Shangri-La Hotels

What are the key elements of Shangri-La Hotel’s strategy? Which of the five generic competitive strategies described in Chapter 5 is the company employing? What is Shangri-La’s strategy for competing internationally? 2. What policies, practices, support systems, and management approaches underlie Shangri-La’s efforts to execute its strategy? 3. How important are the company’s training and Shangri-La Care program to its success? What is your assessment of Shangri-La’s compensation policies and career growth effort? What pluses and minuses do you see? . What are the key features of the culture at Shangri-La Hotels? How important is the culture in the company’s success? Explain. What impact do the company’s mission statement and the Shangri-La Care program have on the company’s culture? 5. What core/distinctive competencies has management at Shangri-La tried to build and nurture? What challenges does the company face as it attempts to transfer its core and distinctive competencies to other cultures? How has the company attempted to resolve these challenges? Has it been successful in doing so? 6.What does the company’s financial and operational performance reveal about how successful its strategy and strategy implementation efforts have been? Should shareholders be pleased with the company’s financial performance? Why or why not? What financial and operating performance pluses and minuses do you see? 7. What challenges does Shangri-La face in expanding into Eastern China? Do you believe the company’s current policies and operating procedures will be sufficient in addressing these challenges? If so, why? If not, what else may need to be done? 8. How do the challenges associated with Shangri-La’s expansion into Europe,Australia, and North America compare with the company’s expansion in China? Do you believe the company’s current policies and operating procedures will be sufficient in addressing these challenges? If so, why? If not, what else may need to be done? 9. How big a threat does the expansion of other hotel chains into China pose for Shangri-La Hotels? What specific challenges are likely to arise as a result of this expansion? How should Shangri-La address these challenges? 10. What recommendations would you make to Symon Bridle to improve Shangri-La’s prospects for continued success? Shangri-La Hotels Shangri-La Hotels Contents Background Executive Summary Problem Statement Current Strategy External Environment VRINE Model Internal Analysis TOWS Analysis Value Chain Analysis Key Success Factors Alternatives Recommendations Implementation Plan Prologue Appendices Background Hong Kong-based Shangri-La Hotels and Resorts is Asia Pacific's leading luxury hotel group and regarded as one of the world’s finest hotel ownership and management companies. The Shangri-La story began in 1971 with its first deluxe hotel in Singapore. Today, there are  71 hotels and resorts throughout Asia Pacific, North America, the Middle East, and Europe,  representing a room inventory of over 30,000. In addition, new hotels are under development in  Austria, Canada, mainland China, India, Macau, Philippines, Qatar, Turkey and United Kingdom. Executive Summary The purpose of this report is to provide a strategic analysis of Shangri-La Hotels and its rapidly expanding business of luxury hotels into Eastern China, Europe, North America, and Australia; while still holding on to Shangri-La’s signature standards of â€Å"Shangri-La Hospitality. My analysis supports the recommendation that Shangri-La hotels have the required resources, expertise and efficiencies to successfully expand into these markets even with the tight labor markets and vast cultural differences Problem Statement Shangri-La Hotels is attempting to expand its business into other countries; however, expanding into high-wage economies’ such as E urope and North America could tarnish their brand and lead to a reduced overall profit. Current Strategy External Analysis PESTEL Analysis Political – little impact in Canada, however foreign companies may restrict trade or impose tariffs, thus increasing costs. Free trade may help or hinder companies. Favorable taxation or subsidies in other countries may assist competitors. Economic – Collectivity stage and needing to delegate (marketing). Interest rates, currency fluctuations and unemployment are factors. Social and Cultural – Foreign interest in products could be a fad. Advantage is quality. Technological – improved production/packaging technology needed Environmental- could focus on recyclable, reusable packaging. Legal- Foreign sales may require changes or inter-provincial sales may result in abiding by various provincial regulations. | Test| Competitive Implication| Performance Implication| Valuable| Does the resource or capability allow the firm to meet a market demand or protect the firm from market uncertainties| The product itself doesn’t protect the firm from uncertainties. The marketing concept of a healthy product, charming PEI and authentic ‘goodness’ is the competitive edge. Protecting the branded image and promotion is important in sustaining the market position and increasing this position. | Rare| Assuming the resource or capability is valuable, is it scarce relative to demand? Or is it widely possessed by most competitors| The preserve product can be copied. Strawberry jam has the most demand and supply meets demand in N America. Unique product combining high fruit content and liquors. | Product is easily copied; therefore it is important to differentiate fro m the competition with use of specific formulas of ingredients to have a unique taste. Inimitable and non substitutable| Assuming a valuable and rare resource how difficult is it for competitors to either imitate the resource or capability or substitute for it with other resources and capabilities that accomplish similar benefits| Preserve resource is not rare. The culture of home made natural image in the PEI setting is the rarity and could be substituted but countered with its original/ authentic brand. | Product is easily copied, so value must be in packaging/image/marketing appeal. Exploitable| For each set of the preceding steps of the VRINE test, can the firm actually exploit the resources and capabilities that it owns or controls? | One resource that the company has access to is the fresh fruit within the region, therefore there is the potential that the Company could monopolize the fruit market in the area. | Product is easily produced with access to fruit in the area. | Int ernal Analysis Functional Analysis Production Marketing Human Resources Finance Value Chain Analysis TOWS Analysis | From External Analysis| Opportunities1. New national and international markets/customers2. Custom production to utilize spare capacity3. Japanese tourism and marketplace4. Potential to tailor products to consumers in each geographical region| Threats:1. Potential entrants/substitutions claiming PEI origin2. Tariffs on exports make the product a less competitive price3. Labor intensive and seasonal labor 4. Significant currency fluctuations can impede exporting| From InternalAnalysis| Strengths:1. Quality product attracting premium pricing2. PEI ethnicity and charm3. Favorable tax status in Cda4. Increased sales and international interest5. Fresh local produce not requiring freight and storage costs6. Quality staff with low turnover. | SO strategies (use strengths to take advantage of opportunities)Increasing sales across Canada will promote PEI, incur favourable tax status vs imported products and therefore increase/improve competivenessJapanese market can be tapped with Japanese tourism in Canada (Vancouver/Toronto) without incurring the prohibitive multi levels of taxes and levies. Expansion would not only include different geographical locations but includes the potential to utilize quality staff throughout the year, rather than only seasonallyPromote company culture| ST Strategies (use advantages of strengths to overcome threats)PEI authenticity and premium gourmet product with specific marketing highlights to overshadow competitors substitutions. Selling to tourists within Canada, with no GST/PST or tariffs makes the product more attractive Selling nationally reduces freight/shipping damages and more inventory control | | Weaknesses1. Marketing plan2. Restaurant business dilutes core business3. Seasonal business4. Underutilized capacity5. Management’s lack of experience in growth management| WO strategies (use opportunities to overcome weaknesses)Custom production, expansion of selling to new markets/customers and effective marketing plan can utilize the unused capacity and even out the seasonal nature of the business Outsource canning, packing – research alternatives with environmental/recycle benefits| WT strategies (use defensive strategies to minimize weaknesses and avoid threats) Targeted marketing plan and sales agent to identify the place and promotion of the 4P’s to expand sales and sales mix. Increased sales and production would require full time staff and reduce seasonality which would increase ability to retain quality staff. | Key Success Factors Alternatives 1. Pro Con 2. Pro Con 3. Pro Con Recommendation Implementation Plan Short-Term Long-Term Prologue According to the SHANGRI-LA ASIA financial reports for 2006 through 2009 the Asian division has had an increasing net income with the exception of 2008. Proving that Shangri-La has been a success in Asia, even with the expansion into the Chinese market. Appendices Bargaining Power of Suppliers Substitute Products Bargaining Power of Buyers Threats of new entrants Competitors-Airbus/Boeing CCCComCompetitAIRBUS/Boeing Airlines Leasing companies Governmental institutions FAA, IATA, EPA Other regulating bodies Advance in short haul turboprop technology Advances in automotives industry and infrastructures High speed train Advances in telecommunications: video conferences etc†¦ Engine manufacturer Electronic, Semiconductor etc†¦ Others manufacturers such as metal, composite materials Government institutions Capital sources investors and banks FAA, IATA, EPA Other regulating bodies Mitsubishi Others emerging power Others small aircraft manufacturers Military companies: Dassault, Lockheed, ATR Mission Statement We envision a community of responsible and educated citizens who are environmentally conscious, practice social responsibility in their daily lives and inspire others to do the same. We commit to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders. We strive to be a leader in corporate citizenship and sustainable development, caring for our employees and customers, seeking to enrich the quality of life for the communities in which we do business, and serving as good stewards of society and the environment. Partnering for the Future With a solid foundation and reputation for excellence in Asia Pacific, the Middle East and North America, the company's strategic plan now incorporates the goal of expanding the Shangri-La brand globally by operating deluxe hotels in gateway cities and key resorts around the world under management agreements, equity participation or ownership. Given the commitment to becoming a top-end global hotel company, the development functions of Shangri-La Hotels and Resorts are directly led by the President and Chief Executive Officer. Shangri-La has always believed in the unique characteristics encapsulated by Asian Hospitality. Our commitment to providing guests with distinctive Asian standards of hospitality and service from caring people remains our major point of differentiation from our peers and the very cornerstone of our reputation as a world-class hotel group. â€Å"Pride without arrogance† is of particular importance as we want our people to be internally proud of our achievements but outwardly humble. After all, the hallmark of true success is that it does not need to be stated. In striving to delight customers each and every time they stay with us we aim to exceed expectations through consistently providing quality and value in our products and services. That’s why we look for trendsetters, professionals who are enthused by innovation and driven by achievement. Environment Our  daily operations ensure that we mitigate the impact of climate change, uphold biodiversity in conservation/habitat restoration, adopt the best practices in preventing ozone depletion, and continually strive to improve ater-use management, waste-disposal management and indoor air quality. Health & Safety We  are committed to protecting our customers, employees, stakeholders and the greater public by providing a safe and healthy environment based on international standards. Employees Our colleagues are our number-one asset, and our source of inspiration for the greater communities with which we work. We value our stakeholders and always engage them with clarity, honesty, and respect. We require that our business partners ensure the highest standards in environmental, hygiene and labour practices. We believe that caring for others today allows them to care for themselves and others tomorrow. ‘Embrace’ aims to build, strengthen and sustain local communities through various and specific education and health projects. Each of our resorts provides a natural habitat for flourishing biodiversity. The ‘sanctuary' is Shangri-La’s project for ensuring the highest standards in marine and terrestrial habitat restoration and environmental conservation.