Banyan Tree Harvard Case Solution & Analysis


Banyan Tree was co-founded by Mr. and Mrs. Ho Kwon Ping. Banyan Tree is based in Singapore that is well-reputed for its spas and resorts all having a vast network in Asia. There is no doubt that the Banyan Tree has won various tourism awards since its beginning and is also one of the most favored tourist place among many across the globe. The company currently holds ownership of around 68 spas, 25 resorts and hotels and 65 retail galleries in over 50 locations and in 23 different countries. One of the best things which needs to be mentioned  here is that the banyan Tree stands in between the pioneers who actually introduced this concept of individual villas on the resorts (Prahalad, 1990). This concept of individual villas was furnished with private pools, necessary oil treatments in their spas and the additional closeness with an addition of a Jacuzzi. Without any doubt this actually helped the Banyan Tree in adding an exceptional value added services and enhancing consumer privacy with tremendous exclusivity.

As far the targeted customers are concerned, so they are relatively high profile customers from which company could charge a superior price for the additional value added services. For giving their clients an extraordinary experience, the company has its own exceptional academy for training its staff on the customer service. The great quality spa and customer services provided by the company are its frantic efforts the company puts in its employee training that too with no pressure, as the employees feel ownership of the company. The company fosters its culture and values derived from its inheritance, however, the employees are given independence to distract the theme or the way the services are presented until they deliver an exclusive romantic atmosphere to the customers. The company has its own aggressive distribution network the GDS (Global Distribution System) and signature spa products, spas, galleries, destination club memberships and retail outlets (Schilling, 2013).

The company currently is one of the leading players in the market that actually represents the spas and luxury resorts in Asia. The company now plans moving its brand extensions to the Chinese market. It wants to preserve its extricating Asian identity and strong brand image of Banyan Tree in the Chinese market too: with an aim to target the global ventures.

Market Analysis

a.      Market Analysis: PEST ANALYIS

i.            Political

In China, approximately all industries play an important role in the efficiency and growth of the China’s economy. Moreover, the People’s Republic has the authoritative power of control for the 22 provinces (Karanasios, 2007). It is a known fact that the Chinese government now favors the businesses like resorts to the extent that foreign companies find it easier to compete in China’s market. Nevertheless, foreign companies are dying to enter China due to its large population and higher demand of resorts and such elements, as per capita income has increased and is rapidly growing. There is a single party leadership in the Chinese market rolled over by the Chinese Communist party. Moreover, the country has extraordinary economic growth and the businesses and the citizens show satisfaction of the governing party (McCarthy, 1964).

ii.            Economical

The tourism industry of China without any doubt is the fastest growing industry with an exceptional competitive advantage. As of the year 2011, 58 million tourist arrivals were recorded with accumulation of U.S. $48 billion in tourism receipts. Domestic market makes around 90% of the tourism traffic and contribute to 70% of the revenues. The local retail market shows successful growth of around 12% per annum as of 2013 (Korstanje, 2008). Moreover, China also holds a 27.5% share in the worldwide luxury goods market, which can be a real advantage of the Banyan Tree. The GDP of China is about $10.028 trillion with a marvelous per capita GDP of $7,333. China holds world’s 2nd highest billionaires that would for sure value the Banyan Tree for possible expansion opportunity as it wants to target relatively high profile customers. The rapid growth has injected consumer inflation to the economy, as a result of which there is increased guideline by the Government. The nominal and real GDP growth is 9.5% and 7.5% correspondingly.

iii.            Social

The Chinese culture is an important aspect of the market. It is important to understand the culture in order to provide relevant products for the target market segments. Chinese society is normally illustrated as the multifaceted creation of three classifications of thought, which includes Taoism, Confucianism and Buddhism (Roger, 2012). The Chinese population has improved epidemics, however, due to excessive family planning pressures from the government the population growth rate has declined. At present the country is counted as one of those lowest birth rates. The life style preferred is somehow less structured and more of a free style one. Chinese people.....................

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