InterContinental Hotels Group
Company Status Update
InterContinental Hotels Group (IHG) belongs to one of the leading hotel companies in the world. It operates in more than 100 countries. In 2003, IHG became the standalone company, but hotel brands broad portfolio and the hospitality business have the long history.
In 1777, William Bass found the brewery in Burton-on-Trent, UK. Throughout the years, the business grew and changed to become the global hospitality company. In 1949, the first company hotel was found in Brazil in the city of Belem (InterContinental Hotels Group). Thereafter, the brand of InterContinental Hotels & Resorts expanded to become the first international luxury hotel trademark in the world. In 1998, Bass acquired the international part of the corporation in 1988. In 1990, it acquires the North American division. Additionally, in the 1960s, Bass bought both brewing companies Mitchells & Butlers and Charringtons, which made the company one of the biggest pub owners and brewers in the UK. In 1991, the company launches limited service Holiday Inn Express. Later, Bass bought Harvester chains and the Browns restaurant, and developed All Bar One and O’Neill’s brands. In 1995, Bass founded Candlewood Suites that became the first hotel brand, which could offer free guest laundry (IHG). Bass acquired Southern Pacific Hotels Corporation (Australia) and Bristol Hotels & Resorts Inc. (the USA), becoming Six Continents Plc. In October 2002, the company was separated into hotels business and soft drinks retail. Finally, in 2003, InterContinental Hotels Group Plc became the standalone company.
IHG is dual listed company, as it has the listing on the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE). The Board of Directors leads the corporate governance framework to support values, culture, and commitment of IHG. The Board consists of Audit Committee, Corporate Responsibility Committee, Nomination Committee, Remuneration Committee, and Management Committees that includes Executive Committee, Disclosure Committee, and General Purposes Committee. Each of Committee has its chairman and members.
Mission Statement Analysis
The mission statement of InterContinental Hotels Group is “To become the greatest company in the world through creating great hotels guests love” (Konopelski). Its vision statement is “To build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts” (IHG). The company has similar mission and vision statements that complement each other. However, the focus on the biggest markets should be present in the existed mission statement. Therefore, the improved mission statement is “To become the greatest company in the world focused on the biggest markets through creating great hotels for guests with different income who will enjoy and love each moment spent in IHG hotels.”
Input Stage of Strategy Formulation
First, the company is one of the biggest world companies with the strong global presence and famous brands (Konopelski). Second, IHG has the solid research and development department. Thus, it may adapt to different socio-economic trends that often change through using contrast innovation. Third, the company has solid reputation in superior customer service delivery.
Although IHG owns the hotels in more than 100 countries of the world, the company has high geographical concentration. Thus, nearly 80% of its hotels are situated in 20 countries (Konopelski). Moreover, 69% of operating profit is generated from its American divisions.
First, emerging markets of the company offer tremendous potential for growth. Second, sales resources can be better distributed as a result of changed sale outlook. Third, the company has positive feedback from its stakeholders, as the leadership showed CSR results that are well managed. The international positive reputation ensures the increase in customer base.
The global recession causes the decline in demand for lodging. The possibility for the uncontrolled terrorist attacks, natural disasters, and other events can have the negative impact on the hotel business. Finally, some countries of the world are politically unstable (for example, Egypt and Syria), which contributes to the decline of tourism in the regions.
IHG Company has highly cash-generative business, and the three ways for cash using ensure long-term financial sustainability. They include the investment in business for stimulating growth, maintain sustainable growth in known ordinary dividend, and return its surplus funds to shareholders (IHG). Thus, IHG Company has a rather successful competitive profile because of strategic excellence and tactic goal achievement.
Matching Stage of Strategy Formulation
Internal environment is within the control of the company; thus, the management influences the following aspects
1. Reduced labor costs.
2. Skilled workforce.
3. The balanced Board of Directors with professionals in different business fields.
1. The company has the third world largest hotel chain after Marriott International and Hilton Hotels.
2. The IHG has diverse brand portfolio of twelve brands.
3. Many new and well-positioned hotels are in China.
4. Large and financially stable domestic market.
1. Monetary assistance provided.
2. In 2015, System Fund income increased by 7.2% to $1,573m mainly as a result of a 6.3% growth.
3. System Fund 2015 is $1.6bn.
Production & Operations
1. Sales networks and existing distribution contribute to success.
2. The IHG Company includes more than 5,000 hotels and nearly 744,000 guest rooms in nearly 100 countries. The company has over 1,300 hotels in IHG development pipeline.
Research & Development
1. IHG Company has 1,720 hotels in particular 231,553 rooms in a pipeline.
2. The company responds to socio-economic trends in the timely manner.
IHG shares information on policies and people through team meetings, conferences, and IHG intranet site. Moreover, it has wikis, where customers can be informing about any innovations and services of IHG.
Decision Stage of Strategy Formulation
There are four appropriate strategies derived from SWOT analysis, which are SO, WO, ST, and WT (David & David 169). For IHG Company SO (strengths-opportunities) and WO (weaknesses- opportunities) strategies are prospective. SO strategy uses the company internal strengths to get advantage of external opportunities. For example, IHG Company takes strong global presence in the world hotel business and always develops and improves innovations. Thus, the company has to expand its market demand into the other countries because of rapid growth in emerging markets. Moreover, application of the innovation in the new hotels is critical. On the other hand, WO strategy directs to the improvement of internal weaknesses by external opportunities advantages. IHG Company has rather concentrated placement of the hotels (weaknesses); thus, the opportunities of emerging markets are the rapid growth and many young people desiring comfortable conditions. The aspects should be taken into account by IHG Company to open new hotels in other places of the world.
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Strategy Implementation Plan
The strategic management strategy implementation includes the establishment of annual objectives, devising policies, allocation resources, altering the organizational structure, restructuring and reengineering. Moreover, the approach requires reviewing incentive plans and reward to minimize resistance to change, as well as matching managers with strategy Strategy-supportive culture ensures that operations processes and production are adopted in an efficient manner. The next step of implementing SO and WO strategies are marketing, finance, accounting, R&D, and management information systems. Moreover, marketers have to establish the connection with customers through company website and solicit customers’ suggestions in terms of customer service, product development, and ideas (David & David 248). The new approaches to marketing are work with customers during the integrated marketing process. Each company can create their wikis to be able to find the maximum needed information about the company. Research and development plays an important role in strategy of IHG because something service innovation and adjustment of hotels to the market changes create customers-driven service supply. Analysis of projected financial statement is important before venturing into application because it allows a firm to examine the needed and expected results of actions (David & David 260). The effective information system is required in strategic management process.
Strategy Evaluation Plan
Strategy evaluation is important for all organizations. SO strategy of IHG Company is expected to be effective because the organization has a success history in emerging markets. Moreover, the size and revenue grow annually. Thus, internal strengths of the company are the most important benefit and strong capital for IHG business development. The company every year opens the new hotel in the new part of the world and possesses various world known brands. The company has strong R&D, well-organized management, and significant income growing each fiscal year. Therefore, the attention to IHG strengths plays the most important role in business strategy. The company has to determine if major changes occurred in company internal strategic position. Then, the managers have to do the same with external strategic position to identify outside potential. The next step is the determination if IHG has progressed satisfactorily regarding realizing its stated objectives (David & David 286). Thus, after processing of results, the company has to decide whether the corrective actions are needed the present strategic course yields profits. The IHG Company has to employ the potential growth strategy including consideration for acquisition in the developing markets. It helps to expand company coverage and get the growth of income.
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