Cinnamon Grand Colombo (CGC)
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Internal Analysis CINNAMON GRAND and New Strategy COLOMBO (CGC) Recommendation Business Strategy _ Irushi Ratnaweera_21273184 i. Executive Summary This report stems down from the Assignment one done on the Five Star City hotel industry. In this the focus is narrowed down to an organization from the same industry which is Cinnamon Grand Hotel Colombo (CGC). In this the focus has been to identify the CGC’s strategic position with aid of many tools, Value chain analysis was utilized to understand the activities involved in creating value which then continued to recognizing resources and competences where it was further categorized into threshold and distinctive. Furthermore identification of core competences allowed understanding the elements which gives the competitive edge to CGC. Previous assignment was taken into consideration when the SWOT analysis was done where the opportunities and Threats were derived from that and the organizations Strengths and Weaknesses were looked at by different credible sources which then was carried on to the TOWS matrix. Before looking at the new strategies a brief overview was done on the organizations culture to grasp on how culture would impact on the new strategies and then a financial analysis with few ratios were done to compare the financial stance of CGC in terms of its competitors. Then with the aid of TOWS matrix several strategies were recommended out of which two were further analyzed in terms of their suitability, feasibility and acceptability and one was taken into consideration of the implementation stage and discussed on it’s consequences and stages of implementation. 1 | P a g e Table of Contents I. Executive Summary ............................................................................................................................... 1 1.0 Introduction ............................................................................................................................................ 3 2.0 Company Overview ................................................................................................................................. 3 3.0 Internal Analysis ...................................................................................................................................... 3 3.1 Value Chain ......................................................................................................................................... 4 3.2 Strategic Capability: Resources and Competences ........................................................................... 6 3.2.3 Distinctive / Unique Capabilities (Resources and Competences) ................................................ 6 3.3 SWOT................................................................................................................................................... 7 3.4 VRIN – Identifying core competences ................................................................................................. 8 3.4.1 What is VRIN ? .............................................................................................................................. 8 3.5 Culture of CGC ......................................................................................................................................... 9 4.0 New Strategies ...................................................................................................................................... 11 4.2 TOWS Matrix ..................................................................................................................................... 11 4.2 Strategy one (01) in Focus................................................................................................................. 12 4.3 Strategy Two (02) in focus ................................................................................................................ 15 4.4 Strategy Two (02) Implementation ................................................................................................... 17 Appendices .................................................................................................................................................. 19 Appendix 01 ............................................................................................................................................ 22 Appendix 02 ............................................................................................................................................ 23 Appendix 03 ............................................................................................................................................ 23 2 | P a g e 1.0 Introduction This report consists an Internal Analysis on Cinnamon Grand Colombo (CGC) where the author has analyzed its strategic position and then provided with new strategies based on its resource, competences, strengths, weaknesses, financial stance and culture. Further information with regard to the external environment was utilized from the previous assignment as the need arose. Many strategies were recommended while two were comprehensively discussed and one was expended to the level implementation with consideration of change management and implementation process. 2.0 Company Overview “Cinnamon Grand Colombo (CGC) , under the wing of Asian Hotels & Properties being the flagship hotel continues to retain its enviable position as the leading hotel in the country” (Asian Hotels and Properties PLC, 2013) CGC holds the highest number of rooms and the dining options (Restaurants) in the country with a 32% market share under the city hotel sector. (Asian Hotels and Properties PLC, 2013) Given the scale of the business the actions, strategies and initiatives of the business has a great impact on the industry as much as the external environment has on the business. 3 | P a g e 3.0 Internal Analysis Stemming from the Assignment 01 External environment analysis, it is essential to understand the internal part of the organization in focus to understand its strategic positions. In doing so firstly we have looked at the activities of Cinnamon Grand Colombo which brings its final products and services to what it is today. In order to do that Michael Porter’s value chain model was adopted 3.1 Value Chain “The value chain describes the categories of activities within an organization which, together, create a product or service”. (Johnson, 2010) Exhibit 01 4 | P a g e Below depicts the Value Chain of Cinnamon Grand Colombo Exhibit 02 Sources: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013) Sources: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013) 5 | P a g e Above presents a comprehensive understanding of the activities that adds value to the final product/ service of CGC, however it is then essential to understand the strategic capability of CGC ( resources and competences) that allows these activities to be performed in such manner for which below analysis on resources and competences were done 3.2 Strategic Capability: Resources and Competences “There are two components of strategic capability: resources and competences… which then need to be distinguished between threshold and distinctive or unique” (Johnson, 2010) In analyzing CGC’s strategic capabilities identifying the threshold resources and competences were a clear cut guideline, as we identified as a threat in the Assignment 01 “The Tourism Act of 2005” defines all threshold resources and competences that every five star city hotel must hold, which clearly CGC has achieved and maintained to remain in the title of the Market leader of the Five Star City hotel’s in Colombo. With all competitors holding similar threshold capabilities what makes CGC stand out as the market leader is showcased below with the distinction of the capability as to a Physical, Financial or a Human 3.2.3 Distinctive / Unique Capabilities (Resources and Competences) Sources: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013) *MICE – Meetings, Incentives, Conventions and Events * GDS – Global Distribution Systems 6 | P a g e With the understanding of the distinctive resources and competences, it’s vital to identify CGC’s strengths and weaknesses while combining the assignment 01‘s findings on Opportunities and Threats to see the impact of those towards CGC. 3.3 SWOT Strengths and Weaknesses will enhance the capabilities and opportunities will give the edge it requires to grow in the business while been aware of threat will minimize any risk that could come in the way. Sources: (Assignment 01, 2014) / (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013) 7 | P a g e Value chain analysis, Resource and competences and SWOT analysis done it is much evident of the core competences of Cinnamon Grand Colombo that has made it the market leader in the city hotel industry. Below highlights the summary of the core competences with the aid of VRIN to understand how it gives a competitive edge to CGC among the rest. 3.4 VRIN – Identifying core competences 3.4.1 What is VRIN ? “VRIN stands for four criteria’s by which capabilities can be assessed in terms of their providing a basis for achieving competitive advantage: Value: When the competences provide potential competitive advantage in a market at a cost that allows an organization to realize acceptable levels of return such as – Taking advantages of opportunities and neutralizing threats , value to customers , providing potential competitor