INTRODUCTION
Planning for growth within firms involve a number of strategic decisions that need to be made. These include the direction in which to expand, expansion method and how far or fast they should aim to grow. Firms may choose to expand by increased involvement with their existing products or services, or diversify into new activities. They may also set up new capacities within the firm or expand externally through mergers, acquisitions, strategic alliances, joint ventures with one or more firms (Morgan, 1980; Hornby et al, 2001; Johnson et al, 2008). The service sector has grown rapidly in both developed and developing countries during the past three decades. The hotel industry is characterised by high capital intensity,
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Horizontal growth is achieved when firms expand their products or services into other geographic locations and/or by increasing the range of products and services offered to current markets. Horizontal growth results in horizontal integration, which is the degree to which a firm operates in multiple geographical locations at the same point on an industry’s value chain. This can be achieved through acquisitions or strategic alliances with other firms in the same industry (Dess et al., 2005; Grant, 2005; Wheelen and Hunger 2006; Johnson et al 2008).
Whitbread Plc is a good example of a well-integrated and well-grown hospitality industry. It is one of the leading players in the U.K. leisure industry, now concentrating on restaurants and coffee shops, hotels, and health and fitness clubs. Although its roots were in brewing, from this it grew to become one of the most prestigious of London 's older breweries, with its history closely paralleling that of the Whitbread family, which retained continuous control of the company from 1742 to 1992. Whitbread began to diversify in the early 1960s. Its long involvement in the pub industry led to a deeper delving into the restaurant sector, with a key development being the 1974 launch of the Beefeater casual dining chain. In 1982 a 50-50 joint venture with PepsiCo Inc. Began. It
Horizontal refers to the idea of one firm joining with another at the same stage of the same production process. It also allows for greater market share; achieves economies of scale; and an opportunity to enter a different market segment. An example of this would be Ford’s takeover of Volvo - both being car manufacturers.
Growing through integration is concerned with mergers and takeovers of businesses. There are a number of different ways of integrating: Horizontal (same industry, same stage of production), backward vertical (same industry towards a supplier), forward vertical (same industry towards the customer) and Conglomerate (different industries).
Horizontal integration involves buying out other companies and taking over one single step of an industrial process. It establishes a monopoly because, with horizontal integration, everyone must go the company that has monopolized that step.
Vertical integration is a business growth strategy for economics of scale. It is typified by one firm engaged in different parts of production example; growing raw materials, manufacturing, transporting, marketing, and/or retailing to expand business in existing market for the firm. It can function in two directions both forward integration and backward integration.
The growth strategy of Four Seasons Hotels and Resorts, Inc is multifaceted. Their growth strategy is driven by opening the finest hotel, in the right destination, which will lead to the right economics for the hotel owner. They not only discover destinations where their consumers want to go, but target those markets where they want to create their presence and to increase awareness for future Four Seasons’ travelers. But at the same time investigate opportunities to engrain their positions in those destinations, where they have already operated. According to Kathleen Taylor ‘Four Seasons has approximately 50 projects in various stages of design and construction. The vast majority will come outside the U.S., with a focus on China, India and Latin America. There are lots of cities in those areas where Four Seasons needs to
As we discussed in class, every business is faced with these issues and they are important to managers making strategic decisions. One of the first things learned about business is that if there is no demand for a good or service, the firm that provides it will not continue to exist. Over time the hotel industry has continued to change with market conditions and make itself attractive to business
Since its foundation in 1927 Marriott Corporation grew into one of the leading lodging and food services in the US. With three major business lines: lodging, contract services and related business, Marriott has the intention to remain a premier growth company. To achieve this goal the corporation’s strategy is to develop aggressively appropriate opportunities within their business lines. Marriott would like to be the preferred employer, the preferred provider and the most profitable company in each of the operating areas. The financial strategy includes four key elements:
The hotel industry is a very hard industry to enter into, due to one of the biggest obstacles, which is brand recognition. Right now there are a few large hotel chains that make a large footprint in the market. It is hard for a new entrant to come into the industry and compete with these large hotel chains without bringing something new to the table. Many large chains in the industry dominate the industry due to economies of scale due to franchising.
The 3rd most largest sector of workforce size is in hospitality, leisure, travel and tourism.In UK theres lots of unemployed people which the UK government social mobility stategy, guide and sopprt them to benifits into higher skilled and managment roles.there are 106,300 people to replace both those who are leaving and to fill a new job.
We first have to define what horizontal integration is? “According to Shi and Singh (2015) is a growth strategy in which a healthcare extends its delivery core product or service”. The way horizontal integration is obtained by is internal development, acquisition or merger. Organization can be linked horizontally closely, through ownership or alliances. Horizontal integration mainly focuses on controlling the distribution of certain type of health services in an area. Some examples of the focus are multihospital chains, nursing facilities chains or chains of drug stores all under the same name and management. Diversification of new products or services is not reaching within horizontal integration Shi & Singh (2015).
This will lead the hotel succeeding in filling up all available capacity, which is impossible for single segment. Moreover, serving several segments also bring profits to the hotel.
Mergers and acquisitions can be classified in terms of the direction of the growth. A horizontal merger/takeover is the combining of two firms in the same stage of production, for example Well come Pharmaceuticals merged with Glaxo Pharmaceuticals. This sort of integration takes place to combat competition from the market and secure market domination; to reduce risks and increase financial strength; and to compete in
The following report was derived from the primary use of secondary sources, in addition to telephone contact with hotel representatives. Secondary sources included research from the Internet, industry books, company marketing communications, trade and general business newspapers and magazines, among others. Through all the sources, relevant data and information was extracted into the report's appendices. After individual analysis and group discussion, the following report was devised. The mandate of this report is to provide a macro examination of the luxury hotel industry and specifically the future outlook of Four Seasons Hotel and Resorts, Inc.
Describe horizontal and vertical integration. Why do businesses leverage these vehicles for growth, and how can they aid in gaining competitive
Having just analyzed the general environment surrounding the upscale and luxury hotel industry, the next step in determining whether such an industry is attractive or not is to conduct an in depth external analysis of the threats and opportunities facing the industry. Thanks to the help of Michael Porter and his Five Forces Model, this analysis is not nearly as difficult or as time consuming as it may seem. According to Porter, there are five forces which determine the competitive intensity and therefore attractiveness of a market. These forces include the threat of entry, the threat of rivalry, the threat of substitutes, the threat of buyers,