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Course/Unit Information
Course Pearson BTEC Level 5 Higher National Diploma
Unit No. and Name Unit 32: Business Strategy
Unit code 32: K/508/0574
Unit Type Core
Batch

Instructor Information
Name Prof. Raman Subramanian
Phone 971 52 100 7124
Email [email protected]

Assignment Information
Full/ Part Assignment
Date Assignment Issued
Date Assignment Due

Student Information
(To be filled by the student prior to submitting the assignment)

Name
Email
Date of Submission

Student Assignment covering form is an integral part of the assignment document and should be
submitted along with all submissions.

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 SAMPLE ASSIGNMENT ONLY

Student Declaration

I, _____________ I hereby confirm that this assignment is my own work and not copied or plagiarized. It has
not previously been submitted as part of any assessment for this qualification. All the sources, from which
information has been obtained for this assignment, have been referenced as per Harvard Referencing format. I
further confirm that I have read and understood the Westford University College rules and regulations about
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 SAMPLE ASSIGNMENT ONLY

Achievement Feedback Summary

Assessor’s Name

Pass Merit Distinction Grades Awarded

LO1 Analyze the impact and influence which the macro

environment has on an organization and its business strategies.
P1 Achieved
M1 Achieved
P1 Applying appropriate M1 Critically analyse the
frameworks analyse the impact macro environment to D1 Achieved
and influence of the macro determine and inform
environment on a given strategic management
organisation and its strategies. decisions.

LO2 Assess an organization’s internal environment and

capabilities.
LO1, 2, 3 & 4
D1 Critique and
interpret information
M2 Critically evaluate the and data applying P2 Achieved
P2 Analyse the internal internal environment to assess environmental and
environment and capabilities of a strengths and weaknesses of M2 Achieved
given organisation using an organisation’s internal competitive analysis to
appropriate frameworks. capabilities, structure and produce a set of valid
skill set. strategic directions,
objectives and tactical
actions.
LO3 Evaluate and apply the outcomes of an analysis using
Porter’s Five Forces model to a given market sector.

P3 Applying Porter’s Five M3 Devise appropriate P3 Achieved

Forces model evaluate the strategies to improve
competitive forces of a given competitive edge and market M3 Achieved
market sector for an position based on the
organisation. outcomes.

LO4 Apply models, theories and concepts to assist with the

understanding and interpretation of strategic directions available
to an organization.

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 P4 Achieved
P4 Applying a range of theories, M4 Produce a strategic
concepts and models, interpret management plan that has
M4 Achieved
and devise strategic planning for tangible and tactical strategic
a given organisation. priorities and objectives.

Overall Feedback Summary

Over All Grade Date

[To Achieve a PASS, all P grade descriptors should be achieved; To achieve a MERIT, all P and M grade descriptors should be
achieved; To achieve a DISTINCTION, all P, M and D grade descriptors should be achieved.]
Summative Feedback

Overall feedback on current

work with emphasis on how the
student can improve and achieve
higher grades in future.

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 General Guidelines

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5. Harvard Referencing System and Citations are strictly followed

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 Business Strategy: Assignment Task

Assignment title BUSINESS STRATEGY

LO1: Analyze the impact and influence which the macro environment has on an organization
and its business strategies.

LO2: Assess an organization’s internal environment and capabilities.

LO3: Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given
market sector.

LO4: Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organization.

Scenario:

McDonald’s established its first Hotel in 2001 in Switzerland. You are hired as a Corporate
Strategy Consultant by McD [American Multinational Fast Food Company] to plan its entry
strategy in United Arab Emirates [UAE] to set up its first Hotel in UAE. You have been assigned to
prepare a report that includes the environmental analysis and strategic growth management plan
based on the use of recognized internal and external analytical tools.

The report should include the following:

1. Critically analyze the impact and influence of macro environment in UAE on the strategic
management decisions to be made by McD applying the PESTLE model.

2. Analyze the internal environment and strategic capabilities of McD using Value Chain Analysis.

3. Critically evaluate the internal environment to assess the organization’s internal structure,
capabilities and skill set.

4. Evaluate the competitive forces in UAE applying Porter’s Five Forces Model for McD. Devise
appropriate strategies to improve competitive edge and market position based on the outcomes of
Porter’s Five Forces analysis.

5. Interpret and devise a strategic management plan for McD applying a range of theories, concepts
and models like Porter’s Generic Strategies, Ansoff’s Matrix and Bowman’s Strategy Clock (all
three models are mandatory).

6. In the proposed plan discuss the tangible and tactical priorities and objectives, and thereafter
critically analyze and interpret the relevant information to produce strategic directions, objectives
and tactical action which McD can adopt.

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 7. As a part of class participation, students in groups need to debate for and against the topic: “Does
UAE need a Hotel as they established in Switzerland?”

The submission on the LMS is in the form of an individual written report. This should be written in a
concise, formal business style using single spacing and font size 12. You are required to make use of
headings, paragraphs and subsections as appropriate, and all work must be supported with research and
referenced using the Harvard referencing system. Please also provide a bibliography using the Harvard
Referencing System. The recommended word limit is 4000–5000 words, although you will not be
penalized for exceeding the total word limit.

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 Mchotels: A business feasibility report.

McDonald’s or McDonald’s corporation was founded in 1948 by brothers Maurice (Mac) and
Richard McDonald in San Bernardino, California. What started as a small hamburger joint in
the brothers’ hometown eventually flourished into a multibillion-dollar franchise that has the
highest market share in the U.S fast food industry, sitting at 35%. (Britannica, n.d.)

Figure 1 The first McDonald's restaurant

McHotel

The Golden Arch hotels, in Zurich, opened in Switzerland back in 2001. One near the airport
and another in Lully nearby the A-1 interstate. This idea of a McDonald’s themed, 4-star
hotel came from Urs Hammer, the chairman of McDonald’s, Switzerland, who was
responding to the parent company’s request to diversify and introduce innovative concepts.
One of these hotels’ main unique selling point was the fact that they were open 24/7 which at
that time as a rarity for Switzerland. Featuring a patented curved wall, see-through shower
stalls that jutted out into the bedroom areas with vibrant and bright décor. (Michel, 2007)

Figure 2 The Golden Arch Hotel in Zurich, Switzerland

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SWOT Analysis of the UAE hospitality industry

Strengths:

In light of the upcoming 6-month long Expo 2020, the UAE hospitality sector has had a
significant boost by adding 56,701 rooms that represent 33.6% of the country’s existing
supply over the next fiscal year. According to a survey, Dubai is the 4th most tourist visited
city in the world and is expected to welcome 25 million patrons for 2020. (John, 2019)
The researcher believes that the locations of hotels within the UAE place them at a strategic
advantage due to local attractions available nearby like cultural museums, heritage sites and
mosques.
Due to the UAE’s relatively stable economy, there are no taxation information exchange
agreements with other countries. So, there is no need for any special requirements for clients
travelling from other countries. (Council, 2019)

Figure 3 Expo 2020

Weaknesses:
The UAE as a tourist destination has garnered itself a reputation as being a onetime visit
destination rather than repeat visiting due to large costs associated with residing within the
country’s hotels. There is also a lack of national tourism so the individual emirates of U.A.E
are competing against each other for a segment of the market share.
Lack of skilled hospitality staff is causing problems for the industry’s growth as a whole. The
upcoming Expo 2020 has generated around 110,000 new jobs within the hospitality and
tourism sector, but hiring chefs, chauffeurs, sommeliers, and others with the right
communication and customer service skills is a different challenge. And due to more jobs
being introduced in the hospitality sector, other industries’ employees are at the risk of losing
their jobs within the private sector. (Mack, 2019)

The researcher believes that while the UAE’s standards for hospitality is of the highest grade,
more effort could be made to educate the employees on proper service and etiquette by
holding mandatory campaigns and seminars for existing staff members and optional classes
for those wishing to be part of the hospitality sector.

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Opportunities:

Figure 4 UAE Historical Occupancy Performance % (2008-2018

Digital marketing has improved leaps and bounds over the years, allowing companies to gain
an even further reach. Online promotions, banner ads, social media marketing, and search
engine optimization are some examples. Hotels in the UAE rely very heavily on this kind of
marketing by using 3rd party booking websites to promote their inventory. For e.g.
booking.com, trivago.ae or cleartrip.ae. And also, by using social media websites like
Facebook, Twitter, YouTube, and LinkedIn, to further promote their services and features.

Some UAE hotels utilize MICE (Meetings Incentives Conferences and Events) to attract
traveling business guests. By expanding the hotels’ leisure tourism market, business guests
can be enticed to return and visit as leisure tourists. (Council, 2019)
Celebrity endorsement can create a lot of favor in the public’s eye. By teaming with up
returning celebrities or new ones can ensure greater business.

Threats:
Greater competition due to tourism development from each of the Emirates. All 7 emirates
are considered to be urban hubs for business with their own attractions and all of them bring
in millions of tourists every year. So, hotel brands constantly need to keep up with their
competitions to ensure they don’t get left behind. The introduction of VAT in the UAE has a
major impact on the hospitality realm as VAT needed to accounted for in each and every
purchase and cost, including adjusting cancellation, membership and parking fees. Currency
exchange also gets affected by the inclusion of added VAT prices. (EY, 2017)
(C.Kiritharan nair, 2016)

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SWOT analysis of Mchotel

Strengths:
When first introduced in Zurich and Lully, Switzerland, the Golden Arch Hotel was one of a
kind. Its 24-hour service along with inexpensive prices made it seem implausible back then.
The parent company, McDonald’s, is one of the most well-known brand names in the
industry. Many customers who choose the Golden Arch Hotel, do so out of brand loyalty and
McDonald’s made sure to reinforce their brand at every turn. The hotel integrated modern IT
technology infrastructure to make service more efficient. The whimsical and unique interior
designs attracted swarms of young adults and families with children.
The hotel in Zurich was located near the local airport which made attracting travelers more
convenient. (Michel, 2005)

Weaknesses:
The Golden Arch Hotel was notorious for weak customer service, including a lack of helpful
and friendly front reception employees or security staff. The modern service kiosks failed to
attract guests as it was too advanced for its time and created more queries rather than
solutions. 4-star hotels are known for not only impeccable service but also offer the finest
cuisine options. The hotel only allowed customers to consume their own patented products
and did not offer any other kind of meal options. (Rexton, 2013)
The economy also played a part in the hotels’ ultimate shutdown as soon after the 9/11
attacks, there was a worldwide economic contraction that affected their currency, the Swiss
franc in a large way. (Michel, 2007)
Some of the nonsensical design choices that were meant to increase efficiency and
convenience fell flat such as the shower within the sleeping quarters as well as the adjustable
bed that, to some customers, resembled hospital beds.

Opportunities:
As the population increases so does tourism and a search for affordable accommodations.
With the newer generations getting more technologically advanced with the use of social
media and the internet, a more IT-based service will almost always be preferred. Instagram,
Snapchat and YouTube users who have followings online will choose the hotel for its
aesthetic and appealing nature. Free internet service was provided within the room as well as
several electronic devices to enhance the guests’ stay. Shuttle buses could transport travelers
to the hotels from the airport, carrying the brand name on their exterior.
With the hotels having 211 rooms in Zurich and 80 rooms in Lully, there was a decent
amount of accommodation available for consumers. (Deseret News, 2000).

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By forcing guests to carry their own luggage to their rooms and use the McPorters (a luggage
carrying trolley with McDonald's branding), McDonald’s ideology was to create a sense of
independence within the guests. However, guests want preferential treatment so having
elevators as well as bell boys who can carry the bags, are necessary.

Figure 5 McPorters within Golden Arch Hotels

Threats:
Each and every country have regulations for hotels. The hospitality star rating is a universal
guideline and the parameters are carefully set in place to ensure that a guest’s needs and
wants are met. The Golden Arch hotel faced difficulties as it didn’t adhere to the regulatory
framework set by the Swiss government back in 2001. A 4-star hotel typically offers a
knowledgeable concierge who assists guests by providing entertainment options outside the
hotel as well as a fully staffed front desk including a desk bell in case a guest needs
assistance. A pool, a fitness center along with full-service spas are usually found, if these are
not available within the hotel, then exchange programs are made with local gyms, pools
and/or spas. (Chi, 2020)
The hotel provided none of these services. Its sole inception was based of franchising,
inexpensive accommodation as well a quick solution for business travelers in need of a bed
for the night. The lack of skilled labor along with competent management made it
unattractive for customers as well as potential new employees.
While the idea of a McDonald’s themed hotel is novel but promoting it as a 4-star experience
was not the right approach. 4-star hotels typically target upper-class urban citizens, while
McDonald’s brand image is affordable and family-friendly. (C.Kiritharan nair, 2016)

Figure 6 Pool and gym in Queen Elizabeth 2 hotel, Dubai, UAE.

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PESTLE Analysis:

Political:
(Juan Ignacio Pulido Fernández, Antonia Sáez Cala, Cristina Figueroa Domecq, 2011)
In this tumultuous, information age of technology and social justice, UAE is on the few who
have been, more the most part, politically stable with no current prevailing conflicts being
waged against other countries. This will provide a lot of business opportunities for both
domestic and foreign domains. The government wants the UAE to become a hub for all types
of business and are especially looking to invest in the hospitality realm as with the
approaching of Expo 2020, the number of visitors travelling to the UAE are estimated to be
about 25 up to 100 million. So essentially more accommodation is required, thus a hotel like
Mchotels has a great chance of succeeding within the UAE due to its inexpensive rates and
non-politically motivated franchise.
Venturing into newer businesses like the Mchotel can be achieved during this time as the
UAE has come into an age where they are able to offer long term visas (golden visas) to
expatriates who wish to travel to the UAE in search of job opportunities. (UAE government,
2020).
As of mid-February, 2020, the UAE has introduced a revolutionary visa application process
for expatriates, social workers, and business owners which, can be processed from
registration to issuance in little over 30 minutes up to 28 hours. (Gokulan, 2020)

Economic:
One of the main reasons behind the UAE’s steady growth of the tourism sector is some of the
strict policies adopted by the UAE government such as providing the world’s best
entertainment, education, medical and hospitality facilities at comparatively lower rates while
making improvements without jeopardizing standards. With the upcoming Expo, UAE is
expected to recruit employees for over 277,000 new job opportunities in multiple sectors, like
real estate, media and especially tourism and hospitality. (Adat admin, 2020)

Since introducing VAT back in 2018, the UAE’s economy has witnessed a dramatic change
within many sectors including the hospitality realm as a major issue arose for hotels due to
UAE’s accounting of VAT placed on free of cost (FOC) supplies of food, guest rooms, gift
items, and other business partnerships. Hotels do not earn any amount of money from FOC
supplies but the UAE law mandates VAT be paid on them. (grantthornton, 2018)

Social:
The visa options will ensure that Mchotels will be able to hire a diverse range of individuals
who are not only experienced in this realm but can also bring a unique cultural aspect to the
hotel. By being able to communicate in various languages as well as conducting a multitude
of celebrations can prove to customers that within a Mchotel, all people are accepted.
By introducing more disabled access rooms within hotels as well as specialized bathrooms

13
with open floor showers that will make any guests with disabilities feel more welcome. More
trained staff with medical training to assist such guests. Some of UAE’s hotels already
provide such services. And Mchotels can too, whilst making certain that the price difference
between a regular room and a disabled access room is not too vast. (Swan, 2013)
By appealing to the local crowd and offering special discounts can entice customers and
investors to give Mchotels a chance.

Technological:
Currently, UAE’s hotels are fully furnished with state-of-the-art IT infrastructure such as free
Wi-Fi, digital conference facilities. mobile communication and automation. Some hotels like
the Atlantis Hotels are in partnership with digital ecosystems, looking out for AI technology
that can help collect guest feedback and recommend extra on-site activities for guests based
on previous activity and responses. They also utilize a blockchain mechanism that provides a
wristband for guests to use as a digital wallet to pay for services, which also incorporates a
loyalty program.
The Shangri-La hotel and resorts are a massive enterprise with some of the latest IT
integration. The Abu Dhabi branch has implemented a guest automation system across all its
214 rooms. Where the online hotel reservation system can switch room status’ from
‘Occupied’ to ‘Vacant’ digitally and also adjust the temperature of the rooms according to the
guests’ ideal comfort level. (Sanu, 2019)

Legal:
One of the main legal factors that affect the UAE’s hospitality realm is the Islamic Sharia
law. This places restrictions on hotels’ entertainment policies as well as a diminution on the
serving of alcoholic beverages within hotels. The Mchotel must adhere to these regulations if
they choose to build in the UAE. (Birchall, 2009). They must also undergo a registration for
halal certification by the Emirate Authority for Standardization & metrology (ESMA).
((ESMA), 2020)

Environmental
Sustainability is the future and this is the same for hospitality as well. From managing the
ecological impact to waste management, hotels in the UAE are doing their best to protect the
environment. Food wastage is a cause of major concern in the UAE, where it’s estimated that
the county discards Dh13 billion worth of food every year, with an average individual
responsible for 2.7 kg worth of food waste a day, between food and non-biodegradable
packaging. To combat this ever-growing problem, the UAE ministry encouraged the
hospitality sector to adopt an AI program, called the Winnow Vision system, which has set
parameters to measure the amount of food that is wasted and place a monetary value on it. It
achieves this utilizing a camera and a weighing scale to identify the food items and its
weight. This information is then searched through a database and the price is determined.
(Ryan, 2019)

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Value Chain Model of Mchotels

Figure 7 Value Chain Diagram

The ideology behind a value chain is to create a comprehensive set of activities dictated out
by an organization to create value for their assets or products, to their customers. (ifm, 2020).

Primary Activities;

Inbound Logistics:
Any hotel needs supplies that can provide them with a multitude of different products,
ranging from food & beverage to laundry services and even inventory control and stock
requisitions. They need to get in touch with local providers that can offer hotels with cheap
and fresh produce of the highest quality. And international providers for more global products
such as skincare or appliances.
In the case of laundry services, hotels need to team up with local laundromats to utilize their
services or have a designated laundry system within the hotel for customers to use.
For Mchotels to succeed within the UAE, they should strive to deal directly with suppliers,
then negotiate prices and markups with distributors, handle the warehousing including well as
delivery of their products. Doing this can enable Mchotels to have control over the supply
chain. They also need to hire appropriate vehicles to transport products as well as security for
safe arrival. Furniture must be custom made with design and comfort in mind so getting in
touch with private furniture building stores who can offer discounts on bulk purchasing while
keeping the brand image in mind. (Jonathan Mitchell, Xavier Font, 2014)

Operations:
Modern hospitality depends on the use of technology for all kinds of operations. From online
booking to inventory checks as well as room availability. UAE hotels have mechanisms
integral for the operations of a hotel. Maintenance and facilities management is one such
operation where staff needs to be well equipped with proper tools and have expertise in
plumbing, electrical and knowledge of repairing mechanical troubles. Maintenance staff are
also, typically, in charge of landscaping, cleaning and securing parking lots and maintaining
operations of outdoor pools.
One of the UAE hotels’ major operations are their front desks, which are considered to be a
hotel’s lifeline. Majority of UAE’s hotels thrive on having a 24/7 operated front desk with
staff working in shifts to make sure that there is always someone available to attend to guests,
provide information and suggestions as well as performing as a communication hub between
other departments. For e.g. housekeeping or maintenance. (Phillips, 2017)

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The researcher believes by combining McDonald’s classic automation method of using
kiosks as servers of food and the Mchotel’s more dynamic cuisine to create a delivery system
that will allow guests to order food and have it delivered to them from the comfort of their
rooms.

Mchotels should also introduce an integrated hotel management system (HMS) to filter
through McDonald’s global data and pick up on existing customers. By the use of digital
marketing, the hotel could promote their services and offer ‘customer delighting’ discounts to
ensure their return to the hotel and by offering bundled offers, enticing them to bring along
their friends, family or colleagues, which eventually addresses ROI’s and enhanced Customer
Acquisitions as well. (Simão, 2010)

Outbound Logistics:
In a hotel, the outbound logistics refer to the way services and final products are offered, as
well as distributed to different branches and outlets along with being specially catered to
guests. So, in this case, getting guests to the hotels to utilize their services. UAE hotels are
very prompt at dealing with customers’ concerns about how they are expected to arrive at
their lodging. Most hotels offer shuttle services that offer rides for guests travelling from the
airport. Some of these services are even free of cost for e.g. Premier Inn. (expedia, 2020)

Figure 8 Premier Inn Complimentary Shuttle bus

Marketing and Sales:

Marketing is crucial for any hotel brand to be able to flourish and get their name out there
amongst competitors. Hotels in the UAE market usually utilize purpose-driven marketing in
conjunction with native advertising, according to their features. As people are, currently,
considered to living in an information age, digital marketing is the pinnacle of online
promotion as average consumers spend more than 20 hours a week online. (Condliffe, 2018)
By utilizing social media, hotels are able to create content for advertising by using a low cost,
high impact method. Creating a website that furthers brand awareness as well as boosts
customer loyalty by promoting events, answering & responding to customers’ queries and
opinions, attract new, potential business investors who are on the hunt for lucrative
partnerships.
The Expo 2020 has created an opportunity for Mchotels to thrive on. When throngs of foreign
consumers set foot on UAE soil, by being able to reach as many people as possible digitally,
will allow Mchotels to become the top of mind name for guests who wish to experience the
UAE and not have to shell tons of money for accommodation.

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Services:
Every company that offers products or services to consumers depend on pre- and post-sale
services to ensure customer loyalty. Feedback is crucial for any hotel to thrive or even
survive. If a customer deems a hotel’s service as poor, the chances are that they take to online
platforms and butcher the reputation of the hotel, which in some cases can result in the
closure of that particular branch or in worst-case scenarios, termination of the entire brand.
A dedicated customer support team needs to be available at the Mchotel to answer questions,
and provide assistance. A proficiently knowledgeable and eloquent concierge should be
available for making restaurant reservations, booking spa services, recommending city life
hot spots as well as coordinating luggage assistance services for guests’ baggage.
Including these with a highly trained maintenance staff that can repair any room concerns
efficiently will allow customers to have a not only a cost-effective stay but a fully satisfying
one as well.

Support activities;

Procurement:
The UAE’s hospitality industry is ever-growing and the role of procurement is time and again
proving to be the key in adapting and adjusting to the constantly evolving hospitality
landscape. UAE hotels have learned to project demand so as to not buy too much of
something or too little as in both methods, the brand loses revenue. Most hotels prefer value
over savings so the quality of products is more important than their price, this is only
achievable by doing proper research into customers’ wants or needs. For e.g. comfortable
furniture over luxury and also fresh food over frozen. Seasonal procurement is crucial as well
as during certain times of the year, specific products are high in demand for e.g. seasonal
fruits in summer. Getting in touch with vendors who not only offer the highest quality but at
reasonable prices. (Wilson, 2015)
Mchotels can practice responsible procurement also known as environmentally preferable
purchasing (EPP) where environmental, social and ethical consideration are all taken into
account before making a purchase. This method looks beyond traditional parameters of cost,
quality, availability or functionality. Rather products are chosen based on sustainability, their
effect on human health as well as the environment. This method will enhance McHoul’s
image of being just a typical cost-effective hotel to one that not only cares about their
customers’ safety but the environment as well. (admin, 2012)
Also, by using AI-based technologies to check inventory and procure necessary items will
make the operation more accurate and time-efficient.

Human Resource:
HR is responsible for the people side of any company. Within hotels, the staff are arguably
the most crucial aspect of determining its success as well as being the ultimate cause of its
failure. Hiring staff who not only have experience working within the hospitality sector but
customer service as well. Within the UAE, a multitude of languages are spoken so the hotels
need to cater and provide communication for all guests so employees who can speak in
several languages, fluently are preferred. Once hired The HR team can set up mandatory
sessions and training programs for staff to teach them about the proper etiquette, use of
formal language and courtesy required by a staff member of a typical 3-5-star hotel.
Mchotels’ parent company, McDonald’s have their staff study at Hamburger University in
Chicago, Illinois to instruct them in various aspects and knowledge of restaurant
management.

17
Mchotels are meant to be a brand that accepts all people. So, by hiring a diverse staff
consisting of an equal ratio of male and female employments to promote equality within the
workforce.

Firm Infrastructure:
Typically, hotels within the UAE have a fairly large and complex firm infrastructure. This is
usually driven by corporate or strategic planning, in departments such as finance, accounting,
legal, public affairs, and quality management. Here all the planning and setup for the brand
occurs by prioritizing certain tasks and objectives for each department of the hotel. The
finance department focuses on communicating information by analyzing data sent from other
departments. This allows them to create a comprehensive plan to reduce costs by cutting
down on unnecessary products or services and relaying more funds into higher demand
services.
Quality management proves to be essential within any organization. Hotels depend on their
staff and AI utilized services to make solution-oriented decisions to cater to guests’ requests
or demands.
In the researchers’ opinion, the Mchotel should be at the center of an urban hub with all sorts
of facilities available to guests, nearby. For e.g. a shopping center that has partnered up with
the hotel to provide special discounts for guests residing within the hotel. Since the majority
of UAE’s population identify themselves as Muslim (over 76% of the population), the
Mchotel must be able to accommodate for such guests. So, by having a designated mosque
within the hotel or at least an area where congregation for prayer can take place. As well as a
free, fully, functional gym which should also include a separate ladies’ only area.
Another strategic plan can be to introduce a loyalty card for Mchotel guests where only
existing guests of the hotel can redeem special promotions. (indexmundi, 2019)

Technological Development:
Associated closely with operations, technological developments are crucial in a company’s
strive for progress. Technology in UAE hotels has come a very long way within the last
decade. Big data analysis allows hotels to reach potential customers in different countries so
when the customer does decide to travel to a particular city that is inhabited by the hotel, their
mind is set on that particular accommodation brand because the hotel reached out and
marketed their product to them. This is only viable due to digital marketing. (Attala, 2019)
The use of AI in hospitality could potentially increase hotel revenues by around 10% as well
as reduce costs by more by 15%. (Sanu, 2019)
In addition to food waste management, check-in mechanisms, guest automation systems,
Mchotels can also potentially have automated food delivery methods from guests’ rooms. So,
by using their own Mchotel smartphone app, customers can place food orders without talking
to an operator and have it delivered to their rooms promptly. Orders can be placed and
relayed to the kitchens directly via the app, making it time-efficient.

18
VRIO;

Value:
Mchotel’s inception is based around the idea that the brand will eventually expand globally,
with multiple branches in several urban centers, all with their own cultural and regional
flavors that would entice local customers to utilize their services as well as attract travelers
that are looking to explore cultural aspects of the city.

Rarity:
The idea of an inexpensive yet premium accommodation service is in itself a rarity. And for
the hotel to be a 4 to 7-star rated one is pretty much unheard of. It will be known as an all-
inclusive company with staff being acquired from all corners of the globe. The hotel’s main
aim is to provide guests with all services that are available in most upscale hotels, such as a
gym, pool, spa, etc., at an affordable rate for all people.

Imitability:
When the Mchotel first launches, the threat from competition will be high however there will
be none like it. It will be the first of its kind to be launched in the UAE. And provided it takes
off and becomes successful, other brands will want to imitate their business strategy.
Premium hotel chains will launch more economic versions of their accommodation. Other
hotels will bump up their offers and discounts to compete with Mchotels.

Organization:
Mchotels must be sufficiently funded to ensure that resources are placed into management
processes, services, and infrastructure. The internal organization must be fully realized, with
dedicated staff support. McDonald’s has a network of consumers who are loyalists and by
targeting those consumers, Mchotels can further enhance their profit margin. By doing this
the Mchotels can achieve their ultimate goal of sustained competitive advantage. (I.
Gutiérrez, 2015)

19
Mckinsey 7S model:

Figure 9 Mckinsey 7S Model

Hard Elements:
Strategies:

Mchotels have to implement specialized strategies in order for it to become successful and
achieve consistent competitive advantage. A few examples can be yield management, where
the hotels will promote the right accommodation to a certain type of customer based on
several factors for e.g. age, marital status, etc. Effective segmentation by targeting a specific
market segment. Distribution channel management will effectively cultivate the services of
online partners by closely monitoring the performance of various distribution channels. And
most importantly, competitive pricing, which will ensure customers choose Mchotels and in
the process gain advantage over competitors.

Structure:
The internal structure of any hotel depends on the chain of authority. This is referred to as
‘span of control’. A wider span of control ensures that every department reports to the general
manager of that hotel. And one with a narrow span of control delegate management authority
to assistant managers, supervisors and assistant supervisors as well as individual department
heads for any regular day to day issues. The smaller the hotel, the greater the span of control
as the area of the infrastructure is on a lesser scale, the general manager may be available on
a daily basis. Larger, international hotel chains prefer using smaller spans of control which
allows them to address any problems or complaints quickly and effectively by that branch’s
senior management as the general manager of the brand may not be on-site on a regular basis.
The researcher believes that initially, the Mchotels will have a large span of control as there
will be only 1 branch but eventually have a narrower span of control as it grows into a global
chain and hire more management-level employees.
Some examples of departments within a hotel’s organization scheme:
 Food and Beverage
 Human Resource

20
  Rooms
 Accounting
 Marketing
 Security
The ‘Rooms’ department handles everyday tasks like laundry, housekeeping as well as
customer service, while the F&B is essential for handling room service, online food
purchases, and restaurant operations. HR is tasked with staff recruitment and training, while
Accounting handles the finance side of the hotel. Marketing makes sure to promote the hotel
to the best of their capabilities. Security teams are responsible for performing surveillance,
escort guests to and from premises, maintain order as well as investigate disturbances
including risk management. (Katers, 2017)

Systems:
As a new brand just entering into the market, Mchotels needs to adopt the most efficient
operations that would enable it to function at peak performance. Every process that goes on
within the hotel from daily operations to administrative tasks, as well as the complex system
that encompasses the activities of several departments, within the hotel, requires dedicated
staff and modern innovative IT infrastructure to see to completion, this includes HR and
finance as well. One such system, referred to as a property management system (PMS), can
facilitate a hotel’s reservation management including front desk operations, housekeeping
and occupancy management as well as payment processing. This method can save on time
and effort of employees as in-built AI in this system allows staff to view booking status,
occupancy, and control reservation or even receive customer feedback, just from their
computers, in minutes. (oracle, 2020) (NEKESA, 2017)

Figure 10 How Property Management Systems works (PMS)

Soft Elements:

21
Skills:
An employee working within a 4-7 star rated hotel requires impeccable communication skills
and decorum. HR is crucial for hiring such individuals whose skills can yield better positional
advantage and ensure positive outcomes in terms of market share and greater profitability.
They must not only possess teamwork and time management skills but be proficient at
multitasking, as well as being flexible as no 2 days are the same within the hospitality sector,
customer footfalls change daily, employees may be required to work during holidays. They
must be able to adapt to sudden evolutions.

Style:
The manner in which Mchotels will be perceived by the public has to differ from its previous
image of an accommodation offering location with mediocre service and nonsensical room
infrastructure. The new and improved Mchotel’s conception will be ‘luxury within economy’.
The staff will be formal yet respectful. Guests will be greeted with a smile, no matter the time
of the day. The interior will be clean, lobby, spacious with seating areas for guests. The
ambience will depend on the signature brand’s color scheme whilst incorporating more
darker hues to provide a sense of relaxation and comfort. (Sanghi, 2014)

Shared Values:
Mchotels prime directive will be ‘for the people’. So, the hotel will follow 5 major core
values, integrity, environment, teamwork, ethics and innovation. Respectful interactions and
services provided will be communicated consistently by well-trained staff, who work together
as a singular unit to bring about the best results. By creating new and novel methods to
further increase customer satisfaction, increase revenue while being as ‘green’ as possible.
(Mesa hotels, 2020)

Staff:
As previously discussed, the staff will be well trained and diverse. The researcher also
believes that besides regular employees, management staff will also be crucial within the
Mchotels, to delegate and lead each department as efficiently as possible. They must possess
leadership, problem-solving, and interpersonal skills. The HR team must hire those who
possess no bias towards any people and treat all their subordinates with the same manner of
respect and courtesy. (Kong Hai‐yan, 2006)
The security staff within the Mchotel should possess either law enforcement, prior military or
security experience, who have professional authority as well as basic first aid skills in cases
of emergency. (jobhero, 2020)

22
Porter’s 5 forces analysis;

Figure 11 Porter's 5 forces

Threat of entry;
As this is considered to be a new venture into the UAE market, this threat is high. As once it
takes off several new players will come in as competition. Existing brands will bring out
affordable branches to compete with the Mchotels. The strategy here is to keep the hotel’s
prices low and guests’ expectations high. Aggressively promoting the brand with hopes of
creating differentiation and loyalty from customers, and in turn, block any attempts of
newcomers from entering. Other barriers to entry for newcomers can be demands for funds
during entry and access to local and international distribution networks (Pimtong
Tavitiyamana, 2011). So Mchotels need to be properly funded by the parent company
McDonald’s as well as forming lucrative partnerships with distributors.
Another entry barrier for Mchotels is that a substantial amount of investment is required to
build the infrastructure. This problem is thus solved by the involvement and funding of
McDonald’s. (Oh, 2004)

Threat of substitute products or services:

This particular threat is one of the major factors that intensify competition within the
hospitality sector. Substitutes meet the needs of consumers and are arguably cheaper or more
efficient to use. So, when a significant number of substitutes are available, the hospitality
realm is careful to not increase prices at the risk of losing clientele. One of the greatest threats
in this sector is the implementation of the shared housing economy, such as renting
apartment-style rooms for short durations by utilizing online platforms like Airbnb.
Another major threat for hotels’ services is the increase of the use of on-demand taxi services
rather than hotel sanctioned shuttle vehicles that carry travelers from airports to hotels. As
services like Uber or Careem are considerably cheaper for customers to use, hotels are losing
out on profits because of this. (GEORGOPOULOS, 2017)

Bargaining power of suppliers:

Suppliers may exert their bargaining power by threatening to raise prices, limit resource
availability and/or reduce the quality of products however the number of suppliers who

23
provide goods to hotels are numerous. Mchotels will always have a choice between
distributors and suppliers. Costs from suppliers are typically standardized with similar
pricing. And since suppliers also depend on the hotels for profit, including the fact that the
hotels buy products in bulk, this power on the lower side (Oh, 2004)

Bargaining power of buyer:

This researcher believes the threat from customers is high and is ever-increasing since
customers have many alternatives available to them, ranging from economic options to the
luxurious. Due to new modern technologies that allow travelers to reserve hotel rooms from
any location of the world, they are no longer limited to searching for lodging near the
airports. Customers only want the best deals and if the market is competitive, more options
are available for consumers.
One way to combat this is for Mchotels to create customer loyalty programs that reward
guests for choosing to stay at their hotel and further bonus points for repeat purchases, and
utilizing the hotel’s service offerings. (Pimtong Tavitiyamana, 2011)

Rivalry amongst existing competitors:

This is the biggest threat that Mchotels will be facing, as there is stiff competition from big
players on the cost front. Within the UAE, the tradition of the price of accommodation being
associated with the star rating is slowly becoming obsolete as there are multiple 4-5 star rated
hotels offering services at 3-star hotel rates. The upcoming expo 2020 has been a huge
accelerator for the expansion of the hospitality sector. The UAE projects, according to BNC
network has been divided into 3 major types:
 Hotels
 Hotel apartments
 Resorts.
All of these pose a threat to Mchotels as consumers have more choices now more than ever
before. Another major factor is the impact of VAT, so higher prices can lead to increased
competition between market players, both regional and non-regional as hotels are becoming
more technologically proficient and use digital tools to attract audiences worldwide. (Sidharth
Mehta, 2018) (Abbas, 2017)

24
Porter’s Generic Strategies:

Cost leadership:
This strategy is based upon Mchotels organizing and managing its value-adding activities so
as to be the lowest-cost producer of a service offering accommodation as their primary
venture. In the broadest sense, Mchotels must attempt to serve a large percentage of the total
market. Attainment of this leadership position depends upon the arrangement of the value
chain activities as well as several other factors including:
 Accurate demand forecasting as well as high capacity utilization.
 Economies at scale
 Technological aids
 Outsourcing
Mchotels can practice specific management methods to keep costs to a minimum by utilizing
AI software for hospitality management solution (HMS).
Outsourcing would play a part in reducing Mchotel’s hard costs, especially when used in
areas like landscaping, payroll, airport shuttle, valet services or even programing the Mchotel
website. (Barnes, 2018)

Differentiation Strategy:
So, this strategy differs from the cost leadership strategy as more emphasis is placed on
creating value through uniqueness and innovation as opposed to having low cost. This will
persuade customers that Mchotel’s products and services are superior than those offered by
their competitors. Service innovations, novel & attractive advertising, strong supplier
relations which ultimately lead to better services for Mchotels. The key to success in this
strategy is that customers must be willing to pay more for the services than it cost Mchotels
to create it. One method is for the hotel to not invest a lot of funds for real estate but focus
more on brand and franchise differentiation. To put customers’ happiness first, such as
complimentary celebrations for guests’ special occasions, customizable room layouts,
expedited room service based on guest loyalty and custom offers based on guest usage.
(Machuca, 2019)

Focus Strategy:
This strategy specifically aims at a segment of the market rather than the market as a whole.
Mchotels pursuing focus strategies have to be able to identify their target market segment,
assess and meet the needs and desires of customers within the segment, with a more lucrative
portfolio as compared to Mchotels’ competitors. Focus strategies can be based on
differentiation or lowest cost. There is considerable debate about whether a hotel can have
both as it is hard to please a particular segment of guests without some form of differentiation
and emphasizing on having the lowest cost. Mchotels can specifically target Millennial and
Generation Z customers who travel to the UAE for leisure visits and need cheaper
accommodation services. The hotel can also introduce a shared accommodation feature for
traveling students or early working professionals who wouldn’t mind sharing a room in case
the hotel is fully booked. (Ovidiu N. Bordean, 2010)

25
Ansoff’s Matrix:

Figure 12 Ansoff's Matrix

Market Penetration:
As Mchotels are a new enterprise entering into the ever-growing UAE hospitality market, in
order to penetrate and grow, competitive pricing strategies, specialized advertising, sales and
cross-promotions and introducing loyalty schemes. If successful, securing dominance of
growth markets become possible. Maintaining and potentially increasing market share can
also be achieved.

Market Development:
Once the Mchotel is established within Dubai, the franchise can venture outwards, to other
emirates of UAE, then to other countries within the Middle East and eventually global
expansion can also be addressed, especially with the backing of the parent brand. By
expanding the arrangement of businesses of the current services and products Mchotels can
unquestionably cause a rise in productivity overall. Targeting a new segment of customers
can give rise to greater profits and a larger consumer base for e.g. offering couple discounts
for newly married guests.

Product Development:
This segment will require Mchotels to upgrade the aptitude in new services or products and
demonstrations in the current business. Doing so will expand the monetary success of the
organization overall. Mchotels can evolve and release newer products to attract a wider
audience such as making use of technology by offering a virtual tour of the hotel to
prospective guests through Mchotel’s website. Creating a global events calendar that will
engage guests and allow them to experience a multitude of cultural heritages from all over the
world. Offer helicopter rides to customers who wish to travel in style from the airport to the
hotel. Open a souvenir shop that offers discounts and complementary products for guests
currently staying within the hotel. (Frehse, 2006)

26
Diversification:
When Mchotels enter the UAE hospitality market, diversification will typically take place in
3 different strategies: (Ahsan, 2014) (Chia-Yu Yeh, 2012)
 Concentric/horizontal diversification:
Where Mchotels can release a new service that is related to its existing product offerings for
e.g. acquiring or introducing a McDonald’s themed resort where customers can expect the
same high standard of service of Mchotels. Or even a hotel apartment offering shared housing
style accommodation.
 Conglomerate diversification:
Once Mchotels’ takes off, expansion will oblige the hotel to dispatch new items for new
markets. The researcher believes that McDonald’s has such a massive global presence that
anything they choose to promote and sell will gain traction. McDonald’s already has their
own university, Hamburger university in Illinois. Mchotels’ can take this a step further by
creating their own university training programs as well and eventually open a community
college in their brand name where instructors can train people to acquire the necessary skills
required within the hospitality sector or at Mchotels as a successful full-time employee. If
Mchotels were to open a mosque, gym or pool under their brand name, it would also fall into
this category. They can also introduce their own line of merchandise like bags, fashion
accessories or even clothing, guests can be given these, complimentary when they choose to
stay at the hotels.
 Vertical Diversification
Acquisitioning a supply company that is found along Mchotel’s value chain and taking
control of their activities can potentially bring in a lot more profits. By cutting out the
middlemen will strengthen the hotel’s supply chain, reduce production costs, capture upwards
& downwards profits or even gain access to new distribution channels. Delays in delivery and
transportation can also be prevented. (Kracer, 2013)

27
Bowman's Strategic Clock:
This model explores options for strategic positioning for a company taking price and
perceived value of the products or services offered into account. The researcher believes that
Mchotels can be placed into 3 separate positions on the clock face.

 Hybrid position:
This position suits Mchotels the best when it will be first established. As it involves low price
(relative to present market conditions) and some product differentiation. Customers must be
persuaded that Mchotels can provide both great value and an innovative product portfolio. By
offering a multifaceted hospitality experience where customers are treated to specially
tailored amenities like activity bookings, tours, even babysitting sessions while converting a
portion of their property to meet important social events (engagements, wedding ceremonies,
corporate parties) and special moments (fashion & jewelry shows) by assigning the ball
room, conference halls etc.

 Differentiation position:
Once the hotel is up and running, it can open a more luxurious version of their brand, where
guests are offered with products of the highest level of perceived value with relative pricing.
This means that accommodation will be a bit more on the pricey side however key

28
differentiation strategies are adopted to make sure that customers do not feel cheated. For e.g.
using sky taxis, so during busy times of the day, helicopters will bring guests to any location
within the city the hotel operates in, to avoid traffic jams. For children, having a separate
hotel room for them where it will be fully stocked with the child’s preference of toys, snacks,
and entertainment. A 2 for 1 spa session for both the guests and their pets. Golf course for
connoisseurs to host professional championships.

 Focused differentiation:

This particular strategy can only be accomplished once the Mchotels are fully established and
are looking to expand outwards. Mchotels will begin positioning their services at the highest
price levels and customers will buy them because of their high perceived value. This is for a
small target segment of customers for e.g. Modihost HMS is a cloud-based platform that
utilizes artificial intelligence, machine learning, voice recognition, and cognitive computing
to be able to offer hotels and guests with enhanced services for advanced booking and. The
platform operates on a Pay-Per-Use model where hotels can utilize their services but not have
to pay for anything that is not being used. As well as taking personalized guest metadata, and
segment them into a large number of categories, so each and every customer will feel like the
service that is being provided is tailor-made for them. (ModiHost, 2019) This will allow the
Mchotel to save funds that would otherwise be spent now instead they would only have to
pay a small predetermined fee. Another idea would be to give each room their own
designated personal butler to attend to guests every need from food delivery to being a valet.

Figure 13 Modihost

29
Tactical Objectives and priorities:

The upcoming expo 2020 has been a huge accelerator for the expansion of the hospitality
sector and by utilizing all the several business models and frameworks, (SWOT, PESTLE
etc.) a deeper understanding is gained into the market place of UAE and from there,
formulate some strategies to ensure that the Mchotels are able to function with efficiency and
potentially expand outwards, domestically and globally.

HR Strategies:
The lack of properly educated and trained staff can be attributed to budget constraints that a
multibillion-dollar company like McDonald’s shouldn’t have to deal with. The researcher
believes that by tweaking the budget and switching up the allocations a bit may have
improved the hotels’ reputation and ultimate fate. The Mchotel must spend more resources on
staff by hiring employees with experience and knowledge of the hospitality sector and
holding seminars to further train them.
Also, before hiring any new employees, a mandatory background checks should take place
using 3rd party background check providers like AccurateNow (formerly Hirease) and
Checkr.

Figure 14 Checkr Figure 15 AccurateNow

Implementing employee incentive programs such as a ‘You’ve been caught’ program. When
employees are ‘caught’ going beyond their duties, they will be awarded gift certificates or a
free night’s stay at the hotel with their families. Or even a public recognition award which
will be given in a public setting, to an employee, voted by his/her peers. This will boost
morale and inspire others to increase performance. Encouraging healthy department
competitions and team-building exercises will help with teamwork.

Environmental Strategies:
The Mchotel should take food wastage extremely seriously, its parent company has some
waste management techniques that can be adopted by the hotel such as recycling kitchen
waste materials like cooking oils, polyethene foils and corrugate or cardboard used in
packaging. As well as donating large sums of food to charity on a routine basis.
Another method of being environmentally conscious is to use more electric/hybrid vehicles
for the hotel’s shuttle and tour buses.
Following in the footsteps of Hotel Indigo’s plan, the Mchotel can utilize solar power for
their source of energy as well as reprocess and recycle waste products and water. In the
beginning, for smaller services, solar energy can be harvested and used for trial testing but
after thorough research and development, the Mchotel can become one of UAE’s first
sustainable integrated projects with zero waste or carbon footprint. (Rai, 2017)

Partnership Strategies:

30
Partnering up with local franchises like cafes or restaurants so that cross-promotion may
occur and the hotel will be able to sell their products without any violations. Teaming up with
Starbucks to give new guests a free boost of caffeine or other refreshments when they enter
the hotel for the 1st time or when guests re-enter the hotel.
Airports can team up with Mchotels to eventually open a branch within them, where travelers
who are in the UAE because of transit flights or do not have a visa but wish to experience the
UAE culture can choose to stay in the Mchotel.
Online travel agencies can seamlessly connect customers with Mchotels by displaying the
hotel’s booking information and room availability for e.g. booking.com or cleartrip.ae

Cost strategies:
As Mchotels are designed to be cost-effective and more about the experience rather than the
stay, shuttle vehicles can be decorated in reference to the parent brand’s image as well as
being completely free of cost during special occasions, with information about the hotel
relayed to customers, aboard.
By removing the adjustable beds and replacing them with a more traditional design would
have lessened blows on the budget.

Technology Strategies:
The Mchotel ideally should have a modern and inbuilt, customer-friendly IT infrastructure,
such as self-check-in counters and an effective loyalty program that offers impressive
benefits.
Depending on when the Mchotel launches within the UAE, they may be able to utilize voice
and facial recognition softwares and biometrics as well as integrating rooms with virtual
assistants such as Google Assistant or Alexa to make the guests’ stay more comfortable and
informative. Take customer feedback through such assistants.
Since customers sometimes may not wish to interact with hotel staff, the Mchotel should also
have a check-in kiosk, which are fully operational 24/7, to allow greater customer satisfaction
as well as the front desk. The Mchotel should also introduce a downloadable app for
smartphones so that customers may address their needs or wants through the app’s built-in
helpline (Mcline).

Marketing Strategies:
Utilizing online platforms more effectively by having more content marketing such as videos,
blogs and social media posts that do not actively and directly promote the brand but is
designed to stimulate interest towards the hotel.
Most travelers (75%) start by using online search engines for accommodation, using popular
keywords on the Mchotel website is important and using banner ads for promotion. (rategain,
2017)

Expansion Strategies:
Once Mchotels become established in Dubai, the combination of new segment development
and investors will allow the brand to expand outwards. Newer franchises can be made under
the umbrella of Mchotel like a more luxurious 7-star hotel or a hotel apartment for cost-
conscious customers. For global expansion, choosing a politically stable economy and
thorough research into other markets and geographical concentration will be necessary.
Liaisons will have to be hired who speak the language of where the new branch will be built
and act as a bridge between the 2 branches. (Jean Jinghan Chen, 2005)
By acquiring independent boutique hotels in the UAE, Mchotels can gain a larger customer
base and exposure. Boutique hotels are attractive to the younger generation who prefer

31
accommodations with a whimsical touch. They are typically a small design space and
conduct a more personalized approach to every guest. By tapping into this market, an entirely
new segment of customers can be targeted. (Wiley, 2019)

Conclusion:
The researcher believes that if McDonald’s wishes to open a Mchotel within UAE now is the
time as the Expo 2020 will bring opportunities for businesses worldwide to establish
themselves within the UAE. And for it to eventually become a household name, Mchotels
need to focus on 4 main factors:
 Customer service.
 Marketing strategy.
 Global outreach.
 Pricing strategy.
By taking all of these into consideration, Mchotels have a clear shot at becoming a successful
business venture in the UAE’s hospitality realm.

32
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