SWOT Analysis / TOWS Matrix for Melia Hotels (United Kingdom)
Based on various researches at Oak Spring University , Melia Hotels is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, there is backlash against globalization, increasing energy prices, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Melia Hotels can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Melia Hotels, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Melia 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 Melia Hotels can be done for the following purposes –
1. Strategic planning of Melia Hotels
2. Improving business portfolio management of Melia 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 Melia Hotels
Strengths of Melia Hotels | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Melia Hotels are -
Successful track record of launching new products
– Melia Hotels has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Melia 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.
Sustainable margins compare to other players in Hotels & Motels industry
– Melia Hotels has clearly differentiated products in the market place. This has enabled Melia Hotels to fetch slight price premium compare to the competitors in the Hotels & Motels industry. The sustainable margins have also helped Melia Hotels to invest into research and development (R&D) and innovation.
Strong track record of project management in the Hotels & Motels industry
– Melia Hotels is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Hotels & Motels
– Melia 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 Melia Hotels in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Melia 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.
Digital Transformation in Hotels & Motels industry
- digital transformation varies from industry to industry. For Melia Hotels digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Melia 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.
High brand equity
– Melia Hotels has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Melia Hotels to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Melia 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 Melia Hotels is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Melia Hotels emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Melia 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 Melia Hotels have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Melia Hotels is one of the most innovative firm in Hotels & Motels sector.
Operational resilience
– The operational resilience strategy of Melia 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.
Cross disciplinary teams
– Horizontal connected teams at the Melia 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.
Weaknesses of Melia Hotels | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Melia Hotels are -
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 Melia Hotels supply chain. Even after few cautionary changes, Melia Hotels is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Melia Hotels vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Melia Hotels has some of the most successful models in the Hotels & Motels industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Melia Hotels should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– From the outside it seems that Melia 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 Melia Hotels can leverage the sales team experience to cultivate customer relationships as Melia Hotels is planning to shift buying processes online.
Lack of clear differentiation of Melia Hotels products
– To increase the profitability and margins on the products, Melia Hotels needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee of Melia 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.
Ability to respond to the competition
– As the decision making is very deliberative at Melia Hotels, in the dynamic environment of Hotels & Motels industry it has struggled to respond to the nimble upstart competition. Melia Hotels has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Melia Hotels has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High operating costs
– Compare to the competitors, Melia 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 Melia Hotels lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the Hotels & Motels industry, Melia 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.
Skills based hiring in Hotels & Motels industry
– The stress on hiring functional specialists at Melia 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.
Capital Spending Reduction
– Even during the low interest decade, Melia Hotels has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Hotels & Motels industry using digital technology.
Melia Hotels Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Melia Hotels are -
Leveraging digital technologies
– Melia 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.
Using analytics as competitive advantage
– Melia Hotels has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Hotels & Motels sector. This continuous investment in analytics has enabled Melia Hotels to build a competitive advantage using analytics. The analytics driven competitive advantage can help Melia Hotels to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Melia Hotels can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Hotels & Motels industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Melia Hotels is facing challenges because of the dominance of functional experts in the organization. Melia 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Melia Hotels can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Melia Hotels to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Melia Hotels has opened avenues for new revenue streams for the organization in Hotels & Motels industry. This can help Melia Hotels to build a more holistic ecosystem for Melia Hotels products in the Hotels & Motels industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Melia 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 Melia Hotels to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Melia Hotels can use these opportunities to build new business models that can help the communities that Melia Hotels operates in. Secondly it can use opportunities from government spending in Hotels & Motels sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Melia 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.
Developing new processes and practices
– Melia Hotels can develop new processes and procedures in Hotels & Motels industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Learning at scale
– Online learning technologies has now opened space for Melia Hotels to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Melia Hotels to increase its market reach. Melia Hotels will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Melia Hotels to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats Melia Hotels External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Melia Hotels are -
Technology acceleration in Forth Industrial Revolution
– Melia Hotels has witnessed rapid integration of technology during Covid-19 in the Hotels & Motels industry. As one of the leading players in the industry, Melia Hotels needs to keep up with the evolution of technology in the Hotels & Motels sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Melia Hotels demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Hotels & Motels industry and other sectors.
Regulatory challenges
– Melia Hotels needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Hotels & Motels industry regulations.
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.
High dependence on third party suppliers
– Melia 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.
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 Melia Hotels business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Hotels & Motels industry are lowering. It can presents Melia Hotels with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Hotels & Motels sector.
Stagnating economy with rate increase
– Melia Hotels can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Hotels & Motels industry.
Increasing wage structure of Melia 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 Melia Hotels.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Melia 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Melia Hotels can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate Melia Hotels prominent markets.
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 Melia Hotels in the Hotels & Motels sector and impact the bottomline of the organization.
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. Melia 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.
Weighted SWOT Analysis of Melia Hotels Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Melia 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 Melia 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 Melia 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 Melia 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 Melia Hotels needs to make to build a sustainable competitive advantage.