The Banyan Tree Harvard Case Solution & Analysis

INTRODUCTION

Co-founded by Mr. and Mrs. Ho Kwon Ping, Banyan Tree is a company based in Singapore that is well-reputed for its resorts and spas all spread in Asia. The company has achieved various tourism awards since its inception and is also one of the most preferred tourist place. The company at present holds ownership of 25 resorts and hotels, 68 spas, and 65 retail galleries in fifty plus locations and 23 countries (Wirtz, 2011). The banyan Tree stands amongst the pioneers who introduced the concept of individual villas to the resorts. The individual villas were the ones equipped with private pools, essential oil treatments in their spas and the additional intimacy with an addition of Jacuzzi (Wirtz, 2011). This helped in adding a value added service and enhancing consumer privacy and exclusivity.

The targeted consumers for the company are high profile consumers from which it can charge a premium price for the value added services. For giving their customers an extraordinary experience, the company has its own academy for training its staff on the customer services. The high quality spa and customer services provided by the company are its hectic efforts the company puts in employee training that too with no pressure, as the employees feel ownership of the company (World Travel and Tourism Council, 2012). The company fosters its values and culture derived from its heritage, however, the employees are given autonomy to divert the theme or the way the services are presented until they provide an exclusive romantic ambience to the customers. The company has its own distribution network the GDS (Global Distribution System) and signature spa products, spas, destination club memberships, galleries, and retail outlets (Wirtz, 2011).

The company at present is one of the leading players in the market that represents the luxury resorts and spas 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 (Wirtz, 2011).

MARKET ANALYSIS

a.      Market Analysis: PEST ANALYIS

i.   Political

The Chinese market is politically stable for expanding the resort business. There is single party leadership in the Chinese market ruled 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. The tariffs in china are high but are subject to a declining slope. There are also some moves by the government to political liberalization.  Moreover, the People’s Republic has the authoritative power of control for the 22 provinces (World Travel and Tourism Council, 2012).

ii.      Economical

The nominal GDP of china is approximately $10.028 trillion with a tremendous per capita GDP of $7,333. The country holds world’s second highest billionaires that would benefit the Banyan Tree expansion as it wants to target high profile customers. The domestic retail market shows prosperous growth of 12% per annum as of 2013, and the country also holds a 27.5% share in the global luxury goods market. However, the rapid growth has also injected consumer inflation to the economy, as a consequence of which there is increased regulation of the Government. The nominal and real GDP growth is 9.5% and 7.5% respectively. Some key tourism related facts and figures are presented below:

  1. The tourism industry of China is the fastest growing industry with a distinctive competitive advantage (World Travel and Tourism Council, 2012)
  2. As of 2011, 58 million tourist arrivals were recorded with accumulation of U.S. $48 billion in tourism receipts.
  3. Domestic market makes 90% of the tourism traffic and contribute to 70% of the revenues.
  4. According to WTO (World Trade Organization) Chinese tourism industry will take 8.6% of the world market share and become the top tourism industry by 2020.

iii.      Social

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. Nevertheless, it is the most rapidly ageing countries of the world. According to (Forbes, 2007) the country had 66 billionaires second rank after U.S.A however, in the latest of the reports, it is 106 in number (Hurun, 2007). The country is subject to income inequality across major areas which contributes to the lag in its growth. The life style preferred is 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: Opportunity for Banyan Tree to expand in this area with target market having high incomes.

iv.   Technological

Chinese people are the most advanced in developing technology and in creative destruction. The country has a huge user base for internet and .....................

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