Shangri La Hotels Malaysia (SHGM) SWOT Analysis / TOWS Matrix / MBA Resources
Hotels & Motels
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Shangri La Hotels Malaysia (Malaysia)
Based on various researches at Oak Spring University , Shangri La Hotels Malaysia is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, technology disruption, there is increasing trade war between United States & China,
increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Shangri La Hotels Malaysia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shangri La Hotels Malaysia can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shangri La Hotels Malaysia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia can be done for the following purposes –
1. Strategic planning of Shangri La Hotels Malaysia
2. Improving business portfolio management of Shangri La Hotels Malaysia
3. Assessing feasibility of the new initiative in Malaysia
4. Making a Hotels & Motels sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shangri La Hotels Malaysia
Strengths of Shangri La Hotels Malaysia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shangri La Hotels Malaysia are -
Strong track record of project management in the Hotels & Motels industry
– Shangri La Hotels Malaysia is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Shangri La Hotels Malaysia is present in almost all the verticals within the Hotels & Motels industry. This has provided Shangri La Hotels Malaysia a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Low bargaining power of suppliers
– Suppliers of Shangri La Hotels Malaysia in the Services sector have low bargaining power. Shangri La Hotels Malaysia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shangri La Hotels Malaysia to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Shangri La Hotels Malaysia 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.
High brand equity
– Shangri La Hotels Malaysia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shangri La Hotels Malaysia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shangri La Hotels Malaysia emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Shangri La Hotels Malaysia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shangri La Hotels Malaysia 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
– Shangri La Hotels Malaysia has clearly differentiated products in the market place. This has enabled Shangri La Hotels Malaysia to fetch slight price premium compare to the competitors in the Hotels & Motels industry. The sustainable margins have also helped Shangri La Hotels Malaysia to invest into research and development (R&D) and innovation.
Training and development
– Shangri La Hotels Malaysia has one of the best training and development program in Services industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Shangri La Hotels Malaysia has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Shangri La Hotels Malaysia 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 Malaysia 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.
Organizational Resilience of Shangri La Hotels Malaysia
– The covid-19 pandemic has put organizational resilience at the centre of everthing Shangri La Hotels Malaysia does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of Shangri La Hotels Malaysia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shangri La Hotels Malaysia are -
Lack of clear differentiation of Shangri La Hotels Malaysia products
– To increase the profitability and margins on the products, Shangri La Hotels Malaysia needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Shangri La Hotels Malaysia 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.
High dependence on Shangri La Hotels Malaysia ‘s star products
– The top 2 products and services of Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Shangri La Hotels Malaysia 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.
Products dominated business model
– Even though Shangri La Hotels Malaysia 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. Shangri La Hotels Malaysia should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the Hotels & Motels industry, Shangri La Hotels Malaysia 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.
Ability to respond to the competition
– As the decision making is very deliberative at Shangri La Hotels Malaysia, in the dynamic environment of Hotels & Motels industry it has struggled to respond to the nimble upstart competition. Shangri La Hotels Malaysia has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Shangri La Hotels Malaysia is one of the leading players in the Hotels & Motels industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Hotels & Motels industry in last five years.
Compensation and incentives
– The revenue per employee of Shangri La Hotels Malaysia 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, Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia lucrative customers.
Skills based hiring in Hotels & Motels industry
– The stress on hiring functional specialists at Shangri La Hotels Malaysia 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.
Shangri La Hotels Malaysia Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shangri La Hotels Malaysia are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Shangri La Hotels Malaysia 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shangri La Hotels Malaysia can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Shangri La Hotels Malaysia 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.
Manufacturing automation
– Shangri La Hotels Malaysia 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shangri La Hotels Malaysia 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.
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 Shangri La Hotels Malaysia in the Hotels & Motels industry. Now Shangri La Hotels Malaysia can target international markets with far fewer capital restrictions requirements than the existing system.
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 Shangri La Hotels Malaysia 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.
Creating value in data economy
– The success of analytics program of Shangri La Hotels Malaysia has opened avenues for new revenue streams for the organization in Hotels & Motels industry. This can help Shangri La Hotels Malaysia to build a more holistic ecosystem for Shangri La Hotels Malaysia products in the Hotels & Motels industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Shangri La Hotels Malaysia 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.
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. Shangri La Hotels Malaysia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shangri La Hotels Malaysia can use these opportunities to build new business models that can help the communities that Shangri La Hotels Malaysia operates in. Secondly it can use opportunities from government spending in Hotels & Motels sector.
Using analytics as competitive advantage
– Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shangri La Hotels Malaysia to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Shangri La Hotels Malaysia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Shangri La Hotels Malaysia 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.
Increasing wage structure of Shangri La Hotels Malaysia
– 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 Shangri La Hotels Malaysia.
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. Shangri La Hotels Malaysia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Shangri La Hotels Malaysia needs to understand the core reasons impacting the Hotels & Motels industry. This will help it in building a better workplace.
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.
Shortening product life cycle
– it is one of the major threat that Shangri La Hotels Malaysia is facing in Hotels & Motels sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shangri La Hotels Malaysia 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, Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia prominent markets.
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 Shangri La Hotels Malaysia.
Regulatory challenges
– Shangri La Hotels Malaysia 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Hotels & Motels industry are lowering. It can presents Shangri La Hotels Malaysia with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Hotels & Motels sector.
Technology acceleration in Forth Industrial Revolution
– Shangri La Hotels Malaysia has witnessed rapid integration of technology during Covid-19 in the Hotels & Motels industry. As one of the leading players in the industry, Shangri La Hotels Malaysia 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.
Weighted SWOT Analysis of Shangri La Hotels Malaysia Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia 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 Shangri La Hotels Malaysia needs to make to build a sustainable competitive advantage.