Strategic Management A1

Module Code: TH6AH02O

Module Leader: Sneha Thakkar

Date of Submission: 8 March, 2019

Student ID: 21386525

Word Count: 1853
Executive Summary:
It is been approach by the CEO, Christopher Nassetta to evaluate the strategic environmental tools. The
internal tools used are Porter’s Value Chain Analysis, BCG Matrix and Mckinsey’s 7S. The external tools
used are Porter’s Five Forces, Pestle Analysis, and Industrial Lifecycle. This report critically analyses internal
and external tools for better performance. This report aims to evaluate the strategic environment where they
operate in. The report will be forwarded to higher management. The report consists of various academic
sources such as books, journals, articles, annual reports, pdfs, e-books, and case studies.

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Table of Contents
Executive Summary.....................................................................................................................................1
About Hilton...............................................................................................................................................3
Mission and Vision......................................................................................................................................3
Industry Overview.......................................................................................................................................3
Facts and Figures........................................................................................................................................3
Internal Analysis.........................................................................................................................................3
Value Chain Analysis...................................................................................................................................3
Boston Consulting Group Matrix.................................................................................................................4
Mckinsey’s 7S..............................................................................................................................................4
External Analysis.........................................................................................................................................4
Porter’s Five Force Analysis.........................................................................................................................4
Pestle Analysis............................................................................................................................................6
Product Lifecycle.........................................................................................................................................6
Conclusion...................................................................................................................................................6
Bibliography...............................................................................................................................................7
Appendix.....................................................................................................................................................9

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About Hilton:
Hilton is an American multinational hospitality brand established by Conrad Hilton in 1919, Texas
(Hilton.com 2018). Hilton hotels and resorts is a full-service hotels with its headquarters in Virginia, U.S.A. It
is one of the well-known and the biggest hospitality brands worldwide. It targets corporate and leisure
travellers in popular locations and key cities. Currently Blackstone group is acknowledged as the owner of
Hilton (Ahsan, Qazi and Syed, 2014).

Mission and Vision:

Pratap (2017), states “Hilton’s vision is to fill the earth with light and warmth of hospitality by producing
extraordinary encounters to every hotel, guest and every time.” However, Hilton.com (2018), suggests that its
mission is “to be the most friendly organization in global market by initiating heartfelt events for guests,
significant prospects for team mates, great importance for owners and a positive effect in the communities.”

It has been awarded various awards (App 1.3) and record breaking achievements (App 1.4) over the years
such as 10 Best workplaces in the Fortune 500 in 2017 (Newsroom.hilton.com, 2016), “World’s most
reputable companies, 2017” and “America’s Best Employers for Diversity, 2017 Forbes”
(Newsroom.hilton.com, 2018).

Industry Overview:
Hilton hotels caters to the hospitality industry globally (Ir.hilton.com, 2017). Hilton Worldwide was acquired
by Blackstone group which owns 76 percentage of Hilton’s stock in 2017 (Ahsan, Qazi and Syed, 2014).

Facts and Figures:

Since 1919 it has multiplied its chain to over 100 countries (App 1.2) and is one of the swiftest emerging hotel
brands worldwide (Annualreports.com, 2017). Which includes 14 lavish brands in its portfolio such as Double
Tree, Waldorf Astoria, Canopy, Curio to name a few (App 1.1). It has over 5000 hotels with 856,000 rooms
and counting (Trejos, 2018). Its loyalty program, comprises of over 60 million members
(Corporatereport.com, 2017). In 2017, Hilton opened its 14th brand in its record setting growth (App 1.5).
Cederholm (2014), states “In 2007, Hilton was acquired by Blackstone group owning 76 percentage of
Hilton’s stock.

Internal Analysis:

Value Chain Analysis:

Recognizes the corporate activities which creates value and competitive benefit to the business (Dudovskiy,
2016). Ensign (2001), states “Value chain analysis can be used to create competitive strategies, understand the
source of competitive advantage and find the links between activities which create value (App 1.7).”
Firm Infrastructure: Hilton has many hotels globally and Hilton’s goal is to provide high quality services to
the guests (Kulgarin, 2016).
Human Resources: Hilton trains employees to deliver quality service and motivate to work better (Kulgarin,
2016).
Technology: Technology is used to enhance customer satisfaction and smooth usage (Kulgarin, 2016).
Procurement: Kulgarin (2016) states, “Hilton requires large requirements for its suppliers and they have to
follow rules set by Hilton. Suppliers mustn’t be involved in unethical issues.”
Inbound Logistics: Hilton represents highly refined system which ensures easy operations globally.
Dudovskiy (2016) states, “The procurement group aggregates purchasing national contracts for its numerous
brands which enables local providers to make sense to do so.”
Operations: Dudovskiy (2016) states, Hilton operates its business ownership in three divisions. “Ownership
which is owned or leased by Hilton, Management and franchise which is owned by third parties and managed
by Hilton, and Timeshare which is involved in selling, operating and marketing timeshare intervals, resorts
and membership clubs.”
Outbound Logistics: Is referred to activities required to transport the finished products to the customer.
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Marketing and Sales: It hires over 700 sales professional globally and the sales team is allocated with tasks
of seeking bookings from guests. Dudovskiy (2016 states, “The loyalty program adds value to the firm’s
marketing and sales by encouraging guests to re-visit since they get points to redeem for free room nights, wi-
fi and more.”
Service: A fine class service is one of Hilton’s competitive benefits. Dudovskiy (2016) states, “It’s customer
service team members are fluent in over 10 languages and customer services can be reached through social
media 24/7.”
1. After analysing value chain analysis Hilton may develop a technological product to appeal the guests.

Boston Consulting Group Matrix:

Stimpson and Smith (2015), states “Boston consulting group matrix (BCG) is a growth-share matrix (App
1.8).” It is a process of analysing the product portfolio of a business on the basis of its market growth and
market share. Lominé, Muchena and Pierce (2014), states “Market share growth displays how appealing a
product is in the market whereas comparatively market share aims at how much of the market a product has
captured and its strength in the market.”
Stars: Ahsan, Qazi and Syed (2014), states “It represents a high and effective share and development in the
swift developing industry. Generally start firms needing a high capital to fight from the competition.”
Cash Cows: Hilton has a high market share in a gradually developing industry. These firms generally create
huge amount of money required to sustain their business than the primary cost (Ahsan, Qazi and Syed, 2014).
Dogs: These are the firms who have low market share in a rapid developing industry. Organizations are
unfortunate since they are incapable to get closer to the growth and pace of the firms functioning in the same
industry (Ahsan, Qazi and Syed, 2014).
Question marks: Hilton’s new property desire to enter a high growth market with a limited shares are known
as Question marks (Ahsan, Qazi and Syed, 2014).
Hilton has a large market share and brand recognition in the hospitality industry and it has to maintain the
same effectiveness for a long duration in the market to stay competitive. Hence it falls under ‘Cash Cows
(Ahsan, Qazi and Syed, 2014).’
1. After analysing BCG Matrix Hilton should embrace dynamic innovations to stay in the industry
(Masra, 2016).
2. It is important to change dogs to cash cows as it shows negativity.

Mckinsey’s 7S:
Mckinsey’s 7S is a tool used to comprehend the complexity of the company. Mckinsey’s 7S underlines robust
connections between components in such manner that an alteration in one component triggers alterations in
others.
Strategy: Hilton’s strategy attempts to relate the experience of staying in Hilton with customer perception of
status, recognition and luxury (Ravanfar, 2015).
Structure: Hilton’s organizational structure is hierarchical and is divided into ownership, management and
franchise and timeshare (Ravanfar, 2015).
Systems: “Hilton depends on various systems but since the appointment of President and CEO Christopher
Nassetta its simplified to a single firm system for employee performance” (Ravanfar, 2015).
Style: Hilton represents the way the company is managed by top level managers and their management styles
(Ravanfar, 2015).
Staff: Employee to be given 30% discount on all Hilton hotels (Ravanfar, 2015).
Skills: The abilities that Hilton's employees perform well which also consists of capabilities (Ravanfar, 2015).
Shared Values: Highest and lowest comments of Hilton Belfast are posted on employee cafeteria (Ravanfar,
2015).
1. After analysing Mckinsey’s 7S Hilton can introduce a new budget luxury segment to spread its target
audience globally.

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External Analysis

Porter’s Five Force Analysis:

Hoang (2012), states “the Porter’s five force analysis is a strategic management instrument created by Michael
Porter (App 1.9).” It was developed to examine industry and to comprehend how the five forces affect the
profitability and create a tactic for improving Hilton hotels and resorts competitive advantage and long term
profitability in hotel industry (Fern Fort University, 2018).
Threat of new entrants: New competitors in hotels causes innovation of approaching things in a unique way,
which lays pressure on Hilton by low pricing strategy and diminishing costs to the guests. Hilton has to cope
to all such encounters and shape hindrances to maintain its edge in the competition.
Threat of substitute products or services (High): In hospitality it’s not important, since direct substitutes of
Hilton are people staying at family’s or friend’s house or renting apartments (Fern Fort University, 2018).
Bargaining power of buyers (High): Because of the high competitiveness in the industry guests frequently
ask for discounts.
Bargaining power of suppliers (Low): Dudovskiy (2016) states, “It purchases from in excess of 4000
suppliers internationally and the bargaining strength of the majority suppliers is less because of the lack of
exceptional products supplied.” Which significantly makes the suppliers paramount and thus none of the
suppliers switch costs for Hilton.
Rivalry among existing firms (High): Hilton competes with Marriott, Hyatt, Radisson Blu in the premium
segment (Dudovskiy, 2016).
1. After analysing Porter’s five forces, Hilton might consider to increasing the scope of innovative
products specifically events and conferences which will increase revenue from the services during low
seasons (Masra, 2016).
Pestle Analysis: It is business tool determining the pivotal structural alterations in the business (App 2.0). It
is a medium of evaluating all the external aspects that might influence the success of a business (Lominé,
Muchena and Pierce, 2014). A business deems certain influences of every section and afterwards carries out
an analysis to identify the most significant impacts (Stimpson and Smith, 2015).

Political Cox (2017) states, “Travelers increasing because of British pound’s drop after Brexit
vote.”
Economical U.K economy grew swifter after Brexit (Bowler, 2017).
Social Growth of gluten free foods (Ross, 2015).
Technological Technological impact on product offerings (Forgione, 2014).
Legal Health and safety laws and Employment laws, Hilton (Ir.hiltonworldwide.com, 2016).
Environmenta Diminishing waste from hotels aids protect the environment (Tuppen, 2012). Hilton
l Worldwide goes environmental friendly (World Wildlife Fund, 2016).
1. After pestle analysis, Hilton should consider an approach to diversify products to reduce risks (Masra,
2016).
2. Hilton should invest in research and development for more innovation.
Industrial Lifecycle: Product lifecycle displays the course which a product takes from its introduction to
its decline in the industry (Lominé, Muchena and Pierce, 2014) (App 1.6).
Introduction: Hilton requires high costs to open a hotel in a new industry. Where sales are minimal and
market size for the product is small (Pettinger, 2018).
Growth: Hilton’s competition increases with time and might lower its price or approach a different marketing
method to increase profits (Pettinger, 2018).
Maturity: Hilton’s profits begin to diminish with diminishing market share and continued reduction costs
(Pettinger, 2018).
Decline: Hilton’s market is in decline with profits and sales dropping along with cheaper production and
product withdrawal (Pettinger, 2018).

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 1. After analysing industrial lifecycle, Hilton may introduce limited service budget hotels to reach more
audience globally.
2. Hilton has to follow the government policies and rules in different countries with different regulations.

Conclusion:
The report gives recommendations to improve aspects for Hilton Hotels in terms of internal and external tools
to perform better. The internal tools used are Porter’s Value Chain Analysis, BCG Matrix and Mckinsey’s 7S
which impacts the staff and human resources. Since it creates value to the customers and the employees,
analyses product portfolio on the basis of market growth and market share and helps to understand the
complexity of the hotel. Hilton falls under the category of ‘Cash Cows’ which has a great market share and
brand recognition in the hospitality industry. The external tools used are Porter’s Five Forces, Pestle Analysis,
and Industrial Lifecycle that helps the hotel determine the important structural changes in the business in
aspect of the environmental factors and it also displays the future growth of the hotel. To conclude in this
report Hilton Worldwide successfully evaluates the strategic internal and external environmental tools.

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Bibliography:
Ahsan, L., Qazi, B. and Syed, S. (2014) Strategic Management of Multinational Companies: Case of Hilton
[online] Mpra.ub.uni-muenchen.de. Available at: https://mpra.ub.uni-
muenchen.de/58366/1/MPRA_paper_58366.pdf [Accessed 4th March 2019].

Annualreports.com (2017) Hilton 2017 Annual Report [online] Available at:

th
http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_HLT_2017.pdf [Accessed 4 March
2019].

Bowler, T. (2017) How has the economy fared since the Brexit vote? [online] Available at:
https://www.bbc.com/news/business-36956418 [Accessed 6th March 2019].

Cederholm, T. (2014) Overview: Hilton Worldwide Holdings Inc [online] Available at:
https://articles.marketrealist.com/2014/10/overview-of-hilton-worldwide-holdings-inc/ [Accessed 7th March
2019].

Corporatereport.com (2017) Hilton 2017 Annual Report [online] Available at:

th
http://www.corporatereport.com/hilton/2017/ar/ [Accessed 4 March 2019].

Cox, J. (2017) Pound sterling slump after Brexit vote leads to sharp decline in hotel closures [online]
Available at: https://www.independent.co.uk/news/business/news/pound-sterling-hotel-closures-tourism-bust-
brexit-vote-results-a8073321.html [Accessed 8th March 2019].

Dudovskiy, J. (2016) Hilton Porter’s Five Forces Analysis - Research-Methodology [online] Research-

Methodology. Available at: https://research-methodology.net/hilton-porters-five-forces-analysis/ [Accessed 5th
March 2019].

Dudovskiy, J. (2016) Hilton Value Chain Analysis [online] Available at: https://research-

methodology.net/hilton-value-chain-analysis/ [Accessed 5th March 2019].

Ensign, P. (2001) Value Chain Analysis and Competitive Advantage [online] Available at:
https://www.researchgate.net/publication/265181192_Value_Chain_Analysis_and_Competitive_Advantage
[Accessed 7th March 2019].

Fern Fort University (2018) Hilton Worldwide Holdings Inc. Porter Five Forces Analysis [online] Available
at: http://fernfortuniversity.com/term-papers/porter5/analysis/2856-hilton-worldwide-holdings-inc-.php
[Accessed 3rd March 2019].

Forgione, M. (2014) Hilton's Digital Reboot: Mobile check-in, check-out, room selection [online] Available
at: https://www.latimes.com/travel/deals/la-trb-hilton-room-mobile-check-in-20140729-story.html [Accessed
7th March 2019].

Hilton.com (2018) Hilton Brands | Global Hospitality Company [online] Available at:

https://www.hilton.com/en/corporate/ [Accessed 3rd March 2019].

Hoang, P. (2012). Business and management. 2nd ed. Victoria: IBID Press.

Ir.hilton.com (2017) Investor Presentation Hilton 2017 [online] Available at:

https://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-V3/presentations/hlt-investor-presentation-mar-
2017.pdf [Accessed 5th March 2019].

Ir.hiltonworldwide.com (2016) Human Rights Policy Statement [online] Available at:

http://ir.hiltonworldwide.com/~/media/Files/H/Hilton-Worldwide-IR-V2/committee-composition/human-
rights-policy-statement.pdf [Accessed 8th March 2019].

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Kulgarin, N. (2016) Value chain of Hilton [online] Available at:
th
https://www.academia.edu/7702986/Value_chain_of_Hilton [Accessed 7 March 2019]

Lominé, L., Muchena, M. and Pierce, R. (2014) Business management Course Companion. 1st ed. Oxford:
Oxford University Press.

Masra, A. (2016) Marketing Strategies: A Case Of Hilton Hotel In U.K By Course Instructor Institution Date
of Submission [online] Available at:
https://www.academia.edu/37241781/MARKETING_STRATEGIES_A_CASE_OF_HILTON_HOTEL_IN_
UK_By_Course_Instructor_Institution_Date_of_Submission [Accessed 7th March 2019]

Newsroom.hilton.com (2016) Heart of Hilton | Diversity and Inclusion [online] Available at:

https://newsroom.hilton.com/assets/HWW/docs/2016/DiversityAndInclusionFactSheet_4.pdf [Accessed 3rd
March 2019].

Newsroom.hilton.com (2018) Diversity and Inclusion at Hilton [online] Available at:

https://newsroom.hilton.com/assets/HWW/docs/2018/2018_Internal_Diversity_and_Inclusion_Brochure
%5B2%5D.pdf [Accessed 3rd March 2019].

Pettinger, T. (2018) Product Lifecycle [online] Available at:

https://www.economicshelp.org/blog/140934/business/product-life-cycle/ [Accessed 7th March 2019]

Pratap, A (2017) Mission and Vision of Hilton Worldwide: An Analysis [online] Available at:
https://www.cheshnotes.com/2017/03/mission-and-vision-of-hilton-worldwide-an-analysis/ [Accessed 6th
March 2019].

Ravanfar, M. (2015) Analyzing Organizational Structure based on 7s model of McKinsey [online] Available

at:
https://www.researchgate.net/publication/315940491_Analyzing_Organizational_Structure_based_on_7s_mo
del_of_McKinsey [Accessed 7th March 2019]

Ross, E. (2015) Is gluten-free good for the planet? [online] Available at:
https://www.theguardian.com/sustainable-business/2015/feb/10/is-gluten-free-good-for-the-planet [Accessed
8th March 2019].

Swotandpestle.com (2018) Hilton Worldwide Holdings Inc. SWOT & PESTLE Analysis [online] Available at:
https://www.swotandpestle.com/hilton-worldwide-holdings-inc/ [Accessed 6th March 2019].

Trejos, N. (2018) The brands and hotel rooms of Hilton Hotels and Resorts, by the numbers [online]
Available at: https://www.usatoday.com/story/travel/hotels/2018/03/12/brands-and-hotel-rooms-hilton-hotels-
and-resorts-numbers/415784002/ [Accessed 6th March 2019].

Tuppen, H. (2012) Hilton takes steps forward to minimise food waste [online] Available at:
http://www.greenhotelier.org/our-themes/waste/hilton-takes-steps-forward-to-minimise-food-waste/
[Accessed 7th March 2019].

World Wildlife Fund (2016) Earth Hour: Preserving Environments at Hilton [online] Available at:
https://www.worldwildlife.org/blogs/sustainability-works/posts/earth-hour-preserving-environments-at-hilton-
worldwide [Accessed 7th March 2019].

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Appendix:
App 1.1: Hilton’s 14 brand portfolio and its scale, number of hotels present in countries, number of properties
number of rooms and competition.

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App 1.2: Hilton’s expanded global footprint to 105 countries and territories.

App 1.3: Hilton’s Awards in 2016-17.

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App 1.4: Hilton at a glance, the achievements in 2017.

App 1.5: A comparative number of room’s growth data of top 7 hospitality brands. With Hilton’s growth
percentage being the highest out of the 7 brands from 2007 to 2018.

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App 1.6: Shows the graphical representation of Product/Industrial life cycle.

App 1.7: Displays Porter’s Value chain analysis.

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App 1.8: Represents BCG Matrix, with market growth on the y-axis and market share on the x-axis.

App 1.9: Represents a visual image of Porter’s Five Force Analysis.

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Page 14 of 17
App 2.0: Represents a tabluar Steeple Analytical factors.

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