Banyan Tree

Published: 2019-11-07 09:00:00
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This report offers and analysis and evaluation of the macro environment and microenvironment factors that may influence Banyan Tree Holdings success in America, Europe, Arab and Asia and the recommendations which identify the opportunities and challenges of each market. The report has used research from various scholarly journal articles and books to collect information. The research has discovered that Banyan Tree is a renowned hotel business that has a good reputation in the market and needs to improve its marketing strategies as well the quality of services it offers to succeed in the new markets.

Banyan Tree Holdings Ltd. is an operator of resorts and spars that has new branches in Mexico, Maldives, United Arab Emirates (UAE) and China in America, Europe, Arab, and Asia regions respectively. It has macro and micro environmental factors that affect its operations. The business is a global brand that is found in areas such as Spain, Mexico, Morocco, and in the Arab world.

Macro-environment

The macro environment consists of political, economic, social and technological factors.

Political

Banyan Tree has been affected by various political factors in Asia such as government regulations where the Chinese government has focused on e-commerce for many businesses (Shen 2015). The country has not drafted its e-commerce legislation that supports consumer rights, recognition, and privacy of digital signatures which may affect Banyan Tree Holdings that could highly affect the company as it has an e-commerce platform. Europe has recently faced terrorist attacks which could affect Banyan Tree in Maldives. Morocco has had political stability thus would lead to the growth of business in Tamouda Bay. The United Arab Emirates has had political conflicts over oil reserve ownership that could trigger wars which may affect the operations of Banyan Tree in the country. America, on the other hand, has high political instability, and there is pressure for high wages that may require Banyan Tree to reduce its operational costs to offer its employees higher wages.

Economic

The GDP of China has increased over the years, and it has almost surpassed that of the U.S. There is more export business and potential urban growth which is a boost for Banyan Tree branches in China (Malesky and London 2014). There is, however, high property prices and inflation rate which means Banyan Tree may face financial problems before the economy in China stabilizes. The service sector holds the highest part of the Mexican economy which is 73%, and Banyan Tree is among the businesses in this sector (Zarate-Lomeli et al. 2013). The Growth Domestic Product (GDP) has risen from 1.4% in 2013 to 4.2% in 2016 while the inflation rate has decreased from 5.3% in 2009 to 3.8% in 2013. Banyan, therefore, has a good economic environment to operate in Mexico. The economy in Maldives relies heavily on tourism that generates 28% of its GDP (Potjanajaruwit 2016). The tourism sector boosts the hotel industry to a great extent hence the branch in Europe is fit for to enable Banyan to get enough profits. The United Arab Emirates had low unemployment rates and had a GDP growth rate of 3.4% in 2016 which has reduced from 7.2% in 2012. It means that there is a decrease in the real income and wage growth thus the business in UAE may be affected due to the change in GDP.

Socio-cultural

Citizens of UAE live comfortably because most have well-paying jobs. The Muslim religion, however, controls the highest part of the country thus almost everyone is Muslim in UAE. The good salaries can enable the citizens to spend more thus promote local businesses such as Banyan Tree. Maldives is also an area that has Islam as the official religion, and the average age is 26.2 years. It, however, has shortage of labor and employers have been forced to offer competitive working conditions to appeal to employees. Banyan Tree may, therefore, have inadequate and low skilled staff due to the reasons above. Mexico is improving its access to education and literacy levels hence an educated nation. Rural-urban migration is also high in Mexico thus the employees in the region are well-skilled and available due to the migration (Bennett and Sharpe 2014). China as well has high literacy rate of over 90% of the population. Banyan branches in China, therefore, have enough and highly skilled employees as well as thus more profits to the hotel industry among others. The wage levels are not high in China because of the many employees which will enable Banyan to save some money from the low wage rates.

Technology

China is a country that has embraced technology and it has over 420 million internet users. Most businesses in the country use e-commerce platforms to sell or market their products among them Banyan Tree (Lam et al. 2015). It has also invented many mobile telecommunications as well as embraced the use of extranet and intranet in companies or businesses. Banyan Tree can easily thrive in China due to the technological advancements in the country. UAE has a middle-aged and wealthy population thus technology is a non-issue in the country. The businesses in UAE such as Banyan Tree have leveraged technology in their operations. Mexico has a young generation that is focused on the sales and creation of apps as well as biotechnology and nanotechnology. The government is also emphasizing the use of biotechnology and nanotechnology which makes it easy for businesses to automate their systems and reach consumers easily through online platforms. Maldives, on the other hand, has a high number of people using mobile-cellular networks, and many are linked to international submarine cable, Fiber Optic Link Around the Globe (FLAG) which has made internet connectivity faster and cheaper in the region (Cheng 2016).

The micro environment involves the porters five forces which are the buyers purchasing power, suppliers bargaining power, the threat of new entrants, substitutes and competitors.

Micro-environment

The microenvironment factors affecting Banyan Tree Holdings are common in Asia, America, Arab and Europe. There are many businesses offering similar hotel services such as Banyan Tree, and it has made it easy for the clients to have a variety of companies they can rely on for spars and resorts. The bargaining power of the suppliers is, therefore, low because most countries offer low costs for their products and services and the operations of the hotels rely on local resources hence low operational costs. The customers can also easily substitute the hotel services hence businesses such as Banyan Tree need to competitive.

The bargaining power of the customers is moderate. The customers have chosen the company for its brand identity because many know it as Sanctuary for the Senses and Banyan Tree has also segmented its market well. It has targeted people from 30 to 40 years old (Janyajarasporn 2015). It has offered amazing services that customers like. There is, however, an increase of similar businesses where the new companies are gaining the market share hence may outdo Banyan Tree. The competitive rivalry is high because of the high numbers of hotels globally offering hotel and spar services at lower prices than Banyan Tree hence attracting customers to their businesses and posing a great threat to Banyan.

Banyan Tree has many competitors who have made it easy for customers to find similar renowned services easily. The threat of substitute products is, however, moderate for Banyan Tree as it still has a distinctive position in the hotel industry globally. The threat of new entrants is low because of the high costs of investment needed to start similar businesses. The non-performing firms also find it hard to leave the industry easily without facing huge losses.

Recommendations

Banyan Tree needs to come up with competitive strategies in the market to ensure the penetration into the new regions will be successful. The hotel line should ensure that every new region it starts its services, it offers cultural experiences of the native settlers of that area. For instance, the hotel in Mexico can have Mexican cuisines in their menu, play Mexican music and decorate the buildings according to the Mexican culture and architecture (Shi and Zhuo 2014). There is high competitive rivalry that requires Banyan Tree to have unique services to attract customers. It will make the customers acquire the feeling that they are in a particular city or country because of the services offered. It will also make customers who use Banyan Tree hotels when they travel across the world to have a different experience which is more enticing than using hotel rooms that look alike no matter the country one is in. In China, Banyan Tree should work with other private sector businesses to liaise with the government to adjust the laws of e-commerce businesses which will enable the business operations be safe from violation of consumer and ownership rights. In China, e-commerce regulations have not been drafted hence there is a need to solve this issue.

Banyan Tree needs to have security surveillance systems in all their hotels, especially in Europe and UAE. The two regions have experienced terrorist attacks or wars which may discourage customers from using the hotels in the countries. It enables customers to feel secure when using the hotels and also attracts customer loyalty due to the quality services offered by the company. Banyan Tree needs to maximize the availability of resources such as labor and minimize the operational costs to maximize their profits. The business will, in turn, receive higher profits and hence manage to offer better prices in the market compared to its competitors. Lower prices will attract more clients hence expand the market share of the business. Areas such as Maldives where educational levels are low, Banyan Tree should offer corporate social responsibility activities such as building schools and pay for some of the children in this area their tuition fees to enable them to have a better future (Cherapanukorn and Focken 2014).

The branches in UAE and Maldives need to have Islamic architecture or rooms secured for prayers which are main requirements of the Islamic community. It will hence attract more clients in the countries to use the hotel because they are assured of having their normal religious schedules such as the prayers even within the hotel.

There is need to offer promotions to return clients. Customers feel appreciated when they are offered discounts because they frequent or regularly pay for services for a given business. Discounts for regular customers should, therefore, be a plan that Banyan Tree should implement. There should also be the use of celebrities, media platforms and direct marketing from their clients to other potential customers to market the hotels because they are influential and will attract more clients to use the hotels.

Many customers use Banyan Tree for the quality services it offers to them. There are times the economic status in some countries may deteriorate due to high inflation rates or political conflicts. It leads to losses in many businesses which may make the businesses offer lower quality of their services hence discouraging clients from using them because they do not provide value for money to them. Despite such economic crises, Banyan Tree needs to ensure its services are always of high quality to retain its market share and if possible better the quality. In the end, Banyan Tree will have a competitive advantage globally and retain a higher market share

References

Bennett, D.C. and Sharpe, K.E., 2014. Transnational corporations versus the state: The political economy of the Mexican auto industry. Princeton University Press.

Cheng, F.W., 2016. Constructing hotel brands: A multimod...

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