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Strategy Management Report in Shanghai Jing An Shangri La Hotel
Strategy Management Report in Shanghai Jing An Shangri La Hotel
Student number:732307
Date:4/4/2018
report, we will divide into two parts the internal and external environment. For
external environment will use the model P5F and STEEP, for external part will use
PBV by Barney (2012).In this report we use Shanghai Jing An Shangri-La Hotel as
the background, it is a luxury five-star in China that open in 2013, this hotel located in
the center part of Shanghai. Shanghai Jing An Shangri-La Hotel has five different
Restaurant, 1515 WEST Chophouse & Bar. The total number of room is 503 (Jingan-
shangrila.com, 2018).
strategic analysis, the most famous strategic analysis is Porter's Generic Competitive
Strategies. The strategy has two basic types of competitive advantages: low cost or
and focus. There are two variants of the focus strategy, cost focus and differentiation
generic strategies we know that the description of the company pursues a competitive
advantage within its chosen market. There are two general strategies that can be used,
obtain higher prices. A company also chooses one of two types of scopes, either
focusing on (providing some parts of its product selection market) or providing its
products across the entire industry, across multiple market segments. The first is what
Jing An Shangri-La Hotel 3
describes a way to build a competitive advantage. Basically, cost leadership means the
efficiency, size, size, scope, and cumulative experience. The cost leadership strategy
aims to use production scale, a clear scope, and other economies (for example, good
products or services to make them specific to a target market. More attractive. This
products.
Cost leadership strategy has insights that can help companies in hotel industry
such as Shanghai Jing An Shangri-La Hotel to have competitive advantage. The idea
behind this strategy is to serve a larger market by where cost is used to win customers.
A cost leader firm will have a broader scope to succeed using cost to compete.
According to Porter (1980), firms that use cost leadership usually use one or a
combination of these factors to become low cost producer within the industry. He also
said that when companies aggressively compete in price to earn some profits, rivals
experience losses and when prices continue to decrease rapidly, and the industry is
mature, only low cost producers remain profitable. Porter (1980) also noted that
efficiency in production process can help reduce cost of production and the benefit
Jing An Shangri-La Hotel 4
Differentiation is all about making goods and services different from that of other
goods and services at the lowest cost. Porter (1980) thought that differentiation
strategy give customers assurance that the product and services are superior.
Differentiated products do not have to be cheap since the unique nature and features
of the product can attract premium prices (Huybrechts & Nicholls, 2012). This can be
a hard task but a company can enjoy benefits when done right. Instead of charging
high prices, a company can be innovative and use least cost to differentiate its goods
and charge the same price as competitors. The differentiation process should not be
easy to copy and real benefits can be enjoyed when a company convinces customers
that there is high switching costs. Therefore, we will select Jing An Shangri-La Hotel
To analyze the internal and external environment .We mainly analyze from the
macro and micro parts. We use STEEP's strategic analysis method macro and the
Porter five-force analysis method. First we analyze from a macro perspective. STEEP
that affect the organization. STEEP as an analysis method is method is used to map
Environmental and Political (Evans, 2015) First of all, we analyze the society.
According to the demographic statistics, by the end of 2016, Shanghai has reached a
Jing An Shangri-La Hotel 5
Shanghai, they usually spend their free time after work mainly on shopping and going
customer base comes from different places, local and international. A social element
culture (Enz, 2009). For international customers, the hotel provides exposure to the
Chinese culture as well as its own unique experience. Shanghai demographics are
changing, so ate China and global demographics. Factors such as lifestyle definitely
affect how the hotel operates and its future outlook. The world’s population is
growing and people above the age of 65 years are increasing and this means that
desire to travel is increasing. Shanghai is a major tourist destination in China and thus
the hotel will likely serve more foreign visitors in the future. The trends in hotel differ
with the targeted segments and the expected type of visitors. Therefore, for
advertising, hotels can adopt different advertising modes for different types of people.
For example, our target market is business guests and families. We can use the
The second point is technology. Technology is the aspect of STEEP that focuses
transaction, energy and automation affect the way companies operate. The first is the
service facilities. Jing An Shangri-La Hotel has high-speed wireless network and
wireless internet access. It provides smart TV and movie channels. In the hotel
building part, the hotel's bathroom has a 15'TV and LED alarm clock in the mirror
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and provides floor heating in the bathroom floor. Finally, regarding payment methods,
due to the current popularity of online payment in China, Jing An Shangri-La Hotel
has gradually begun to popularize channels for using Alipay and WeChat payment.
Alipay is a mainstream payment method in China and this caters for the payment
countries and we would not be surprised to discover that most foreigners visiting the
hotel will use WeChat to pay their bills. Therefore, Jing An Shangri-La Hotel is doing
The third part is the economy. The economic factor is strongly related to
consumers’ purchasing power and the general performance of the economy. Economic
factors that influence businesses include interest rates, inflation, savings, taxes,
international trade, and unemployment (Bygrave & Hofer, 1992). According to the
survey, the employment rate of recent graduates in Shanghai reached 96.9% in 2017.
The total GDP of Shanghai in 2016 was 2.82 yuan. And Shanghai's annual per capita
disposable income in 2010 Was 31,838 yuan, and the annual per capital expenditure
on urban residents was 23,200 yuan. Apart of Shanghai’s economic factors the overall
outcome. The Chinese economy is the second biggest economy in the world after the
U.S. and has been ranked as the fastest growing among developed countries. The
economy has been associated with high gross domestic product and this boosts
(Huybrechts & Nicholls, 2012). The share of green land in Shanghai is 2.8%
Quality Index, Shanghai's air quality was unhealthy for sensitive groups before 101 to
150. This is an adverse effect (Stateair.net, 2018). The above part is the analysis of the
environmental factor that affect the hotel sector. The level of pollution in Shanghai is
low compared to other major cities like Hong Kong. This shows that Shanghai
The last factor in the STEEP model is political. Political factors have great power
to affect Jing An Shangri-La Hotel. , changes can affect all other factors i.e. social,
regulations. Shanghai enjoys good political stability and transition of authorities and
politics do not threaten Shanghai businesses. Shanghai is a free trade zone and the
economy is influenced by market forces of demand and supply (Bardoloi, 2017). This
means that Jing An Shangri-La Hotel’s prices are determined by demand and supply
of hotel services in Shanghai. The free market system in Shanghai means that Jing An
Shangri-La Hotel is free to shift ownership, develop its brand independently, and
After analyzing the macro, we use the P5F method to analyze the microscopic part.
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Porter Five Forces is a model that can identify and analyze the five competitive forces
that shape each industry, and identify the weaknesses and strengths of the industry.
Porter's model can be applied to any part of the economy to find profitability and
attractiveness. (Porter, 2008) The force 1 is the threat of new entrants to the industry.
As a new hotel, to enter the market, there are two main influencing factors. The first is
government policy, and the second is brand loyalty. Therefore, according to China's
government policy, the support for the hotel industry makes it easier for new hotels to
enter the market. The second point is brand loyalty. Brand hotels have brand loyalty
so there is no threat to enter the market (hotel analyst, 2019). So it is a low force.
However, as our hotel, we will have more competition in the same market. Force 2 is
the threat of substitute products. For the alternatives to Jing An Xianggra Hotel,
mainly the guest house and Airbnb type of 'new hotel' and the same level of five-star
hotel with Shangri-La, is a lower-level hotel for the guest house, the main difference
in price will be compared to Shangri-La hotels It is low and therefore not easy to be
replaced. The advantages of Airbnb are low prices, more accommodation options but
not enough brand specialization, and some lack of management. There is no big gap
in the price of the same level of hotel. There is no difference in the geographical
position of the same level of hotels in the same area. Therefore It is a low force. Force
For bargaining power, because the current Chinese market is a very fast
information market, people’s ability to obtain information is also getting faster and
Jing An Shangri-La Hotel 9
faster. For example, there are many OTA platforms in China that can provide
customers with bargaining power, so they are in the market. The competition in China
is even stronger because the prices are all open (hotel analyst, 2019). Force 4 The
Bargaining power of suppliers. This is mainly for hotel products, as most of the
branded hotels are like themselves, they also have their own loyalty to the products,
such as kitchen utensils in the kitchen, many brands of hotels will use a brand of the
same product. Therefore, there is a certain dependence on the product. For example,
Jing-An Shangri-La Hotel, the rooms are always using L'OCCITANE brand bathroom
toiletries (Sohu.com, 2019). Since the brand hotels we mentioned before have brand
loyalty, the bargaining power of the corresponding brand suppliers has also become
weak. Generally, hotels will have long-term cooperation with brand suppliers, so there
is also a price between them. The corresponding contract, so the supplier's bargaining
power is not so strong. Force 5 is the intensity of rivalry among competitors. For the
intensity of competition among competitors, combining the first point, it is very easy
for branded hotels to enter the market now, so the competition is very fierce.
Hotel is surrounded by many brand hotels such as: Shanghai west Four Seasons Hotel,
Shanghai west Portman Ritz Carlton (Hotels.ctrip.com, 2018). So the force is low.
In the second part we will analyze the internal environment. Mainly analyze
RBV and VRIO. So what is RBV? The RBV full name is the resource-based view
performance. If resources have VRIO attributes, resources will enable the company to
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gain and maintain a competitive advantage. (Evans, 2015) RBV is mainly divided into
five parts, the first financial, this part is mainly for the hotel's budget and income.
Budget and income as a basis to become a key to the company's competition in the
market. The second is Physical. There is a famous painting in the lobby of the Jing An
Center. Then there was human as a previous internship at this hotel. I knew that the
training materials. In terms of talent recruitment, employees who had work experience
were given priority, and employees needed to have Clear judgment, managers need to
Then we talk about VRIO analysis. What is the meaning of VRIO analysis?
company. VRIO refers to four standards that the factory considers mainly about value,
Next is the analysis of SWOT. SWOT analysis mainly comes from strengths,
hotel are mainly three points, first of all this hotel has a very professional and
help guests more convenient booking and to understand the latest hotel information.
Finally, the location of the hotel is very good and the traffic is very convenient. The
disadvantages of the hotel are mainly three points, the first is there is no corporate
cohesion. The second is the internal management of the situation is also confusing.
The third service has no characteristics. The hotel's opportunities are mainly five
points, the first guest is highly loyal, the second hotel supplier's brand advantages, the
third It’s better for hotel to make different types of advertisements for the different
target market, the fourth point of the latest payment methods, the fifth point of
government support for tourism. The last is threat. The first is too competitive. The
second customer can get information through OTA. The third Shanghai has bad air
quality. Therefore, through the analysis of the previous P5F and RBV, we know the
current specific situation of the hotel, which is very helpful for the later new strategic
analysis. The individual SWOT factors are summarized in the table below.
Strengths: Weaknesses:
Professional and comprehensive Lack of corporate cohesion.
staff training methods. Confusing internal management
Customized APP to help guests system.
more convenient booking and Lack of service characteristics.
understand the latest hotel
information.
Strategic location.
Effective communication system.
Unique style and culture.
Opportunities: Threats:
Loyal customer base. Stiff competition.
Supplier’s brand advantage. Bad air quality in Shanghai.
Making different types of Customer getting information
advertisements for the different through OTA
target market.
Use of the latest payment
methods.
Jing An Shangri-La Hotel 12
Shangri-La Hotel attracts high end customers and the hotel has an edge since it offers
professional and comprehensive training methods for its workers. Happy workers
located at the heart of Jing ’an District. The hotel has continued to embrace
technology and this has helped improved its communication with stakeholders
Hotels and Resorts chain and it differentiates itself by offering unique style and
culture. These strengths is what has made the hotel great and competitive in Shanghai.
Jing An Shangri-La Hotel can enjoy a lot of opportunities. Its customer are loyal. The
hotel is ranked number 24 out of 4788 hotels in Shanghai and is rated 4.5 out of 5
(Trip Advisor, 2019). Even if it is not rated number one, the hotel satisfy the needs of
its target customers who have been loyal. The hotel can introduce new hospitality
products and services. It can study the unmet needs of domestic and international
customers and provide them. This will automatically increase the customer footfalls
and stage a stiffer competition with hotels ranking above it. Shanghai authorities and
Chinese government at large continue to support tourism. This in turn attracts more
visitors, especially international tourists. Jing An Shangri-La Hotel can position itself
as an ideal place for tourists to seek hospitality services and this will grow its market
Jing An Shangri-La Hotel can work on its weaknesses and convert them into
Jing An Shangri-La Hotel 13
management should address the problem by creating shared vision and strategic plans
to guide the hotel. Vision and strategic plan will help address the weaknesses of
Hotel is a luxury hotel and it should not focus on the small details. The hotel tends to
serve western customers using western style. The hotel is Chinese, and even western
Competition is stiff. Jing An Shangri-La Hotel is ranked #24 among 4,788 hotels
in Shanghai. It can up its competition to perhaps be ranked in the top 10 tier. OTA is
quite outdated system and Jing An Shangri-La Hotel should focus on latest
application. The hotel can keep progress toward online customer segment by
integrating booking services, travel, and taxi into one application. Customer
convenience will improve the brand. Bad air quality is a factor outside the control of
the hotel and this can be addressed by the government. Jing An Shangri-La Hotel can
comply with regulations to improve air quality and this will go a long way into
Shangri-La Hotel . For cost leadership, the constant cost reduction is the main theme
of this strategy, and for product differentiation, it is Costs increased to add premium
features, but higher price chargeable . Therefore, combining with the current strategic
analysis of the hotel, we conclude that the current situation of the hotel is a product
Compared with the entire surrounding hotel market, the price of the hotel is also
compared with the competitive hotel. The price is the same as a high price. However,
there is still the problem of management confusion and service features. So I think
this hotel is trying to use the strategy model of Cost leadership. Mainly on the cost
control, the price does not change, the main measures are: to increase the sales of the
rooms, adopt economies of scale, develop new technologies such as the latest online
payment model, then reduce the cost, use low distribution costs, and lower the cost of
According to the results of the strategic analysis, we need to adopt certain tactics
to ensure the implementation of the strategy. Therefore, we will make a detailed plan
for the base BS. So what is BS? The Balanced Scorecard is a strategic performance
track the execution of activities of staff within their control and monitor the
company uses the Balanced Scorecard element to perform individual goal setting and
perspectives of BSC. So we analyze from the four perspectives of the BSC. The first
is Vision and Strategy. The latest strategy at the moment is the cost leadership. So we
Perspective and Innovation and Learning Perspective to analyze. For the financial
part, we mainly focus on the hotel's revenue, so we can subdivide the strategy into
each department and carry out monthly index planning. And conclude the analysis at
Jing An Shangri-La Hotel 15
the end of the year. Then from the perspective of the customer perspective, as the
guests mainly hope to have high-quality services, our strategy should therefore be to
improve service quality. The third point is the internal business perspective, as
with mastery of professional skills and the ability to handle customer complaints. The
last point is the Innovation and Learning Perspective. We must make breakthroughs in
the basic basic professional services and technologies. Develop new technologies to
attract guests.
Finally, there are tactics that Jing An Shangri-La Hotel can use to boost its
outlook. This Jingan Shangri-La strategic analysis report, through the internal and
disadvantages, analyzed the current use of the hotel's current strategy, and found that
there are some of the actual concerned questions. For example, the service has no
customers’ needs are not met, they can end up feeling they made a purchasing
well-made brochure that explains services in as much details as possible will provide
adequate information. Services are also inseparable. The tactic will be to continually
Jing An Shangri-La Hotel 16
improve customer experience by training staffs. The questions that Jing An Shangri-
La Hotel need to ask themselves are how do we ensure customer satisfaction? How do
we deal with unhappy customers? Services are perishable and this means that unused
capacity can never be stored for future use or sale. For example, Jing An Shangri-La
Hotel can be full during summer and half empty during winter. This can be addressed
by managing demand and supply where the hotel operates with fewer staff during
peak season. This will allow the hotel to offer the same level of customer service with
varying customer demand. The main tactic from this discussion is effect
strategy.
In the latter part, the latest strategic analysis is obtained through cost leadership
and product differentiation. And give specific strategies, mainly to improve the
quality of service, and improve customer satisfaction. Maintain good advertising and
together enticing promotional deals. The deals can draw in new guests who are
unfamiliar with Jing An Shangri-La Hotel, and would not have stayed in the hotel
destinations abroad and locally, Jing An Shangri-La Hotel should tap to growing
number of visitors by advertising itself to visitors. This can be done using website and
billboards in major entry points like airports in Shanghai. The hotel can also partner
with tour firms and ticket sellers to ensure visitors buying tickets have an option of
focuses on publicity, and then continues to select professional talents for hotel
Through strategic analysis, we can know the current status of the hotel and conduct
positive influence on the daily management of the hotel. Hotel management should
understand internal and external factors that affect their business. The analysis was
done from bother macro and micro perspective. STEEP model was used in macro
analysis while Porters five forces were used for micro analysis. Sociological,
example, China’s economy is second largest in the world and Shanghai is a major
business hub and tourist destination. The Porter’s five forces shows the strength of
Chinese hotel sector and the relative position of Jing An Shangri-La Hotel. For
getting more and more information. RBV, VRIO and SWOT analysis have been used
to scan the environment in which Jing An Shangri-La Hotel operates. The three
factors helped formulate strategic direction and tactics that Jing An Shangri-La Hotel
References
Jing An Shangri-La Hotel 18
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Enz, C. A., 2009. Hospitality Strategic Management: Cases and Concepts. 2 ed.
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Jing An Shangri-La Hotel 19
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