Discussion
The external and the internal factors play a major role in affecting the overall functioning of the organizations. Companies should be able to predict future changes accordingly and bring up new modifications in their business model to overcome these challenges. There are several competitors operating in the industry so it is very important for them to bring up new changes and have a competitive edge in the market (Chang, Ku & Chen, 2019). This will not only help them to attract new customers but also make sure that they are able to retain their loyal customer base too. Some of the most common frameworks used by the companies include the SWOT, PESTLE, and Porter’s five forces model. This helps the companies in acknowledging their strengths and weaknesses and utilizing them for grabbing opportunities. Lastly, the companies get detailed information about the latest market trends and strategies their business model accordingly to overcome these challenges.
The SWOT analysis helps the company in identifying its strengths and weaknesses which ultimately helps the company to tackle the opportunities and threats in the near future. The strengths and opportunities of Hilton hotels are as follows:
- Hilton Hotels has high brand recognition in the hotel industry. The brand name automatically attracts the customer to avail of the services offered by Hilton.
- The company always comes up with new innovations to improve customer experiences. Thus, they are always up to date with the trending technology (Vlados, 2019).
- Hilton hotels have been one of the well-known brands in the industry in the context of employee retention.
- Hilton hotels are present for 93 years in the market with over 540 hotels across 78 different countries (Ma, 2021). Thus, the widespread presence of the brand plays an important factor in assessing their strengths too.
- Hilton hotels have generated a high potential in emerging markets.
- The Indian, as well as the global hospitality sectors, are in a boom period. This is a great opportunity for the company to penetrate into different markets and generate the maximum possible revenue (Benzaghta et al., 2021).
- With the innovations in technology, the company has a wide scope of reaching out to customers digitally.
- Lastly, innovation in customer service is an important aspect for Hilton hotels.
There are certain political implications introduced by the government in Australia. Hilton hotels should be fulfilling those obligations for smoothly functioning in the markets of Australia. These include payment of taxes, fiscal policies, and trade tariffs.
Australia has been the 14th largest economy in the world. The pandemic had a relatively lesser effect in Australia in the year 2020. As per the statistics, it is expected that the GDP will grow by 3.1% by the year 2022 (Christodoulou & Cullinane, 2019). Thus, the chances of growth of Hilton hotels in relatively higher in the near future and should focus more on retaining their loyal customers.
The standard of living of individuals in Australia is relatively higher in terms of wealth, education, and quality of life. The life expectancy of men is around 80 years while it is around 84 years for women (Racz et al., 2018). The individuals have a preference to lead a sophisticated life and hang out with their loved ones. Thus, it is a great opportunity for Hilton hotels to expand their business in a highly emerging Australian better market.
Australia has been one of the most technologically advanced countries in the world. The country has been found with huge growth with the adoption of the new technology. The individuals are also familiar with the new technologies trending in the market (Capobianco et al., 2021). It would be better for Hilton hotels to invest more into digital platforms for providing the customers with a better experience. Thus, the adoption of the latest technology will enhance Hilton Hotels’ growth in the future.
SWOT Analysis
The Australian Government has formulated some of the laws such as fair trading law, competition law, and consumer laws. Hilton hotels should comply with all these formalities for having a smooth operational experience in the markets of Australia. The company should fulfill the Fair Work Act 2009 that focuses on employment in the country (Nandonde, 2019). On the other hand, private laws describe the rules and regulations handling the personal information of the customers.
This is the last element under the PESTLE model which focuses on the betterment of the environment in which the companies are operating. Australia has been well known for three beauty of nature with stunning beaches, mountains, and forests. Hilton hotels should focus on engaging in waste management activities that will enhance the external environment (Saudi et al., 2021). Lastly, the company should focus on implementing some of the innovative Corporate Social Responsibility practices for the overall growth of the external environment.
The rivalry among the premium hotels is huge due to the alternative brands operating in the market. Hilton hotels face huge competition from Marriott, Sheraton, Hyatt Regency, Westin, Radisson Blu, and other premium segment hotels in the market. Thus, Hilton hotels had to completely bring new innovations in their service quality according to the needs and wants of the customer (Bruijl, 2018). This is how the company is able to handle the pressure in the market and mark its dominance in the hotel industry of Australia.
The bargaining power of the suppliers of Hilton is comparatively low. Hilton purchases their products from more than 4000 suppliers globally which automatically decreases the bargaining power of the suppliers (Irfan et al., 2019). This is because of the lack of uniqueness of the products and services that are being offered by Hilton hotels. Even also the order volume of the Hilton suppliers is paramount and thus there are no chances of supplier switching costs in the majority of the cases. Thus, the suppliers have less or no bargaining power from Hilton hotels.
The threat of substitutes in the hotel industry is not significant. In the case of Hilton hotels, the direct substitutes include individuals staying in friends’ or relatives’ homes or rather renting some apartments for a short period of time. Even also the arrangements of these are very time consuming and the customers have to face several complexities in doing this. Hilton hotels are also installed with the latest technology that provides video conferencing facilities to the customers.
PESTLE Analysis
The threat of new entrants is very low in the hotel industry. This is because the capital expenditure related to it is very high which almost makes it difficult the entry of the new hotels and compete with these premium hotels. So Hilton hotels are less affected through the entry of new hotels in the industry. On the other hand, economies of scale are fairly difficult to achieve in this industry. This helps those companies to have a cost advantage that is operating with large capacities (Uçmak & Arslan, 2012). This ultimately results in increasing the cost of production for the new hotels in the industry.
Hilton belongs to one of the premium hotels in the service industry. So, the buyers have few firms to choose and thus they do not have any proper control over the prices. Thus the bargaining power of the buyers is very low in the case of the hotel industry which results from product differentiation and few organizations being available to the buyers.
- Hilton hotels focus on premium pricing policy while entering into new markets. The company is well known across the world but they should focus on penetration marketing policy while entering into a completely new market. This will help them to attract more customers in the initial stages. So it will be better for the company if they focus on reducing the prices of the services they offer and gradually increase the price while they have already gained a hold of the market share.
- Hilton hotels should focus on recruiting young and talented employees below the age group of 40. This is because as the company is focused on providing service to the customers, the young and smart generation will be best suited in addressing the requirements of the customers. Thus, the customer service will keep on improving which will help them to have a competitive edge in the market irrespective of the other brands operating in the market.
Conclusion
Thus it can be concluded from the above analysis that it is very much important for the companies to address the changes in the external environment and bring modifications according to it. This will help them to gain more market share and ultimately help them to survive in the long run. So the factors of the internal and external environment play a major role in fulfilling the requirements of the market.
References
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https://doi.org/10.1108/JSMA-02-2019-0026
