The analysis will be used in this piece to look into the challenges that the Emerging Capital Group (ECG) is dealing with. Marketing and branding, as well as human resource management, are two main difficulties that the organization is now dealing with. In order to increase its brand image and brand awareness in the hospitality and tourism business, ECG requires a strong branding scheme and an initiation of strategies regarding incorporation of fresh technological models in the business process. Otherwise, as an international firm, keeping a cheerful atmosphere among diverse cultures and personalities while ensuring reasonable employee overeating is tough. Not only that, human resource management is also a concern that ECG needs to address in order to create a great bond between personnels and organizational culture. To address this issue, the organization will need to develop an appropriate leadership style as well as an effective people management approach. This paper, in addition, will apply relevant management models to give a better insight of the company’s problems and further provide logical recommendations for actions. ECG will be able to better grasp the determinants of industrial competitiveness and examine the study topic from various perspectives with the help of an effective model which is Porter’s Five Forces Model.
A company’s success is determined on its capacity to successfully analyze both the internal and external business environments, as well as design and implement relevant plans. Effective change management is one of the most important parts of a company’s long-term success. After analyzing the Emerging Capital Group’s external, industrial, and internal environments in Assignment 1, the purpose of this report is to explore the concerns and challenges posed by the management challenge. The research will be used to look into the challenges that the Emerging Capital Group (ECG) is dealing with. Marketing and branding, as well as human resource management, are two main difficulties that the organization is now facing. In addition, recommended management options are developed and used to look at the research topic from a business standpoint as well as to see whether they can provide relevant solutions to the problems. The model discussed in this study is the Porter’s Five Forces Model which helps comprehend the factors that influence industrial competitiveness and to approach the study topic from several perspectives.
Relevant management models
Porter’s Five Forces Model
The Porter Five Forces Model is a framework for analyzing and implementing business strategies based on the degree of competition in a given industry (Porter 2008). According to Porter, the five forces that control competition in an industry are the threat of new entrants, consumer bargaining power (buyers), supplier bargaining power, threat of substitute products or services, and rivalry among current competitors (Figure 1).
The threat of entry refers to a new entrant’s ability to drive competition by increasing existing capacity and capturing market share. According to Porter (1979), the degree to which new entrants pose a threat is decided by the degree to which new entrant obstacles exist. Higher entry barriers make it more difficult for new entrants to obtain an immediate competitive advantage, and they may face retaliation from established competitors. If entry barriers are low, on the other hand, the threat of new entrants is greater, and present competitors will have to compete with new potential competitors in the market, resulting in a smaller profit margin in the business (Porter 2008). New entries to the hospitality business increase the number of rooms available and compete for market share, placing pressure on price, costs, and the required return on investment (Bedlington 2009).
Supplier’s bargaining power can have an impact on an industry’s profitability by raising costs or degrading the quality of goods and services acquired (Porter, 1979). If a supplier can improve in this way, he will have a better opportunity of obtaining more of the value.
Buyers can use their bargaining power to lower prices, demand improved quality and service, and allow suppliers to compete for the job. The buyer will be looking to get more value for their money by paying one of the lowest, if not the lowest, costs for good quality. In this setup, suppliers are dependent on the buyer, who takes advantage of his position by putting pricing pressure on suppliers (Porter 2008).
Threat of substitutes products or services are products and services that already exist or are planned to serve the same function. Substitute products can save money while also providing better performance and value, which is often the result of technological improvement (Porter 1980).
The number and size of direct competitors determines rivalry among existing competitors, as having a high number of and/or evenly balanced competitors may result in strong competition (Porter 1980). This is due to the fact that the desired rate of business growth exceeds the rate of growth in the industry. When switching costs and product differentiation are minimal, market share competition is strong.
As a result, while Porter’s Five Forces model provides strategic prescriptive analytics for making decisions based on a collection of data and insights, the framework’s internal situation and external environment drivers must be combined to make it more comprehensive.
Implementation of management models for recommendations
In a broad sense, all businesses in a given industry compete with businesses that make similar goods. The more appealing the price-performance alternative provided by substitutes, the tighter the grip on industry earnings becomes. Finding substitute items entails looking for different products that can serve the same purpose as the industry’s product (Porter 1980). In the case of ECG and the hospitality industry, we should keep in mind that it encompasses a variety of enterprises (e.g., hotels, real estate, hospitality services, and so on), all of which provide unique products and services while providing the same purpose. We can observe that different sorts of firms provide different types of services and goods that perform the same function within the same industry, thus we can conclude that the threat posed by substitute goods makers is significant (Francesca 2015). Staying with relatives, friends, or shortening one’s stay are the most popular indirect substitutes for vacation travelers. Guests can also choose a less expensive choice or stay in a hotel with less amenities and a reduced nightly rate; this ECG should adopt in order to capture as many customers as possible (Bedlington 2009).
New entrants to a sector bring new capacity, a desire to gain market share, and, in many cases, substantial resources. As a result, prices may be lowered or incumbents’ expenses may be exaggerated, resulting in poorer profitability. The existing barriers to entry define the threat of entry into a certain business, as well as the reaction that the entrant can expect from existing competitors (Porter 1980). ECG is suggested to diversify their hotels’ locations to assist mitigate the risk of market fluctuations in specific locales. This ability to diversify a company’s assets necessitates a significant amount of capital as well as strong industry ties, which gives incumbent corporations an advantage. It is conceivable for these smaller enterprises like ECG to take significant market share away from larger industry players by employing a highly differentiated luxury strategy. ECG might stand out by emphasizing stylish decoration, sophisticated amenities, and highly customized service which can target a large pool of customers such as young travellers. Along with this should be a more intense marketing campaign which can help ECG to reach out to more potential clients and catch the current needs.
A large network of suppliers is used within the hospitality industry, in which labour holds a significant bargaining power in profit maximization followed by the existence of a labour union. Labor is one of the most important inputs in a service-based economy, especially given the high cost of wages and staff training. Customer service is a critical component of a hotel’s success, and without strong service standards, hotels would struggle to attract repeat business and brand loyalty. As a result, when seen as a service provider, establishing great connections with employees is a critical success factor for ECG to control labor bargaining power. Moreover, investing in employee training and strengthening organizational culture for employee retention are matters the ECG should also keep in mind.
Hotel guests seek to increase their own worth as buyers by requesting higher quality or extra services. Buyers, like suppliers, have different amounts of power depending on which consumer sector they belong to. Consumers now have more control when it comes to choosing a hotel, thanks to increasing access to hotel-specific information such as facility amenities and online guest reviews. Many websites currently exist that allow users to search multiple databases at once and compare properties based on factors such as location, cost, star rating, amenities, and availability dates. The emergence of such web-based travel companies has had a significant impact on the hotel industry’s buying power. As a result of improved access to information, buyer power is becoming more moderate as a result of price comparisons and consumer driven evaluations with significantly less bias than hotel home sites. ECG is recommended to keep their business platforms updated and developed in approaches to have stronger marketing performance as well as prices competitive (e.g. promotions) with quality service. Consequently, gaining trust and approval in service will increase ECG brand awareness.
In any industry, not only hospitality, price reductions, the introduction of new things, advertising campaigns, and improvements in customer service are all regular kinds of competition. As the race for market share heats up, a slew of huge refurbishment projects have sprung up among the major hotel companies. Mid-scale hotels are now offering features that were previously only available in expensive establishments. Similarly, budget hotels are also giving free Internet access, spa-quality shampoos and lotions, etc. It is urgent for ECG to have a clear plan on improving hotel branding as well as invest in large expansion projects with hotel owners and investors.
After examining the problems of ECG using the Porter Five Forces model, they should devise a long-term strategy that focuses on raising brand awareness, establishing powerful brand recognition campaigns, and launching employee training programs, as well as being able to deal with any challenges that arise during future expansion. Furthermore, ECG should incorporate such management tools for determining the optimal strategy for them, as well as potential changes to mitigate flaws.
After receiving the comment of my first assignment, I can see that I have missed out some requirements and not addressing them comprehensively. However, the feedback from the first task has taught me to be more critical of the second. The work overall provided me with knowledge of the industry ECG working in, as well as the structure of a business and the roles of executives. Moreover, given my in-depth look at a corporation’s structure and operation as well as assisted me in identifying the organization’s strengths and shortcomings, allowing me to find the answers we require to assist them in achieving their goals. It is a bit disappointing that I have high expectations for the initial assignment but the feedback proves that there is a lot for me to improve in the second assignment. Especially in terms of the structure of the paper and the purpose of each part, I could have put more effort in providing more in-depth discussion. Another important thing that I missed out is to properly justify the framework in the first task. I believe I failed miserably in my application of appropriate framework as I did not carefully read the requirements of the task. Furthermore, I believed that the applications were never well-considered, and that they lacked comprehension of how the theory should be used in the case. Since the model will determine the overall discussion, it is important for me to carefully choose the right framework in the second assignment and comprehensively explain it as well as give a reason as to why it is the correct model to implement. I can see myself that I was handling the assignment in the wrong direction and at several parts, I wish I could have adjusted it correctly to match the purpose of the work. Moreover, since no relevant framework was used, I was unable to provide the internal analysis that could have given an explanation of why such issues that ECG is facing existed. Overall, the assignment is a disappointment to me and I’m hoping that through doing better research and analysis in assignment 2 as well as being able to fully demonstrate my critical thinking abilities. I deeply appreciate all the comments and I will use them to improve my writing for Assignment 2.