Strategic Management Position of Sheraton Grand Sydney Assessment 2 Answer
Strategic Management-Sheraton Grand Sydney
The purpose of this task is to identify the strategic management position of a chosen organisation, Sheraton Grand Sydney, in Hyde Park. The competitive advantage of the organisation also needs to be determined with references from the SWOT analysis. The discrepancy of the organisation needs to be identified from the reviews of the customers and respective recommendations to improve their situation. Sheraton Grand Sydney is the part of the prestigious Marriott Hotels Group. It is a five-star hotel, which is situated five minutes away from the Town Hall railway, Pitt Sit Mall and the State Theatre. The Sydney Opera House, Circular Quay and the Rocks are situated at a distance of 20 minutes from the hotel. The hotel rooms provide 17 different types of flexible facilities to support the needs of the customers. There are in total of 558 guest rooms along with 48 suites with luxury interiors. The hotel provides the guests access to Sydney’s premier lounge and Sheraton Club Lounge.
Theoretical Position from the Sheraton Grand Sydney
The service sector industries, like the hospitality industry, have now adopted strategic management to mitigate the impact of globalisation on the business. The creation of effective planning, processing, and operating of the services within the hospitality industry is important for the growth of business for large organisations like Sheraton Grand Sydney (Molina-Azorín et al., 2015). This is essentially important since the organisation provides operational as well as recreational services to its customers in Australia. This supersedes the accommodation services and integrates the dining, entertainment, event management and transportation services for the customers. In an industry, where the competition is strong, the necessity of strategic management is understood.
Previously, the organisation was not known to provide innovation and newness in its luxury services, but the recent changes in the strategy of Sheraton Grand Sydney reflect different future. The portfolio renovation of Sheraton Grand Sydney is aimed to focus on shared experiences, co-working and community development (Roblek, Milenkovska, & Milojica, 2016). The completion of the renovation costing 50 million AUD to create newer lounging areas could provide a sustainable future for the organisation. The renovations included the integration of technological services that would be functional for the guests (Hsu et al., 2016). The Sheraton Grand Sydney wants to encourage the community members to engage in events with collaborations with local vendors in differentiation the supplier base. The initiative to entail local farmers by Sheraton Grand Sydney with improved condiments, baked goods and fresh ingredients would be beneficial.
In order to obtain competitive advantage gap and the competitive advantage period that provides it with the opportunity to enter different markets, be ahead of its rivals, ensure control over supplier and suppliers and minimise the impact of substitutes on its business (Espino-Rodríguez & Ramírez-Fierro, 2017).
The threat of new entrant: The high profitability of the hospitality industry attracts new entrants to try their luck. The overall profitability of the industry is lowered with the entry of newer businesses as it affects the productivity of the existing leaders. The blockage of the market entrants is offered when the entry barriers like business capitals are high (Zervas, Proserpio & Byers, 2017). The organisations like Sheraton Grand Sydney invest large of capitals to maintain their business as well the standard of services for which the smaller business organisations would not be able to attain success. The switching cost within the industry is also high, for which the new entrants are less likely to survive. Access to suppliers and distributors are not so difficult within the industry.
The threat of substitutes: Substitute services are highly threatening for bigger organisations within the hospitality industry. The luxury hospitality service providers like Sheraton Grand Sydney have to ensure that the quality of their offerings is highest in the market. Failure to provide the improved service quality would result in the diversion of the customer’s attention towards substitute products (Zervas, Proserpio & Byers, 2017). The performance of the substitute services and the lowered price range would attract customers from different segments since Sheraton Grand Sydney does not cater to middle-income segments. This is so since the cost switching is profitable for the customers in the hospitality industry.
Degree of industrial rivalry: The existence of the rivals with equal calibre within the Australian hospitality sector is detrimental for the profitability of the Sheraton Grand Sydney. Competitors like Hilton, Holiday Inn etc. can make it difficult for Sheraton Grand Sydney to establish their monopoly in the Australian tourism sector (Singal, 2015). Continuous innovation by the competitors might decrease the force of the business. The sustainability in the market position for Sheraton Grand Sydney is important. The level of advertisement and the competitive strategy determines the competitive force.
Control of buyer power: The service industry is highly controlled by the power of the customers. A customer has the ability to determine the prove of the services and products being offered The Sheraton Grand Sydney provides the best quality luxury services through its products. Here the customers do not obtain the control of power as the rarity and uniqueness are high (Brito & Miguel, 2017). The buyer power is only higher when the availability of options for the services is intense. The competition from the other luxury accommodation providers in Sydney might influence the business of Sheraton Grand Sydney. The customer loyalty and the support of the big brand name of Marriott’s ownership provide the advantage for the Sheraton Grand Sydney.
Control over supplier power: The increasing number of suppliers in the hospitality industry influences the business for small-scale hospitality service providers. The commonality in the services and products can be obtained from different suppliers (Altuntaş et al., 2014). However, in the case of the Sheraton Grand Sydney, the luxury services and products can be collected from a few suppliers who share long-term connections with the organisations. The increasing power of the suppliers would be detrimental for Sheraton Grand Sydney since the costs of raw material acquisition would be more. The bargaining power of the suppliers would be affected by the input differentiation, impact of cost on differentiation, strength of distribution centres and the availability of substitutes.
Strengths: The distribution and reach of the Sheraton Grand Sydney are wide, which is obtained from the majority of the outlets present all over in Australia. The distribution network of the hotel also plays an important role in the awareness and awareness for the customers (Law et al., 2015). The worldwide network of the Marriott hotels provides the organisation with more than 400 hotels just in Australia. The strong presence of the brand ensures that Sheraton Grand Sydney is supported by the owner’s brand. The Sheraton Grand Sydney has a large portfolio of the products and services, which are exclusive in nature. The competition is overcome with the uniqueness in its products and services within the industry. The flow of cash within the organisation is fluent, which allows the organisation to invest and expand their business effectively (Kizildag, 2015). The expertise in the hospitality services within the market has provided Sheraton Grand Sydney with the competitive advantage in newer markets, the expansion of the business in new markets has provided Sheraton Grand Sydney with the opportunity to obtain a newer stream of revenues and diversify their risk cycles within the markets. In addition to this financial position of the Sheraton Grand Sydney, is strong as it was successfully obtained profits over the past several years within Australia. The accumulated reserves of the profits over the years can be reimbursed to provide for the capital expenditures of the organisation (Eriksson et al., 2015). A large number of assets owned by the organisation and its parent company also allows added advantage to overcome insolvency issues even with a poor economy. The success in the generation of the return of investment for Sheraton Grand Sydney has provided its strength to undertake several investment and acquisition projects over the past few years.
Weakness: There is a lack of innovation within the services and products provided by the Sheraton Grand Sydney, which reduces their competitive advantage (Thomas & Wood, 2014). The investment from the parent organisation towards the expansion is being overridden with smaller organisations investing in research and development. Sheraton Grand Sydney has a tendency to purchase products from the industry and sell those within the industry at higher prices that increases the cost of the business. Another weakness of Sheraton Grand Sydney is that the increasing and continuous of the organisation with their hotels is diluting the value of the brand in price-conscious and developing markets. The company invests the least amount of money for the quality control for which there is inconsistency in the services being provided in different outlets of business (Huang & Sarigöllü, 2014). Sheraton Grand Sydney has yet to obtain success outside its core business, which is a weakness, as it could not successfully expand its products to other segments. The lack of control over its properties and services pose weakness for Sheraton Grand Sydney, as it owns mostly rented properties. The additional cost of renting the properties also affects the business. There is potential that the operations of the company might result in liquidation with respect to the current liabilities of Sheraton Grand Sydney.
Opportunities: Sheraton Grand Sydney has an opportunity to expand its services and products in the affordable luxury segment. This would allow the company to target a new segment of customers and attain a market monopoly. The continuous growth of the hospitality business in the developing nations can pose an opportunity for the Sheraton Grand Sydney. The organisation could expand its business with affordable luxury in developing nations ad set a foothold. The development and diversification of the luxury consumer goods would ensure the promotion of the services and brand awareness for Sheraton Grand Sydney (Chang & Ma, 2015). The growing utilisation of the internet for purchase and payments are making it essential for the Sheraton Grand Sydney. The growing popularity of affordable travelling to international regions can be beneficial for the Sheraton Grand Sydney. The introduction of affordable luxury and hospitality through its hotels would allow Sheraton Grand Sydney to attract customers from developing nations. There is also an opportunity for the Sheraton Grand Sydney to provide health and wellness facilities in its hotels to attract the customers. The awareness and consciousness of the high-end customer segment would be obtained with this proposal.
Threats: Intense competitive pressure within the hospitality industry could provide a threat to the business of Sheraton Grand Sydney. Then economic condition in domestic and global context determines the profitability of the business (Bustinza et al., 2015). The constant need for innovation and reinvention within the services and products are difficult to maintain by the Sheraton Grand Sydney. The rapid integration of technology by the competitive organisations is increasing the threat for Sheraton Grand Sydney. The integration of newer technologies will deviate the organisation’s customer base to other hospitality service provides and decrease Sheraton Grand Sydney’s profitability. The increase in the substitute products within the hospitality market is decreasing the profits of luxury service providers like Sheraton Grand Sydney.
Issues with inconsistency in services: The review of the complaints from customers reflected that there was inconsistency in the services within the hotels. The staffs need to provide consistent and effective hospitality facilities to ensure that the guest satisfaction level is obtained. In this regard, automation of the operational management might improve the services in future. Effective standardisation of the services might increase the experience of the service quality within Sheraton Grand Sydney (Kasiri et al., 2017). The consistency in the training and development services would facilitate the uniformity in the services within the workforce.
Hi-Tech Accommodations: The Sheraton Grand Sydney lacks the hi-tech technology to support modern living. It is important to create smarter living services in the interior of the hotel rooms to match the preference of their mainstream customers. There needs to be a setup of next generation tech services including all-in-one SaaS solutions within the hotels. This will ensure that the protection of the real estate services and will provide cost savings. This would improve the customer services and generate more sales revenue.
The discussion made it clear that the strategic management of hospitality businesses requires an all-rounded approach to maintain sustainability. The Sheraton Grand Sydney hotel might improve its competitive advantage in the future after involving consistent service and effective monitoring of customer reviews.