Table of Contents
In this article, a strategic analysis report on the Wyndham Hotels has written to ascertain how the company is competing within the industry and the various strategies used to give it a competitive advantage over other companies. The article discussed the methodology used to perform the search and report about the hotel. The methodologies used were secondary data and qualitative research. The company’s history, vision and mission statement was also discussed. The PEST analysis was used to analyze the macro environment of the company where the political, economic, social and technological factors were used to analyze how it directly affects the business of the hotel. The Porter’s five forces framework was again used to analyze the micro environment in relation to the hotel and the larger industry in which it finds itself. Analysis of the internal environment of the company including operations, marketing, human resources management, finance and IT was discussed. Finally, the overall strategy and strategic direction of the company was discussed to determine how the company has a competitive advantage in the industry.
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Introduction and methodology
The purpose of this article is to write a strategic analysis report on Wyndham Hotels. The methodology which will be used to write the strategic analysis report on the company is secondary data where I will conduct an online research for articles and reports about Wyndham Hotels. Secondary data refers to the gathering of information that has already been collected and used by another person and it is readily available for use from other sources (Aldehayyat, et al, 2011). With the use of secondary data, information are collected and used for a purpose but the information gathered differ from your current research into the article but because it has some relevance for the your research, you use it. The research is also a qualitative research where there will be an exploratory research in order to gain an understanding of the company and also provide insight into the analysis of the company. The analysis will illustrate the company’s history, vision and mission, analysis of the company’s macro environment, micro environment and internal environments. It will also show the overall strategy and strategic direction of the company.
Company’s history, vision, and mission
Wyndham was first started in Dallas, Texas in the United States of America but now operates in countries like Canada, Mexico, Ecuador, Turkey, Colombia, Germany, the Caribbean and the United Kingdom. The hotel was named after a writer for Fortune Magazine named Wyndham Robertson who wrote a profile on Crow. The company was founded with the aim of providing series of hospitality services and products through different segments and in the late 1990 the company acquired different portfolios of world renowned brands of hotels. The vision of Wyndham hotels is “Making holiday dreams come true” and the company’s core values are “Integrity, Leadership, Innovation and Growth”, and the mission statement is “Enriching people’s lives through Count On Me service, great destinations and memorable experience (Molina-Azorin, et al, 2015). Because the company wants to achieve the vision, mission and values, they have made their vision, mission and values the core of everything that the company does.
Analysis of the company’s macro (general) environment
For the analysis of the company, the PEST analysis will be used and I will use the United States where the headquarters of Wyndham is located. The PEST analysis will consider the political, economic, social and environmental factors in the United States that directly affects the business operations of the company.
Several political factors including tax policies, labor law, the danger of terrorism, political climate and international relations will affect Wyndham hotel in the United States. Considering all these factors, the biggest political factor that will affect the company is the threat of terrorist attack (Tuominen, 2014). The issue of terrorist attack has been the concern of many businesses in the United State and Wyndham hotels is no exception. These terrorist attacks will disrupt the activities of Wyndham hotels and also frighten customers away from purchasing the services of the company. In recent times, terrorist are attacking hotels, resorts and other tourist sites and this is a danger that Wyndham hotels will face. For example, in July 17, 2009, two separates bomb which was targeted at foreigners visiting JW Marriott and Ritz-Carlton hotels killed about seven people and injured so many others. These attacks can affect Wyndham hotel by driving away potential customers from visiting the hotel.
There are several economic factors that can affect Wyndham hotel’s business operations in the United States. Economic factors such as taxation, general demand, interest and exchange rates and global economic factors can affect the company (Prajapati, Jadeja, 2014). Among these factors, the major economic factor that will affect Wyndham hotels is the general demand of the company’s products by consumers. In 2009, there was a period of reduced economic activities in the United States. Although the country regained recession, the increase budget deficit has an effect on the economic prosperity of USA and by default will affect the general demand of the company. Considering the long-term economic threat in the United States, there is a possibility of income inequality among the middle class wages in the country. This economic factor will reduce the purchasing power of both locals and foreigners to stay in hotels and resorts and this will affect the business operations of Wyndham hotels. Another major economic factor is the high exchange rate for the US currency against other currencies (Phillips, et al, 2015). This will reduce foreign tourist from visiting US and will affect Wyndham hotels.
One social factor that will directly affect the business operation of Wyndham hotels is the emphasis on safety of consumers. Considering the rate of terrorist attacks at various gatherings especially at beaches, hotels, sport centers and others, Wyndham hotels is like to suffer from low demands from the citizens and foreign tourist (Rahman, 2015). Most foreign nationals are critical when it comes to their safety and this will reduce the number of visitors who travel to the United States and purchase the services of the hotel and it resorts. Another social factor that will affect Wyndham hotels is the purchasing habit of the citizens. This refers to the trend of consumer lifestyle in assessing the services of the company especially during the holiday seasons. At the peak of the holiday seasons in the United States, there will be high demand for Wyndham hotels will but as the season passes out, demand for the services of the company will decline.
Technological factors can directly affect Wyndham hotels both positively and negatively. The introduction of new technologies can hinder the growth of the company in its business operations. The introduction of Airbnb will directly affect the operations of Wyndham hotels. Airbnb allow individuals to rent hotel rooms, homes, vacation rentals and other hospitality services directly to foreigners (Prajapati, et al, 2014). There is a major threat with the use of this technology by consumers seeking to spend their holidays in the various hotels in the United States. The number of guests who are currently staying on Airbnb properties is estimated to be more that 6 million people. The numerous hosts of Airbnb will have an advantage to undercut hotel room rates and other expenses like hotel taxes and this will affect the operation of Wyndham hotels. There are new technologies that Wyndham can use to enhance its business operation; however, the invasion of software hacker will have an effect on the company.
Analysis of the micro (industry) environment
In the analysis of the micro or industrial environment of Wyndham hotels, I will use the Porter’s Five Forces Framework to assess the points will be discussed below in relation to the hotel and the larger industries in which it finds itself.
How competitors impact the company
Following the large industry in hotel management in which Wyndham hotel finds itself, there are a large number of competitors present currently apart from the existing ones. The increasing number of hotel industries signifies an increase in keen competition. Among its key competitors in the industry are Hilton Hotels Corporation, Starwood Hotels and Resorts Worldwide, Inc., Marriott International Inc., Choice Hotels International, Inc., and other competitors both existing and new entries (Phillips & Moutinho, 2014). Considering the geographical location of Wyndham hotels, the company is the world’s largest and most diverse hotel business. Wyndham hotels have a global portfolio of more than 8000 hotels across 77 countries with over 697,600 hotel rooms available. The company’s use of web, mobile apps, call centers, distributors such as Sabre and Amadeus to improve its e-commerce and marketing abilities is offering convenient services to its customers and it is helping the company to differentiate itself from their major competitors (Lehr, 2015). Based on the facts presented on intensity of competitive rivalry, there is low level of competitive rivalry and this puts Wyndham hotels at an advantage over its competitors.
How suppliers impact the company
When there are powerful suppliers in the system, it decreases the profit potentials in an industry. Suppliers can decide to increase prices or reduce the quality of services they provide. When this happens, there is an eventual increase in competition within the industry. Many a times, when a company wants to divert to another supplier, high costs are involved and suppliers who find themselves in such position usually demands premium prices (Roper & Hoder, 2015). Wyndham hotels’ suppliers are usually chosen based on the demand and feedback of the market. With its largest lodging franchiser, Wyndham hotels do not enter into agreement with suppliers but instead, list the names of companies in their catalogue and publish it for consideration. A supplying company named OTRUM has been made the preferred supplier of infotainment systems and services to all its franchised hotels and resort (Koseoglu, et al, 2013). In analyzing how suppliers impact the company based on the switching cost of suppliers relative to the switching cost of the company and the presence of substitute suppliers, it can be said that there is a low bargain power of suppliers and this puts Wyndham hotels at an advantage.
How customers impact the company
In analyzing Wyndham hotels based on Porter’s Five Forces Framework in relation to the hotel and the larger industry in which it finds itself, the bargaining power of customers can determine how customers impact the company. Bargaining power of customers illustrate the extent of pressure that consumers can put on industries in order to get the industry to lower its prices, increased its customer services and provide better quality products and services (Phillips, 2014). Looking at the standard of Wyndham hotels, it has built brands for itself and has over 8000 hotels internationally. The number of consumers visiting hotels and resorts are considerably large enough to purchase the services of the industries. For instance, the number of people who have booked hotels and other hospitality centers in the United States has increased considerably. The issue of buyers and sellers ratio where buyer power is high when there are few buyers available is overruled. From the analysis, it can be said that there is low bargaining power of customers and this analysis puts Wyndham at an advantage.
How substitutes impact the company
There are many companies within the hotel industry and as Wyndham hotels find itself among these numerous companies, the hotel is forced to compete with the other industries that produce substitute products and services. There is an intensity of competition in the industry and this may reduce the potential profits of Wyndham hotels and may also hinder the price that Wyndham hotels place on its product and services to make profits. The availability of close substitute like Airbnb with its relative price performance is a threat of substitutes for the large industry in which Wyndham hotel finds itself (Lehr, 2015). Wyndham hotels offer loyalty programs and standard experience to its customers and with the introduction of corporate travel policies the company has an advantage over its substitutes in the industry. Wyndham hotels own one of the oldest vacation rentals and it contains a combination of self-catering and private accommodation that compose the bulk of vacation rentals. The analysis which is based on the facts presented on the threat of substitutes, there is a low level of threat of substitute and this puts Wyndham hotels at an advantage.
How new entrants impact the company
A lot of companies are continually emerging in the midst of the larger industry and their entrant into the industry pose a threat to the existing competitors in the industry in which Wyndham hotel finds itself. Wyndham hotel is a profitable company therefore it will attract a lot of competitors who are also looking to achieve profits and this can reduce the profit margin of the company as it is faced with new entrants. Considering the access to distribution by Wyndham hotels and the loyalty of their customers to their established portfolios of hotels across the globe, will not necessary have an impact on the company. With the cost advantage that Wyndham hotel has due to its size, output, scale of operation and the brand name that the company has acquired over the years of operation put the company at an advantage over new entrant (Molina-Azorin, et al, 2015). From the analysis, it can be said that there is low threat of new entrants and this puts Wyndham hotels at an advantage over its competitors.
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Analysis of the internal environment
In this section, an explanation and evaluation of the internal environment of the company relation to the strengths and weaknesses of the company in terms of operations, marketing, human resources management and IT will be discussed.
One of the major strength of Wyndham is their mode of operations. The company’s distinctive competencies in terms of operations are unique and it is superior to other companies in the industry. Wyndham hotels have a multilevel operation support team that provides recommendation in order to improve the experience of their customers. The company provides training and orientation services and programs to both owners and new managers to Wyndham hotels and this has a competitive advantage over its major competitors in the industry. Another strength of the company is geared towards its marketing systems put in place. Because marketing is very essential to function of the company, Wyndham hotels have developed a support system that allows the company to extend its sales to international market and they also have a special marketing programs which has a variety of support materials (Roper & Hodari, 2015). The final strength of Wyndham hotel group in it business activity to ensure sustainability is its finance. The financial strength of Wyndham hotel group is measured by the company’s liquidity, solvency, profitability and operating efficiency (Touminen, 2014).
As every business organization has its strength, they equally have its weakness. One of the weaknesses of Wyndham is in the area of its human resources management. The human resources management in Wyndham hotel group creates and develops the basis for continuing innovation and performance of the company (Koseoglu, et al, 2013). However, the human resources management of the company poses a threat for the competitiveness of the business operation. This is seen by the leaking of essential information in the form of knowledge and intellectual capital to those outside the company. This activity exposes Wyndham hotel groups’ critical knowledge this may destroy the key development of the company’s future projects. Another weakness of Wyndham hotel groups is in the area of the company’s Information Technology. The company is deficient in the use of e-commerce which allows both the company and its consumers to sell and buy the products of the hotel or to transmit funds or information over an electronic network (Lehr, 2015).
Overall strategy and strategic direction of the company
In this section, I will explain Wyndham hotels’ strategic resources, competencies and distinctive competencies and discuss whether the company has any competitive advantage and whether it is sustainable.
Wyndham’s resources include the entire asset, knowledge, skills and other items which is controlled by the company (Phillips & Moutinho, 2014). Wyndham hotels have human resources which bring together all the leaders, managers and all other employees of the company and their various knowledge and skills that put the company ahead of its major competitors. The company’s physical resources which also include all the tangible assets of the company like properties and other recreational materials. Wyndham hotels have a global portfolio of more than 8000 hotels across 77 countries with over 697,600 hotel rooms available. With the financial resources of the company, Wyndham hotels has a lot of financial assets including bank deposit, bonds and stocks which give them the opportunity to acquire additional finance if they are required and find it necessary.
Wyndham hotels bring together all the activities and processes that enable the company to use its resources effectively. The company uses competences to provide products and services that offer important value to customers. As competence deals with the ability to do something well, Wyndham hotels have competences in key areas like threshold competence. The threshold competence deals with the activities of the company to provide products and services with unique features that are sufficient to meet the needs of the customer (Phillips, Zigan, et al, 2015). Another key area where Wyndham hotels have competence is their ability to meet the critical success factors for their product and services and this helps them to achieve competitive advantage.
Wyndham hotels use threshold capabilities to compete in the industry and since capabilities needed for competitive advantage consist of core competences, the company adopts better ways to use its resources effectively than its competitors. Wyndham hotels use sustainable core competencies to provide a competitive advantage within the industry. Sustainable core competence is used by Wyndham to keep it in competition for a long period of time and in keeping it for that long time, the company is able to plan and achieve strategic objectives (Roper & Hodari, 2015). Using this strategic direction, the company has been able to sustain and it has given it a competitive advantage in the industry.
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In the strategic analysis report on Wyndham hotels, the use of secondary data and qualitative research provided a means to perform an online search for articles and reports about the hotel and to determine how the various analyses used put the company at a competitive advantage over its competitors. Analyses of the company’s macro environment talk about the PEST analysis in which the political, economic, social and technological factors that directly affects the business of the hotel. Analyses of the macro environment using the Porter’s five factor framework and the internal environment using operations, marketing, HRM, finance and IT also answered questions in relation to the hotel and its competition within the industry. The company’s strategic direction in relation to resources, competences and sustainable core competencies identified the company’s competitive advantage and its sustainability.
Base on the weaknesses of the company, I recommend that Wyndham hotels strengthen the use of IT in its marketing strategies especially in the use of e-commerce which allows the company to sell products and services and also transmit information to it potential consumer through the internet. Wyndham hotels stand the chance of influencing the purchasing decision of customers. One important use of e-commerce is that, it serves as a showroom for Wyndham hotels where customers can conduct a research into the products and observe all the reasons that makes it right for them to purchase the services of the hotel. Most consumers now enjoy the convenient of online shopping so I strongly recommend e-commerce as an information technology system for Wyndham hotels. I also recommend that the human resources management should be strengthen by way of learning the best way to manage each employee so that information which is essential to the company will not be disseminated to the company’s major competitors.
My learning from this project
I have learnt a lot of things from this project. One important thing that I have leant from this project is the use of the PEST analysis to analyze the macro environment of a company. The PEST analysis demonstrates how political, economic, social and technological factors will directly affect a business organization in a particular country. I have learnt how government other interventions in the economy in areas such as tax policy, trade restriction, threat of terrorism and others have a direct effect on a business organization. I have also learnt how the Porter’s Five Forces Framework can be used to analyze the micro environment of a business organization. With the use of Porter’s five forces framework, you could analyze the level of competition within an industry. The five forces which include threat of new entrant, threat of substitutes, bargaining power of customers, bargaining power of suppliers and industrial rivalry can be used to determine whether there is a high or low level of competition within an industry and how a company in the industry has an advantage over the others.
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