INVESTIGATIVE REPORT ON STRATEGIC MANAGEMENT OF Intercontinental Hotels Group Contents 1. Summary2 2. Background of Intercontinental Hotels Group (IHG)2 3. Evaluation of Intercontinental Hotels Group Strategic Plans2 4. Intercontinental Hotels Group’s Strategic Plans3 a. Improving the performance of their brands3 b. Generating excellent returns from their hotels3 c. Putting their market scale and knowledge to good use3 d. Strengthening our organisation4 e. Corporate Responsibility strategy4 5. Intercontinental Hotels Group’s way of Implementing their Strategic Plan4 6. Benefits of their Strategic Planning5 . Conclusion5 1. Summary This report examines the background of Intercontinental Hotels Group and the types of business model it adopts in its operations. It also investigate the how it use strategic plans to compete in the markets that it operates and the benefits it attached from having strategic plans down to implementation and monitoring. In summary, Intercontinental Hotels Group is a worldwide company focusing of the hospitability and tourism industry. It has clear vision, mission and values which were supported with sensible strategic policies to achieve their organizational goals.
Implementing the strategies in the best possible way and monitoring their progress which enables them to refine their strategies is at the heart of their operation. 2. Background of Intercontinental Hotels Group (IHG) The history of Intercontinental Hotels Group date back to seventeen century, when William Bass started Bass Brewery in1777. The business continues to develop within UK into other regions and in the late eighteen century it became the leading Brewers and registered its trademark in 1876 as Bass Red triangle.
The company enters into hotel industry in 1988 when it bought Holidays Inns International which was followed by a number of acquisitions internationally. Ten years later, it acquired Intercontinental Hotel Company and their prominent hotels and resort across the globe. It was until 2002 when the group decided to separate the Hotels and soft drinks business make the Intercontinental Hotels Groups Plc a separate business to focus on Hotel industry and listed its stock in UK and US stock markets in 2003. (Our History). Today the group has over 4,400 hotels under its portfolio worldwide offering midscale and upscale services to its customers.
The main business model of the chain is ownership, managing and franchising of hotels worldwide operating under seven hotel brands which includes; InterContinental, Holiday Inn, Holiday Inn Express, Hotel Indigo, Crowne Plaza, Staybridge Suites and Candlewood Suites. “(IHG at glance Factsheet)”. 3. Evaluation of Intercontinental Hotels Group Strategic Plans It must be said that almost all companies have a strategy be it formal or informal because the strategy requires knowledge of the business and what you want to achieve in the future. This can be back by K.
Andrews (1971) who defined strategy as “the pattern of major objectives, purposes or goals and essential policies or plans for achieving those goals”. The Intercontinental Hotels Group’s strategic goals start from its vision/mission which set out it purpose and objectives and states that the chain’s ultimate goal is that they “want to grow by making their brands the first choice for guests and hotel owners”. This bold statement continues to determine the future operations of the group and all others plans are geared to ensure that the ultimate goal is achieve.
The vision and mission statement determines how a company operate as it set out what they want to achieve in the future. This is back by the values which outlines how a company behaves and for Intercontinental Hotels Group their values includes; “Do the right thing, Show we chare, aim higher, celebrate the difference and work better together”. All the chain’s operations boil down to their ultimate goal of growth by making their brands the first choice for both guest and hotel owners guided by their values. The rest of plans follow the same pattern of achieving that goal which manifests its operations wherever they are.
The group has made clear what they want to achieve and they are putting every effort to ensure that those objectives are achieve. (Our Strategy and Annual report) 4. Intercontinental Hotels Group’s Strategic Plans Reiterating the definition given by Kenneth Andrews above that the organisation must have essential plans for achieving their overall objective, the International Hotels Group have made explicitly that their “strategy is to build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts”.
This core strategy was then broken down into specific strategic priorities to make easy for them to focus their energy and resources in achieving their goals. The group has made it explicit that they would continue to “concentrate their resources on the opportunities that will provide the greatest return”. The following are their strategic that they intent to implement in order to help them achieve their core strategic objectives. (Our Strategy and Annual report) a. Improving the performance of their brands
Brand recognition and enhancement is an important part in many industries especial in hotel industry and the intercontinental Hotels Group has made a lot of effort in trying to improve their brand recognition and loyalty. b. Generating excellent returns from their hotels Of course for any business to continue to operate, it must have the financial backers who own it and they too require a return on their investment. The Intercontinental Hotels Groups has made a major priority to generate good margins for their investors. c. Putting their market scale and knowledge to good use
It is part of their priorities to use their presence in the market and knowledge to their advantage and continuously developing more hotels to their portfolio using their brand names. This experience and knowledge enables them to make their presences notable in each market hence they choose brands that are suitable to each market. d. Strengthening our organisation Building the capacity and capability of those (the people) who will be responsible for running of the business is fundamental for any business success and Intercontinental Hotels Groups has made this strategy as a priority.
This is coupled with binding solid partnership within the group and stakeholders worldwide. e. Corporate Responsibility strategy Corporate Responsibility has become the focal strategy in many businesses in recent years and it is sensible to see that a group like Intercontinental Hotels Group has put that at the heart of their business operational policy. 5. Intercontinental Hotels Group’s way of Implementing their Strategic Plan Having a strategic plan alone is important but being able to transform into achievable plans and implement for the success of the business is another thing.
Implementing the strategic plan of a business is the most difficult part that many business face and that determines success or failure. The Intercontinental Hotels Group realised this fundamental issue and that’s why they laid down policies that will enable them to smoothly implement their strategies across the globe. The first technique is to believe in what they stand for and believe in their strategies that they will be able to guide them in achievement of their goals.
They use communication as the most important tool to communicate across the board for maximum understanding of what they want to achieve and how they want to achieve it. This communication process is also extended to various stakeholders at different stages of interaction. They ensure that their hotels are within easy reach to their customers as a means of fulfilling their vision of making their brands the first choice for guests and raising customer satisfaction.
This is why they strengthen their distribution network and offer Priority Club Rewards to customer to bind that relationship. Maintaining high quality of services is an important formula for maintaining the standard of their brand and lasting loyalty and this is what they believe in. Good return for investment is critical for future operations and the group has been using necessary means to encourage more guest visits to their hotels in order to achieve this strategic objective.
This is backed by continuous improvement on efficiency and effectiveness of their processes. They use various means of advertising and marketing to reach out more customers and accelerated the use of internet as a means of booking through 13 language websites has enable to achieve some of their goals. Booking can also be made through their sales force that are spread all over the world in different languages to ensure that rapid services is provided. Developing the capabilities of their people who makes things to happen has given them an advantage.
This is done through various methods of people development to ensure that the services they offer are up to the highest standards. Strong relationship within the group is also part of the method they use to ensure that long and lasting partnership is achieved. Working with various stakeholders up to the community level in different parts of the world to ensure that their operations adhered to the good standards of accepted socially responsible company is achieved. To achieve his promise, they use communication and engagement as a tool. (Our Strategy and Annual report) 6. Benefits of their Strategic Planning The intercontinental Hotels Group is satisfied with their success so far and this is as a result of what they believe and how they do their things. This result from the overall ultimate goal and the plans employed to achieve that goal. In their Annual Report 2009, they have stated how they achieve their strategic objectives and how they intent to further push that success into 2010.
This shows how they value their strategic plans and refine it where and when necessary to suite the challenges of 2010 and beyond. The benefits of their strategic plans have further strengthened their commitment to the guest and owners and made them a formidable force during the economic down turn which has been a big challenge for many businesses. Those commitments have been echoed by both the chairman and the chief executive in the 2009 annual report as it has made it possible for the future success of the business. (Our Strategy and Annual report) . Conclusion Although, I have discussed the strategic plans of the group and how it has benefited, it is also prudent to conclude this discussion with some recommendations in the following areas which that I think will further add value. Now that there is an increase in competition it is recommended for Intercontinental Hotels Group to further strengthen its distribution network to include social networking sites. This area is becoming an important part of many businesses especially the hotel industry as a means of linking people together.
Mobile internet communication is also gaining a momentum. Midscale branding and expanding to cover many geographical areas is going to be the battle ground for businesses in this industry and it would be to the group advantage if they blend this strategy into their expansion plans. Markets in America and Europe are becoming saturated and therefore any effort to expand into Latin America, Asia Pacific, the Middle East and Africa is highly recommended. Emerging markets are now gaining momentum and many businesses don’t want to be the last to enter those markets.
Pricing is also going to be a competing tool due to economic uncertainties hence many businesses in the hotel industries will be using discounting to overcome the economic downturn. It is highly recommended for the group to have a strategic plan of dealing with such strategies by their rival companies especially when they are entering new markets. To sustain competition on pricing from competitors, it is recommended that proper cost management should be establish to ensure maximum results are achieve through efficient use of resources with minimal cost.
We have all witness how natural disaster in various parts of the world such as the volcanic ashes has made impact on businesses. It is therefore wise to recommend for the group to develop a strategic to deal with such uncertainties and eventualities. Andrews, K (1971) The concept of corporate Strategy (Homewood, III, Irwin) Bacharach, S. B. , Aiken, M. (1976), “Structural and process constraints on influence on organizations: a level-specific analysis”, Administrative Science Quarterly, Vol. 21 pp. 623-42 Baker, M. , Hart, S. , (1999), Product Strategy and Management, Prentice Hall, Harlow Briley,A,D. Aaker,J (2006) Bridging the Culture Chasm: Ensuring That Consumers Are Healthy, Wealthy, and Wise, American Marketing Association, Vol. 25,pp. 53–66 Drucker, P. F. , (1974), Management: Tasks, Responsibilities, Practices, Butterworth-Heinemann Ltd, Oxford Johnson, G. , Scholes, K. , (2002), Exploring Corporate Strategy, (6th edition), Prentice Hall. London. Katzenbach, J. R. , Smith, D. K, (1993), The Wisdom of Teams: Creating the High-Performance Organisation, Harvard Business School Press, Boston. Lynch, R. (2006), Corporate Strategy, (4th edition), Prentice Hall, Harlow Scott, W.
R, (2003) organisations rational, natural, and open systems (5th edition) Prentice Hall, New Jersey InterContinental Hotels, March 2008. Corporate Responsibility Report [online]. Available at: http://www. ihgplc. com/index. asp? pageid=723. [Accessed 1 June 2010] InterContinental Hotels, IHG at a Glance factsheet [online]. Available at: http://www. ihgplc. com/index. asp? pageid=40. [Accessed 1 June 2010] InterContinental Hotels , February 2010. Preliminary Results Presentation [online]. Availalbe at: http://www. ihgplc. com/index. asp? pageid=55§ion=Investor. [Accessed 1 June 2010]
InterContinental Hotels. Our History [online]. Availalbe at: http://www. intercontinental. com/intercontinental/en/gb/about-us/our-history. [Accessed 1 June 2010] InterContinental Hotels, 2009. Annual Report and Financial Statements [online]. Availalbe at: http://www. ihgplc. com/index. asp? pageid=55§ion=Investor. [Accessed 1 June 2010] InterContinental Hotels, Our Strategy [online]: Availalbe at: http://www. ihgplc. com/index. asp? pageid=43. [Accessed 1 June 2010] InterContinental Hotels, How we behave [online]: Availalbe at: http://www. ihgplc. com/index. asp? pageid=350. Accessed 1 June 2010] Datamonitor. , 2009. InterContinental Hotels Group PLC, Company Profile [online]. Available at: www. datamonitor. com. [Accessed 1 June 201] Euromonitor Internantional, February 2010. InterContinental Hotels Group Plc in Travel and Tourism –World [online]. Available at: https://www. portal. euromonitor. com/Portal/ResultsList. aspx. [Accessed 1 June 2010] Euromonitor Internantional, May 2010. Travel and Tourism Forecast Update –Recovery in Sight? [Online]. Available at: https://www. portal. euromonitor. com/Portal/ResultsList. aspx. [Accessed 1 June 2010]