HOS802 Simulation Techniques for Developing Business Plan for ICMS Hotel Assessment 3 Answer
STRATEGIC BUSINESS PLAN
The report is based on using simulation techniques for developing the business plan for ICMS hotel. The business plan for the first four years has been already conducted. Therefore; in this report, the focus will be on developing plan for the next three years. It has been identified that North shore hotel and Castel Hill hotels are the main competitors for this hotel and therefore; it would be important to develop an overall strategy of business to counter the impact of the competition. Similarly, it will be also important to develop the marketing, operational and financial strategies of the business of ICMS hotel.
The main aim of this report is to make use of the simulation techniques and model to analyze the internal and external environment of the business and subsequently, develop a proper business strategy for the company.
The scope for this report is based on assisting the company to consider the various operations of the business and to manage them effectively. Therefore; the aim will be covered by assessing the factors such as factors such as pricing strategy, target market, staffing, performance management and others. However; the focus will not be given on developing the strategies for customer services.
In the process of developing the overall business strategy, focus will be given on considering the feasibilities of the business. It will be also important to consider the factors such as location of the hotel, local competition, constraints in supply chain, positioning of the hotel products and trends of growth demand in the market. In case of determining the feasibilities, the hotel will require considering some important factors which include market factors, infrastructures, brand positioning, commercial climate, staffs availability and others (Lutfi, Hermawan & Zubaidah, 2018). In the process of analyzing the market supply and demand, primary data will be collected from the local people and the tourists or business people who visit the area. This would help in assessing an initial though about the demands of the customers from the hotels of the area. In terms of financial feasibility, it will be important to identify the expected returns from the business within next six years and the actual costs for the overall project (Rianse et al., 2016). This would help the company to develop a suitable budget for the next 3 years.
In the process of developing the overall strategy of the business, two key models will be used. The first model that will be used is the Porter’s Five Forces model.
Porter’s Five Forces model:
Competition: The main competitors for the business are North shore hotel and Castel Hill. There are also some new hotels coming up in the area which can give tough competition in the future.
New entrants: This threat is on the lower side as it will be difficult for any new entrants to immediately capture the market and will require a long time to develop their brand images (Luttgens & Dianer, 2016).
Supplier power: This is moderate as there are currently limited numbers of hotels in this area
Customer power: This is also moderate as the demand for hotels is increasing and customers have limited options.
Threats from substitutes: Hotel industry is always in high demand and the demand is expected to increase further (Ionel, 2016). Therefore; currently there are no threats.
Grenier’s model of growth:
There are six phases of growth which ICMS Hotel will require to assess in the process of developing the business strategy. These phases involve creativity in the business, proper direction of growth, delegation, coordination between the teams, collaboration with the suppliers and ad agencies and by developing some alliances (Brodehrson et al., 2017). These phases are extremely important and will help in establishing the business in the market with success.
At first it will be important for ICMS Hotel to identify the target customers. In this regard, market segmentation is going to be the key (Venter, Wright & Dibb, 2015). In this business, customers can be segmented mainly on two aspects. One is tourists and the other is business people (Amoah, Radder & van Eyk, 2018). Therefore; the marketing strategies will be developed by considering the two factors. In this regard, first of all marketing mix strategy will be used as one of the efficient models for developing the marketing strategy.
Product: The products for the business will be based on the rooms and services that will be available for the customers and the menus of the restaurant and bar from which the customers will be able to select the food and the beverages.
Price: The price can be kept as dynamic according to the demand (Zhuang, Chen & Fu, 2017). However; surrounding pricing strategy can be used for the customers to gain the profits along with attracting the budget customers. There would be budget rooms which would be available for the customers at a lower price range than the customers and the superior rooms will cost similar as the prices offered by the competitors in the market.
Promotion: Promotion will be made in the social media and with some travel sites such as Expedia and Booking.com.
Place: The place for marketing will be based on conducting ad campaigning in the popular tourist places of the area and by communicating with the people in social media pages.
Market segmentation can be described as a process of segregating the potential customers in to different parts or groups. The division is actually based on several criteria or characteristics. It is obvious that the segments consist of the consumers who have similar wants, similar place of interest and similar locations. There are several benefits of market segmentation. Market segmentation helps in the matching of the needs of the customers. It helps in enhancing the profits in terms of business. It helps create better growth opportunities and also helps in retaining more customers.
Apart from that there are other benefits as well. There are four types of market segmentation which are quite common. The different types of segmentation are psychographic, behavioral, geographic and demographic segmentation. It is also necessary to identify the three types of markets which are the industrial market, consumer market and the reseller market. Market segmentation is of huge importance in today’s world of business. Rather it can be said that it is the oldest of all the marketing tricks that can be found in the books. With the increase in the varieties of the products and preferences and also with the increase in the number of alternatives and substitutes, the competitors in the world of business, made the marketing segmentation very necessary in today’s world. This is vital in the market strategy of a company. The company has to know that why will the consumers or their customers select their products and not others. The company should also know what the customers want. To know what their demand or need is, the company need to have the market segmentation. The very initial step to market segmentation is to understand who the potential customers of the company are or who are the one who will but the products of the company. So it can be said that the implementation of market segmentation is quite necessary and can be considered as the base or pillar of any business or organization.
The market segmentation of the business will be based on geography, demographics, and psychographics and behavioural. Both Australian and international tourists and business people will be given the importance. Both male and female will be under the target segments. Corporate customers will be segmented as individual and groups.
In terms of developing the operational strategy, first of all importance will be given on implementing a proper human resource planning (Tarhini et al., 2015). The labour requirements would be managed by predicting the demands of the services and then, it will be important to arrange the required number of staffs for various operations of the business. The strategic plan of the business would be integrated with the HRP. In this regard, the workforce planning model will be used.
Workforce planning model:
First of all, a strategic direction will be set, then, the supplies and demands for the workforces will be analyzed (Momin & Mishra, 2015). An action plan will be developed which will be followed by the implementation of the action. At last, the action will be monitored and evaluated. Training will be provided to the staffs for managing their skills and performances.
Food and beverages for the customers will be selected by evaluating the demands and by analyzing the preferences of the target customers.
Development of the adaptive business:
The adaptive business will be development by following some important phases. The vision of the business owner will be given importance on developing the operational strategies. Responsibilities will be defined for each of the internal stakeholders. Continuous morphing of the operations is going to be an effective strategy (Velu, 2017). Changes would be made as per the requirements of innovations in the business. An innovative climate will be developed as the part of the business operations.
In the process of developing the financial strategy of the business, revMAP model will be used.
Dynamic pricing strategy will be kept for the hotel rooms. The demand forecasting method will be used for analyzing the demands of the hotel in the market. Competitive analysis will be made by assessing the market position of the two competitors. Strategic pricing will be used as per the requirements of the business.
In case of product versioning, a price band will be showed and it can change as per the demand of the market (Guizzardi, Monti & Ranieri, 2016). Price transparency will be now met as the prices of the rooms as per the dates will be listed in the booking websites. This would help in maintaining the transparency with the customers.
From the financial data, it can be seen that the expenses of the business are reducing compared to year 2016 and 2017. However; the percentage of other expenses has increased to 8.9% compared to the previous years. Cash balance has also increased, however; the issue is regarding the increase of the loan amount. Therefore; it would be important to develop the pricing strategies which can help in clearing all the debts in the business as soon as possible. In this regarding, it would be also important attract more customers with innovative services.
National sustainable development strategy or NSDS is described as a coordinated process of thoughts as well as actions to achieve environmental, economic and social objectives in a more balanced manner. Sustainable development consists of three elements which are economy, environment, society and economy. The main motto of sustainable development is that we should meet all the requirements today and also do ensure that tomorrow’s requirements are not compromised.
In other words the resources that have, ICSM hotel should use those in a limited way without any wastage. This will ensure that the next generation can also continue using the same resources. The emission of carbon in the environment should be reduced and stabilized. Resource planning needs well planned use of resources with the least harm possible to the environment. The main motto of development is actually the satisfaction of the needs of human beings in terms of shelter, food and clothing. Sustainable development is needed to ensure that everyone’s basic needs are fulfilled.
It is ICSM hotel’s duty to ensure a better environment for the future generations and also keep enough resources so that they can use those and forward those for the use of next generation too. We should be more careful in using the natural resources and keep it in mind that these natural resources one day can also come to an end.
Conclusions and recommendations:
The information about the company shows that it would be important to consider all the factors that have been identified to implement the strategies. The operational and marketing strategies have been highlighted. The financial strategy has been also briefly discussed by analyzing the current financial scenario.
It would be important for the company to consider all the external and internal factors before implementing the business strategies. It would be essential to make continuous improvement by implementing an effective change management. It would be also important for the company to consider the market demands and then implement the plan as per the requirements.