Strategic Impact of Business Environment

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Introduction to Strategic Impact of Business Environment

The external environment of business influences the major strategic decisions on the organization. The outside surroundings of the company include its competitors, suppliers, customers, government. These components of environment affect the strategic planning of the organisation (Baddache and Nicolai, 2013). A better understanding of external environment will help the organisation to survive, sustain and grow. Screening of exterior environment helps company in making strategic plans. Any change in external environment will have a huge impact on the strategic plans of the company. External environment analysis will help firm to knowing its internal strengths and weaknesses. In addition to this company can also identify its opportunities and threats present existing in external environment. This report includes SWOT, Pestle, and Porter analysis of Hilton. 

Introduction to company

Hilton Hotels & Resorts is an international brand which provides full services to its customers. It is owned, controlled by, or franchised to independent operators by Hilton globally. Conrad Hilton is the founder of Hilton hotel and resorts. Hilton is located in 90 countries across the globe. Presently it has 4000 hotels (The touches that make us Hilton Worldwide, 2014). The major products in which Hilton deals are food & beverages, guest rooms, and public space, and property operations- with a devotion to social responsibility.

It is specifically a people centric industry has to provide satisfactory services to its customers. Hilton has a wide customer base which is loyal to organisation. Company is a leading global hospitality brand. This is all because of strong workforce of Hilton. The organisation depends on approximately 300, 000 employees. This work team provides superior guest experience to millions of customers (Sloman, 2008). Hilton also emphasize on corporate social responsibility. They employ such activities which are advantageous to the natural environment. Hilton management services are the most successful meeting and event operator industry. Hilton meetings and events delivers customer quality control, strategic supplier alliance as well as contract support (Bogue, 2011). This hotel regularly accommodates all types of events, corporate gatherings. Hilton main aim is to attain a balance between customer satisfaction and profitability while at the same time enhancing the goodwill of the company. Hilton facilitates efficiency and effectiveness in all the aspects of hotel operations. The hotel focuses on high income group and business travellers. Hilton maintains experienced and talented work team who ensures customer satisfaction as the top most priority (Ghuman, 2010). The experience of customer leads to customer loyalty. To meet the challenges of environment the company has strong technological base. This helps the managers and employees of Hilton to plan for the company benefits for future.

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Micro environment analysis

Micro environment analysis includes analysing the stakeholders of the company which can affect the business environment.

Supplier: The suppliers to Hilton are those who supply raw material to company which help it carrying out its operations (MICRO ENVIRONMENTAL ANALYSIS, 2010). The company’s activities largely depend on the suppliers. If there is a change in price of goods provided by supplier then Hilton has to look for other supplier. This may affect business of company. Hilton is large organisation which operates in variety of businesses. In order to operate in all such businesses Hilton requires plenty of raw materials which are supplied to it by a number of suppliers. If the company wants its business operations to run smoothly then it has to analyse how many suppliers it has, their products, price, terms and conditions. 

Public: A major force in micro environment is constituted by public. Marketers of Hilton should analyse the taste, belief, attitude and opinion of public in order to plan marketing strategy (Pal, 2012). Marketing strategy should be such that it fulfils the need of the customers. Hilton, in order to attain customer satisfaction, requires knowing the preferences of public which will help it in knowing where it lacks and where it can improve in order to make customers loyal towards the organisation.

Intermediaries: Intermediaries include agents, brokers who act as a bridge between customer and sellers. There interest lies in getting commission on sale of product from seller. These intermediaries have a great influence on the business environment (Fernando, 2011). Hilton has to appoint intermediaries who can make relation with customers on behalf of the company. Intermediaries represent the company in front of the buyers. In order to promote the product to large mass the company needs to have sound network of intermediaries. 

Customers: Customers are the king of the market. They play a major role in affecting the business environment. Hilton needs to carefully analyse its customers so that it can know their tastes and preferences. Any change in demand of customers need to be analysed by the marketer. Hilton has to provide the services to its customer in accordance with their needs (Dobbs, 2014). If customers are satisfied with services of the company then they will not switch to other brands to fulfil their requirement. This brand loyalty will help Hilton to sustain in long run. However, if the customer needs are not considered then the company may bear loss and has to shut down its operations in future.

McKinsey’s 7S model to analyse organisational culture

This model is generally used by the organisations to evaluate the culture prevailing within the firm (The McKinsey 7S Framework, 2014). This model is used by organisation to monitor changes in internal business environment. The 7S analysis for Hilton is as under:

Strategy: The strategy of Hilton is flexible which changes as when required. Hilton in order to spread its business worldwide has adopted growth strategy. It focuses on market coverage by means of franchisees. Strategy of Hilton should be such that the customer can easily access those strategies (Gebrekidan, 2010). Strategy of Hilton in order to achieve customer satisfaction is by providing right information to customers and product availability at the right time. Strategy of the company is to attract high income people. Their target market is the people who have less concern for money and are more concerned with the value.

Structure: Hilton’s structure is very flexible. The employees working in the organisation have clarity of roles and responsibilities they need perform (Fernando, 2011). Clearness of what one needs to perform makes it easy for organisation to achieve its goal.

Systems: The system is business and technical infrastructure of Hilton which the employees use on daily basis in order to fulfil the goals of firm. There is coordination of activities performed by employees at different level for smooth functioning.

Style: The Hilton follows innovative style in bringing new ideas of delivering services in hospitality sector (Sloman, 2008). The company uses people oriented style which means personal attention is given to all the employees at work. This provides motivation to employees to work out with full zeal and enthusiasm.

Staff: Hilton provides training to its staff as the key role in hospitality is played by the employees (Perrott, 2011). The staffs are one who is in direct contact with the customers. So they play a very important role in building the image of organization.

Shared values: It includes the trait behaviour of the Hilton that is company’s vision and mission. Hilton has a vision of filling the earth with brightness and warmness of hospitality (The touches that make us Hilton Worldwide, 2014). Mission of the company is to become leader in hospitality industry. This reflects that organisation will direct all its efforts in achieving these goals. The company works keeping in view its shared values.

Skills: This includes the ability of employees to do specific job. Hilton acquires talented personnel who have experience in hospitality sector. These experienced employees will help the company in enhancing its performance.

MACRO ENVIRONMENT

Macro environment includes those factors which affects productivity of company. These are uncontrollable in nature and require changes in various activities of organization such as production, operation, marketing etc (Baddache and Nicolai, 2013.). It includes six components for analyzing the outside impact of environment on Hilton hotel in form of PESTLE analysis. It lies outside business and can be analyzed by using following factors which are indirectly related and have great impact on the performance of the firm (Barraza-Urbina and Ramos, 2012)

PESTLE analysis

It can be described as follows-

Political factors - It have great impact on company  because it affect the supply and demand of the Hilton. It states the rules and regulation of government policies such as Tax, governments contracts, international laws, trade agreements and tariff. So it affects the profitability and performance of firm (Berthon and et. al., 2008)

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Economical factors- Economic factors plays vital role for growth of the company. It affects activities of corporation by boom; recession and inflation rate in the market because they directly engaged with the production. These have influence on Hilton by level of unemployment and foreign exchange rate.

Social factors- It affects demand of company because consumers taste and preferences keep on changing as per the time. Therefore firm need to emphasize on it so they can get profitability. Increasing targets population will have positive impact on the company for enhancing its sales.

Technological factors- It tells about the updated technology to influence customers. So Hilton hotel must recognize updated technology for its advertising, distribution of product which helps to enhance the sales as well as volume of customers (Perrott, 2011).

Environmental factors- Natural changes and disasters affect the performance and productivity of company because by this they can maintain peace at the workplace. So Hilton must have provision regarding this contingency which can ensure its continuing flow of operation and production.

Legal factors- Under this company have to follow the laws which are determined nationally, locally and international level. It includes labour law, laws regarding safety and hazardous equipments, related to workers wages and salaries etc. So they have to obey these rule strictly otherwise it can harm reputation of Hilton by the legal activities.

Therefore corporation must pay proper concentration on these factors to make competitive advantage in the market and to capture market share so that they can grow in the industry in long run with leading role.

This theory is used to identify profitability of the firm by launching new products or services in market. It determines strength and competitive position of the firm so that it can come to know about its potential area and can grow in the market by adopting various strategies. It provides overall review of performance and future of company by which it can overcome its difficulties which can hindrance its productivity. It includes five forces which are mentioned below.

Bargaining power of suppliers- It provides detail about the suppliers for their policies, prices, their strategies. In this Hilton hotel’ supplier’s power of switching is low which can help it maintain its continuous flow of production. Supplier’s power is low because Hilton’s is global brand and it makes commodity based product. So Hilton has control over the power of suppliers (Gebrekidan, 2010).

Bargaining power of buyers- Under this customers engaged with Hilton has higher power and they are price sensitive. Buyers have brand loyalty so they have low switching cost and they prefer the premium services provided by the firm (Stonehouse and Houston, 2013).

Competitive rivalry- In this, there is moderate competition within industry due to high barrier to exit from the market. Industry posses moderate level of product differential so they utilize available capacity to work in the prevailing competition.

Threat of Substitute- There is moderate threat of substitute in market for Hilton because customers have variety of options. Substitute can easily come to market and it can affect the sales of existing product and services 

Threat of new entry- New entrance have very low power to enter into the market because market is capital intensive  and industry is dominating which put restriction on the new firm. Hilton possess strong brand so it have good command over market (Berthon and et. al., 2008).

Therefore proper consideration must given to all above five forces so that company can have create its strong position in the market and can have focus on future strategies according to that. It will ensure proper utilization of resources as well as cost and time saving which will result in the creation Hilton’s goodwill.

SWOT analysis of Hilton hotel

It helps firm to know about its strengths, weaknesses, opportunities and threats. It assists Hilton to look forwards by concentrating on available opportunities by using its strength. This method helps firms to know about its internal as well as external factors where it has its command and where it is lacking. So this way Hilton hotel can do analysis (Ghuman, 2010). As follows-

Strength- Quality of services attracts superior customers and it has many branches over 78 countries. Company has good reputation in the market with higher brand recognition. Hilton is serving customers for 93 years which ensures its effectiveness. It has diversification on the basis of prices and services which helps to enhance the volume of customers. It has access to overall globe and performs loyalty programs that will build image of the company.

Opportunities- Hilton has many opportunities to expand in the market where they have not established their presence such as developing countries like India and China. In addition to this it has an opportunity to introduce new services in market by targeting new customers (Stonehouse and Houston, 2013).

Weakness- Delay expansion of the firm and it has more focus on domestic market which can harm the business by economic condition. It doesn’t have command over market share and due to government policies its operations are affected globally. 

Threats- There can be change in taste and preferences of the customers which can affect the productivity of firm’s services. Hilton has threats related to political risk and entry of substitute products by the competitors.

Therefore Hilton must pay attention on its opportunities for its growth which will help it for achieving long term goal by performing well. SWOT analysis will provide exact information about the external as well as internal factors for improve its productivity ( Perrott, 2011).

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Recommendations

Competitive pricing- Hilton can have competitive advantage by adding values to product and then offer the product to customers at reasonable prices. It should  be in touch with the media to define Hilton’s brand

Customized offering of service - Company can offer more tailored services and freebies to customers which will make great impact on buyers they will attract towards it.

Training sessions for employees - Employees must be more efficient and quick so that they can deliver services 24/7. Firm need to keep updated in them like changing their uniform which will look more professional. They must be well trained time to time which can attract and can recommend to consumers.

Promotion by social networking and mobile technology - These activities must be in that form where customers have quick access like facebook, mobile devices. Updated technology should be used for promotion which will result in quick and positive response of the people. It can give braded gifts and can organize customer’s appreciation event as per the occasions which will make them feel good and they will attract towards it. It can attractive brochures also

Policy related to Parking- It will help to attract more customers because to cost for buyers.

Provision of expected loss- It should anticipate the expected loss can occur by the external factors which cannot become hurdle in the growth of company.

Time of environment analysis- Analyze PESTLE environment at first and after that SWOT should be conducted so that it can have right information about external as well as internal factors affected the business.

Other recommendations- Keep data base of customers to excite them by offering new products in the test marketing, provide after sales services. They can provide provide proper finance and can adopt various strategies to overcome its weaknesses.

Therefore firm should take care of all these factors which will help it to work effectively and stand in the market with leading position. It will result in overcome of threats available for the company.

CONCLUSION

It can be concluded from the study that Hilton has strong goodwill in the market. This helps the company in attracting more and more customers (Proctor, 2014). It is also found that the corporation has pool of talented and experience personnel who are responsible in enhancing its profitability. The company is also facing some problems which can harm its business in long run. Hilton has a brand image which is promoting its product worldwide. 

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