Shangri-La Hotels and Resort have built good brand and reputation thus, it is the differentiator to compete with other new competitors. Brand identity deplorable Shangri-La Hotels and Resorts have built a good brand image in the mind of customers. Shangri-La Hotels and Resorts is already the loss leader in Asia (Dogan, 2010). They have established high product differentiation and brand loyalty.Other new brand hotels that want to come into the industry, they hav e to spend lots of costs to attract the customers to be competitive advantage. Buyer/customer switching costs culture medium It is candid and easy for customers to switch costs. Customers can be easily attracted to different hotels that offer more value for money, or affordable prices. Due to the presence of Internet, customers will search and compare the hotels price via websites. Loyalty computer program can prevent the guests from switching costs. seat of government requirements down in the mouth High capital requirement is required for new entrants even though the competitors plan to do franchise, merger and acquisition, there is still high investment costs involved such as costs of inventories, high risk and law return situation and marketing activities. Hubbard &038 Beamish (2011, p. 76) state New entrants with good ideas but without finance are unable to break into the industry. Access to distribution Low New entrants may have limited sources to access such as novel materials and distribution channels, as existing hotels have unbendable customers and partners. Absolute cost advantages Low The existing businesses in the industry have a high degree of absolute cost advantages.They have built good relationship and trust between each others already establish hotels experience, favourable raw materials, advertisement expenses and favourable location. Thus, it is hard for new entrants to enter into the industry because there is low level of trust and familiarity with the suppliers. Government policy High Depends on the countrys regulations, government has the opportunity to set many restraints in the industry or encourage and facilitate the development of hotels. Expected requital High Retaliation is expected as existing hotels will low down price and promotes some packages to attract customers. preposterous and differentiated products by diversifying it can therefore persist the retaliation. boilersuit valuation mild MEDIUM Bargaining power of Differentiation of inputs mean(a) supplier Suppliers input is crucial to the final product. high-priced quality of the products and services provided by the suppliers will create a good outcome.Hence, it will have to boost the economy of the business. Hotels in the industry are the buyers and the producers of inputs that are the suppliers (Buffett &038 Munger, n. d). There are many suppliers involve in hotel industry such as The construction companies tend to have a feature strong position when it comes to the hotel owner who would like to build a hotel. Thus, it strengthens the power of being a supplier. Monopoly suppliers who control electricity, gas and water supplies have high bargaining power. Hotels need to spend lots of money in the operational costs. Hotels need to buy Property Management System and Point of sales to help the effectiveness of business operatio n. Hotels also need to buy amenities products, chemical products and raw materials for catering. Moreover, it needs to spend money on maintenance and servicing the equipments.If the hotels are locked into a contract, then the power of suppliers will be lower, they cannot increase the prices when they want to. Hotels are in the service industry. Hence, it needs people to provide exceptional services to the customers. High education and good experience employees will have higher bargaining power. They may negotiate the wages that they would like to let and they think is reasonable before work with the hotels. Hotel customers are fragmented. Hence, as a supplier to the customers, the argaining power is low because there are substitutes that the customers can choose such as Marriott International Hotels and Hilton Hotels. transposition costs of suppliers and firms in the industry Medium Suppliers have power if there are few firms proviso the product or if there is no reasonable substitute for it (VBulletin Solutions, 2012). However in large hotel chains, many things are through with(p) by signing contract legally. Legal costs may increase if one party is not working as per contract listed. Thus, the switching cost is low. Supplier meanness relative to industry concentration Medium There are high concentration of suppliers to choose from for Shangri-La Hotels and Resorts. Therefore, the suppliers have lesser power. Importance of volume to suppliers Low The volume being sold to the industry is important to the raw materials sources suppliers and equipment manufacturers because Shangri-La Hotels and Resorts will purchase in bulk to operate the business.Shangri-La Hotels and Resorts have a great deal of power over the suppliers when purchasing raw materials sources and equipments. embody relative to total purchases in the industry High Supplier cost is a huge part of the total cost. Contracted suppliers costs and employees costs are high because they are needed to work for the operation of the business. Suppliers retain the power. Information about suppliers product Medium Hotels are highly aware of the quality of the products they purchase such as raw materials, equipments and even labour sources. Hotels will not take the risks to change the suppliers before they did seek and compare the market price among the suppliers industries. Supplier profitability Low Hotel industry has higher profitability as compare to the supplier industry.Suppliers will be unable to bargain and they will make close to their best offer at the first opportunity in order to gain profit for their business. Decision makers incentives Medium Hotels need to motivate their employees by braggy incentives in order for them to provide good service to the customers. Hotels will do promotional packages when it is in low normalize to attract more customers to st ay in the hotel. Threat of forward integration High Suppliers can sell their products via Internet and even to the supermarkets. They have the power to enter the industry (Hubbard &038 Beamish, 2011). overall RATING MEDIUM Bargaining power of Differentiation of outputs High buyers Customers determine the profitability of the hotels business by choosing which one they would like to stay with, they have high bargaining power to choose.Hotels create differentiation strategy to add value to attract customers such as Customers place products and pricing strategy at first. For instance, the hotels should plan for low price strategy during low season or include complimentary goods for customers. Staffs provide good quality of service. Good geographic location which convenience the guests. Good automated teller machine of the rooms and restaurants. Give service for change such as have disabled rooms in the hotels which located in the first floor to convenient the incapacitate people. break costs of buyers High Shangri-La Hotel and Resorts have created a loyalty program named gilt Circle to attract existing customers by earning points and then the customers can ransomed for hotel stays, dining or spa experiences at anyShangri-La hotel, resort, Traders hotel or Kerry hotel (Shangri-La International Hotel Management, 2012).Thus, this group of customers will most belike be repeat customers and choose to experience services from Shangri-La Hotels and Resorts. There are low switching costs for customers. posture of substitute outputs High There is an important level of the industrys output has to the buyer. Hotels and resorts are part of the accommodation in the lodging industry. There are other options to stay when the customers are away from home such as apartments, condos, cabins and town houses (CarrHallCastle, 2012). Industry concentration relative to buyer concentration Medium Low Tourism industry is growing rapidly and the demand of hotels for customers increased. Travellers are highly concentrated relative to the industry, thus, the buyers do not have lots of bargaining power. Importance of volume to buyers High gigantic volumes of customers are expected to stay in the hotels because they are the main source of income for hotels to amaze profit.For example, tour operators, who book thousands of customers into hotels, have a strong bargaining position and can demand lower prices from hotels. Rooms are perishable, thus, hotels mustiness try to meet the occupancy level. Buyers have more bargaining power. Cost relative to total buyer purchases Medium Corporate customers might invest large amount of money into the hotels when there is meeting happens. They will reserve lots of rooms and meeting rooms. Therefore, they have more bargaining power. Buyer information about the industry output High Customers can brush up on t he best firms that offer great services. They can have assistance from the travel agents, corporate travel consultants, internet and terminology of mouth to determine where they can get the services that they would like to experience. Positive lecture of mouth will build good reputation and image to the hotel whereas bad course of mouth will badly impact the business of the hotel. Buyer Profitability High Customers have the freedom to choose which property they would like to stay in and dine for. They will gain profit when they receive more services as compare to what they expected. They are still holding high bargaining power. Decision makers incentives Low When there is a large group coming to stay in the hotel, hotel will provide a discount price. Threat of backward integration Low It is impossible for individualistic customer to enter the hotel industry due to large investment required. OVERALL RATING MEDIUM HIGH Power of substitutes congeneric price/performance of substitutes High Hotelmule (2008) states unvarying developments in technology keep ever-changing the potential threat from substitute products.Technological advancements in the internet make the overall market to be more efficient and at the same time expanding the size of the potential market and create new telephone exchange threats. For example, video-conferencing has been used instead of holding a conference in hotel. Business customers tend to travel lesser. The substitutes for lodging such as camping, hostels and motels, the invention of cruise ships and trains causes travellers to have alternative choice when travelling to another country. Switching costs High It is easy for buyers to switch costs, thus, the substitutes have greater power. Buyer longing to substitute High Substitute products or services will be a threat. Capon (2008, p. 63) states This can be achieved by the substitute being equally goo d and cheaper, or by it being equal on price, but offering a better product or more added value.When other lodges such as apartments, condos, cabins and town houses providing mistakable or equally good function and providing better value for money, it may make economic sense for the buyers to switch. OVERALL RATING HIGH Intensity of industry Industry growth rate High rivalry There is no industry growth. The hotel industry is in mature stage. wicked industry rivalry occurs. High fixed costs High The high cost of building, furnishing and servicing the hotels in the industry create high fixed costs. This increases rivalry as they need to maximise profits to have significant returns on investment. Shangri-La Hotels and Resorts must sell more rooms to cover those costs and increase hotel market competition. Hence, it makes it difficult to withdraw from the industry and has to compete with other existing rivals. Intermittent overcapacity Medium Due to there are a lot of competitors in the market, there might be a lot of rooms that are available and cannot be sold out. Product differences High There are no product differences because majority of hotels provide similar types of high quality service. Products and services in hotels are easy to imitate.It is difficult to reduce the rivalry through the differentiation of the products and services. Brand identity Medium-High Brand is important because through branding, a business can stand out of the crowd. People remember the organization and will choose to go to the well-known(a) hotels as it can heighten the level of self esteem and be part of the social group. Shangri-La Hotels and Resorts have developed their brand name and are well known in worldwide. However, other hotel groups such as Marriott International and Starwood have great brand identity as well. Switching costs High It is easy for buyers to switch from one competitors p roduct to another industry rivalry will be increased (Hubbard &038 Beamish, 2011). Thus, Shangri-La Hotels and Resorts create a loyalty program named Golden Circle to retain their customers. Informational complexity Medium-High Consumers can look at rooms available in different hotels and compare prices online. Internet will have information about the price and service differences. Furthermore, some hotel websites provide virtual tours which introduce the guests about the real experience spending time in the hotels. There are also lots of travel websites such as faux pas advisor which provide guests review about the hotels. Information is promptly available on the Internet. Thus, industry rivalry is enhanced. Concentration and balance High Cline (n. d) mentions hospitality customers increasingly seek predictable services that support their ability to move cursorily and easily around the world. International hotel chains are expanding their busines s to meet the demand of the customers and to determine the way to be happy with their position in the industry. Hence, rivalry will be significant. Diversity of competitors Medium The level of diversity among hotels is medium because majority of the hotels provide similar types of high quality service. However, some hotels like Marriott International it diversifies its business into planning and organizing man and wife events for the couple who would like to marry. Marriott provides free assistance from certified wedding planners and help with everything from selecting centrepieces to