Global Business Strategy of Hilton Hotel: Assessment Answer
Global Business Strategy
Global Business strategy refers to the business approach planned by businesses, companies, or organisations, which operate in the international purview of the market and serve the clients throughout the world (Peng, 2016). These strategies are closely linked to the organisation's short-term goals and long-term goals. The increase in global markets demands the companies to frame a procedure by which they can operate smoothly and competitively in the market.
Hilton hotel is one of the largest brands in the hotel industry. These hotels offer both leisure and business visit facility to travellers at various locations in the world. The headquarters of Hilton hotel is located at Tyson Corner, Virginia. It has approximately 5500 properties in 109 countries and territories. Hilton Hotels holds 15 different brands under it with different names. The organisation has an expected turnover of roughly $9.14 billion (Chang et al., 2017). In this study, the various factors, which are affecting the Hilton hotel group at this time will be reviewed and asserted. All the threats of globalisation and opportunities have been analysed in this study.
Reviewing and asserting suitable techniques to analyse the business environment
There are absolute numbers of technologies, which can be used to study and affirm the business environment of Hilton Hotels. The best method, which can be used here, is the environmental analysis method. This method focuses on both the internal and external processes of the business.
The environmental analysis is the best-proven method to conduct an analytical and diagnostic evaluation of the Hilton Hotel group. This method is best suited as it helps in earlier identification of the threats that can turn it into an opportunity. This also provides the means to be in close contact with the things happening in the market. The environmental business analysis provides a way to anticipate the plans of the future in regards to an organisation that can act in the benefit of an organisation. The limitations of this method is that it does not provide assurance in the effectiveness as the people might place a faith on the data, without much analysis. This approach also lacks the cautiousness that is required for making a strategic approach. The internal or the micro factors, which affect the Hilton Hotel, can be examined by stakeholder examination and the organisational audit of the business. The stakeholder analysis has been considered as the best option for conducting an investigation. It helps in deciding the requirements of the stakeholders of the organisation and the organisation responsibilities, which the stakeholders have towards the business (Cooper, 2017). The relative significance of each of the stakeholder, the collective powers, and interests of each of the stakeholder can be quickly concluded. By using this analysis technique, the Hilton Hotel can promptly increase its market affiliation with the international and national businesses. As a whole, stakeholder analysis has been regarded as a significant method for analysing the internal factors of the Hilton Hotel.
In the case of weighting the external factors that affect the Hilton hotel, the PESTEL analysis tool is used. PESTEL analysis is a tool, which is used by the organisations to determine the external factors that are affecting the business. The result of this analysis gives the weakness and threats to the organisation in case of external factors (Cuppen, 2016).
Analysing the microenvironment of the Hilton Hotel
The stakeholder analysis method is used to examine the microenvironment of the Holton Hotel. This is an effective method to analyse the internal factors, which pose a threat to the hotel business. The investigation has proved that the major stakeholders in the Hilton Hotel are the customers, dealers, employees and the government.
- Customers: They are considered as a chief stakeholder in the business that significantly affects the profitability and stability of the Hilton Hotel. The qualitative or the conditioned services are the major requirements of the clients of the company. For gratifying this need, the hotel offers personalised products to the clients. It also provides adaptive services to customers.The relationship of the hotel to the customers are good enough to make the customers loyal. The services provided in the hotel also favor the customer's loyalty. Apart from the personal touch of the hotel, the business uses Electronic CRM system, which helps them develop strong relations, and bonding with the customers and this step help them to understand the customer's requirements (Andriof et al., 2017). According to the stakeholder analysis, the customers are always kept satisfied by the organisation.
- Employees: As per the findings, the employees of the Hilton Hotel constitute a high turnover of the establishment. The employees are not satisfied much with the hotel. They are not given incentives and privileges as they think they require. The hotel emphasises on several training programs to boost the employee's zeal, but there has been a communication gap between the higher level and the lower employee levels. This leads to greater dissatisfaction among the Hilton Hotel employees (Kent and Zunker, 2017). The organisation should focus more on employee satisfaction so that its productivity can be increased. According to the stakeholder analysis, the employees are monitored closely so that they do not affect the brand image.
- Suppliers: To maintain the adequate supply of the raw materials and the edibles in the hotel, the suppliers and dealers should be paid on time. There should also be good communication establishment between the hotel and the dealer so that there is never any supply issue to the organisation. The Hilton Hotel maintains an adequate relationship with it suppliers, mainly the relationship with the raw materials suppliers are maintained very closely. The relationship with the suppliers is always gratified by the organisation.
- Government: The Hilton Hotel has to pay a tax to every government of the country where it operates. All the financial transactions of the organisation have to be reported to the government of that nation. The organisation pays the taxes properly and on time, this helps the Hilton Hotel to maintain good relationships with the government of every country, wherever it operates. As per the stakeholder analysis, the government is managed closely by the organisation.
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Analysing the macro environment of the Hilton Hotel
The PESTEL analysis is used to weight the external factors that affect the Hilton Hotel.
|Political||In the UK, the Hilton hotel is expected to face a significant loss due to the Brexit issue as the business is going to suffer a decline. This will lead to fewer business travels, as the companies will decrease in the UK. This will reduce the profits of the business. In the US and other developing nations, the terrorism rates are increasing. This has led many people not to travel towards the prone countries due to the safety measures. This also is impacting the hospitality industry. The people are terrified of any terrorist activities happening in the states like America, and they avoid these places, which has led to less number of tourists (Talias, 2016).|
|Economic||The national and international fluctuation of the currencies in the financial market also affects the hospitality industry. A decrease in the pound value after the Brexit has led to a decline in the expenditure of the people, as they are not spending at the same rate. An instance was the recession in 2008, and there was a considerable loss to the Hilton hotel as the people insisted on budget hotels in place of the luxury hotels. Hilton hotel needs to strategise the global strategy considering the currency fluctuations expected and other issues such as Brexit. The demonetization in the UK in 2015 also led to a significant loss to Hilton as the people had to think a lot before spending and controlled their expenses significantly for useful purposes (Ortega, 2016).|
|Social||Hilton Hotel has been famous among the people who love travelling. Several social factors like the population rate, economic strength, demographics and current trends affect the Hilton hotel. In China, where the population rate is high, the Hilton hotels have been seen to make huge profits in a short time. In some nations like Brazil and Ethiopia, the Hilton Hotel has been running on a small advantage considering the low economic strength of the country. The Hilton Hotel should try to make some budget accommodations available in its hotel according to the places it is in, so that it gets the same amount of customer base in the lesser economic regions too.|
|Technological||The progression of technology has an impact on the hospitality industry. The technical advancement in the catering department helps to reduce the energy required for a particular task and on the other hand increases the cost of the servings (Chan et al., 2018). Hilton Hotel has been trying to develop many self-centred methods for the smooth check-in and checkout of the customers. As it is a leading organisation in hospitality. The use of technological factors will help the hotel to increase its customer base. The government has also been helping the Hilton Hotel in technical advancements and it should try to implement more technological advancements to ease the customer's accommodation.|
|Environmental||The hospitality industry has been affected positively and negatively by ecological factors. The construction of hotels leads to environmental degradation. Several natural disasters in some places also affect the hotel, as the customers do not prefer to travel to the locations where the intensity of these is high. The environmental strict rules and regulations have to be followed by the hotel in every nation. This makes it a bit difficult for its operation as the rules keep on changing. In the coming days, there will be more emphasis on stricter environmental regulations, which will make the hotels change their disposal and waste management criteria (Yang and Cai, 2016). Hilton Hotel should try to implement more organic ways to dispose the garbage generated by it. It should try to incorporate new waste disposal methods that will help it to be more sustainable.|
|Legal||Several legal issues affect the hotel industry. The hotel industry should precisely follow the regulations stated by the nation it is working on. The law agreement should be indicated clearly. The license and permits, which regulate the hotel to perform any transactions, should be correctly done in the state of law. All the legal laws and regulations should be revised by the legal team of Hilton Hotel in every country carefully to make sure it does not cause any risk of interest in any country.|
Table 1: PESTEL Analysis of Hilton Hotel
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Impact of international business environment on Hilton Hotel
International business is very dynamic, complicated, and fast changing. This has both positive and negative effects on the hospitality industry. There are several principal factors, which affects the Hilton hotel. These are cultural differences of the nation, the CSR guiding principle, and the political issues. The Hilton Hotel is highly affected by the competitions, which it faces in several countries due to unanalyzed economic power of the people. The international competitors are providing budget accommodations to the people unlike Hilton Hotel that has not started any plan for the implementation of the budget accommodation of the people. Many of its competitors have focused on providing regular working hours for people in different nations. Hilton Hotel should also try to adopt the regular working hours for its employees so that they are satisfied with the hotel. The Hilton hotel should strive to find a way between maintaining its social strategy and corporate responsibility without affecting the cultural differences. The technological differences in every nation provide competition to the Hilton hotel in the countries that are technically sounder. Many hotels are using the e-business strategies to promote and attract the customers towards them. Hilton hotel is not using this type of marketing, so the customers and scope of the hotel are seen to be reduced in the international market (Xu et al., 2018).
Impact of globalisation on Hilton hotel
Trade: Hilton Hotel is currently operating in 109 countries and territories with 5500 properties approximately. As it is hospitalisation industry, it is unable to import/export its finished products and goods to the other countries as it will not be feasible. Hilton can use the trade regulations wisely and try to transport its raw materials to its different properties. This will help the organisation to reduce the cost of its raw materials and keep a centralised track of the expenditure.
Technical development: Hilton Hotel is trying its very best to make changes in its technological structure. The hotel is adapting the technological features and progressions of every nation it is in to suit the needs of the tourists and the customers. This gives a cutting edge to the Hilton Hotel, but it also increases the cost of the technical installations and programming in the budget of the hotel (Rao, 2018).
Benefits, opportunities, and challenges of globalisation on Hilton hotel
Globalisation poses both the benefits and the challenges to the growth of the Hilton hotel industry. Globalisation has allowed free trade, the labour movement, and removal of communication barriers but on the other hand, it also poses several restrictions to the growth of the organisation.
Benefits: The increase in free trade between the countries has led to a lowering down of the prices of services and products for the customers of the Hilton hotel. Hilton hotel has a significant profit in sales and finance due to this factor. As there is a substantial movement of the labour in the international market, this, in turn, reduces the labour issues and cost for the workers in every destination. The purchasing and spending power of the customers and clients is increased due to globalisation. This increases the profits of the Hilton (Root, 2016).
Opportunities: Globalization helps increase the market for Hilton as the organisation can build new customers and relationships in different nations. This will increase the number of customers of the hotel. The extension of its business in different countries is also considered as a vast opportunity for Hilton.
Challenges: The cost involved in globalising the hotel is the major issue faced by the Hilton. The value of building, land, taxes, and others are increased. Understanding the requirements of the people in different cultures is also a difficulty for the organisation (Yang and Buschman, 2017). Alongside, the cost of the technical developments and managing competition is also a defying factor to the Hilton.
Structure of different organisations operating in international markets
There are various structures followed by each organisation in the global market. These structures are:
- Hierarchical: In this type of construction, departments divide all the tasks, and each department has its own skill set of people. Each department has a manager or supervisor who coordinates the subordinates in the level lower to him. In this structure, people can focus on their strong areas properly. The disadvantage of this structure is the lack of inter-communication between different departments (Altissimo et al., 2019).
- Divisional: In this type of structure, the organisation is divided into several divisions. The companies, which operate along different horizontal objectives, use this structure. For example- a company having aviation, transport, fashion as its sub-organisation use this type of construction. In a divisional structure, each structure operates own its own and controls all the resources and expenditures by itself. Greater flexibility is achieved in this structure. This structure raises a problem of accounting and tax intimation.
- Matrix: In a matrix structure, the employees are under one or two bosses to which they have to report. Communicating with more than one boss is difficult. This type of construction makes it difficult for employees. The advantage is that the knowledge is shared between divisions, which help them enlarge their skills and knowledge. The negative aspect is that this may create a conflict between the managers.
- Flatarchy: In this type of structure, the decision-making is vested to the people also along with the bosses. The people contribute the ideas for the development of the project. This provides more innovation for the company, but it may be confusing for some people in understanding the structure (Dubey and Singhal, 2016).
Critical evaluation of the international operations of Hilton Hotel
Hilton Hotel provides luxurious accommodation facilities with conference rooms, express malls, printers, children's menu, fitness rooms, business phone service, audio/visual equipment rental. These facilities are provided by the hotels that are too much liked by the customers. The hotel provides several of these amenities for the business people that are really appreciated by the customers. It has also received severalk recognitions for its sightseeing services. The hotel lacks in providing budget hotels, which hampers the customer base of the hotel in several weak economies of the world. Hilton hotel needs to carry out several international activities for performing its international business. These are the services of export and import of the raw materials of the organisation. The export of the made goods is possible for the Hilton Hotel as it is a hospitality industry and the export of finished products would increase its revenue, but on the other hand, the taxes and excise duty will result in the increase in the price. This will be a loss to the hotel. The hotel should try to concentrate more on low cost products (Kruesi et al., 2017). This will increase the net profitability of Hilton. On the other hand, the import of the goods is also beneficial for the industry as it helps them to serve a variety of cuisines to the customers, but in contradiction, the import duty is high from different countries, which has to be managed astutely by the Hilton hotel to increase the profitability.
The stakeholder analysis has shown that the organisation needs to focus on its customers the most as the government analysis is in its favour. There is a disappointment in the employees that should be addressed by the organisation at the fastest. Some external factors have also been seen that are affecting the business of the Hilton hotel. These are the currency fluctuation and the political issues surrounding the nations. Hilton should strategise plans for these situations. There are several challenges, opportunities, and threats to the organisation in terms of globalisation. Hilton hotel should focus on cultural diversity challenges to improve its customer base. There are also several restrictions on the export and import of the products that have been critically evaluated. Hilton should try to follow the prescribed methods to increase its overall profits.