SWOT Analysis / TOWS Matrix for InterContinental Hotels (United Kingdom)
Based on various researches at Oak Spring University , InterContinental Hotels is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, increasing transportation and logistics costs, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%,
geopolitical disruptions, there is backlash against globalization, etc
Introduction to SWOT Analysis of InterContinental Hotels
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that InterContinental Hotels can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the InterContinental Hotels, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which InterContinental Hotels operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of InterContinental Hotels can be done for the following purposes –
1. Strategic planning of InterContinental Hotels
2. Improving business portfolio management of InterContinental Hotels
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Hotels & Motels sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of InterContinental Hotels
Strengths of InterContinental Hotels | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of InterContinental Hotels are -
Ability to lead change in Hotels & Motels
– InterContinental Hotels is one of the leading players in the Hotels & Motels industry in United Kingdom. Over the years it has not only transformed the business landscape in the Hotels & Motels industry in United Kingdom but also across the existing markets. The ability to lead change has enabled InterContinental Hotels in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– InterContinental Hotels has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Hotels & Motels industry. Secondly the value chain collaborators of InterContinental Hotels have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– InterContinental Hotels is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Hotels & Motels industry. The technology infrastructure of United Kingdom is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Hotels & Motels industry
– InterContinental Hotels has clearly differentiated products in the market place. This has enabled InterContinental Hotels to fetch slight price premium compare to the competitors in the Hotels & Motels industry. The sustainable margins have also helped InterContinental Hotels to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy of InterContinental Hotels comprises – understanding the underlying the factors in the Hotels & Motels industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– InterContinental Hotels has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. InterContinental Hotels has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– InterContinental Hotels has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – InterContinental Hotels staying ahead in the Hotels & Motels industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Hotels & Motels industry
- digital transformation varies from industry to industry. For InterContinental Hotels digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. InterContinental Hotels has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the InterContinental Hotels are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of InterContinental Hotels in Hotels & Motels industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- InterContinental Hotels is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at InterContinental Hotels is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at InterContinental Hotels emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– InterContinental Hotels is one of the most innovative firm in Hotels & Motels sector.
Weaknesses of InterContinental Hotels | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of InterContinental Hotels are -
High bargaining power of channel partners in Hotels & Motels industry
– because of the regulatory requirements in United Kingdom, InterContinental Hotels is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Hotels & Motels industry.
Aligning sales with marketing
– From the outside it seems that InterContinental Hotels needs to have more collaboration between its sales team and marketing team. Sales professionals in the Hotels & Motels industry have deep experience in developing customer relationships. Marketing department at InterContinental Hotels can leverage the sales team experience to cultivate customer relationships as InterContinental Hotels is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, InterContinental Hotels has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Hotels & Motels industry over the last five years. InterContinental Hotels even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring in Hotels & Motels industry
– The stress on hiring functional specialists at InterContinental Hotels has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of InterContinental Hotels supply chain. Even after few cautionary changes, InterContinental Hotels is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left InterContinental Hotels vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative at InterContinental Hotels, in the dynamic environment of Hotels & Motels industry it has struggled to respond to the nimble upstart competition. InterContinental Hotels has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Hotels & Motels industry, InterContinental Hotels needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Compensation and incentives
– The revenue per employee of InterContinental Hotels is just above the Hotels & Motels industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, InterContinental Hotels has high operating costs in the Hotels & Motels industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract InterContinental Hotels lucrative customers.
Low market penetration in new markets
– Outside its home market of United Kingdom, InterContinental Hotels needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on InterContinental Hotels ‘s star products
– The top 2 products and services of InterContinental Hotels still accounts for major business revenue. This dependence on star products in Hotels & Motels industry has resulted into insufficient focus on developing new products, even though InterContinental Hotels has relatively successful track record of launching new products.
InterContinental Hotels Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of InterContinental Hotels are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, InterContinental Hotels is facing challenges because of the dominance of functional experts in the organization. InterContinental Hotels can utilize new technology in the field of Hotels & Motels industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in Hotels & Motels industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for InterContinental Hotels in the Hotels & Motels industry. Now InterContinental Hotels can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– InterContinental Hotels can use the latest technology developments to improve its manufacturing and designing process in Hotels & Motels sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. InterContinental Hotels can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects InterContinental Hotels can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, InterContinental Hotels can use these opportunities to build new business models that can help the communities that InterContinental Hotels operates in. Secondly it can use opportunities from government spending in Hotels & Motels sector.
Leveraging digital technologies
– InterContinental Hotels can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for InterContinental Hotels in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Hotels & Motels industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of InterContinental Hotels has opened avenues for new revenue streams for the organization in Hotels & Motels industry. This can help InterContinental Hotels to build a more holistic ecosystem for InterContinental Hotels products in the Hotels & Motels industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– InterContinental Hotels can improve the customer journey of consumers in the Hotels & Motels industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Hotels & Motels industry, but it has also influenced the consumer preferences. InterContinental Hotels can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, InterContinental Hotels can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for InterContinental Hotels to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for InterContinental Hotels to hire the very best people irrespective of their geographical location.
Threats InterContinental Hotels External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of InterContinental Hotels are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of InterContinental Hotels business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that InterContinental Hotels is facing in Hotels & Motels sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of InterContinental Hotels
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of InterContinental Hotels.
Easy access to finance
– Easy access to finance in Hotels & Motels industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. InterContinental Hotels can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Environmental challenges
– InterContinental Hotels needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. InterContinental Hotels can take advantage of this fund but it will also bring new competitors in the Hotels & Motels industry.
High dependence on third party suppliers
– InterContinental Hotels high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for InterContinental Hotels in Hotels & Motels industry. The Hotels & Motels industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. InterContinental Hotels will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, InterContinental Hotels may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Hotels & Motels sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of InterContinental Hotels.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for InterContinental Hotels in the Hotels & Motels sector and impact the bottomline of the organization.
Weighted SWOT Analysis of InterContinental Hotels Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at InterContinental Hotels needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of InterContinental Hotels is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of InterContinental Hotels is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of InterContinental Hotels to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that InterContinental Hotels needs to make to build a sustainable competitive advantage.