Shangri La Value Chain

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COURSE: BUS 3005 Strategic Management

MODULE TUTOR: Chijioke Uba

SUPERVISOR: Ms. Dinusha Boteju

STUDENT NAME: SUN YUJI

STUDENT NUMBER:15422362

1. Introduction

Hospitality industry is one of the most competitive industries in the world. With the development of the society and economic, driving the development of relevant business, such as tourism, food and beverage and so on. In addition, the hotel industry will be boosted rapidly and become more and more luxurious and modern. The global hotel industry revenue is predicted to reach $550 billion US dollars in 2016 which was worth $457 billion US dollars in 2011 (hospitalitynet, 2015). Across the industry, there are key business, technology and hotel marketing trends that are set to take root and impact the industry as a whole. In order to attract consumers interests in using Internet and electronic equipment to provide more personal services to the guests.

Shangri-La Hotels and Resorts (SLA) is a luxury hotel which is founded by Robert Kuok, a Malaysian-Chinese tycoon in 1971. Then in 1983, Shangri-La established its own management company -- Shangri-La International Hotel Management Ltd. to provide guidelines and maintain services and business independently (Shangri-La Hotels and Resorts - Achieving Service Leadership, 2000). Shangri-La can be considered as a industry leader in the world. Another international and full-service hotel is Hilton Hotel and Resort which was founded by Conrad Hilton. At present, more than 550 Hilton-branded hotels operated in 80 countries across six continents. Hilton hotels are managed by the independent operator -- Hilton Worldwide (Hiltonworldwide.com, 2016). Both of those two companies do well in the hospitality industries. It is worth for us to compare their activities and find out the competitive advantage for each.

The following portfolio is conducted to identify Shangri-La and Hilton of its resources and capability in the current situation, and analyzes how to meet their company vision, mission or objectives. According to the value chain model to analyze the competitive advantage of the two companies.

2. Value Chain

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Source: Michael Porter (1985) 

The model of Value-Chain Analysis introduced by Michael Porter (1985) divides business activities into two parts: primary activities and support activities. The corn of value-chain framework is to illustrate the resources and capability of business how to create value and competitiveness to the firm. In addition, Value-Chain model can be applied to analyze the strategic competency of the company which can be seen as “what in business units does exceptionally well -such as a customer relationship programme, manufacturing, or promotion -- that has strategic importance to that  business” (McLoughlin and Aaker, 2010).