Five Forces Of Competition Model Essay Examples
Hilton Hotels and Resorts happens to be a chain of international hotels with among the largest global brands. Located in major cities, the company offers leisure and business packages (Hilton WorldWide, 2013). Therefore, whether it is vacationing or business trips, Hilton Hotel has one covered.
The hospitality industry just like any other can get looked at from Porter’s Five Economic Forces. In terms of supplier bargaining power, the supplier can raise the price of goods thereby forcing the hotel to lower its quality or charge more for the same service. In effect shifting the cost to the client. However, this usually happens when only a few large suppliers control the market. Customer bargaining power can affect volumes and profit margins (Porter, 1980). The customer can spend in plenty or not depending on the economic conditions and time of the year.
The threat of substitutes is another common fear. These substitutes may offer cheaper and higher performing alternatives. Through that, they obtain a large share of the market pushing seasoned veterans out. The threat of new entrants compounds the fierceness of the industry. The new entrants destabilize the already established equilibrium causing uncertainty among the existing hotels. Finally, there is the rivalry among existing players (Porter, 1980). The competitiveness affects prices, profit margins and services. It is good for the customers since prices and services become competitive but undesirable for the Hotels.
The volatility of the industry coupled with its vulnerability to customer perceptions is daunting. Nevertheless the industry allows room for reinvention and creativity (Sloan, Legrand, & Chen, 2013). Attracting the customer is not an impossible task and putting a price on a unique service can rewarding. Building a brand name will ensure customer loyalty and enjoyed profits.
The Hilton Hotel can ride the waves of these forces through strengthening its internal structure and investing in marketing strategies, price discrimination and creativity and innovation.
Hilton WorldWide. (2013). 2013 Annual Report. Retrieved from http://ir.hiltonworldwide.com/files/doc_financials/Hilton_2013_AR.pdf
Porter, M. E. (1980). Competitive Strategy. New York: Free Press.
Sloan, P., Legrand, W., & Chen, J. S. (2013). Sustainability in the Hospitality Industry: Principles of Sustainable Operations (2nd ed.). New York, NY: Routledge.
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