Strategic Expansion Plan For M&A Boutique Hotel In The United Kingdom

Company Overview

Question:

Discuss about the Business Management and Strategic Management for Consumers.

The report has taken an imaginary company in the hotel industry named M&A. M&A is looking to expand their business into United Kingdom and the report will develop goals, evaluate the external and internal factors to formulate and implement strategies suitable for making an expansion into the foreign market.

M&A is one of the largest business hotels in Saudi Arabia which is known for its quality of service and décor. This is a boutique hotel consisting of almost 100 rooms in the poshest areas in Saudi. It is one of the most stylish hotels in the country with added amenities and facilities. The architectural design gives the hotel a unique upscale vibe and segregates M&A from other hotels in the industry.

The five stages of the strategic management plan are goal setting, external and internal analysis, strategy formulation, strategy implementation and evaluation and control (Hill, Jones & Schilling, 2014).

The firm wishes to offer the best quality service to their target consumers at affordable prices and as well as gain sustainability and profit according to the goals set by the stakeholders. M&A has set some objectives for the next five years and they are as follows:

• To expand their business to United Kingdom and other European countries
• To gain long term sustainability in the market
• To develop a unique position in the market

(Table 1: Aithal, 2016)

Internal analysis (SWOT)

(Table 2: Moutinho & Vargas-Sanchez, 2018)

The company will use differentiation strategy to offer products and service with high value. The company will target the premium consumers both business executives and tourists.

The workforce will be provided specific job roles where they will be divided into different teams that will implement strategy based on the organizational requirements. M&A will use aggressive marketing strategy to increase the brand awareness and provide discounts to consumers during mid-week to increase the occupancy rate.

The plan will be monitored and evaluated ion a regular basis to identify the success of the strategy. The deviation from the original strategy will be amended to keep the new strategy right on track.       

The external and the internal factors of the organization will be evaluated thoroughly which will include pestle analysis, porter’s five forces and swot. This will facilitate in identifying the different threats, opportunities, strengths and weaknesses of the company in the operating environment. The strategy for market expansion can be effectively developed based on the external and internal analysis.

The strategic growth plan will use concentration strategy where the organization will focus on only single industry and operate within it to gain competitive advantage. The organization can become one of the dominant player in the market by using this strategy. The concentration strategy consists of three aspects such as market penetration, product development and market development (Kobayashi, 2018). These aspects can be effectively used to develop a strong position in the market and capture a considerable amount of share in the market. The company will use market penetration and market development to increase their share in the market.

The firm will try to increase their market share using their existing services and products. This will consist of using aggressive promotional strategy where both traditional and digital marketing medium will be used. The traditional marketing medium will include billboards and posters in business areas and premium locations (Ward, 2016). This will attract the attention of large number of consumers with the country and these billboards will also be used outside train stations and Airports to attract tourists. The organization will also form partnership with travel companies so that they can gain access to new clients and get recommended clients. The digital marketing will consist of promoting the organization on social media websites and interacting with the consumers to identify their needs and wants. The organization will also search engine optimization, email marketing and search engine marketing to grab the attention of the online clients. The organization will develop an application which will provide the clients with information regarding the schemes, discounts and benefits which the organization is providing to their clients.    

Strategic Management Plan

The organization will also use the market development strategy to enter new markets in the United Kingdom to compete with major companies in the hotel industry. The trend of boutique hotels in United Kingdom and elegant look of the hotels and the services could provide competitive advantage as it portrays a different cultural aspect that the western companies. Therefore, the organization will aim to portray their own culture, living habits and cuisines to the customers to create a differentiated market (Black, Schifferes & Rossiter, 2017). The product and services offered by the company will be unique when compared to the other organizations in the industry.  Therefore, the organization will offer value for money to the consumers and they will aim to create a perception that services offered by the organization have added value of highest quality within them.

The hotel will be a luxury hotel serving only to the premium clients having high disposable income and will use economies of scale to reduce their cost of operations so that they can increase their profit margin. Often it is seen that business strategies do not work they are suppose to do and with the increase in unpredictability in the consumer needs the above strategies may not provide fruitful results to the organization. Therefore, the organization will have to keep a backup strategy in case the first-choice strategy does not work out. M&A will use horizontal integration to form partnership with other famous boutique hotels (Nel, 2016). This will provide them better opportunity of sustainability and they will have a ready set of existing consumers in the new market. This is a defensive strategy in case the market fluctuations and entry barriers become too problematic for the company to invest more into their expansion. This will enable them to access new distribution channels and suppliers that would offer products and services at lower prices due to their partnership with the local company.     

This is the most suitable strategic plan for the company as they have something new to offer in the United Kingdom in terms of their décor and design. Moreover, the organization has strong operations which will enable them to sustain in such highly competitive environment. However, the backup strategy would be used as a safe side if the organizations prime strategy fails.

(Figure 1: Shanbhag,  Dutt & Bagwe, 2016.)

The Bostin consulting matrix is a method of resource allocation to the products offered by a company. The organization will have to identify their revenue generation of all the business units of the hotel. In their domestic market, the company is the market leader so it will require less revenue than the new foreign expansion (Shanbhag, Dutt and Bagwe 2016). The revenue generation of the company will have to identified in United Kingdom depending upon the market growth rate. The market growth in the hotel industry is high and initially the company is expected to fall in the question mark region. Therefore, if we consider that 40 units of capital has been allocated to all the units under the company, then the hotel franchise lying in the question mark region will get the majority of the investment. The hotel falling in dog region will have least investment as the market growth for that product has become saturated and there are no growth opportunities for the organization. Cash cow represents the hotel with maximum market share but the growth rate is low so the investment will be low in this segment due to less growth opportunity and it is the market leader in this segment. The hotel in the star region will have high investments as it is the market leader and the growth in the market is also high. Therefore, the division in investment will be like this:

This shows maximum resources will be invested on sectors and hotels having potential market growth.

Conclusion

The report has been able to depict the importance of business strategy in market expansion and how the different tools can be used to formulate and implement strategies effectively. M&A can effectively expand in United Kingdom if they use concentration strategy and the conclusion drawn from the report is that strategic management is a key for the success of the company. 

References

Aithal, P.S. (2016). Study on ABCD analysis technique for business models, business strategies, operating concepts & business systems. Browser Download This Paper.

Black, P., Schifferes, J. & Rossiter, W. (2017). Refreshing the D2N2 Strategic Economic Plan: the case for inclusive growth.

Hill, C.W., Jones, G.R. & Schilling, M.A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Kobayashi, R. (2018). Financial Advisory Services: Business Analysis and Strategic Growth Plan (Doctoral dissertation, California State University, Northridge).

Moutinho, L. & Vargas-Sanchez, A. eds. (2018). Strategic Management in Tourism, CABI Tourism Texts. Cabi.

Nel, H.J. (2016). Alignment between the strategic performance plans of selected Eastern Cape Provincial Government Departments and the Provincial Growth and Development Plan 2004-2014, South Africa.

Shanbhag, M., Dutt, M.L. & Bagwe, S. (2016). Strategic Talent Management: A Conceptual Analysis of BCG Model. Imperial Journal of Interdisciplinary Research, 2(7).

Ward, J. (2016). Keeping the family business healthy: How to plan for continuing growth, profitability, and family leadership. Springer.

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