Environmental audit of IHG

Topics: InterContinental Hotels Group, Strategic management, Hotel Pages: 9 (1789 words) Published: December 3, 2013


Executive Summary

The purpose of this brief is to evaluate the strategic position of Intercontinental hotels group (IHG) PLC and to make recommendations to the Board of Directors. This brief highlights the environmental audit of IHG. Key drivers of IHG are huge number of hotels, largest in terms of number of rooms and members in Loyalty Rewards club scheme all over the world. The external environmental analysis is done using PESTEL analysis followed by Porters Five forces and Industry Life Cycle. The key drivers affecting IHG are determined by PESTEL. The internal environmental analysis is done using Resources and capabilities, VRIN and Value chain analysis. Annual reports are used to measure current strategic position of IHG. SWOT analysis is used to summarise the environmental analysis of IHG followed by Critical analysis to determine IHG’s current strategic position. Conclusions have been drawn at the end with some recommendations of setting up more hotels in emerging markets like India and China and other things which benefits the organisation in the current economic climate.

Contents Page

1.0 INTRODUCTION_______________________________________________________03 2.0 AN ANALYSIS OF THE EXTERNAL ENVIRONMENT_________________________04

2.1 PESTEL ANALYSIS ______________________________________________04 2.2 PORTER’S FIVE FORCES ANALYSIS _______________________________06 2.3 INDUSTRY LIFE CYCLE ANALYSIS_________________________________08

3.0 AN ANALYSIS OF THE INTERNAL ENVIRONMENT__________________________09

3.1 RESOURCES AND CAPABILITIES___________________________________09 3.2 VRIN ANALYSIS__________________________________________________10 3.3 VALUE CHAIN ANALYSIS__________________________________________11

4.0 CRITICAL ANALYSIS OF COMPANY’S CURRENT STRATEGIC POSITION_______12

5.0 CONCLUSION AND RECOMMENDATION___________________________________14

LIST OF REFERENCES__________________________________________________15

1.0 Introduction

Intercontinental hotels group or IHG is a British based Multinational hospitality company headquartered in Denham, UK. It is the largest hotel company in the world in terms of rooms with more than 676,000 rooms (IHG Plc 2012). It has over 4600 hotels in more than 100 countries and territories (IHG Plc 2012). Out of this, 3934 are Franchised based hotels, 658 are Managed by the company but separately owned and 10 are both owned and managed by the company (IHG Plc 2012). IHG’s portfolio comprises of nine brands which includes Candlewood Suites, Crowne Plaza, Even, Holiday Inn, Holiday Inn Express, Hotel Indigo, Hualuxe, InterContinental and Staybridge Suites (IHG Plc 2012). IHG is listed on the London and New York stock exchanges. IHG runs the world’s largest loyalty programme known as IHG Rewards Club with more than 74 million members (IHG Plc 2012). This shows that IHG as a brand has very remarkable and strong global presence. IHG’s revenue increased from 1768m $ in 2011 to 1835m $ in 2012, a 3.78% growth and operating profit increased from 594m $ in 2011 to 610m $ in 2012, a 2.69% growth which is very good in hospitality sector despite difficult economic crisis (IHG Plc 2011, 2012). Holiday Inn and Holiday Inn Express are the powerhouse of IHG which operates over 3400 hotels globally (IHG Plc 2012). They are the midscale brand of IHG which targets leisure travellers and small business people. This report will use many analytical tools like PESTEL, Porter’s Five Forces, SWOT analysis to evaluate IHG’s current strategic position and Strategic intentions. It will evaluate whether these strategies will be successful or not. It will also make recommendations to deliver improved results.

2.0 An Analysis of the External Environment

2.1 PESTEL – Macro-Environment Analysis of IHG
PESTEL is an important analytical tool for accessing...

References: 1. Barney, J. (2011) 'Firm Resources and Sustained Competitive Advantage ' Journal of Management 17 (1), 99 -120.
2. Datamonitor (2011). 'Global Hotels & Motels Industry Profile ' 2011, Hotels & Motels Industry Profile: Global, pp. 1-40, Business Source Complete, EBSCOhost, viewed 16 November 2013
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4. Evans, N. & Campbell, D. & Stonehouse, G. (2003). Strategic management for
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6. InterContinental Hotels Group PLC (2012): Investors - Overview of IHG. [Online] Available at: http://www.ihgplc.com/index.asp [Accessed: 16 Nov 2013].
7. Jones, P (2009). 'A ‘sound strategy’ for Intercontinental Hotels ', Tourism & Hospitality Research, 9, 3, pp. 271-276, Hospitality & Tourism Index, EBSCOhost, [Accessed 14 November 2013]
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9. Porter (2008), The Five Competitive Forces That Shape Strategy, http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/4 (Accessed 17 Nov 2013)
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