Based on various researches at Oak Spring University , InterContinental Hotels ADR is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of InterContinental Hotels ADR
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that InterContinental Hotels ADR can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the InterContinental Hotels ADR, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which InterContinental Hotels ADR 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 ADR can be done for the following purposes –
1. Strategic planning of InterContinental Hotels ADR
2. Improving business portfolio management of InterContinental Hotels ADR
3. Assessing feasibility of the new initiative in United States
4. Making a Hotels & Motels sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of InterContinental Hotels ADR
Strengths of InterContinental Hotels ADR | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of InterContinental Hotels ADR are -
Low bargaining power of suppliers
– Suppliers of InterContinental Hotels ADR in the Services sector have low bargaining power. InterContinental Hotels ADR has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps InterContinental Hotels ADR to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– InterContinental Hotels ADR has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – InterContinental Hotels ADR 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.
Innovation driven organization
– InterContinental Hotels ADR is one of the most innovative firm in Hotels & Motels sector.
High brand equity
– InterContinental Hotels ADR has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled InterContinental Hotels ADR to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– InterContinental Hotels ADR is present in almost all the verticals within the Hotels & Motels industry. This has provided InterContinental Hotels ADR 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.
Digital Transformation in Hotels & Motels industry
- digital transformation varies from industry to industry. For InterContinental Hotels ADR digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. InterContinental Hotels ADR 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.
Ability to lead change in Hotels & Motels
– InterContinental Hotels ADR is one of the leading players in the Hotels & Motels industry in United States. Over the years it has not only transformed the business landscape in the Hotels & Motels industry in United States but also across the existing markets. The ability to lead change has enabled InterContinental Hotels ADR in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the InterContinental Hotels ADR 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.
Strong track record of project management in the Hotels & Motels industry
– InterContinental Hotels ADR 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 recruit top talent
– InterContinental Hotels ADR is one of the leading players in the Hotels & Motels industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- InterContinental Hotels ADR 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 ADR is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at InterContinental Hotels ADR emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that InterContinental Hotels ADR 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.
Weaknesses of InterContinental Hotels ADR | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of InterContinental Hotels ADR are -
Lack of clear differentiation of InterContinental Hotels ADR products
– To increase the profitability and margins on the products, InterContinental Hotels ADR needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee of InterContinental Hotels ADR 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 dependence on InterContinental Hotels ADR ‘s star products
– The top 2 products and services of InterContinental Hotels ADR 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 ADR has relatively successful track record of launching new products.
Employees’ less understanding of InterContinental Hotels ADR strategy
– From the outside it seems that the employees of InterContinental Hotels ADR don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
InterContinental Hotels ADR has a high cash cycle compare to other players in the Hotels & Motels industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Hotels & Motels industry
– The stress on hiring functional specialists at InterContinental Hotels ADR 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.
Need for greater diversity
– InterContinental Hotels ADR has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, InterContinental Hotels ADR 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 ADR lucrative customers.
Increasing silos among functional specialists
– The organizational structure of InterContinental Hotels ADR is dominated by functional specialists. It is not different from other players in the Hotels & Motels industry, but InterContinental Hotels ADR needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help InterContinental Hotels ADR to focus more on services in the Hotels & Motels industry rather than just following the product oriented approach.
High bargaining power of channel partners in Hotels & Motels industry
– because of the regulatory requirements in United States, InterContinental Hotels ADR 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.
Capital Spending Reduction
– Even during the low interest decade, InterContinental Hotels ADR 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.
InterContinental Hotels ADR Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of InterContinental Hotels ADR are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects InterContinental Hotels ADR can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help InterContinental Hotels ADR to increase its market reach. InterContinental Hotels ADR 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, InterContinental Hotels ADR 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 InterContinental Hotels ADR to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– InterContinental Hotels ADR has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– InterContinental Hotels ADR 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for InterContinental Hotels ADR 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 ADR to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– InterContinental Hotels ADR 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for InterContinental Hotels ADR 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.
Using analytics as competitive advantage
– InterContinental Hotels ADR 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 InterContinental Hotels ADR to build a competitive advantage using analytics. The analytics driven competitive advantage can help InterContinental Hotels ADR to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 ADR can use these opportunities to build new business models that can help the communities that InterContinental Hotels ADR operates in. Secondly it can use opportunities from government spending in Hotels & Motels sector.
Manufacturing automation
– InterContinental Hotels ADR 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.
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 InterContinental Hotels ADR 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.
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 ADR can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats InterContinental Hotels ADR External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of InterContinental Hotels ADR are -
Consumer confidence and its impact on InterContinental Hotels ADR 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.
Stagnating economy with rate increase
– InterContinental Hotels ADR 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, InterContinental Hotels ADR 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 InterContinental Hotels ADR 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 InterContinental Hotels ADR.
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 ADR business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– InterContinental Hotels ADR 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.
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 ADR 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 ADR 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for InterContinental Hotels ADR 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.
Regulatory challenges
– InterContinental Hotels ADR 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.
Technology acceleration in Forth Industrial Revolution
– InterContinental Hotels ADR has witnessed rapid integration of technology during Covid-19 in the Hotels & Motels industry. As one of the leading players in the industry, InterContinental Hotels ADR 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.
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. InterContinental Hotels ADR needs to understand the core reasons impacting the Hotels & Motels industry. This will help it in building a better workplace.
Environmental challenges
– InterContinental Hotels ADR 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 ADR can take advantage of this fund but it will also bring new competitors in the Hotels & Motels industry.
Weighted SWOT Analysis of InterContinental Hotels ADR Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at InterContinental Hotels ADR 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 ADR 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 ADR 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 ADR 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 ADR needs to make to build a sustainable competitive advantage.
