MNG3701 Assign 02 Semester 01
UNIQUE NUMBER: 78056
Introduction:
Organizations operate in a given and fast changing environment; in order to
adapt to the changing environment a business strategy must be formulated in
response to the environment in which it operates.
Porter's Five Forces, PESTLE(G), VRIO and Value Chain are some of the
different business environmental scanning tools that are used to analyse
business environment depending on the situation to determine business’s
strengths, weaknesses, opportunities and threats to help formulate strategies in
the competitive space in driving the business to achieve its goals and objectives.
1. a) Briefly explain the environment in which the use of Porter's five forces
would be applicable. Your explanation should be supported by examples
from the case study. (10)
Porter’s five forces would be applicable in external environment in an industry.
Looking at all Michael Porter’s five forces which include: 1. Threats of new
entrants to the industry 2. Threats of substitute products 3. Power of buyers or
customers 4. Power of suppliers (to businesses in the industry) 5. Rivalry among
businesses in the industry 1. Threats of New Entrants to the Industry; they all
relate to external factors of a particular industry. For example the competitive
environment in the case study of The City Lodge Hotel Group:
Competitive Rivalry among Businesses in the Industry: Rivalry is fragmented
and highly competitive placing pressure on all sector participants especially on
branded hotels like City Lodge Hotel Group. According to the case study the
rivalry is compounded by rapid development of digital consumer of booking and
the growing interest of international hotel groups in the quest of developing and
expanding their offerings in Africa.
The buyer power: the groups’ customer buying power largely depends on South
Africa’s GDP growth rate; the buyer power drops to medium due to lower investor
confidence on the back of the controversial land reform debates, high
unemployment rates, electricity crisis and credit rating downgrade in the country.
Other factors include the impact on international tourism causing the confusion
1
, around visa requirements for families traveling to South Africa as well as the water
crisis affecting Western Cape and Eastern Cape.
b) Briefly explain the environment in which the use of PESTEL(G) would be
applicable. Your explanation should be supported by examples from the
case study.
External environment is made up of remote or macro environment and market
environment. A PESTLE(G) analysis is applicable in the macro and market
environments and helps a team to understand the organization’s market and
business position better, plan strategically, and conduct market research in new
and existing markets. The framework provides an overview of the crucial external
influences on an organization and encourages strategic thinking and helps to
evaluate how a business strategy fits into the broader environment. The
acronyms PESTLE(G) stand for Political, Economic, Social, Technological,
Environment and Global factors.
Using technological factor in the case study for example, according to the City
Lodge Hotel Groups Integrated report 2019: The Group takes steps to keep
abreast of the industrial revolution challenges to safeguard its technology
systems from risks by protecting its clients from cyber fraud and other forms of
technological crime; it also takes the opportunity to design innovative Lodgix
property management system to capitalized on digital shifts of technology. The
Group also developed an app and new website that places guests in control of
their own bookings via mobile devices, online payments and other related
activities to maintain existing relationships and attract new guests to maintain its
competitive edge over rivals.
2. Use examples from the case study to explain the acronym VRIO. (10)
According to Rachel Smith, a Clear Point Consultant, who works with Clear Point
customers to improve their performance management and strategy execution:
VRIO is an acronym for a four-question framework of Value, Rarity, Imitability, and
Organization. It is used to uncover "sustained competitive advantage."
Value: The use of human capital management data to hire and retain innovative,
productive employees. For example, City Lodge Hotel Group has a team of highly
skillful and competent employees of all disciplines from executive managerial
positions across functional to operational level management consistently creating
hotel and hospitality services to its consumers and some African countries. The
2
UNIQUE NUMBER: 78056
Introduction:
Organizations operate in a given and fast changing environment; in order to
adapt to the changing environment a business strategy must be formulated in
response to the environment in which it operates.
Porter's Five Forces, PESTLE(G), VRIO and Value Chain are some of the
different business environmental scanning tools that are used to analyse
business environment depending on the situation to determine business’s
strengths, weaknesses, opportunities and threats to help formulate strategies in
the competitive space in driving the business to achieve its goals and objectives.
1. a) Briefly explain the environment in which the use of Porter's five forces
would be applicable. Your explanation should be supported by examples
from the case study. (10)
Porter’s five forces would be applicable in external environment in an industry.
Looking at all Michael Porter’s five forces which include: 1. Threats of new
entrants to the industry 2. Threats of substitute products 3. Power of buyers or
customers 4. Power of suppliers (to businesses in the industry) 5. Rivalry among
businesses in the industry 1. Threats of New Entrants to the Industry; they all
relate to external factors of a particular industry. For example the competitive
environment in the case study of The City Lodge Hotel Group:
Competitive Rivalry among Businesses in the Industry: Rivalry is fragmented
and highly competitive placing pressure on all sector participants especially on
branded hotels like City Lodge Hotel Group. According to the case study the
rivalry is compounded by rapid development of digital consumer of booking and
the growing interest of international hotel groups in the quest of developing and
expanding their offerings in Africa.
The buyer power: the groups’ customer buying power largely depends on South
Africa’s GDP growth rate; the buyer power drops to medium due to lower investor
confidence on the back of the controversial land reform debates, high
unemployment rates, electricity crisis and credit rating downgrade in the country.
Other factors include the impact on international tourism causing the confusion
1
, around visa requirements for families traveling to South Africa as well as the water
crisis affecting Western Cape and Eastern Cape.
b) Briefly explain the environment in which the use of PESTEL(G) would be
applicable. Your explanation should be supported by examples from the
case study.
External environment is made up of remote or macro environment and market
environment. A PESTLE(G) analysis is applicable in the macro and market
environments and helps a team to understand the organization’s market and
business position better, plan strategically, and conduct market research in new
and existing markets. The framework provides an overview of the crucial external
influences on an organization and encourages strategic thinking and helps to
evaluate how a business strategy fits into the broader environment. The
acronyms PESTLE(G) stand for Political, Economic, Social, Technological,
Environment and Global factors.
Using technological factor in the case study for example, according to the City
Lodge Hotel Groups Integrated report 2019: The Group takes steps to keep
abreast of the industrial revolution challenges to safeguard its technology
systems from risks by protecting its clients from cyber fraud and other forms of
technological crime; it also takes the opportunity to design innovative Lodgix
property management system to capitalized on digital shifts of technology. The
Group also developed an app and new website that places guests in control of
their own bookings via mobile devices, online payments and other related
activities to maintain existing relationships and attract new guests to maintain its
competitive edge over rivals.
2. Use examples from the case study to explain the acronym VRIO. (10)
According to Rachel Smith, a Clear Point Consultant, who works with Clear Point
customers to improve their performance management and strategy execution:
VRIO is an acronym for a four-question framework of Value, Rarity, Imitability, and
Organization. It is used to uncover "sustained competitive advantage."
Value: The use of human capital management data to hire and retain innovative,
productive employees. For example, City Lodge Hotel Group has a team of highly
skillful and competent employees of all disciplines from executive managerial
positions across functional to operational level management consistently creating
hotel and hospitality services to its consumers and some African countries. The
2
