SUBMITTED BY :- Sameer Kumar Swain STUDENT ID MODULE :- c7094007 :- International Strategic

Management

COURSE

:- M. Sc International
Hospitality Management

Date of submission:- 16 Words

th

May 2011

:- 3500 CONTENTS
1

• Executive Summary……………………… • Introduction………………………………. • Backgroung on strategic tools And techniques……………………………. • Strategic Tools and Techniques Used for Shangri-La…………………….. • Implementation of Strategic tools………. • Reccomendation and Conclusion……….

Executive Summary:2

And in the end.The report is all about the strategic role of Shangri-la Asia Limited.000 people as employers. Then it is told that what tools are used for Shangri-la Asia Limited.1 million. The group did not earn much revenue in the year financial year 2009 as compared to financial year 2008. operation and management of hotels and associated properties with 26. Then their implementation and recommendation and conclusion is provided. how these strategies are implemented in proper way is explained. Then one by one all the strategic tools are explained and their recommendation are given. Then a theoretical concept of Strategic tools is given. Also the group faced decrease of 68.1% in revenues as compared to FY2008.5 million in FY2009 showed an increase of 54% as compared to FY2008. 17 are hotels under management and 3 . This section carries three sub-sections i. 1. a Hong Kong based company. This report starts with an introduction i.5% in FY2009 as compared to its FY2008 in the operating profit i. 1.1 Company Overview:Shangri-la Asia. history and aims and objectives of article are discussed. Then the aim and objective of the company is discussed. it carries company overview.1 Company Overview.e. $255. 1. is involved in ownership. Now all the sub-sections are discussed one by one below:1. But the group’s net profit i. The group has 65 companies out of which 47 are hotels. the overview about the company. The group faced a decrease in 9.2 History and international position and 1. After that all the tools are explained. First of all a light is thown on the strategic tools and techniques. Mainly it is an investment holding group which operates primarily in Asia. the operating profit of the group at the end of FY2009 was $5. its history and its international position as a hospitality organisation is discussed.e. Introduction:In this section.e.3 Aim and Objectives.e.

Japan. the group have segmented its business into seven geographic regions i. Trader. 2010) 1. and Indonesia). Thailand. 4 . suggestions and recommendation for the strategic direction and choices to be adopted. In 1989.e. Malaysia. they introduced the brand called Traders Hotels and in 1997. 2010).3 Aim and Objectives:AIM – the main aim is to analyse the current position of Shangri-la using appropriate strategic tool. and European region. the group opened its first spa training centre i. Philipines and signed an agreement with Vancouver’s Westbank and Peterson Group. Summer Palace. Shangri-la Hotels and Resorts in 1983. In 2008 and 2009 the group has signed its deal with Kerry Properties Limited and China Huaming International Investment Corporation respectively. provide some ideas about future directions and critically analyse the implemented issues of the recommended strategies. they had announced openings of three new hotels (Datamonitor. And again in the year 2010. Maldives. the Shangrila Asia group bought Shangri-la Hotels and Resorts.one hotel which is under operating lease and these have spread in Asia Pacific. and other countries (including Fiji. 1. In the year 2007.2 History and Its Position in International Market: The Kuok Group of Companies has founded the Shangri-la groups in 1971 in Singapore and the management group i.e.e. North America and the Middle East. Singapore. They signed six new hotel management contracts in the year 2002. Shang Palace and Rasa (Datamonitor. Myanmar. Philippines. Regarding its geographic segmentation. Shangri-la Spa Academy in Manila. the Peoples Republic of China. The brand names that work under this group are Shangri-la.

“Strategic management can be defined as the art and science of formulating. According to David. 36). which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations”(2009. it is very difficult to talk about its concepts. Strategic choices and Strategy in action (Johnson. Strategic position. production/operations. Scholes and Whittington. Background to the Strategic Tools.OBJECTIVES – explain the need for vision and mission statement of Shangri-la Asia Ltd and the strategic tools and policies used. marketing. and evaluating cross-functional decisions that enable an organization to achieve its objectives this implies that strategic management focuses on integrating management. 2. “Strategy is the direction and scope of an organisation over long term. implementing. because without knowing the meaning.12). p. 2009. changes and problems of implementing business decisions.e. Scholes and 5 . As it has been said that strategic management includes three things i. Scholes and Whittington.3). finance/accounting. and computer information systems to achieve organizational success” (2009. a complete strategic analysis of the group which will recommend on implementation and choice of strategy and evaluation of business and organisational issues. research and development. strategic choices for the future and managing strategy in action” (Johnson. And “Strategic management includes understanding the strategic position of an organisation. p. Techniques and Concepts:Before going into deep about its tools and technique. p. it is very necessary to define Strategic Management. And according to Johnson.

make out what exactly they want to do.1 Strategic Position:This element is required to find out or to identify how the company is affecting its environment. In this report. Five Porters analysis and product life cycle. in which stage it is (Johnson. 2. 2.e. Scholes and Whittington. the company might be entering into new products and markets and to know which strategy will help them to succeed. what all weakness are there which can affect them. Ansof’s model. 2. For example.e.2 Strategic Choice:This element is used to know the direction of the company in which their strategy might work and the process by which the strategies can be implemented. This tool only tells them about the area or sector that is to be evaluated or improved and where they can do their business more profitable. 2009). people affect them. These all can be found out by SWOT and PEST analysis. strategic capability and expectations and influence of stake holders (Johnson.Whittington. Every company have to find out what are there basic strenths. This element contains tools like BCG Matrix. who are their major threats that can affect their business and how is the environment. 2009). 2009). Now one by one these three Strategic steps will be discussed i. they use this element. BCG matrix will be used to now the group’s present market condition. Five Porter’s analysis will be done to get a clear knowledge about present market so that the group can get strategies according to that and product life cycle to know the groups growth i.3 Strategy in Action:This the element is used to determine the techniques to implement the present strategies according to the market and also how to manage them properly. 6 . culture. Scholes and Whittington.

they have a very good vision but from past few years they are not able to maintain their business. The analysis starts in the following sub-sections:- 3. 2010). Mission Statement. they had a increase in share of profit of associates by 253% due to which profit of the year increased by 42% (Annual Report. 2009). despite of decrease in occupancy level.1 Vision and Mission:Vision – “To be the first choice for guests. Strategic tools and techniques used for Shangri-la Asia Ltd:This section carries a complete analysis on the Group’s Vision. The annual report of Shangri-la is telling. colleagues. colleagues. they are able manage their relations with them. Basically if the company wants 7 . They are having a lower occupancy level i.e.e. 2011). 50% in FY2009 as compared to 65% in FY2008 (Datamonitor. But the next three things i. They want to be first choice of guests but this is not at all happening. 2009). This data shows that they are not able to fulfil their vision. 3. SWOT and PEST analysis. BCG Matrix.e. Scholes and Whittington.Basically this element is for using the strategies properly i. shareholder and business partner. As far is their vision is concerned. Five Porter’s Analysis and Product Life Cycle. putting them into action (Johnson. shareholders and business partners” (Shangri-La International Hotel Management Ltd.

and other countries. Japan. without that they can’t do anything. 2010). Malaysia. This has helped the group have a good advantage from different markets (Datamonitor. it has become a good customer choice (Datamonitor. the Aberdeen Marina Club in Hong Kong. Due to this the company is facing lower 8 . 2010). According to their mission they want to differentiate them with others by providing the guests a feeling of home and interacting but for that they need customers. Mainland China. 3.e.5% in FY2007 to 40. Singapore.6% in FY 2009. Weakness:• Increase in indebtedness – the company’s debt has increased upto 47% from 2007-2009 and also the net borrowings has increased from 20. they need to concentrate on customer satisfaction so that they can be the first choice of the guests. Hong Kong. the Xili Golf and Country Club in Shenzhen has very good reputation and are leading in Asia.2 SWOT Analysis:Strength:• Strong Brand Image in the Lodging Industry – The group operates 65 hotels with over 24. The Philippines. but as there is a low traffic of guests. • Geographically Diversified in Asia – the Group is diversified in number of countries in Asia i. they want to delight their guests. Mission Statement – “To delight our guests every time by creating engaging experiences straight from our hearts” (Shangri-La International Hotel Management Ltd. 432 rooms and its recreational clubs.to abide by their vision. Again the same. Thailand. it is self explanatory that they are not fulfilling the needs of their guests. Due to this. 2011).

they might get a good success here. • Hotel management contracts – they have planned operate their hotel under the third party i. they are not pretty well prepared to finance more on their business (Datamonitor. they have also planned for at least give 30% of its rooms under management contracts in 2011. 2010). As China is improving very fast in economy and travel. 58. Not only this. • Opportunities in China – their most of the chains are in China and China ahs helped a lot to increase their revenue. 17 management agreements have been already signed for 2010. 2010). Due to this. they are aiming to open 35 new hotels and add 26 new destinations. 2010).e. This might help them to improve and work properly without much expense which seems to be impossible at this stage (Datamonitor.1% as compared to FY2008. with 65% occupancy level. a decrease in 9. then it could be very profitable market for them and also they already have a good reach in China. • Low occupancy levels – As compared to FY2008.rating and in this difficult situation.e. they are not able to make enough revenue to compete with their competitors (Datamonitor. 2010). they are facing a decrease in occupancy level i. so it would not be difficult task for them to increase their market (Datamonitor. 9 .e.9% of Shangri-la’s revenue comes from China. 2010). 50% in FY2009 which has caused a loss in revenues per available room i. These openings in new markets can help them to gain their lost revenues and can help them to stand again (Datamonitor. If they aim at China. Opportunities:• New openings – they have opened few hotels in Guilin and China and have planned to open four new hotels in 2010.

Threats:• Increased Labour Costs – due to recession and inflation. they have face these problems and wait till the global economy increases. This has harmed a lot to domestic and international customers. These all have made the group little bit weak. due to which they were not able to have enough revenue (Datamonitor. it is very difficult to pay the labours too. customers did not prefer much to the hotels. As it is already discussed that they are facing a decline in revenue. there is a very slow progress in global economy and in the same time H1N1 effect came to the Asia. • Recession – due to this. Therefore. As the has only diversified its branch in Asia. it has caused a rise in overall costs which is affecting the groups margins (Datamonitor. 3.3 PEST Analysis:Political:- 10 . 2010). there is a rise in labour costs. This was the reason of low occupancy levels. 2010). Due to the disease. • Terrorist attacks and natural calamities – Due to terrorist attacks in hotels and natural disasters like Tsunami. 2010). the customers have stopped going to hotels and restaurants (Datamonitor.

d. so for them they should innovate some new and attractive plans which will be helpful for them (Lei. natural calamities and H1N1 disease. Economic:• Inflation – due to rise in inflation the company is facing lots of problem. Strueby and Justin. • The rate of travelling has also decreased due to terrorist attacks. n. n. n.d. This is also one of the reason of their declining revenue (Lei. they have to be best and cheaper so that the customers get attracted towards them (Lei.). n. This might help them to increase their brand image and can add to the revenue (Lei. Strueby and Justin.). n.d. • The society is full of older generation. Environmental:• Environmental protection laws – due to this they have spend money on environment otherwise they will get sued according to the law (Lei. • Exchange rates – the exchange rates are also getting high.).). Strueby and Justin.).Health Centres – they should operate some health centres for older generation as the majority of the customers are old in Asia. Strueby and Justin.).d.). due to which they are facing difficulties in convert the foreign currencies (Lei. Strueby and Justin.d. n.d. Social:• As there is lots of options for the customers. Legal:- 11 . Strueby and Justin. Strueby and Justin. Already the company is in loss and due to inflation it is facing more loss (Lei. n.d.

Strueby and Justin. casinos and etc are illegal in Asia.• Illegal entertainment – entertainment like prostitution.).).d. Strueby and Justin.d. Therefore they don’t have this option as their competitors are having. To get this the have aim on European and American countries so that if they face any loss in Asia. • They need to practice sustainability. as there are different laws and rules in different countries in Asia (Lei. n. night clubs. 12 . they get their money from these entertainments (Lei. n.

4 BCG Matrix:- SHANGRI -LA HIGH MARKET SHARE LOW ? CASH COWS DOGS HIGH 13 .3.

15 (Lei. Strueby and Justin.LA GROUP is on QUESTION MARK (A PROBLEM CHILD)is a growing business unit which is developing the Asian markets well but currently they are not totally internationally renowned which is why their earnings per share is 0. 14 .61 whereas the industry in which they are in i.e. n.MARKET GROWTH LOW Current position with the market share & growth analysis through BCG matrix model for strategic direction THE SHANGRI.).d. the hospitality sector is running with average 0.

5 Five Forces Model:- Bargaining Power of Supplier Threats of New Entrants Degree of Rivalry Threats of New Substitute s Bargaining Power of Buyer (Lei. Whittington. (Johnson. Strueby and Justin. n. Scholes.To enter into STAR – SHANGRI.LA needs to gain a high market share & should invest in heavily in the hospitality sector to make a move & yield better sufficient profits for further investments too. 2009) 3.) 15 .d.

d. n. the bargaining power of supplier is low.Bargaining Power of Supplier:As the rates of availability of substitutes are high. Strueby and Justin. n. And if at all they have a substitute. Due to which they have agree with whatever rates the supplier is giving. They have to work a lot on this to improve. they provide them the product. Bargaining Power of Buyer:They are very much dependent on the supplier and as they have less buyers. Threat of substitutes:They have very less number of substitutes i.). so they have work according to the customer demand and supply to maintain their relations with both the customers and suppliers (Lei. in whatsoever money the buyer wants. This is the biggest threat due to which they are suffering from customer crisis (Lei.e. n.d. Sometimes they have to present the product in fewer prices as compared to the suppliers as the customer traffic is very low. Threats of New Entrants:The threats of new entrants like small restaurants and lodges which provide the same products in a very cheaper price.). Strueby and Justin.). they also do not fulfil the needs of customers. Strueby and Justin. if the customer does not like their product.d. They are also not able to change their prices as their demand is very low at this time. n. 16 . They have very low economies of scale and very low product differentiation. otherwise their customer will choose some other company arther than this (Lei.d. they are not able to provide some other substitutes.). which forces them to make expensive deals (Lei. Strueby and Justin.

3. they have very high substitute performance.Degree of Rivalry:The degree of rivalry is also very high as the strategic stakes are very high and as far as their competitors are concerned. n.6 Product Life Cycle:- (Sam Carrara’s Marketing Education. Strueby and Justin. 2011) Shangri-la Asia Ltd 17 .).d. This is the reason why they are loosing their position and competition (Lei.

These all data says that they are in growing stage and they are fighting with their revenue crisis to come up to level and competition. they are still struggling to achieve their vision and mission statement. 18 .9% of total revenue.e. They need to diversify and make some changes in their products to achieve a good revenue and progress. There are three basic things which they will have to take care of to implement the strategies i. but has not earned enough revenue as it should be.e. They have also not made a good profit as it has been discussed earlier. 4.9% and rest it gets from hotel management and property rentals. 94. Now the important fact is how to put these strategies so that they can improve and will have to expend a lot. Middle East and European Region.Shangri-la Asia limited is in growing stage as it only 65 hotels worldwide that too in Asia Pacific. 2010). To evaluate where all they are lagging. 2009).e. these strategies have been put. Itys major revenue comes from China i. Scholes and Whittington. But the major products are in Asia. This shows that its diversification has not yet worked properly. Organisational Processes and Managing strategic change (Johnson. North America. it gets its revenue mainly from hotel operations i. Implementation of Strategic tools:As it has been discussed earlier that they have been suffering from various problems. It came into existence in 1970. 58. They also have a very low substitute which leads them to a decrease in customers. They are confined to less products and services as compared to their competitors.1% as compared to 2008. In June 2010 they decided to open three new hotel in 2013 and they have also signed many contracts for 2011 i. they are planning to invest 30% of their rooms under management contracts by 2011 (Datamonitor. Structure.e. There is a decrease in revenue in 2009 of 9.

Organisational Structure – the managers need to evaluate which strategy suites them best. For Shangri-la. 2009). they need to work in all the sectors. 2009). its competitors are providing in a cheaper way (Johnson. 2009). Organisational Processes – this is required so that whatever strategy is implemented that can be controlled perfectly. Shangri –la is at growth rather 19 . Scholes and Whittington. 5. Scholes and Whittington. For the growth purpose. their product line offerings should be expanded as the growing trends in the hotels to include the other facilities as well for customers (Casinos. Whether the people should be handled according to business functions or in product or market division (Fundamental of strategy). leisure hotels resorts). They need to diversify their markets and to increase their business they have introduce some new and innovative products and services because they are lagging of customers and whatever the service it is providing. Recommendations and Conclusion:Shangri –la needs to make some heavy investments into the hospitality sector to make a base as its still on the growing stage. Shangri-la should adopt a reactive strategy to follow the leaders’ strategies too & implement them. Scholes and Whittington. The need to evaluate the strategy very often that is whether it is implemented according to the plan and have to check whether the company is doing any progress or not and if not then make some necessary changes to it (Johnson. This also includes adopting different styles to manage the change and the tools by which change can be effected (Johnson. There is a need to expand in the new markets & penetrate further in US & UK markets as there is a large scope of the hotel industry. Strategic Change – this is very important part of the organisation as the company need to know how they will approach the change so that they could make good profit and what all role they have to play in order to manage the customers.

shangri-la. Available from: <http://www.shangri-la. 12th Edition. Sam Carrara’s Marketing Education [Internet]. [Internet].pdf> [Accessed 15th May 2011]. R. Available from: <http://www. • Carrara.plu. [Internet].com/en/corporate/aboutus/overview> [Accessed 16th May 2011].com/viewer? a=v&q=cache:cFabfaKfhSQJ:www. F.ppt+shangrila+ppt&hl=en&gl=uk&pid=bl&srcid=ADGEEShKRIFfJXKhQ wrDCVLThKx2B3ML61b- 20 . S. [Internet]. • Shangri-la Asia Ltd (2009) Annual Report. Available from: <http://www. Strueby and Justin (n.) Shangri-la Hotels and Resorts-ppt.samcarrara.com/marketing/product-life-cycle-overview/> [Accessed 15th May 2011]. Available from: <http://docs.ir. (2009) Strategic Management: Concepts and Cases. United States of America.com/en/annualreports/2009/ar2009. • Shangri-la Hotels and Resorts (2011)About Us. (2011) Product Life Cycle. Pearson Prentice Hall.edu/~leiza/doc/shangrila. • Lei.Overview.google. References:• David.introductory stage evaluated through the portfolio matrices & PLC therefore they need to expand & develop them to gain back the profits as their return on investment is low as compared to the average hospitality markets ROI.d. Thus they need to put in the strategies on immediate basis or should modify their current strategic management plan to refine their working & gain more markets.

Pearson Education Limited. London. • Johnson.datamonitor. • Shangri-La Asia Limited (2010) Company Profile.ac.pWPlWYqW6hNVYbuCeqyJ3ISDr5UU4kE3upKP9pR65XjOdQzTcSefMKG Y7WaBnXQ7LW_UdaskmM5YjN3yMPLnr2GL2L71aH98dDDjq5G6&sig= AHIEtbRcS1DWcJ9Jk2MflSDYc6h2-Ai2uQ> [Accessed 16th May 2011].com. Available from: <http://360. [Accessed 16th May 21 . R. and Whittington.ezproxy.leedsmet. Datamonitor.uk/Product? pid=D742227F-C743-4956-BD92-75B530F6C424> 2011]. [Internet]. 1st edition. (2009) Fundamental of Strategy. K. Scholes. G..

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