10200189_BBE_A2.1

NATIONAL ECONOMICS UNIVERSITY INTERNATIONAL SCHOOL OF MANAGEMENT AND ECONOMICS HIGHER NATIONALS BTEC HIGHER NATIONAL DIPLOMA IN BUSINESS (RQF) Unit Code, Number and Title L/508/0485 RQF level - Unit 1: Business and the Business Environment Semester and Academic Year Semester / Academic year 2020 - 2021 Unit Assessor(s) Daniel Vanhoutte/ Dao Minh Hoang/ Pham Thi Bich Ngoc Assignment Number and Title BBE A2.1: Business Environment Analysis (Assessment of 2, Individual assignment) Issue Date Friday, April 16th, 2021 Submission Date 10:00 am on Monday, May 24th, 2021 IV Name Nguyen Thuy Chinh IV Date Friday, April 16th, 2021 Student name Nguyen Ngoc Quang NEU Student ID 10200189 Pearson ID Plagiarism is a particular form of cheating Plagiarism must be avoided at all costs and students who break the rules, however innocently, may be penalised It is your responsibility to ensure that you understand correct referencing practices As a university level student, you are expected to use appropriate references throughout and keep carefully detailed notes of all your sources of materials for material you have used in your work, including any material downloaded from the Internet Please consult the relevant unit lecturer or your course tutor if you need any further advice Student declaration Student(s) name(s) / Signatu I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism I understand that making a false declaration is a form of malpractice Date: May 24th, 2021 Table of content Introduction .3 Executive Summary Major Findings 3.1 PESTEL .5 3.1.1 Political factor 3.1.2 Technological factor 3.1.3 Economic factor Market Level Industry level Country level 10 3.2 SWOT 11 Conclusion 14 Reference list 15 Appendix 17 Introduction Located right in the middle of Hanoi, Metropole Hotel, one of nation's oldest existing operating hotel, has long stood as one of Hanoi’s most celebrated holiday destination Two French businessmen, Gustave Émile Dumoutier and Andre Ducamp, opened this hotel in August 1901 The Hotel Metropole Hanoi has had many owners over the course of its 120-year existence Metropole is now owned by Lodgis, a joint venture between Warburg Pincus and VinaCapital, and Singapore's Indotel Limited, and run by Accor Group, a well-known French hospitality corporation, which explains the hotel's preservation of the old French style As a result, Metropole has a luxurious beauty, splendid but not less elegant, delightfully that bridging the gap between the past and present of Hanoi Metrople has long become an ideal destination for forginers to come to enjoy, relax and work in Hanoi 2 Executive Summary In this report I used the Porter's Five Forces framework and PESTLE analysis to define and analyze the external factors that affecting Metropole and the hospitality industry I also pointed out the possible opportunities andthreats from political, economy and technological factors that were analysed in the report With SWOT analysis, I demonstrated the strengths and weakness of the hotel and then assessed the interrelationships between the organization's external and internal factors in order to develop some strategies for Metropole Hanoi to implement in order to adapt to the impact of Covid 19 Major Findings 3.1 PESTEL A PESTEL analysis is a framework or methodology for evaluating and measuring the macroenvironmental factors that may have an effect on Sofitel Metropole Hotel (Larsson, 2016) 3.1.1 Political factor The CommunistoPartyoof Vietnam is in charge of controlling the whole country, for that reason, Vietnam is considered as a politicallyostableocountry The InstituteoofoEconomics andoPeace (IEP) in Australia, ranked Vietnam at the position ofo60 out ofo163ocountries in the matter of politicalostability, which requires potential of war and political dissent in 2018 A stable political environment is a vital component contributing to the development of any businesses, included hotel business since tourism can flourish in an environment free of turmoil Political stabilitiy is an oppurtunity for Metropole Moreover, Hanoi’s government considered hospitality & tourism to be the spearhead economic sector of the city, especially focused on hotel & resort with the high-quality services and excellent advertise campaigns, therefore the numberoof domesticoandoforeignotourists were increased (Nguyen, 2020) Vietnam is the memberoof the WorldoTourismoOrganization (WTO) and the PacificoAsia TourismoAssociation (PATA) which leads to a new wave of foreign investment (Foreignobrands eyeingoVietnamodue toogrowingoyoung population andoliberalisingoreforms, n.d.) Vietnam aspires to maintain stable ties with its neighbours, regions, and strategic allies, as well as to expand collaboration and value sharing with major countries (Côngotácođối ngoạiocủa ViệtoNam năm 2017ođạt nhiềuothànhotựu nổiobật, 2018) This has created a challenge for Metropole Hanoi since there are more high-class hotels with big foreign investment capitals like Hilton Hanoi Opera, IntercontinentaloHanoioWestlake and SheratonoHanoioHotel with lower service prices than Metropole 3.1.2 Technological factor Nowadays, technology has grown gigantically into any kind of industries As so, the hospitality industry has long recognised the value of technology in delivering outstanding guest experiences and streamlining operations Number of Internet users in Vietnam is considered to be at high levels around the world with 65 million social network users, accounting for 67% of the population in 2020 (Kemp, 2020) Social networking has been a profound impact on the tourism industry, along with the appearance of Digital marketing, it is now much more easier for hotels in Vietnam nowaydas to advertise their brands and reach out to more potential customers Due to Covid-19, Sofitel Metropole has changed its marketing strategy to be more focus on digital marketing through social networks, online news platforms, etc Therefore, the development of social media is an oppurtunity for Metropole Moreover, many hotels, included Metropole Hanoi, have cooperated with OTAs (Online Travel Agent) such as Booking, Traveloka, Agoda, Avia… Through these websites, hotels can ensure their revenues OTAs will help the hotels attract more customers by offering reasonable prices, putting important information of the hotel on their websites so customers can search, compare, and choose to book hotel rooms according to their needs via these websites (12 OnlineoTraveloAgents (OTAs) to IncreaseoYouroHoteloBookings, n.d.) OTAs can undoubtedly be very helpful for hotels, however, this regularly comes at the expense of paying a commission fee for every single booking For every single booking made via OTAs, Accor Group (the operator of Metropole Hanoi) loses a comission of 30% (Easton, 2020), moreover, these websites are likely to force Accor to reduce the prices in order to attract more users come to their websites, therefore, OTAs can be considered as a threat to Metropole Hanoi 3.1.3 Economic factor There are levels of economy: market level, industry level and country level I will analysed Metropole Hotel based on these levels Market Level Sofitel Metropole Hotel has the market structure of Oligopoly, in which theoindustry of theocompany isodominatedoby a reallyosmall number ofolargeofirms When we look at Hanoi hotel industry, a large porportion of market share belongs to top big hotels namely: Sofitel Metropole, JW Marriott, Inter Continetial Westlake, etc According to Vietnam Guide, Metropole Hanoi holds the biggest share, followed by Lotte Hotel Hanoi (10 Best Luxury Hotels in Hanoi Most Popular 5-Star Hotels In Hanoi, n.d.) In this market, Metropole could collude with other oligopolies to control prices and avoid competition, allowing large companies such as Metropole to outrun smaller firms Additionally, it is difficult to enter an oligopoly, which creates an incentive for Metropole Hanoi to solidify its position Therefore, Metropole can be considered as a price-maker and its customers have to accept the prices it offers to use the services The target customer of Metropole is rich people, businessmen and they normally not care about the price but the unique, luxury experience that only Metropole can provide As a result, the demand of Metropole is inelastic Overall, this market is profitable for Metropole since Metropole will earn more money if they increase the price Oligopoly market structure could cause the misbalance in the market share with small firms and the lack of power of consumers, therefore, Vietnamese government has passed Vietnam’soLawoon CompetitionoonoJulyo1, 2019, which focuses on reduce the power of the producers Industry level Porter's fiveoforcesoanalysisoisousedoinothisocase since there areomanyomarketsobut only one sector, and managers can obtain a deeper understanding of the hotel industry's attractiveness before designing new strategies for existing markets to help Metropole recover from the influence of Covid-19 and improving its competitive capability Figure 1: Porter's forces Image source: Oxford College of Procurement and Supply A Threat of new entrants According to Porter (2018), in Oligopoly market structure,othreat ofonew entrantsoin hotel industry is low since it is determined byobarriers tooentry, whichocomprise theosize andoscope of operationsonecessary to accomplish a competitiveocostostructure;oproductodifferentiation and capitalorequirements, which include the amount of cashoandofinancialoresources necessaryoto developoand operateoa company, etc (Cheng, 2013) In order to compete with such giants like Metropole Hotel, the new comers have to have huge capital investments, good channels of distribution and especially, good locations Due to the exceptionally high land prices, Hanoi's hotel industry is constrained by a scarcity of viable sites Overall, this industry hasohigh entryobarriers restrictingonewoentrants, owing primarily to a combinationoofoeconomies ofoscale and aohigh entry capitalocost, as well as a limited supply of suitableolocations B Buyer Power In hotel industry, power of buyers is very high since they are those who require the facilities and services of a hotel With the advancement in technology, it has become very convenient for buyers to compare hotel prices and services in order to make booking decisions without the involvement of middlemen or travel agencies, which means that the cost of switching is relatively low in this sector As a consequence of Covid 19, the number of tourists visiting Vietnam has declined dramatically To be specific, international visitors visiting Vietnam in 2020 would total about million, down 78 percent from 2019 (Nguyen, 2020) which has a negative impact on the tourist industry as a whole, included Metropole Hotel Metropole has to drop the price from million VND to 1,3 million VND per nice, which is never happens before, in order to maintain business and attract more domestic customers C Threat of substitution There are many substitutes for luxury hotels such as motels, homestays, hostels, etc locates everywhere in Hanoi, however, the threat of substitution is still considered to be low Such substitutes like motels, homestays even though offer low price of accommodation, flexible services but they focus on low low-income or cost-conscious customers, which is different from the type of target customers of big hotels like Metropole Metropole focuses onothe “upper” strategic groupsoforoexample, thoseoparticularlyocatering for international customers likeobusiness traveler, theoupperomiddle aged and oldoagedobracket However, during the Covid-19 pandemic, Vietnamese government has to suspend all the entry of foreigners, which is directly related to the targeted customers of Metropole As a consequence, the threat of substitution is higher since recession domestic travel is replace international travel (Cheng, 2013) D Supplier Power Metropole Hotel has Accor Group to be the main supplier for its products ranging from amentities to provisions There are no substitues in the market for the products provided by Accor Group such as: baguette,wine, soap, perfume, coffee, etc from France since Accor Group is the only distributor of these products in Vietnamese hospitality industry Metropole’s ability to give its customers such unique experience from other hotels in the market depends heavily on the distribution of the suppliers Since Accor Group is in charge of operating Metropole Hotel, Accor has enough power to have impact on the price of the output, nevertheless, the power of supplier is still much lower than the power of buyer (Cheng, 2013) E Competitive Rivalry Before Covid-19, due to the oligopoly market structure, the competitive rivalry was low because there were few sellers and every seller supplied a sufficiently large share of the market With the marketing stragery focused on providing differentiation and unique experience for customers, there were not so many hotels in the market can compete with Metropole However, during Covid-19 pandemic, Vietnamese government has suspended all the entry of foreigners that reduces the market share of every hotels because domestic is now the only market Such hotels like JW Marriott Hotel and Intercontinetal Hanoi, which are provide the similar types of service like Metropole as boutique, spa, swimming pool, bar, etc with a lower price, begin to have pressure on market share of Metropole since they are actively developing new strategies to draw new customers Inoorderotooretain the leading position inotheomarket, Metropole has to innovate, modify the marketing strategy Country level A GDP Figure 2:VIETNAM’S GDP GROWTH RATE IN THE PERIOD 2011-2020 Image source: General Statics Office Online According to General Statics Office recent report in January 2021, there is a considerable decrease Vietnam’s growth rate in 2020 comparedoto the sameoperiod in theopreviousoyear (from 7,02 to 2,91) due to the outbreak of Covid-19 Service industries such as motels and hotels were forced to leave, precipitating an economic downturn in Vietnam and around the world Nevertheless, according to the report of Asian Development Bank in April 2021, it seems that the year 2021 will witness an increase in the GDP growth rate to 6,7 They believe that th eneed for travel and relaxation is likely to increase after Covid 19, when people were almost forced to limit their travel in 2020 This is an excellent opportunity for hotels, particularly given Metropole's potential to improve customer-attraction strategies B Inflation Due to Vietnam's rapid economic growth, inflation or currency depreciation is inevitable In a oligopoly market, such hotels like Metropole considers inflation as an oppurtunity since its demand is inelastic Nevertheless, due to the influence of Covid-19, many companies and consumers have been required to lower spending, leading to a decline in tourism demand Metropole, a five-star hotel, is having difficulty in conducting business Therefore , if the economy improves steadily, the hotel industry will improve; if the economy still experiences a slow growth rate, the hotel industry will continue to be extremely difficult C Unemployment According to General statics office of Vietnam, the unemployment rate in 2020 is 2.48%, a 0.31 percentage point higher than that in 2019 As shown by this statistic, structural unemployment is the main type of unemployment in Vietnam, which indicates that many businesses are short of qualified employees, which poses a serious challenge to businesses in the long run However, in Metropole case, unemployment is not a threat since all of its employees are trained and studied in Accor Academy, therefore, Metropole always has qualified employeees in spite of high unemployment rate in Vietnam 3.2 SWOT STRENGTHS  Franchise Support Team of Accor hotel: Accor Group has been operating Metropole Hanoi for ages With a franchise model, Metropole is given an international management team with a lot of experience in assisting the hotel run smoothly and minimizes risk, moreover, Accor Group also plays the role of sole supplier of Metropole, it provides the  hotel unique products that no competitors have Achieved 5-Star rating standard: Metropole Hotel, one of nation's oldest existing operating hotel, has long stood as one of theohistorical symbolsoofoHanoi At its core, Metropole Hotel maintains an unmistakable, impressive design and facilities to be a perfect combination of the past and present of Hanoi It provides its guests with the most luxurious  facilities available today: 364ohigh-classorooms, swimmingopool, restaurantsoand bars, boutiques, etc Have a large capital investment: he two biggest shareholders of Metropole areoLodgis, theojoint venture betweenoWarburgoPincus and VinaCapital andoSingapore’soIndotel  Limited, the total investment is up to $74.7 million (Thuy, 2020) Digital technology: Metropole Hotel is always strive for being at the forefront of technology in order to make the most comfortable booking experience for customers Having realised the importance of online booking, along with the rapid evolution of smart-phone, Accor Group signed a deal with First Data to develop digital technology To be specific, Accor puts digital technology at Metropole to help customers get easier with checking-in, check-out, updating information process (Lemmon, 2017) WEAKNESSES  Concentrate mostly on foreign customers: While Metropole’s comepitors are gradually focusing on a diverse range of consumers from both domestic and international market, Metropole still focus mainly on foreign customers since they don’t bother the extremely expensive price of Metropole Metropole's dependence on foreign customers, especially during the outbreak of Covid 19, is a weakness As previously reported, during Covid 19, the Vietnamese government has suspended all the entry of foreigners As a result, the  number of visitors to Metropole has decreased sharply Out-dated facilities: Since Metropole has opened since the year 1901, it is inevitable that some facilities are out-dated Through some websites like TripAdvisor or Osyter, there are some reviews complain about some old-time designed like walls aren’t soundproof, much smaller boutique than other luxury hotels and no car park available - STRENGTH Franchise Support Team of - WEAKNESS Out-dated facilities - Accor hotel Achieved 5-Star rating standard Digital technology Have a large capital investment - High price Concentrate mostly on foreign customers Oppurtunity -Political stability -The rising in GDP growth rate after Covid 19 -The development of social media Threat - The rapid development of ST strategies - Cooperate with First Data to develop WT strategies - Reduce the price OTAs -The luxury hotel segment is its website, application to reduce the - Create more interesting events influence of OTAs suitable with domestic customers to - Maintain customer relationships to gain more advantages in marketing highly competitive as a result of Covid 19 -The demand is decrease -The suspension of all foreign retain current customers entries due to Covid 19 ST strategies As I had mentioned before, although OTAs is undoubtedly helpful for hotels but they also charge a comission of 30% for every single booking and they also force the hotel to reduce the price Since Accor Group signed a deal with First Data to develop digital technology, this is the chance for Metropole to create its own booking online website and application in multiple platforms With a large investment capital, they can innovate new technology features to make the website more friendly, interactive to domestic customers Moreover, Metropole have finance resource to run promotions on social medias and network to market its website and application (S3, S4- T1) In order to maintain customer relationships, Metropole should try to utilise the membership card Le Club Accor To so, all the benefits of the card like free amenitites, discount in room services,… has to promote widely on many websites, platforms to attract more new potential members For customers that are members, Metropole can offer several ranks for the membership card bases on amount of time that members spending in Metropole, each rank has exclusive benefits such as free room upgrade, rriority check-in/out, etc Therefore, it will encourage customers to stick with the hotel longer and longer (S2, S3 – T2, T3, T4) WT strategies As a result of Covid 19, Vietnam's economy witnesses a downfall and Vietnam’s tourism is on the decline, which is lessening the number of visitors coming to Metropole Therefore Metropole should create more interesting events to attract more attetion from domestic market In the past, such events like “Gaja: Exceptional Italian Wines” or “Korean Gastronomy Week” only focused on attracting foreign customers To change that, Metropole should keep up the current trend in Vietnam to make more events focus on Vietnamese, these events could relate to Vietnam national beauties, the prevention of Covid 19, etc Overall, these events will be hold to establish customer relationships, to help customers during and after the pandemic, and to attract new customers as well (W3 – T3, T4) Furthermore, to capitalize on the national economic downturn, the hotel should further change the price stay relevant with its competitors, improve the facilities during the low occupancy period, and, when the outbreak is over, publicize these improvements to attract more domestic and forgein customers (W1, W2, W3 – T2, T3) Conclusion So on a whole, in this report, I analyzed and demonstated how the macro environment affected Metropole Hotel WithoPESTEL andoSWOToanalysis, I have aocomprehensiveopictureoofothe companyosuch as both positiveoand negativeofactors Theoreport also inclusesointernal and externalofactors of theocompany suchoas strengthsoandoweaknesses, opportunitiesoandothreats All thing considered, Metropole main objective is to provide unique , luxury experience for highclass forgein customers Nevertheless it givesothe hotel bothoadvantages andodisadvantages Reference list Cheng, D., 2013 Analyze the Hotel Industry in Porter Five Competitive Forces The Journal of Global Business Management, 9(3), pp.52-57 Das, K., 2019 Vietnam's Competition Law and its Impact on Foreign Companies [online] Vietnam Briefing News Available at: [Accessed 18 May 2021] Easton, D., 2020 OTA Comission Rates: The Complete Guide to OTA fees [online] hotelpricereporter.com Available at: [Accessed 12 May 2021] Goldberg, E., n.d The Benefits of the Franchise Model [online] Franchising.com Available at: [Accessed May 2021] Ha, T., 2021 Viet Nam economy in 2020 the growth of a year with full of bravery [online] General Statistics Office of Vietnam Available at: [Accessed 15 May 2021] Kemp, S., 2020 Digital 2020: Global Digital Overviews [online] DataReportal – Global Digital Insights Available at: [Accessed 10 May 2021] Larsson, C., 2016 PESTEL Analysis explained with examples [online] B2U.com Available at: [Accessed May 2021] Lemmon, C., 2017 AccorHotels signs payments deal with First Data [online] Retail Systems Available at: [Accessed 16 May 2021] Nguyen, H., 2020 Hà Nội: Phát triển du lịch thành ngành kinh tế mũi nhọn: Đồng nhiều giải pháp - Tổng cục Du lịch Việt Nam [online] vietnamtourism.gov.vn Available at: [Accessed May 2021] 10 Nguyen, Q., 2020 2020 a devastating year for Vietnam's tourism [online] vnexpress.com Available at: [Accessed 14 May 2021] 11 oxfordbusinessgroup.com n.d Foreign brands eyeing Vietnam due to growing young population and liberalising reforms [online] Available at: [Accessed May 2021] 12 Porter, M.E (1985) Competitive advantage: creating and sustaining superior performance New York: The Free Press 13 Porter, M.E (2008), ‘The five competitive forces that shape strategy’, Harvard Business Review, Vol 86 No 1, pp 79-93 14 Revfine.com n.d 12 Online Travel Agents (OTAs) to Increase Your Hotel Bookings [online] Available at: [Accessed 11 May 2021] 15 Thuy, H., 2020 Owners of Metropole Hanoi proposed for hotel operation extension to 70 years [online] Vietnam Investment Review Available at: [Accessed 16 May 2021] 16 vietnamnews.vn 2020 Việt Nam suspends foreign entry, starting March 22 [online] Available at: [Accessed 16 May 2021] 17 vietnamnews.vn 2020 Việt Nam suspends foreign entry, starting March 22 [online] Available at: [Accessed 16 May 2021] 18 VOV.VN 2018 Công tác đối ngoại Việt Nam năm 2017 đạt nhiều thành tựu bật [online] Available at: [Accessed 12 May 2021] Appendix Vietnam’soLawoon Competition Vietnam’s Law on Competition came into effect on July 1, 2019, replacing the 2004 version of the law In June 2018, Vietnam passed the new regulation, which focuses on competition restraining agreements, market dominance, economic concentration, and unfair practices (Das, 2019) Theoretical framework of forces analysis: Porter's five force analysis is focused on microeconomics and has been one of the most wellknown methods and applied in a large number of big companies, up to the present day It is predicated on the premise that the macroenvironment has an "impact" on how strategies are developed The five forces of Porter’s analysis are threat of new entrants, threat of substitutes, buyer power, supplier power and competitive rivalry:  The threat of new entrants is depended on the barrier to entry that industry and debates that the threat does not arise from new business entering the industry but from what  influences competition and affects the profitability of that industry (Porter, 2008) The threat of substitutes comes from products that provide either similar or more cost-  effective to the product (Porter, 2008) Buyer power is determined based on the customer’s influence on the price and  profitability of the company Suppliers are the people who provide all sources of business that need to run the business Their power is also decided by the impact that the suppliers have on the price and profit  ability of the firm Competitive rivalry is about the intensity of rivalry within the industry in which high level of competition will lead to the decrease in price and profitability of the company (Porter, 1985) SWOT analysis SWOT analysis is the simplest tool for analyzing the company's strengths and weaknesses (S-W), and even the opportunities and threats (O-T) This would assist the organization in increasing visibility in both future market plans and decision-making Value Chain HRM in Metropole Hotel Unlike other hotel, HRM’s manager of Metropole recruits the employees from Accor Academy Mr Haandrikman, general manager of Metropole, had said that in order to provide the most unique, luxury service and experience to customer, the hotel had to have an unique, talented, best workforce in the whole hospitality industry in Hanoi According to the guest speaker, the company has a core value of employees: "All the people who work with us, we call them a "heartist" - a combination of heart and artist - is a very important factor They're the foundation of the company, and it's important to protect them." When Covid 19 has broken out, although most hotels in the industry were forced to close or close temporary, Metropole was concerned that their workers would lose their jobs or suffer from a lack of income, so they remained open Mr Haandrikman said: "I asked the staff if they could keep working and hundreds of them were ready They work with us in the good days, and we have to stand with them in the difficult times" That has contributed to the increase in the productivity and the commitment of Metropole’s employees