BANYAN TREE Harvard Case Solution & 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 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 prefer to be the first movers and the average income in east china is 2.26 times greater than that of West China. A company must look for areas which have relatively high income.

iv.            Technological

As per the global statistics, it can be said without any doubt that Chinese people are the most progressive in developing technology and in creative destruction. The country has an enormous financials which they inject in the research and development to enhance technological innovation (Chermack, 2007). The overall energy consumption by china is way small, sparkly the highly responsible attitude of the people towards preserving nature. This too benefits the company in a real optimistic manner, as its sustainability-oriented model would fit best with the Chinese economy.

b.      Competitor Analysis:

      v.            Four Seasons

  • Strengths

Four Seasons has a strong and well reputed brand equity. There is quite experienced and focused management team. They also possess the handsome market share. Moreover an exception about Four Seasons is that the way they serve the customer is quite innovative and different which actually makes their own separate identity. 

  • Weaknesses

For every business it is highly important to adopt the economies of scale.  Four seasons are unable to achieve economies of scale.  Moreover, their additional weakness is that they were unable to make the proper brand communications to towards the customers.

vi.            Shangri-La Asia Ltd

  • Strengths

Shangri-La Asia Ltd is one of famous and leading hotel in the Asia and is considered as well established brand name in China. Shangri-La Asia Ltd has also won several awards for their exceptional services (Alon, 2008). The owners and the management are committed to delivering the exceptional services to the clients. Additionally, they are quite proactive in crisis management.

  • Weaknesses

Shangri-La Asia Ltd brand name is not currently well established across the entire globe which might create issues in this competitive arena, specifically in the tourism industry. They are more and more focused towards the corporate clients or tourist which is restricting them from additional success (Alon, 2008). 

c.       Industry Analysis: KEY SUCCESS FACTORS

Ø  Well Established Brand

  • 300 awards represent the brand name itself.
  • Counted in the top 50 brands.
  • High customer reach and customer loyalty
  • Counted in the best Spas and resorts in Asia...................

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